Those savvy traders who toil at their computer screens, doping out the finest of five-minute investments, went at the markets today like the economy was in the midst of a major boom, sending the Dow up by more than 200 points and all major indices back to levels prior to the careening downshift from August 4th.
Like it never even happened...
Like there's no debt crisis in Europe. Like the US debt to GDP ratio isn't close enough to 100%. Like the unemployment rate isn't 9.2% (really, upwards of 17%).
Supposedly, according to experts at these kinds of things, this is what the Fed was saying when it pegged federal funds rates at zero percent last Tuesday - that treasuries and savings were for fools and that the only way to make money was to invest in risky assets, like stocks.
It just so happens that today is the 40th anniversary of then-President Nixon closing the gold window, and setting global economies off on a fiat money adventure, wherein currencies are backed by nothing but "good faith and credit" of sovereigns, and nothing more. Whatever hell in which Richard M. Nixon is currently residing, one hopes that the flames are hot enough to toast his dead bones to a crisp, because, more than anything else, taking the US - and thus, the world's reserve currency, and thus, all other currencies - off the gold standard in 1971 has created the gross inequalities in income levels and the bankster/crook/casino mentality that pervades capital markets today.
Nixon destroyed the concept of sound money and replaced it with a world of volatile, floating currencies, mountains of debt and middle class wage slavery. If anyone asks who caused the great collapse of currencies and the three-year financial mess that the world is currently embroiled in, tell them, "Nixon did it," because he started it all (and maybe, when people wake up to reality, they'll elect Ron Paul president to undo it).
Traders (not investors) took to the market like hungry wolves right out of the gate, ignoring the August Empire State Manufacturing Index, which delivered the third straight month of negative readings, coming in at -7.7, an hour prior to the opening bell. It was the third straight month the index came in below zero, which indicates that the economy of NY state has been contracting since May.
Well, it's just one state, like Greece, and Italy, and Portugal and France, are each just one country. But, if New York is contracting, you can bet other states are doing similar, or just barely expanding. Besides, New York is one of the biggest states, by population, 4th in the US.
No problem. Just move along, the government will fix all the bad economic data that's coming out this week, including industrial production, capacity utilization, new and existing home sales, PPI and CPI. Besides, Ben Bernanke has made it very clear that the only place to put your money to work is in equities (oh, and oil), not bonds, or gold or silver.
As CNBC's chief cheerleader, Jim Cramer, would say, BUY, BUY, BUY.
Dow 11,482.90, +213.88 (1.90%)
NASDAQ 2,555.20, +47.22 (1.88%)
S&P 500 1,204.49, +25.68 (2.18%)
NYSE Composite 7,482.71, +178.83 (2.45%)
Stock winners beat losers by a count of 5737-970, in a broad-based beat-down. On the NASDAQ, new lows continued to outnumber new highs, 49-14. The opposite was true on the NYSE, with 11 new highs and just six (6) new lows. The combined total of 25 new highs and 55 new lows, still retains a modest downside bias.
Volume returned to more pedestrian levels after the ridiculous wind and unwind of the previous seven sessions.
NASDAQ Volume 1,915,922,250
NYSE Volume 4,952,016,500
Oil caught a bid, gaining $2.50, to $87.88. With any luck, the speculators and oil barons controlling the futures markets will have it back to $100/barrel by Labor Day. In case nobody's noticed, even though oil is well off it's highs around $100 just three weeks ago, prices at the pump have barely budged. The oil companies say that's because the gasoline already delivered was bought at a higher price and has to be sold at a higher price. When that runs out, and gas can be bought lower, then prices will come down.
Yeah, sure. AAA reports the national average for a gallon of unleaded regular at $3.594 per gallon, down about a nickel from July 22nd, when oil began to slide.
Gold and silver suppression schemes seem to be running out of fuel, however. Gold gained $15.40, to $1,758.00, while silver was up 19 cents, at $39.31.
On Tuesday, a slew of data hits the street, though it will mostly be ignored since there is no other way to make money than by buying stocks.
Finally, below is a video (ain't technology great?) of Richard Nixon forty years ago today, dissembling, in his own beautiful, self-destructive way, in front of the entire world. Enjoy.
Showing posts with label oil. Show all posts
Showing posts with label oil. Show all posts
Monday, August 15, 2011
Monday, August 08, 2011
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:
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:
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 growthThat 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:
Label:
10-year note,
BAC,
Bank of America,
Ben Bernanke,
bonds,
central banks,
CitiGroup,
David Tepper,
Europe,
Greece,
Italy,
oil,
Spain,
Wells-Fargo,
WFC,
yield
Wednesday, May 11, 2011
Dollar Wins; Stocks, Commodities Whacked Again as Chaos Commences
Whatever one thinks about the policies of the Federal Reserve, one has to respect their inside job ability to influence and move markets, thus, it should surprise nobody that everything went down today as the dollar rallied past 75 on the Dollar Index.
The dollar gained nearly one per cent today, closing at 75.29, its best level since April 18. That surge brought down stocks and with them, most commodities. No doubt the Fed has responded to inflationary pressure and the stock junkies have expressed themselves by selling off riskier assets, such as stocks, though their commitment has been anything but binding.
A more cynical view might be expressing serious doubt about the trustworthiness of all markets, as rule changes, manipulation and front-running make price discovery more an abstract art than a defined science. The movement in stocks seems to be suggesting that "buying the dips" may have become out of favor in recent days, and a prolonged correction is at hand. With the Fed ending QE2 this would be an opportune time to begin shedding positions in many overpriced stocks.
That's the flavor of the day, and maybe of the month. Stocks finished well off their lows, but still took a significant drubbing, a scenario that seems to be repeating itself with increasng frequency.
Dow 12,630.03, -130.33 (1.02%)
NASDAQ 2,845.06, -26.83 (0.93%)
S&P 500 1,342.08, -15.08 (1.11%)
NYSE Composite 8,428.09, -122.40 (1.43%)
Declining issues hammered advancers, 4955-1719. New highs totaled 89 on the NASDAQ, offset by 46 new lows. On the NYSE, there were 133 new highs to just 22 new lows. Volume was up to decent levels, indicating that the selling, which began in earnest just over a week ago, has resumed.
NASDAQ Volume 2,229,573,750
NYSE Volume 4,265,927,000
Crude oil took another steep loss, dropping $5.67, to $98.21 at the close on oversupply issues and a dampening of China's economy. The Energy Information Administration reported that demand for gas has fallen for seven consecutive weeks and today reported a 2.4% decline in demand. This prompted the CME to halt trading in gas futures for five minutes as the price plummeted 25 cents, triggering the automatic trading suspension.
Additionally, OPEC reported that member nations were only 65% in compliance with production quotas, and 17 senators, led by Oregon's Ron Wyden, sent a letter to the CFTC, urging them to impose position limits on oil futures trading.
If anything is for certain, it's that the world's driving population has been taken over a barrel recently by the oil cartel and Wall Street traders. While it's encouraging to see a bi-partisan group of senators calling for change in how oil and gas are priced, one should not get too excited until we see oil back to some reasonable level - under $75/barrel - and gas back to $3.00 a gallon or lower. As usual, the price hikes at the pump had little to nothing to do with basic supply/demand fundamentals, but certainly, the demand destruction caused by gas rising to over $4/gallon in much of the United States should serve as ample evidence that high oil and gas prices are a major contributor to economic stagnation or even recession.
Elsewhere, gold dipped $15.90, to $1500.90 and silver took another beating, losing $3.34, to $35.11, after rising for three straight sessions. It certainly appears that the banking oligarchs are not yet through punishing those who would speculate in potentially competing forms of money, such as precious metals. Silver traders have been particularly whipsawed in recent days, though true believers, who buy, hold and do not sell, are looking at any drops with gleeful anticipation of more accumulation.
Strength in the dollar is almost certain to be - to use one of Chairman Bernanke's favorite terms - transitory, which means the collapse in silver and any declines in the price of gold will only lead to more enthusiastic buying.
The true measure of the strength of the decade-long precious metal bull market lies in the ability of gold and silver bugs to hold until the government gives up supression measures completely. That may turn out to be a long time frame, as the printing presses at the Fed will be turned on full throttle and efforts to manage or mangle gold and silver price advances will be well-funded.
Unusual movements and increased volatility in prices of all goods and services are signatures of an economy on its knees, with price discovery completely blown away and manipulation rampant. And while there are major camps of support on Wall Street and in Washington to keep money flows into bonds and equities, the battle may already have been lost. There is simply too much debt and more being piled on every day, to expect an orderly unwinding.
Chaos will become common.
The dollar gained nearly one per cent today, closing at 75.29, its best level since April 18. That surge brought down stocks and with them, most commodities. No doubt the Fed has responded to inflationary pressure and the stock junkies have expressed themselves by selling off riskier assets, such as stocks, though their commitment has been anything but binding.
A more cynical view might be expressing serious doubt about the trustworthiness of all markets, as rule changes, manipulation and front-running make price discovery more an abstract art than a defined science. The movement in stocks seems to be suggesting that "buying the dips" may have become out of favor in recent days, and a prolonged correction is at hand. With the Fed ending QE2 this would be an opportune time to begin shedding positions in many overpriced stocks.
That's the flavor of the day, and maybe of the month. Stocks finished well off their lows, but still took a significant drubbing, a scenario that seems to be repeating itself with increasng frequency.
Dow 12,630.03, -130.33 (1.02%)
NASDAQ 2,845.06, -26.83 (0.93%)
S&P 500 1,342.08, -15.08 (1.11%)
NYSE Composite 8,428.09, -122.40 (1.43%)
Declining issues hammered advancers, 4955-1719. New highs totaled 89 on the NASDAQ, offset by 46 new lows. On the NYSE, there were 133 new highs to just 22 new lows. Volume was up to decent levels, indicating that the selling, which began in earnest just over a week ago, has resumed.
NASDAQ Volume 2,229,573,750
NYSE Volume 4,265,927,000
Crude oil took another steep loss, dropping $5.67, to $98.21 at the close on oversupply issues and a dampening of China's economy. The Energy Information Administration reported that demand for gas has fallen for seven consecutive weeks and today reported a 2.4% decline in demand. This prompted the CME to halt trading in gas futures for five minutes as the price plummeted 25 cents, triggering the automatic trading suspension.
Additionally, OPEC reported that member nations were only 65% in compliance with production quotas, and 17 senators, led by Oregon's Ron Wyden, sent a letter to the CFTC, urging them to impose position limits on oil futures trading.
If anything is for certain, it's that the world's driving population has been taken over a barrel recently by the oil cartel and Wall Street traders. While it's encouraging to see a bi-partisan group of senators calling for change in how oil and gas are priced, one should not get too excited until we see oil back to some reasonable level - under $75/barrel - and gas back to $3.00 a gallon or lower. As usual, the price hikes at the pump had little to nothing to do with basic supply/demand fundamentals, but certainly, the demand destruction caused by gas rising to over $4/gallon in much of the United States should serve as ample evidence that high oil and gas prices are a major contributor to economic stagnation or even recession.
Elsewhere, gold dipped $15.90, to $1500.90 and silver took another beating, losing $3.34, to $35.11, after rising for three straight sessions. It certainly appears that the banking oligarchs are not yet through punishing those who would speculate in potentially competing forms of money, such as precious metals. Silver traders have been particularly whipsawed in recent days, though true believers, who buy, hold and do not sell, are looking at any drops with gleeful anticipation of more accumulation.
Strength in the dollar is almost certain to be - to use one of Chairman Bernanke's favorite terms - transitory, which means the collapse in silver and any declines in the price of gold will only lead to more enthusiastic buying.
The true measure of the strength of the decade-long precious metal bull market lies in the ability of gold and silver bugs to hold until the government gives up supression measures completely. That may turn out to be a long time frame, as the printing presses at the Fed will be turned on full throttle and efforts to manage or mangle gold and silver price advances will be well-funded.
Unusual movements and increased volatility in prices of all goods and services are signatures of an economy on its knees, with price discovery completely blown away and manipulation rampant. And while there are major camps of support on Wall Street and in Washington to keep money flows into bonds and equities, the battle may already have been lost. There is simply too much debt and more being piled on every day, to expect an orderly unwinding.
Chaos will become common.
Wednesday, May 04, 2011
American Sheeple Love to Be Fleeced and Played
The lies, half-truths and material obfuscation by the government has reached new heights with the latest flip-flop on the "Osama bin Laden is dead" story.
Now the president won't release a picture of a dead bin Laden because it might inflame the Jihadists of the world. Rubbish! Pure, unadulterated nonsense from the man who is supposed to be the leader of the greatest nation on the planet, but is now exposed as nothing more than a simple liar.
Lies, lies and more lies are all the American people can expect from the most corrupt government the world has ever seen. The details of this entire, "we got him" affair have changed so often as to strain credulity until it doubles over in laughter or vomiting, or both.
First, the story originally released by AP on Sunday night, May 1, was that bin Laden was killed a week prior and that the White House had been waiting for DNA tests to confirm that the victim was indeed the world's bogeyman. Anyone watching the news scroll on FoxNews or CNN saw it, undeniably. That story vanished as soon as the president stepped up to the podium that Sunday night.
Then there were reports of a firefight, now, no firefight. Osama was armed, then he wasn't; he used his wife as a human shield, then he didn't and it wasn't even his wife, then it was his wife and she was shot because she rushed one of the Seals. There were two helicopters, no, three, no, there were four. Then Osama bin Laden is taken out of the compound to Afghanistan and rushed to an aircraft carrier for a proper burial at sea. Sure, that's completely understandable, especially if you believe Osama bin Laden was a seaman or a pirate.
Of course, there's the implausibility factor of a huge compound with 18-foot high walls, topped by barbed wire in a town populated by retired Pakistani military people, which never raised any suspicion for five or six years. That's certainly believable.
The entire episode is one huge farce and sadly, the iPad buying American sheeple public-at-large will gooble up every last sound bite of it, all the while chanting, USA, USA, USA! because the American sheeple actually love being conned, swindled, cheated, fleeced and sheared by their government. After all, this is the culmination of the 9/11 attacks, the major farce that has to this day never been adequately explained.
But, so what? Osama the Terrible is dead, right, and whether he's been dead for five, six or seven years is really immaterial because the powers that be are changing the narrative. They had to, because the most recent narrative of borrow and spend and gas at $4.00 a gallon and rising food prices and war on three fronts wasn't really going all that well, was it?
So, now, we have crashing commodity prices, falling stocks and oil down seven bucks in three days. Get ready for the new AUSTERITY coming to America. The sheeple will be fleeced from an entirely different direction and instead of calling it a recession or a depression, it will be known as a period of "slow growth" or "stagnation." Anything but calling a spade a spade, a recession a recession, a depression a depression.
The American sheeple will receive less in government service and be taxed more for it all in a "shared sacrifice" decade of austerity that is evolving even as we sit back and watch the latest American Idol or Star Dancing. America has been permanently dumbed-down and defeated, and the government loves it because an ignorant public is a well-behaved public. Give them their bread and circuses, today known as food stamps and football, and they'll just blindly follow along.
That's just the way it is, sheeple, one and all. You love being played.
Dow 12,723.58, -83.93 (0.66%)
NASDAQ 2,828.23, -13.39 (0.47%)
S&P 500 1,347.32, -9.30 (0.69%)
NYSE Composite 8,506.61, -78.07 (0.91%)
For a change, everything (except bonds) went down. Declining issues overwhelmed advancers - for the third day in a row - by a score of 4700-1904. On the NASDAQ, the flip required to shake the markets from rally mode to selling spree occurred today with 52 new highs, but 53 new lows. On the NYSE, stubbornness prevailed with 89 new highs and 28 new lows, but it's getting closer. Volume, unsurprisingly, was up again today, on a down day, an ominous warning that more selling is on the way.
NASDAQ Volume 2,250,185,000
NYSE Volume 5,078,037,500
Commodities continued to be whipped into submission. WTI crude oil futures fell another $1.81, to $109.24, the lowest price in two weeks. Gold tumbled another $20.60, to $1516.50 and silver took another massive beating, down $2.27, to $39.39. And, this just in after the close, margin requirements on silver are being raised again by the CME. Apparently sending the price of silver down $11 in three days isn't enough to square all of HSBC's and JP Morgan's short positions.
The often-discredited ADP Payroll report for April was released prior to the open today, showing private payrolls increasing by 179,000, short of consensus. But the real news was that the ISM Services index fell from 57.3 in March to 52.8 in April, a pretty big loss and well below consensus estimates of 57.5.
Tomorrow comes another week of initial unemployment and continuing claims, which precedes the BLS non-farm payroll report on Friday.
Prepare for disaster because we've been living one for the past three years.
Now the president won't release a picture of a dead bin Laden because it might inflame the Jihadists of the world. Rubbish! Pure, unadulterated nonsense from the man who is supposed to be the leader of the greatest nation on the planet, but is now exposed as nothing more than a simple liar.
Lies, lies and more lies are all the American people can expect from the most corrupt government the world has ever seen. The details of this entire, "we got him" affair have changed so often as to strain credulity until it doubles over in laughter or vomiting, or both.
First, the story originally released by AP on Sunday night, May 1, was that bin Laden was killed a week prior and that the White House had been waiting for DNA tests to confirm that the victim was indeed the world's bogeyman. Anyone watching the news scroll on FoxNews or CNN saw it, undeniably. That story vanished as soon as the president stepped up to the podium that Sunday night.
Then there were reports of a firefight, now, no firefight. Osama was armed, then he wasn't; he used his wife as a human shield, then he didn't and it wasn't even his wife, then it was his wife and she was shot because she rushed one of the Seals. There were two helicopters, no, three, no, there were four. Then Osama bin Laden is taken out of the compound to Afghanistan and rushed to an aircraft carrier for a proper burial at sea. Sure, that's completely understandable, especially if you believe Osama bin Laden was a seaman or a pirate.
Of course, there's the implausibility factor of a huge compound with 18-foot high walls, topped by barbed wire in a town populated by retired Pakistani military people, which never raised any suspicion for five or six years. That's certainly believable.
The entire episode is one huge farce and sadly, the iPad buying American sheeple public-at-large will gooble up every last sound bite of it, all the while chanting, USA, USA, USA! because the American sheeple actually love being conned, swindled, cheated, fleeced and sheared by their government. After all, this is the culmination of the 9/11 attacks, the major farce that has to this day never been adequately explained.
But, so what? Osama the Terrible is dead, right, and whether he's been dead for five, six or seven years is really immaterial because the powers that be are changing the narrative. They had to, because the most recent narrative of borrow and spend and gas at $4.00 a gallon and rising food prices and war on three fronts wasn't really going all that well, was it?
So, now, we have crashing commodity prices, falling stocks and oil down seven bucks in three days. Get ready for the new AUSTERITY coming to America. The sheeple will be fleeced from an entirely different direction and instead of calling it a recession or a depression, it will be known as a period of "slow growth" or "stagnation." Anything but calling a spade a spade, a recession a recession, a depression a depression.
The American sheeple will receive less in government service and be taxed more for it all in a "shared sacrifice" decade of austerity that is evolving even as we sit back and watch the latest American Idol or Star Dancing. America has been permanently dumbed-down and defeated, and the government loves it because an ignorant public is a well-behaved public. Give them their bread and circuses, today known as food stamps and football, and they'll just blindly follow along.
That's just the way it is, sheeple, one and all. You love being played.
Dow 12,723.58, -83.93 (0.66%)
NASDAQ 2,828.23, -13.39 (0.47%)
S&P 500 1,347.32, -9.30 (0.69%)
NYSE Composite 8,506.61, -78.07 (0.91%)
For a change, everything (except bonds) went down. Declining issues overwhelmed advancers - for the third day in a row - by a score of 4700-1904. On the NASDAQ, the flip required to shake the markets from rally mode to selling spree occurred today with 52 new highs, but 53 new lows. On the NYSE, stubbornness prevailed with 89 new highs and 28 new lows, but it's getting closer. Volume, unsurprisingly, was up again today, on a down day, an ominous warning that more selling is on the way.
NASDAQ Volume 2,250,185,000
NYSE Volume 5,078,037,500
Commodities continued to be whipped into submission. WTI crude oil futures fell another $1.81, to $109.24, the lowest price in two weeks. Gold tumbled another $20.60, to $1516.50 and silver took another massive beating, down $2.27, to $39.39. And, this just in after the close, margin requirements on silver are being raised again by the CME. Apparently sending the price of silver down $11 in three days isn't enough to square all of HSBC's and JP Morgan's short positions.
The often-discredited ADP Payroll report for April was released prior to the open today, showing private payrolls increasing by 179,000, short of consensus. But the real news was that the ISM Services index fell from 57.3 in March to 52.8 in April, a pretty big loss and well below consensus estimates of 57.5.
Tomorrow comes another week of initial unemployment and continuing claims, which precedes the BLS non-farm payroll report on Friday.
Prepare for disaster because we've been living one for the past three years.
Label:
austerity,
bonds,
margin calls,
oil,
Osama bin Laden,
silver
Tuesday, April 26, 2011
After the Ramp, Amazon Pigs Go to Slaughter
There's an old market adage, one oft-repeated by the notorious Jim Cramer of CNBC infamy, and it goes, Bulls make money, Bears make money, Pigs get slaughtered.
Today's top candidates for pig of the day were the anti-silver whore banks who shorted silver with May or June 40 puts (almost a sure slaughter there), the naive investors who purchased any of the momo-stocks - Apple, Netflix, Cipolte Mexican, etc. - and those who held their recently-purchased shares of Amazon (AMZN).
The winner - though all may be declared winners, by losing at a later date - for today has to be the Amazon playas who ignored the warnings of today's market action (from above 186 to a low of 181 against the backdrop of an accelerating market rally) and held on, hoping for another blowout quarter from the world's biggest bookseller.
Oops! Amazon reported just after the closing bell that it missed analyst targets by a pretty wide shot, coming in at 44 cents per share, when the market was looking for 61 cents. Some - most likely the fast talkers on Fast Money - will take solace in the fact that they beat revenue forecasts and were beaten up by increased operating costs, but it's earnings that matter, profits, son.
Amazon got the ramp-up treatment just this past Wednesday, soaring, on no particular news or for any good reason, from 178-and-change to just below 185, before noon. On Thursday and Monday, the stock drifted at the high end of the range until it was absolutely belted today during the regular session.
What changed? Precisely nothing, except that somebody got played, and good, and you can bet your last download on your Kindle that it wasn't anybody working at Goldman Sachs or Merrill Lynch or JP Morgan. Nope, the small investor who thought he/she had it all figured out got creamed and once again is left holding the bag (that bag being of the Firesign Theatre variety, and those who don't understand the 1970s reference, grow up!).
Amazon closed the day at 182.30, a loss of 3.12, and was trading below 180 in the after-hours. It's a pretty good bet that it opens tomorrow gapped lower, and trends South from there.
As for the rest of the market, it proved once again that nobody knows anything (other than Ben Bernanke and Jaime Dimon, that is) about short-term moves in the stock market, because, for all intents and purposes, this is an overbought, frothy market top, but this writer and many others have been calling tops for months. We are all equally fallible and ignorant in the face of SIRP and QE2. We are confident tomorrow, when the Fed announces no change in rate policy and Ben Bernanke makes history with a post-nothing-announcement news conference, will be either up, down or flat.
Dow 12,595.37, +115.49 (0.93%)
NASDAQ 2,847.54, +21.66 (0.77%)
S&P 500 1,347.24, +11.99 (0.90%)
NYSE Composite 8,554.99, +69.74 (0.82%)
Advancing issues, as one might have guess, clobbered decliners, 4561-2055. On the NASDAQ, new highs totaled 158, new lows, 28. There were 318 new highs and just six new lows on the NYSE. Volume was good on the NASDAQ, still depressed on the NYSE.
NASDAQ Volume 2,070,959,125
NYSE Volume 4,391,299,000
Commodities had a storied session, especially the precious metals. After making ferocious moves for months, the expected pull-back has begun. Gold lost $5.60, closing in NY at $1,503.50, but silver took a major hit, down $2.10, to $45.05. Crude oil lost a mere seven cents, to finish the session at $112.21. Food-related commodities were mostly lower.
The math on this is pretty straightforward. Since the global banking cartel can't allow gold and silver to defeat their paper monies, they suppress the precious metals with massive short positions in the fluid, over-leveraged paper market. Since most people don't own gold or silver, they can beat the price down when necessary, though physical holders won't actually care much about day-to-day movement since the trend has been up for the past decade and shows no signs of abatement. Oil stays high, as everybody has to put fuel into vehicles or distributed energy and since dead humans don't drive much, the cost of food must not rise severely.
It's all about oil, has been for many years and isn't going to change soon. That's why wise guys and gals like gold and silver. It's a hedge, it's real money and you can't eat it out of existence.
Tomorrow, the great and glorious Ben Bernanke will quiver and quake through a non-eventful press conference after the "no change" FOMC policy announcement. Maybe Ben will offer some tidbit about how he can stop inflation in 15 minutes or some other rubbish. Most likely, however, it will be snoozing as usual and the market will go... somewhere.
Today's top candidates for pig of the day were the anti-silver whore banks who shorted silver with May or June 40 puts (almost a sure slaughter there), the naive investors who purchased any of the momo-stocks - Apple, Netflix, Cipolte Mexican, etc. - and those who held their recently-purchased shares of Amazon (AMZN).
The winner - though all may be declared winners, by losing at a later date - for today has to be the Amazon playas who ignored the warnings of today's market action (from above 186 to a low of 181 against the backdrop of an accelerating market rally) and held on, hoping for another blowout quarter from the world's biggest bookseller.
Oops! Amazon reported just after the closing bell that it missed analyst targets by a pretty wide shot, coming in at 44 cents per share, when the market was looking for 61 cents. Some - most likely the fast talkers on Fast Money - will take solace in the fact that they beat revenue forecasts and were beaten up by increased operating costs, but it's earnings that matter, profits, son.
Amazon got the ramp-up treatment just this past Wednesday, soaring, on no particular news or for any good reason, from 178-and-change to just below 185, before noon. On Thursday and Monday, the stock drifted at the high end of the range until it was absolutely belted today during the regular session.
What changed? Precisely nothing, except that somebody got played, and good, and you can bet your last download on your Kindle that it wasn't anybody working at Goldman Sachs or Merrill Lynch or JP Morgan. Nope, the small investor who thought he/she had it all figured out got creamed and once again is left holding the bag (that bag being of the Firesign Theatre variety, and those who don't understand the 1970s reference, grow up!).
Amazon closed the day at 182.30, a loss of 3.12, and was trading below 180 in the after-hours. It's a pretty good bet that it opens tomorrow gapped lower, and trends South from there.
As for the rest of the market, it proved once again that nobody knows anything (other than Ben Bernanke and Jaime Dimon, that is) about short-term moves in the stock market, because, for all intents and purposes, this is an overbought, frothy market top, but this writer and many others have been calling tops for months. We are all equally fallible and ignorant in the face of SIRP and QE2. We are confident tomorrow, when the Fed announces no change in rate policy and Ben Bernanke makes history with a post-nothing-announcement news conference, will be either up, down or flat.
Dow 12,595.37, +115.49 (0.93%)
NASDAQ 2,847.54, +21.66 (0.77%)
S&P 500 1,347.24, +11.99 (0.90%)
NYSE Composite 8,554.99, +69.74 (0.82%)
Advancing issues, as one might have guess, clobbered decliners, 4561-2055. On the NASDAQ, new highs totaled 158, new lows, 28. There were 318 new highs and just six new lows on the NYSE. Volume was good on the NASDAQ, still depressed on the NYSE.
NASDAQ Volume 2,070,959,125
NYSE Volume 4,391,299,000
Commodities had a storied session, especially the precious metals. After making ferocious moves for months, the expected pull-back has begun. Gold lost $5.60, closing in NY at $1,503.50, but silver took a major hit, down $2.10, to $45.05. Crude oil lost a mere seven cents, to finish the session at $112.21. Food-related commodities were mostly lower.
The math on this is pretty straightforward. Since the global banking cartel can't allow gold and silver to defeat their paper monies, they suppress the precious metals with massive short positions in the fluid, over-leveraged paper market. Since most people don't own gold or silver, they can beat the price down when necessary, though physical holders won't actually care much about day-to-day movement since the trend has been up for the past decade and shows no signs of abatement. Oil stays high, as everybody has to put fuel into vehicles or distributed energy and since dead humans don't drive much, the cost of food must not rise severely.
It's all about oil, has been for many years and isn't going to change soon. That's why wise guys and gals like gold and silver. It's a hedge, it's real money and you can't eat it out of existence.
Tomorrow, the great and glorious Ben Bernanke will quiver and quake through a non-eventful press conference after the "no change" FOMC policy announcement. Maybe Ben will offer some tidbit about how he can stop inflation in 15 minutes or some other rubbish. Most likely, however, it will be snoozing as usual and the market will go... somewhere.
Label:
Amazon,
AMZN,
Ben Bernake,
crude oil,
Fed,
FOMC,
Jim Cramer,
oil,
silver
Monday, April 18, 2011
S&P Shocks Markets, Downgrades US Outlook to Negative
Us markets barely shrugged when Japan's nuclear reactors exploded, Egypt's government was overthrown, Ireland and Portugal needed bailouts and the entire nation of Libya was turned upside down in a violent civil war.
But it was something not destructive, threatening or otherwise physically damaging - a downgrade of the economic outlook from neutral to negative for the United States from ratings agency Standard & Poors (S&P) - that caught everyone's attention on Wall Street and in Washington.
The agency - the very same one which rated hundreds of mortgage-backed securities (MBS) as AAA when they clearly were not - verified what practically everyone on the planet already knew: that the USA was spending well beyond its means and that the federal government needs to fix its financial affairs in short order.
While shying away from actually downgrading the rating, the outlook downgrade comes as a kind of warning to politicians on both sides of the aisle. S&P is concerned that long-term high deficits could lead to dire consequences if not reined in soon. Concerned that Democrats and Republicans will be unable to come to terms with glaring deficits and reach a spending and revenue compromise, S&P said, "The negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years."
An actual ratings cut could impact the government spending and borrowing programs in a nyriad of ways, making new and old debt alike more expensive to service due to higher interest rates.
Of course, the United States is not just any country. It still enjoys the best rating possible AAA on long term debt and A-1+ on short term borrowings. Nonetheless, Wall Street stood up and took notice, with across-the-board selling right from the opening bell.
The Dow was down as much as 247 points early on, but managed to pull itself higher in the afternoon, shaving off 2/5ths of the decline.
Dow 12,201.59, -140.24 (1.14%)
NASDAQ 2,735.38, -29.27 (1.06%)
S&P 500 1,305.14, -14.54 (1.10%)
NYSE Composite 8,277.11, -123.20 (1.47%)
Declining issues soared over gainers, 5219-1370. New lows exceeded new highs on the NASDAQ, 50-42, and rolled over on the NYSE as well, with 30 new lows and just 22 new highs. Volume was not impressive, though overall breadth was somewhat stunning, with all sectors ending in the red, led by energy, capital goods, basic materials and financials.
The lack of volume is more ominous than it may appear at first glance, significant in that not all investors took this warning seriously and continue to not only hold stocks, but were buying in the afternoon. With the Fed's QE2 program drawing to a close in just two months time, a tough fight for certain in Washington over raising the debt ceiling and the 2012 budget and an economy still not flourishing a full two years after the banking crisis, there are more than enough potential causes for a rapid - and lasting - decline in stocks.
NASDAQ Volume 1,817,444,625
NYSE Volume 5,013,312,500
Besides the potential S&P downgrade, corporate earnings thus far have been short on results. Bank of America's miss on Friday was widely overlooked, but today after the bell, Texas Instruments (TI) also missed, and revised 2nd quarter estimates. Before the bell tomorrow, Goldman Sachs (GS) is due to announce their results for the first quarter, which, if all goes according to plan for the company that supposes to be doing "God's work," then this downdraft will be quickly forgotten and a new era of prosperity proclaimed.
That's another bet on which we're not taking sides.
Once again, commodities and the consumer were the winners of the day as crude oil slipped $2.54, to $107.12 at the NYMEX close, while gold flirted with the $1500 mark, closing the day at $1,492.90, a gain of $6.90. Silver continued to set new 31-year highs, finishing at 42.96, on a gain of 39 cents, though it was well above the $43 mark through most of the day.
In what had to be the least-appreciated news item of the day, Saudi Arabia cut its oil production by 800,000 barrels a day due to - get this - oversupply.
Now, if only somebody can explain to the millions of drivers worldwide just how that supply-demand dynamic works again maybe we can eliminate some of the obvious gouging that's gone on over the past two months. If the Saudis are cutting production due to oversupply, then oil should be more like $40 a barrel, not over $100, and gas should be a heck of a lot closer to $2.00 a gallon than it is to $4.00.
Trust nobody. It's obvious that our own government could care less about the general welfare of its own people. And for those who paid their income taxes today, too bad, because you just threw your money right down the memory hole.
What's in store from here is anybody's guess, but you can count on a number of things: the politicians will continue to bicker and fight like little girls and accomplish next to nothing; the bankers will continue to evade prosecution for their frauds and receive bigger bonuses; and the American people - sheep that they are - will not protest but will still want their iPads, food stamps and football.
But it was something not destructive, threatening or otherwise physically damaging - a downgrade of the economic outlook from neutral to negative for the United States from ratings agency Standard & Poors (S&P) - that caught everyone's attention on Wall Street and in Washington.
The agency - the very same one which rated hundreds of mortgage-backed securities (MBS) as AAA when they clearly were not - verified what practically everyone on the planet already knew: that the USA was spending well beyond its means and that the federal government needs to fix its financial affairs in short order.
While shying away from actually downgrading the rating, the outlook downgrade comes as a kind of warning to politicians on both sides of the aisle. S&P is concerned that long-term high deficits could lead to dire consequences if not reined in soon. Concerned that Democrats and Republicans will be unable to come to terms with glaring deficits and reach a spending and revenue compromise, S&P said, "The negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years."
An actual ratings cut could impact the government spending and borrowing programs in a nyriad of ways, making new and old debt alike more expensive to service due to higher interest rates.
Of course, the United States is not just any country. It still enjoys the best rating possible AAA on long term debt and A-1+ on short term borrowings. Nonetheless, Wall Street stood up and took notice, with across-the-board selling right from the opening bell.
The Dow was down as much as 247 points early on, but managed to pull itself higher in the afternoon, shaving off 2/5ths of the decline.
Dow 12,201.59, -140.24 (1.14%)
NASDAQ 2,735.38, -29.27 (1.06%)
S&P 500 1,305.14, -14.54 (1.10%)
NYSE Composite 8,277.11, -123.20 (1.47%)
Declining issues soared over gainers, 5219-1370. New lows exceeded new highs on the NASDAQ, 50-42, and rolled over on the NYSE as well, with 30 new lows and just 22 new highs. Volume was not impressive, though overall breadth was somewhat stunning, with all sectors ending in the red, led by energy, capital goods, basic materials and financials.
The lack of volume is more ominous than it may appear at first glance, significant in that not all investors took this warning seriously and continue to not only hold stocks, but were buying in the afternoon. With the Fed's QE2 program drawing to a close in just two months time, a tough fight for certain in Washington over raising the debt ceiling and the 2012 budget and an economy still not flourishing a full two years after the banking crisis, there are more than enough potential causes for a rapid - and lasting - decline in stocks.
NASDAQ Volume 1,817,444,625
NYSE Volume 5,013,312,500
Besides the potential S&P downgrade, corporate earnings thus far have been short on results. Bank of America's miss on Friday was widely overlooked, but today after the bell, Texas Instruments (TI) also missed, and revised 2nd quarter estimates. Before the bell tomorrow, Goldman Sachs (GS) is due to announce their results for the first quarter, which, if all goes according to plan for the company that supposes to be doing "God's work," then this downdraft will be quickly forgotten and a new era of prosperity proclaimed.
That's another bet on which we're not taking sides.
Once again, commodities and the consumer were the winners of the day as crude oil slipped $2.54, to $107.12 at the NYMEX close, while gold flirted with the $1500 mark, closing the day at $1,492.90, a gain of $6.90. Silver continued to set new 31-year highs, finishing at 42.96, on a gain of 39 cents, though it was well above the $43 mark through most of the day.
In what had to be the least-appreciated news item of the day, Saudi Arabia cut its oil production by 800,000 barrels a day due to - get this - oversupply.
Now, if only somebody can explain to the millions of drivers worldwide just how that supply-demand dynamic works again maybe we can eliminate some of the obvious gouging that's gone on over the past two months. If the Saudis are cutting production due to oversupply, then oil should be more like $40 a barrel, not over $100, and gas should be a heck of a lot closer to $2.00 a gallon than it is to $4.00.
Trust nobody. It's obvious that our own government could care less about the general welfare of its own people. And for those who paid their income taxes today, too bad, because you just threw your money right down the memory hole.
What's in store from here is anybody's guess, but you can count on a number of things: the politicians will continue to bicker and fight like little girls and accomplish next to nothing; the bankers will continue to evade prosecution for their frauds and receive bigger bonuses; and the American people - sheep that they are - will not protest but will still want their iPads, food stamps and football.
Label:
gold,
Goldman Sachs,
GS,
oil,
Saudi Arabia,
silver,
Standard and Poors,
Texas Instruments,
TI
Tuesday, April 05, 2011
Markets Struggle Through Late-Session Sell-Off; Metals Soar
Disappointed that government leaders met and failed to reach agreement on a compromise plan that would keep the government from shutting down later this week, investors mostly headed for the hills late in the day.
With the North Africa, Middle East and Japan worries already weighing on the markets, the idea that the federal government would shut down at the end of the week seemed to be the last straw. President Obama met with House Republican leader John Boehner and Senate majority leader Harry Reid, but failed to reach any meaningful understanding on the proposed spending bill making its way through congress.
The politicians are squabbling over whether to cut anywhere from $35 to $61 billion dollars from the remaining 2011 budget, with the fiscal year ending in September. It's all become just bad theater, with both parties' leaders posturing and waving their arms about like crazed lunatics. In the end, the cuts will matter little, since the money will be re-appropriated in the next or an upcoming session and all of it is borrowed anyway.
Besides the amounts differing by so little, the amount of "cuts" is laughable, at well less than 1% of total federal outlays, which totaled more than $4 trillion in the 2010-11 budget.
Still, investors worry that the money spigot from Washington may be cut off in some unfathomable way that could affect them, though prospects for anything changing very much - even in the case of a shutdown - are slim.
Another worry is that the government exceeds the debt ceiling, which some contend has already been breached, so that the government would not have funds available to service their debt, sending interest rates soaring and confidence - what little of that is left - in the United States plummeting.
As such, stocks retreated in unison in the afternoon after racking up decent morning gains, the major indices finishing in split fashion.
Dow 12,393.90, -6.13 (0.05%)
NASDAQ 2,791.19, +2.00 (0.07%)
S&P 500 1,332.63, -0.24 (0.02%)
NYSE Composite 8,488.39, +5.98 (0.07%)
Gainers beat losers by a narrow margin, 3456-3000. On the NASDAQ, there were 203 new highs and 34 new lows, while the NYSE saw 284 stocks reach new highs and only 14 make new lows. Volume was materially better than Monday's dreadfully slow session.
NASDAQ Volume 1,967,010,125
NYSE Volume 4,186,267,250
The real story of the day came from the commodity pits. While WTI Crude futures slipped slightly, down 13 cents, to $108.34, gold powered ahead $19.50, to a new, all-time closing high of $1,452.50. Silver was also on the buying list, adding 69 cents, to $39.18, the highest price since 1980.
What the gold and silver physical markets (if you're in an EFT, you'll likely never actually see or touch the silver or gold your shares represent) are telling us is that the level of fear and distrust has risen to feverish levels. Beyond $4/gallon gas and a nuclear holocaust in Japan, the threat of a major credit and/or liquidity crisis has once again reared its ugly head, this time in the threatened shutdown of the US federal government.
Whether the politicians are merely toying with the emotions of the American people or serious about failing to resolve their budgetary differences, the world is watching and most don't like what they see.
Expect more turbulence in days to come unless the government situation is resolved prudently and in all due haste. MAybe then somebody can take a look at those Japanese reactors which threaten to kill everybody with radioactive isotopes unless a solution is found, like entombment.
With the North Africa, Middle East and Japan worries already weighing on the markets, the idea that the federal government would shut down at the end of the week seemed to be the last straw. President Obama met with House Republican leader John Boehner and Senate majority leader Harry Reid, but failed to reach any meaningful understanding on the proposed spending bill making its way through congress.
The politicians are squabbling over whether to cut anywhere from $35 to $61 billion dollars from the remaining 2011 budget, with the fiscal year ending in September. It's all become just bad theater, with both parties' leaders posturing and waving their arms about like crazed lunatics. In the end, the cuts will matter little, since the money will be re-appropriated in the next or an upcoming session and all of it is borrowed anyway.
Besides the amounts differing by so little, the amount of "cuts" is laughable, at well less than 1% of total federal outlays, which totaled more than $4 trillion in the 2010-11 budget.
Still, investors worry that the money spigot from Washington may be cut off in some unfathomable way that could affect them, though prospects for anything changing very much - even in the case of a shutdown - are slim.
Another worry is that the government exceeds the debt ceiling, which some contend has already been breached, so that the government would not have funds available to service their debt, sending interest rates soaring and confidence - what little of that is left - in the United States plummeting.
As such, stocks retreated in unison in the afternoon after racking up decent morning gains, the major indices finishing in split fashion.
Dow 12,393.90, -6.13 (0.05%)
NASDAQ 2,791.19, +2.00 (0.07%)
S&P 500 1,332.63, -0.24 (0.02%)
NYSE Composite 8,488.39, +5.98 (0.07%)
Gainers beat losers by a narrow margin, 3456-3000. On the NASDAQ, there were 203 new highs and 34 new lows, while the NYSE saw 284 stocks reach new highs and only 14 make new lows. Volume was materially better than Monday's dreadfully slow session.
NASDAQ Volume 1,967,010,125
NYSE Volume 4,186,267,250
The real story of the day came from the commodity pits. While WTI Crude futures slipped slightly, down 13 cents, to $108.34, gold powered ahead $19.50, to a new, all-time closing high of $1,452.50. Silver was also on the buying list, adding 69 cents, to $39.18, the highest price since 1980.
What the gold and silver physical markets (if you're in an EFT, you'll likely never actually see or touch the silver or gold your shares represent) are telling us is that the level of fear and distrust has risen to feverish levels. Beyond $4/gallon gas and a nuclear holocaust in Japan, the threat of a major credit and/or liquidity crisis has once again reared its ugly head, this time in the threatened shutdown of the US federal government.
Whether the politicians are merely toying with the emotions of the American people or serious about failing to resolve their budgetary differences, the world is watching and most don't like what they see.
Expect more turbulence in days to come unless the government situation is resolved prudently and in all due haste. MAybe then somebody can take a look at those Japanese reactors which threaten to kill everybody with radioactive isotopes unless a solution is found, like entombment.
Label:
gold,
Japan,
Middle East,
oil,
silver
Monday, April 04, 2011
No Volume, No Follow-through After Jobs Data
With the markets closing Friday in a state of ebullience and optimism, the Monday morning hangover was worse than expected.
Stocks got out of the gate well, with the averages hitting their highs of the day early on, but there was no catalyst and thus, no enthusiasm for either buying or selling, though tech stocks suffered more than most.
Stocks drifted in listless fashion on what will almost certainly turn out to be one of the five lowest trading volume sessions of the year thus far. Appetite for risk has been muted by world events, the least of which being the continuing saga of the nuclear reactors melting down at Fukushima Daiichi facility in Japan.
High levels of radiation have been found hither and fro, even in the United States, where air and water readings were above safe levels in communities from the West coast all the way east to Pennsylvania.
As for Japan itself, the situation appears even more out of control, as both the government and TEPCO, the utility company responsible for the failures, have run out of viable options for containment. If not for the "fear factor" the mainstream media would be full of horror stories, but the prevailing wisdom is not to alarm the populace over what looks to be already as bad as or worse than the disaster of Chernobyl, 25 years ago, a man-made calamity now estimated to have caused over a million deaths and multiple times that number in birth defects, miscarriages, and diseases.
With Japan's nuclear woes - where the "dead zone" is expected to eventually be 30 to 40 miles in all directions from the plant - the general mood of the people is a thinly-disguised panic and a heightened level of distrust of authorities. Said distrust is with good cause. The officials handling the situation are either incompetent, stupid, afraid or a combination of all three, and have yet to reassure the Japanese people of anything, other than the situation remains a catastrophe with potential to become even worse.
High gas prices have also put a damper on the proceedings worldwide, with both Brent crude and West Texas Intermediate (WTI) hitting 33-month highs on the day. Continued unrest in the oil-rich Middle East and North African countries - Libya, Bahrain, Kuwait, Yemen and now Ivory Coast - haven't helped slow down the oil rally and the onset of $4/gallon gas in the US.
So, little surprise that nothing is moving in the world of high finance.
Dow 12,400.03, +23.31 (0.19%)
NASDAQ 2,789.19, -0.41 (0.01%)
S&P 500 1,332.87, +0.46 (0.03%)
NYSE Composite 8,482.41, +13.07 (0.15%)
The level of disdain could be clearly seen in market internals. Advancing issues narrowly bettered decliners on the day, 3006-2630, though NASDAQ new highs soared against new lows, 222-30, while on the NYSE, the bias was the same, with new highs beating new lows, 259-15. As mentioned earlier, volume was extremely light.
NASDAQ Volume 1,679,897,000
NYSE Volume 3,273,874,500
WTI crude futures hit $108.47, a gain of 53 cents, the highest level since June of 2008. Prices above $4.00 per gallon for regular unleaded have been reported in New York, Chicago and various California locales.
Gold inched closer to all-time highs, gaining $4.10, to $1,433.00, while silver exploded to 31-year highs, ending the NY session on the COMEX at $38.49, on a gain of 76 cents (2%).
The stark comparisons between the economic climate today and that of 2008 could not be clearer. High oil and gas prices, a stagnating stock market close to multi-year highs nearing the end of a long bull run, ramping foreclosures and falling real estate values, and political uncertainty carry all the trademarks which eventually led to the great unwinding in Fall 2008.
Three years hence, after trillions of dollars in stimulus, the very same banks that caused the calamity before are still leveraged to the hilt, hiding liabilities off the books and still in denial over their true, illiquid conditions.
For mood to change so impressively from good to bad over the weekend is stunning. Americans and the world at large should be prepared for another round of asset-crushing deflation once the Fed decides to stop printing dollars into existence come June.
Stocks got out of the gate well, with the averages hitting their highs of the day early on, but there was no catalyst and thus, no enthusiasm for either buying or selling, though tech stocks suffered more than most.
Stocks drifted in listless fashion on what will almost certainly turn out to be one of the five lowest trading volume sessions of the year thus far. Appetite for risk has been muted by world events, the least of which being the continuing saga of the nuclear reactors melting down at Fukushima Daiichi facility in Japan.
High levels of radiation have been found hither and fro, even in the United States, where air and water readings were above safe levels in communities from the West coast all the way east to Pennsylvania.
As for Japan itself, the situation appears even more out of control, as both the government and TEPCO, the utility company responsible for the failures, have run out of viable options for containment. If not for the "fear factor" the mainstream media would be full of horror stories, but the prevailing wisdom is not to alarm the populace over what looks to be already as bad as or worse than the disaster of Chernobyl, 25 years ago, a man-made calamity now estimated to have caused over a million deaths and multiple times that number in birth defects, miscarriages, and diseases.
With Japan's nuclear woes - where the "dead zone" is expected to eventually be 30 to 40 miles in all directions from the plant - the general mood of the people is a thinly-disguised panic and a heightened level of distrust of authorities. Said distrust is with good cause. The officials handling the situation are either incompetent, stupid, afraid or a combination of all three, and have yet to reassure the Japanese people of anything, other than the situation remains a catastrophe with potential to become even worse.
High gas prices have also put a damper on the proceedings worldwide, with both Brent crude and West Texas Intermediate (WTI) hitting 33-month highs on the day. Continued unrest in the oil-rich Middle East and North African countries - Libya, Bahrain, Kuwait, Yemen and now Ivory Coast - haven't helped slow down the oil rally and the onset of $4/gallon gas in the US.
So, little surprise that nothing is moving in the world of high finance.
Dow 12,400.03, +23.31 (0.19%)
NASDAQ 2,789.19, -0.41 (0.01%)
S&P 500 1,332.87, +0.46 (0.03%)
NYSE Composite 8,482.41, +13.07 (0.15%)
The level of disdain could be clearly seen in market internals. Advancing issues narrowly bettered decliners on the day, 3006-2630, though NASDAQ new highs soared against new lows, 222-30, while on the NYSE, the bias was the same, with new highs beating new lows, 259-15. As mentioned earlier, volume was extremely light.
NASDAQ Volume 1,679,897,000
NYSE Volume 3,273,874,500
WTI crude futures hit $108.47, a gain of 53 cents, the highest level since June of 2008. Prices above $4.00 per gallon for regular unleaded have been reported in New York, Chicago and various California locales.
Gold inched closer to all-time highs, gaining $4.10, to $1,433.00, while silver exploded to 31-year highs, ending the NY session on the COMEX at $38.49, on a gain of 76 cents (2%).
The stark comparisons between the economic climate today and that of 2008 could not be clearer. High oil and gas prices, a stagnating stock market close to multi-year highs nearing the end of a long bull run, ramping foreclosures and falling real estate values, and political uncertainty carry all the trademarks which eventually led to the great unwinding in Fall 2008.
Three years hence, after trillions of dollars in stimulus, the very same banks that caused the calamity before are still leveraged to the hilt, hiding liabilities off the books and still in denial over their true, illiquid conditions.
For mood to change so impressively from good to bad over the weekend is stunning. Americans and the world at large should be prepared for another round of asset-crushing deflation once the Fed decides to stop printing dollars into existence come June.
Label:
gas,
housing,
oil,
Real Estate
Friday, April 01, 2011
Perception Trumps Reality: Stocks Buoyed by Jobs Data
Like it or not, most of the people who watch these kinds of numbers generally accept what the BLS calls "data" as being somewhere close to the truth. Regardless of opinions on the birth-death metric, various seasonal adjustments and the entire methodology which leaves out discouraged workers, March non-farm payroll provided a boost to markets prior to the bell, posting a monthly jobs gain of 216,000.
Broken down, the private sector showed a gain of 230,000 jobs, while the public sector - government - shed 14,000 in March. That ticked the unemployment rate down to 8.8% and marked the first time in five years that private employers added more than 200,000 net new jobs.
In the widest general terms possible, it was rousing good news for the US economy and the stock market, whether the robust numbers are true or not. Stocks galloped out of the gate, gave much of their gains back in the afternoon and finished on an uptick.
Dow 12,376.72, +56.99 (0.46%)
NASDAQ 2,789.60, +8.53 (0.31%)
S&P 500 1,332.41, +6.58 (0.50%)
NYSE Composite 8,469.34, +64.36 (0.77%)
Advancing issues led decliners by a solid margin, 4204-2339. NASDAQ showed 249 new highs and 29 new lows. The same spread was in effect on the NYSE, with 382 new highs and 12 new lows, even more an extreme spread than yesterday's already overbought situation. Volume was slightly better than the low, low numbers posted all week.
NASDAQ Volume 2,057,080,375
NYSE Volume 4,220,516,000
The bad news of the day came from the commodity space, where crude oil hit another 2 1/2 year high, closing at $107.94, up $1.22 on the day. With equities soaring and the outlook for extending the Fed's QE program past June dying on the vine, precious metals took an untimely hit, with gold dropping $11.00, to $1,428.90, and silver falling in tandem, down 16 cents, at $37.73.
As the second quarter starts out on a positive note, investors appear pleased with recent gains, unemployment actually appears to be on the wane and the governors of Federal Reserve are taking bows and praise for how they've handled the as-yet-unresolved financial crisis.
With the caveat that the financial media might be spinning everything a bit more positively than most would dare, America seems not ready to fall into the ocean of debt below it, nor does the congress have gained much in the way of fiscal restraint, though signs of progress have been noted, especially in the House of Representatives.
There's still enormous problems which have yet to be sorted out, but only the robustness of the American economy can be credited with having withstood shocks equally from the financial, natural and political spheres.
While this space has been generally devoted to the darker sides of the economic debate for quite some time, Mr. and Mrs. Average American don't read Fed minutes, track commodity prices or even understand what a credit default swap is. Rather, the bulwark of American enterprise wants only to go to work, receive a fair pay rate and raise their families.
It is a fact that Americans still maintain the highest standard of living on the planet and despite its detractors, maintains a safe, livable environment for even the poorest of its citizens. The world revolves around the US dollar, love it, hate it or loathe it, and it probably will for some time. There are many problems still needing correction, but for today at least, the dark clouds of the past few years seem to be parting and the sunshine of economic freedom is shining through.
Maybe the words of Peter Benenson, the English lawyer and founder of Amnesty International, are appropriate for today: "It is better to light a candle than curse the darkness."
Broken down, the private sector showed a gain of 230,000 jobs, while the public sector - government - shed 14,000 in March. That ticked the unemployment rate down to 8.8% and marked the first time in five years that private employers added more than 200,000 net new jobs.
In the widest general terms possible, it was rousing good news for the US economy and the stock market, whether the robust numbers are true or not. Stocks galloped out of the gate, gave much of their gains back in the afternoon and finished on an uptick.
Dow 12,376.72, +56.99 (0.46%)
NASDAQ 2,789.60, +8.53 (0.31%)
S&P 500 1,332.41, +6.58 (0.50%)
NYSE Composite 8,469.34, +64.36 (0.77%)
Advancing issues led decliners by a solid margin, 4204-2339. NASDAQ showed 249 new highs and 29 new lows. The same spread was in effect on the NYSE, with 382 new highs and 12 new lows, even more an extreme spread than yesterday's already overbought situation. Volume was slightly better than the low, low numbers posted all week.
NASDAQ Volume 2,057,080,375
NYSE Volume 4,220,516,000
The bad news of the day came from the commodity space, where crude oil hit another 2 1/2 year high, closing at $107.94, up $1.22 on the day. With equities soaring and the outlook for extending the Fed's QE program past June dying on the vine, precious metals took an untimely hit, with gold dropping $11.00, to $1,428.90, and silver falling in tandem, down 16 cents, at $37.73.
As the second quarter starts out on a positive note, investors appear pleased with recent gains, unemployment actually appears to be on the wane and the governors of Federal Reserve are taking bows and praise for how they've handled the as-yet-unresolved financial crisis.
With the caveat that the financial media might be spinning everything a bit more positively than most would dare, America seems not ready to fall into the ocean of debt below it, nor does the congress have gained much in the way of fiscal restraint, though signs of progress have been noted, especially in the House of Representatives.
There's still enormous problems which have yet to be sorted out, but only the robustness of the American economy can be credited with having withstood shocks equally from the financial, natural and political spheres.
While this space has been generally devoted to the darker sides of the economic debate for quite some time, Mr. and Mrs. Average American don't read Fed minutes, track commodity prices or even understand what a credit default swap is. Rather, the bulwark of American enterprise wants only to go to work, receive a fair pay rate and raise their families.
It is a fact that Americans still maintain the highest standard of living on the planet and despite its detractors, maintains a safe, livable environment for even the poorest of its citizens. The world revolves around the US dollar, love it, hate it or loathe it, and it probably will for some time. There are many problems still needing correction, but for today at least, the dark clouds of the past few years seem to be parting and the sunshine of economic freedom is shining through.
Maybe the words of Peter Benenson, the English lawyer and founder of Amnesty International, are appropriate for today: "It is better to light a candle than curse the darkness."
Label:
Fed,
non-farm payroll,
oil
Tuesday, March 22, 2011
A Day Without Disaster
Thankfully, Tuesday is almost over with and there haven't been any grave disasters, though the ones that have been hovering over the globe for the past few weeks are still far from resolved.
It seems to make some sense that markets would just wallow around until the damaged nuclear reactors in Japan are finally shut down, whenever that may happen, Colonel Qadaffi is defeated or found dead in Libya and the level of unrest settles down in various countries in Northern Africa and the Middle East.
That's exactly what went on today. There seemed to be no reason to either buy or sell equities and the major indices traded in narrow ranges all session long.
Naturally, conditions in the hot spots around the world could get better or worse, and nobody is really sure of anything at this juncture, especially when officials in Japan continue to stage a weird kind of kabuki theater in the way they report the situation at the damaged Fukushima nuclear plant, where four reactors have experienced some kind of explosion, accident, fire or other condition as an indirect result of the 9.0 earthquake that rattled the island nation on March 11.
That the reactors are spewing radioactive gasses and material is not disputed, but how much of which particular isotopes are going where and when has not been even remotely reported. All we know is that the radiation levels are higher than they were a week ago in various areas around the site and that the spread has become nearly global in nature, though slight in terms of actual threats to human health.
That's not really very reassuring since the problems persist and any increased exposure to any kind of radiation is potentially a health hazard.
Meanwhile, the US response, in conjunction with a bevy of nations, to the blood-letting in Libya has been met with considerable criticism and even our own representatives are speaking in tongues, with the president, congress and the military all putting out their own spin, none of it making a whole lot of sense.
More than likely, these issues will remain in some kind of focus for the coming weeks, if not months, and there will be other unexpected events in the interim. The best advice would be to expect the unexpected at this juncture, because nothing is for certain and situations are still, as they say, fluid.
Dow 12,018.63, -17.90 (0.15%)
NASDAQ 2,683.87, -8.22 (0.31%)
S&P 500 1,293.77, -4.61 (0.36%)
NYSE Composite 8,228.41, -27.95 (0.34%)
Declining issues dominated winners, 3743-2718. There were 72 new highs and 33 new lows on the NASDAQ; on the NYSE 109 new highs and just 8 new lows. Volume was miserably low. This was, if not the slowest trading day of the year, among the three or four worst. There's simply too much event risk associated to equities in the current cycle.
NASDAQ Volume 1,671,905,000
NYSE Volume 3,995,960,500
Oil finished at an even $104.00, up another $1.67 due to unresolved Middle East issues. Gold managed a squeeze out a gain of $2.30, closing at $1,427.60 in New York, within 1% of its all-time high. Silver gained nicely, adding 27 cents per ounce, to $36.27, the third-highest point in the last 31 years and just pennies away from the nominal high of $36.60, reached just two weeks ago, on March 7.
The longer it takes for Japan's nuclear reactor problems to be resolved, the longer stocks will remain bogged down, stuck in a range between the highs of February 18 and recent lows. Radiation leaks and potential melt-downs are nothing to joke about, and the condition of those plants is such that it could easily become a much more severe problem before it is eventually resolved.
There's already a panic quietly building world-wide, even though the reported radiation levels have been in an "acceptable" range. However, the longer the reactors leak radiation, the lower the tolerance of acceptance becomes. That situation remains highly volatile and potentially upsetting on a global basis, not only to investors but to the health of people.
It seems to make some sense that markets would just wallow around until the damaged nuclear reactors in Japan are finally shut down, whenever that may happen, Colonel Qadaffi is defeated or found dead in Libya and the level of unrest settles down in various countries in Northern Africa and the Middle East.
That's exactly what went on today. There seemed to be no reason to either buy or sell equities and the major indices traded in narrow ranges all session long.
Naturally, conditions in the hot spots around the world could get better or worse, and nobody is really sure of anything at this juncture, especially when officials in Japan continue to stage a weird kind of kabuki theater in the way they report the situation at the damaged Fukushima nuclear plant, where four reactors have experienced some kind of explosion, accident, fire or other condition as an indirect result of the 9.0 earthquake that rattled the island nation on March 11.
That the reactors are spewing radioactive gasses and material is not disputed, but how much of which particular isotopes are going where and when has not been even remotely reported. All we know is that the radiation levels are higher than they were a week ago in various areas around the site and that the spread has become nearly global in nature, though slight in terms of actual threats to human health.
That's not really very reassuring since the problems persist and any increased exposure to any kind of radiation is potentially a health hazard.
Meanwhile, the US response, in conjunction with a bevy of nations, to the blood-letting in Libya has been met with considerable criticism and even our own representatives are speaking in tongues, with the president, congress and the military all putting out their own spin, none of it making a whole lot of sense.
More than likely, these issues will remain in some kind of focus for the coming weeks, if not months, and there will be other unexpected events in the interim. The best advice would be to expect the unexpected at this juncture, because nothing is for certain and situations are still, as they say, fluid.
Dow 12,018.63, -17.90 (0.15%)
NASDAQ 2,683.87, -8.22 (0.31%)
S&P 500 1,293.77, -4.61 (0.36%)
NYSE Composite 8,228.41, -27.95 (0.34%)
Declining issues dominated winners, 3743-2718. There were 72 new highs and 33 new lows on the NASDAQ; on the NYSE 109 new highs and just 8 new lows. Volume was miserably low. This was, if not the slowest trading day of the year, among the three or four worst. There's simply too much event risk associated to equities in the current cycle.
NASDAQ Volume 1,671,905,000
NYSE Volume 3,995,960,500
Oil finished at an even $104.00, up another $1.67 due to unresolved Middle East issues. Gold managed a squeeze out a gain of $2.30, closing at $1,427.60 in New York, within 1% of its all-time high. Silver gained nicely, adding 27 cents per ounce, to $36.27, the third-highest point in the last 31 years and just pennies away from the nominal high of $36.60, reached just two weeks ago, on March 7.
The longer it takes for Japan's nuclear reactor problems to be resolved, the longer stocks will remain bogged down, stuck in a range between the highs of February 18 and recent lows. Radiation leaks and potential melt-downs are nothing to joke about, and the condition of those plants is such that it could easily become a much more severe problem before it is eventually resolved.
There's already a panic quietly building world-wide, even though the reported radiation levels have been in an "acceptable" range. However, the longer the reactors leak radiation, the lower the tolerance of acceptance becomes. That situation remains highly volatile and potentially upsetting on a global basis, not only to investors but to the health of people.
Thursday, March 17, 2011
The Expected Snap-Back Rally Occurs Right on Time
As mentioned in this space yesterday,
Well, today was it. If there's one thing the self-appointed Masters of the Universe on Wall Street and in Washington absolutely cannot tolerate, it is human events spinning beyond their ability to control them, because their power declines under such circumstances, and their sole response is to turn up the algos on their stock-buying computers and send equity prices ever further into the stratosphere of the absurd.
Today's mammoth run-up was well conceived and not derailed by any further bad news coming out of Japan, though what to do about those rebellious peasants in the Middle East still remains a problem for our sweet, elite masters. For a microcosmic view of it all, note how stocks and oil advanced smartly, with gold lagging and silver falling even more.
The elitist snobs will tolerate gold, even hoard it in times of panic, but they hate silver, because if gold is the metal of kings and monarchs, silver is the coin of gentlemen and lower rabble. The great wazoos and muckety-mucks will have nothing to do with it, which is why it continues to be supressed at every opportunity, by now, an open secret.
We'll maintain that silver is still the best investment for the current condition, despite its wild swings. Eventually, as we saw in the latter half of 2010, it will stay with and surpass gold in percentage gain.
In the meantime, the Bank of Japan (BOJ) will meet with their effete counterparts in the G7 to receive approval for intervention in their rapidly-appreciating currency. In other words, with money inflows to Japan, the Yen is becoming stronger, making more capital available for eventual reconstruction efforts, while at the same time boosting the price of its exports, which is considered a negative for the globalist agenda. The Bank of Japan will seek to buy up Yen, squeezing some of the liquidity out of it and stabilizing it against other floating currencies.
It's a bit of a complex condition, causing money flow disruptions and imbalances. In the meantime, the US dollar continues to depreciate, falling to a 4-month low, dipping just below the 76 mark at 75.995 on the dollar index.
Dow 11,774.59, +161.29 (1.39%)
NASDAQ 2,636.05, +19.23 (0.73%)
S&P 500 1,273.72, +16.84 (1.34%)
NYSE Composite 8,064.86, +134.99 (1.70%)
Despite the big headline numbers, the internals were less convincing that today's rally was anything more than money-tossing, as advancing issues beat decliners, 4438-2072, though new lows retained their edge over new highs on the NASDAQ, 56-35, for the sixth consecutive session. On the NYSE, it was nearly a dead heat, with 30 new highs and 28 new lows. Over the past six session, the advantage has gone to either side an equal three times apiece.
Volume was once-again telling. Though it was slightly elevated, it by no means was in a range indicative of an all-in rally. As mentioned previously, these kinds of things are normally sharp and short, especially in the light of tomorrow's quadruple witching day for options. There was plenty of arbitrage to go around for the sharpies.
NASDAQ Volume 2,011,827,250.00
NYSE Volume 4,743,120,500
Renewed tensions in the Middle East (and, no doubt, the insatiable urge to screw motorists with high gas prices) caused a run-up in crude, which elevated $3.42, to $101.42, on the NYMEX.
Gold gathered some momentum, gaining $8.10, to $1,404.20, but silver shed 21 cents, to $34.26, a price still close to recent 31-year highs.
With all the focus on the nuclear crisis in Japan, some revealing economic figures were released over the past two days. The PPI was up a whopping 1.6% in February, with the CPI chiming in with a gain of 0.5%. Inflation, that thing Ben Bernanke says is under control, temporary and not a problem (well, maybe not for him), isn't on its way here, it has arrived.
New housing starts were at some horrible four-decade low, with building proceeding at an annualized rate of 479,000 units. Industrial production fell 0.1% in February and capacity utilization dropped to 76.3% These kinds of numbers really gives one confidence that the liars in Washington have once again dropped the ball on the economy, all along telling us that we're "recovering."
In the wild new world normal, "recovery" is tantamount to Charlie Sheen's "winning" - an innocuous word, significant of absolutely nothing.
A decline in US stock markets will only trigger more printing, more inflation and an even more unbalanced global economy, one that was already teetering on the brink of disaster, even before the Japan debacle. However, such an inordinate infusion of capital may cause a snapback rally at any time. If such occurs, it will be easy to spot, as it will be sharp and large. The other characteristic of such an event is that it will have a relatively short duration - an afternoon, a day, a session and part of another, at most.
Well, today was it. If there's one thing the self-appointed Masters of the Universe on Wall Street and in Washington absolutely cannot tolerate, it is human events spinning beyond their ability to control them, because their power declines under such circumstances, and their sole response is to turn up the algos on their stock-buying computers and send equity prices ever further into the stratosphere of the absurd.
Today's mammoth run-up was well conceived and not derailed by any further bad news coming out of Japan, though what to do about those rebellious peasants in the Middle East still remains a problem for our sweet, elite masters. For a microcosmic view of it all, note how stocks and oil advanced smartly, with gold lagging and silver falling even more.
The elitist snobs will tolerate gold, even hoard it in times of panic, but they hate silver, because if gold is the metal of kings and monarchs, silver is the coin of gentlemen and lower rabble. The great wazoos and muckety-mucks will have nothing to do with it, which is why it continues to be supressed at every opportunity, by now, an open secret.
We'll maintain that silver is still the best investment for the current condition, despite its wild swings. Eventually, as we saw in the latter half of 2010, it will stay with and surpass gold in percentage gain.
In the meantime, the Bank of Japan (BOJ) will meet with their effete counterparts in the G7 to receive approval for intervention in their rapidly-appreciating currency. In other words, with money inflows to Japan, the Yen is becoming stronger, making more capital available for eventual reconstruction efforts, while at the same time boosting the price of its exports, which is considered a negative for the globalist agenda. The Bank of Japan will seek to buy up Yen, squeezing some of the liquidity out of it and stabilizing it against other floating currencies.
It's a bit of a complex condition, causing money flow disruptions and imbalances. In the meantime, the US dollar continues to depreciate, falling to a 4-month low, dipping just below the 76 mark at 75.995 on the dollar index.
Dow 11,774.59, +161.29 (1.39%)
NASDAQ 2,636.05, +19.23 (0.73%)
S&P 500 1,273.72, +16.84 (1.34%)
NYSE Composite 8,064.86, +134.99 (1.70%)
Despite the big headline numbers, the internals were less convincing that today's rally was anything more than money-tossing, as advancing issues beat decliners, 4438-2072, though new lows retained their edge over new highs on the NASDAQ, 56-35, for the sixth consecutive session. On the NYSE, it was nearly a dead heat, with 30 new highs and 28 new lows. Over the past six session, the advantage has gone to either side an equal three times apiece.
Volume was once-again telling. Though it was slightly elevated, it by no means was in a range indicative of an all-in rally. As mentioned previously, these kinds of things are normally sharp and short, especially in the light of tomorrow's quadruple witching day for options. There was plenty of arbitrage to go around for the sharpies.
NASDAQ Volume 2,011,827,250.00
NYSE Volume 4,743,120,500
Renewed tensions in the Middle East (and, no doubt, the insatiable urge to screw motorists with high gas prices) caused a run-up in crude, which elevated $3.42, to $101.42, on the NYMEX.
Gold gathered some momentum, gaining $8.10, to $1,404.20, but silver shed 21 cents, to $34.26, a price still close to recent 31-year highs.
With all the focus on the nuclear crisis in Japan, some revealing economic figures were released over the past two days. The PPI was up a whopping 1.6% in February, with the CPI chiming in with a gain of 0.5%. Inflation, that thing Ben Bernanke says is under control, temporary and not a problem (well, maybe not for him), isn't on its way here, it has arrived.
New housing starts were at some horrible four-decade low, with building proceeding at an annualized rate of 479,000 units. Industrial production fell 0.1% in February and capacity utilization dropped to 76.3% These kinds of numbers really gives one confidence that the liars in Washington have once again dropped the ball on the economy, all along telling us that we're "recovering."
In the wild new world normal, "recovery" is tantamount to Charlie Sheen's "winning" - an innocuous word, significant of absolutely nothing.
Friday, March 04, 2011
Is A Trend Developing?
Despite the ramp job at the close (Dow gained 85 points in the final 40 minutes of trading today, stocks still looked pretty weak this week.
In answer to our headline, we call upon our best sarah Palin voice, for a You Betcha! moment. Thursday's wicked "buy the rumor" advance was followed Friday by a "sell the news" decline, of equally wicked proportions, despite very positive numbers from the BLS regardin February employment.
According to the new Ministry of Truth, the US economy created 192,000 net new jobs in February, with 222,000 of those coming from the private sector, as state and municipal governments shed precisely 30,000 employees. These numbers are difficult to believe, especially when the BLS engages in numerous revisions, approximations and their notorious birth/death modeling, by which we are supposed to believe that new businesses created something on the order of 119,000 of those new jobs.
Were that the case - which I assure you it is not, because nobody is taking risks these days, especially when it comes to hiring new employees or starting new business endeavors - the we should expect similar numbers for the remainder of the year, with the caveat that the vast bulk of these new hires by new businesses will be gone within a year.
Small business failure rates over time suggest that 50% fail within the first year, so we should have a double dip of small business failures and antecedent job losses a year from now and continuing through 2012. Joy, joy, joy!
What was probably more important to investors, traders, scammers, scalpers and thieves were developments in the Middle East, where reports suggesting that troops loyal to Lybian president Muammar Khaddafy had set ablaze a large oil production facility. Also, word has leaked out that all is not well in the kingdom of Saudi Arabia, which is the real McCoy when it comes to big players in the oil business.
Not only does Saudi Arabia export 10 million barrels of the liquid goo a day, they maintain extra production facilities for another two millions should the world require more oil.
Those scary scenarios sent prices for crude skyrocketing on all exchanges, with WTI breaking through resistance at $103/barrel. For otherwise more common concerns, American motorists are becoming quite annoyed at the constant rise in the price of fuel at the pump. Unleaded regular has shot to an average of over $3.50 per gallon nationally. It's cheapest in Montana and Utah, at about $3.18 per gallon, and most expensive in California, where prices under $3.78 cannot be found state-wide.
All of this oil-related shock tended to make traders a bit nervous heading into the weekend, save for those short-covering maniacs who boosted the close and shaved roughly half off the session's losses.
Dow 12,169.88, -88.32 (0.72%)
NASDAQ 2,784.67, -14.07 (0.50%)
S&P 500 1,321.15, -9.82 (0.74%)
NYSE Composite 8,413.05, -52.40 (0.62%)
The late-day rally did little to assuage the internals, however, as decliners trumped advancing issues, 4175-2315. On the NASDAQ, there were 110 new highs and 23 new lows. The NYSE saw 152 stocks make new highs on the day, while only 14 registered new lows. Volume was still rather moderate, considering all the ground covered during the session.
NASDAQ Volume 1,941,966,250
NYSE Volume 4,839,070,500
Commodities had a banner day. Crude oil futures on the front end NYMEX contract were up $2.51, to $104.42, the highest finish since 2008. Gold ramped another $12.20, approaching the fresh highs of earlier this week, closing at $1,428.60. Silver gained an even dollar, closing out the week at $35.33 per ounce in New York.
In the long view, the good-but-not-great jobs number was outflanked by pressure from oil and once again the main beneficiaries were holders of physical gold and silver.
After all the flailing about, the major indices barely budged on a week-to-week basis, but commodities finished strongly higher.
Sometimes, it's better to just sit back and enjoy the show, as that was the case this week for owners of precious metals. A good deal of energy was spent pushing equity prices hither and fro, to little avail, though Tuesday's key reversal looks like it will produce a real correction of 10-15% some time soon.
In answer to our headline, we call upon our best sarah Palin voice, for a You Betcha! moment. Thursday's wicked "buy the rumor" advance was followed Friday by a "sell the news" decline, of equally wicked proportions, despite very positive numbers from the BLS regardin February employment.
According to the new Ministry of Truth, the US economy created 192,000 net new jobs in February, with 222,000 of those coming from the private sector, as state and municipal governments shed precisely 30,000 employees. These numbers are difficult to believe, especially when the BLS engages in numerous revisions, approximations and their notorious birth/death modeling, by which we are supposed to believe that new businesses created something on the order of 119,000 of those new jobs.
Were that the case - which I assure you it is not, because nobody is taking risks these days, especially when it comes to hiring new employees or starting new business endeavors - the we should expect similar numbers for the remainder of the year, with the caveat that the vast bulk of these new hires by new businesses will be gone within a year.
Small business failure rates over time suggest that 50% fail within the first year, so we should have a double dip of small business failures and antecedent job losses a year from now and continuing through 2012. Joy, joy, joy!
What was probably more important to investors, traders, scammers, scalpers and thieves were developments in the Middle East, where reports suggesting that troops loyal to Lybian president Muammar Khaddafy had set ablaze a large oil production facility. Also, word has leaked out that all is not well in the kingdom of Saudi Arabia, which is the real McCoy when it comes to big players in the oil business.
Not only does Saudi Arabia export 10 million barrels of the liquid goo a day, they maintain extra production facilities for another two millions should the world require more oil.
Those scary scenarios sent prices for crude skyrocketing on all exchanges, with WTI breaking through resistance at $103/barrel. For otherwise more common concerns, American motorists are becoming quite annoyed at the constant rise in the price of fuel at the pump. Unleaded regular has shot to an average of over $3.50 per gallon nationally. It's cheapest in Montana and Utah, at about $3.18 per gallon, and most expensive in California, where prices under $3.78 cannot be found state-wide.
All of this oil-related shock tended to make traders a bit nervous heading into the weekend, save for those short-covering maniacs who boosted the close and shaved roughly half off the session's losses.
Dow 12,169.88, -88.32 (0.72%)
NASDAQ 2,784.67, -14.07 (0.50%)
S&P 500 1,321.15, -9.82 (0.74%)
NYSE Composite 8,413.05, -52.40 (0.62%)
The late-day rally did little to assuage the internals, however, as decliners trumped advancing issues, 4175-2315. On the NASDAQ, there were 110 new highs and 23 new lows. The NYSE saw 152 stocks make new highs on the day, while only 14 registered new lows. Volume was still rather moderate, considering all the ground covered during the session.
NASDAQ Volume 1,941,966,250
NYSE Volume 4,839,070,500
Commodities had a banner day. Crude oil futures on the front end NYMEX contract were up $2.51, to $104.42, the highest finish since 2008. Gold ramped another $12.20, approaching the fresh highs of earlier this week, closing at $1,428.60. Silver gained an even dollar, closing out the week at $35.33 per ounce in New York.
In the long view, the good-but-not-great jobs number was outflanked by pressure from oil and once again the main beneficiaries were holders of physical gold and silver.
After all the flailing about, the major indices barely budged on a week-to-week basis, but commodities finished strongly higher.
Sometimes, it's better to just sit back and enjoy the show, as that was the case this week for owners of precious metals. A good deal of energy was spent pushing equity prices hither and fro, to little avail, though Tuesday's key reversal looks like it will produce a real correction of 10-15% some time soon.
Thursday, February 24, 2011
Turnaround Thursday? Well, Almost
The panic in the markets has subsided for now, even though conditions in the Middle East continue to spin out of control, especially in Libya.
Stocks zig-zagged across the flat line on Thursday, with oil pricing higher in early trade. Closing in on 2:00 pm ET, the equity markets were skidding badly again, but, as has become the norm, all of a sudden word spread that President Obama and Treasury Secretary Tim Geithner - neither of whom have a lick of expertise in the oil business - put out the word that there was enough supply of oil in reserve to withstand any kind of disruption, and, just like that, stocks and oil prices quickly reversed course, with oil dropping and stocks rising.
As an aside, gold and silver were slammed to the earth. Just prior to 2:00 pm, the Dow Jones Industrials were off more than 120 points, the NASDAQ dipped 17 points and the S&P 500 has crashed through the 1300 plateau, dropping more than 13 points.
Trading for the remainder of the session involved insiders scooping up shares on the "supposed" cheap. Still, three of the four major averages finished in the red despite the best efforts of the PPT or whatever we're calling the mechanics under the hood of the stock markets.
Dow 12,068.50, -37.28 (0.31%)
NASDAQ 2,737.90, +14.91 (0.55%)
S&P 500 1,306.10, -1.30 (0.10%)
NYSE Composite 8,276.29, -16.63 (0.20%)
Advancers broke a two-day trend and finished ahead of declining issues, 3630-2902. On the NASDAQ, new highs outdid new lows, though narrowly, 49-41. So too on the NYSE, where there were 83 new highs and just 18 new lows. Volume was nce again heightened, though below levels of the past two sessions.
We're clearly at an inflection point in the markets and considering that tensions in the oil-rich area of the world are still at high pitch, a resumption of a little panic may occur at any time, depending on circumstances and how hard the Fed and other officials pump the "all clear" signals. The Arab nations aren't the only ones experiencing a bit of displeasure. Here in the USA, protests continue to mount over budget and public union issues in various states. This chapter in world history is far from over.
NASDAQ Volume 2,112,375,750.00
NYSE Volume 5,799,687,500
The front end futures contract at the NYMEX - which was playing above 100/barrel prior to market opening, actually posted a decline on the day, dropping 82 cents, to $97.28. Gold posted a modest gain in NY trading, but at this writing is trading down $9.60, at $1402.10. Silver was hammered down all day long, down in the NY session and currently sporting a loss of $1.43, at $32.11. The machinery of chicanery is once again vigorously at work in all markets, propping them up with unlimited resources.
While many average working Joes and Janes may take solace in today's turnabout, it comes as yet another shining example of how the financial elite control everything they please, even entire global markets, or so they believe. The realities of life here in the US and elsewhere in the world are not quite as rosy as the oligarchs and politicians would have one believe. Little by little, freedoms are being eroded, and soon, as we're seeing with the assault on public labor unions, they'll take more money from the middle class, calling it "shared pain."
Many with a better handle on things than most are opting out, refusing to play along and suffer what's almost certain to be an eventful future. They are preparing, saving, planning and divesting, growing their own food and buying up precious metals and machinery for the day the wheels come completely off the train of money printing and manipulation.
Stocks zig-zagged across the flat line on Thursday, with oil pricing higher in early trade. Closing in on 2:00 pm ET, the equity markets were skidding badly again, but, as has become the norm, all of a sudden word spread that President Obama and Treasury Secretary Tim Geithner - neither of whom have a lick of expertise in the oil business - put out the word that there was enough supply of oil in reserve to withstand any kind of disruption, and, just like that, stocks and oil prices quickly reversed course, with oil dropping and stocks rising.
As an aside, gold and silver were slammed to the earth. Just prior to 2:00 pm, the Dow Jones Industrials were off more than 120 points, the NASDAQ dipped 17 points and the S&P 500 has crashed through the 1300 plateau, dropping more than 13 points.
Trading for the remainder of the session involved insiders scooping up shares on the "supposed" cheap. Still, three of the four major averages finished in the red despite the best efforts of the PPT or whatever we're calling the mechanics under the hood of the stock markets.
Dow 12,068.50, -37.28 (0.31%)
NASDAQ 2,737.90, +14.91 (0.55%)
S&P 500 1,306.10, -1.30 (0.10%)
NYSE Composite 8,276.29, -16.63 (0.20%)
Advancers broke a two-day trend and finished ahead of declining issues, 3630-2902. On the NASDAQ, new highs outdid new lows, though narrowly, 49-41. So too on the NYSE, where there were 83 new highs and just 18 new lows. Volume was nce again heightened, though below levels of the past two sessions.
We're clearly at an inflection point in the markets and considering that tensions in the oil-rich area of the world are still at high pitch, a resumption of a little panic may occur at any time, depending on circumstances and how hard the Fed and other officials pump the "all clear" signals. The Arab nations aren't the only ones experiencing a bit of displeasure. Here in the USA, protests continue to mount over budget and public union issues in various states. This chapter in world history is far from over.
NASDAQ Volume 2,112,375,750.00
NYSE Volume 5,799,687,500
The front end futures contract at the NYMEX - which was playing above 100/barrel prior to market opening, actually posted a decline on the day, dropping 82 cents, to $97.28. Gold posted a modest gain in NY trading, but at this writing is trading down $9.60, at $1402.10. Silver was hammered down all day long, down in the NY session and currently sporting a loss of $1.43, at $32.11. The machinery of chicanery is once again vigorously at work in all markets, propping them up with unlimited resources.
While many average working Joes and Janes may take solace in today's turnabout, it comes as yet another shining example of how the financial elite control everything they please, even entire global markets, or so they believe. The realities of life here in the US and elsewhere in the world are not quite as rosy as the oligarchs and politicians would have one believe. Little by little, freedoms are being eroded, and soon, as we're seeing with the assault on public labor unions, they'll take more money from the middle class, calling it "shared pain."
Many with a better handle on things than most are opting out, refusing to play along and suffer what's almost certain to be an eventful future. They are preparing, saving, planning and divesting, growing their own food and buying up precious metals and machinery for the day the wheels come completely off the train of money printing and manipulation.
Label:
oil,
President Obama,
Tim Geithner
Monday, January 03, 2011
Predictions 2011, Part 1
Before commencing with the annual predictions of where everything is supposed to go in 2011 - up, down, sideways or otherwise, a quick recap of the market on the first trading day of the new year is in order.
As expected, traders - con men all - made sure 2011 got off to a roaring start, with a gap up at the open sending the Dow Jones Industrials up almost 100 points moments into the session. While the gains were outsized as compared to recent run-ups, trading volume remains a viable concern, both short and long-term. Today's volume, while a 60% improvement over those of the last week, is still averaging a size that were the stock market a real roller coaster, volume couldn't get on the ride due to being too short.
It should also be pointed out that the estimates made here - wholly on anecdotal presumptions - have now been duly christened by some valuable researchers - Smithers & Co. - which notes S&P listed stocks some 73% overvalued as of December 10. With the S&P up another 2.5% since then, this data suggests that the stock market is headed for a crash of epic proportions. Based on measurements that ceased functioning around the time of Ben Bernanke's Jackson Hole speech last summer (where he first mentioned QE2), many stocks could experience declines of 50% or more in coming months.
Naturally, nobody is talking about valuation, since the Fed and Wall Street have famously destroyed all methods of honest price discovery and computers are doing most of the trading these days, but stocks are already wickedly overpriced and heading higher. Notice how silent Bernanke is concerning the markets, with no "irrational exuberance" kind of talk. The Fed is desperate to get the moribund economy off its back and the banks back to health. Destroying the currency through money printing and the markets through wild speculation via HFT computers are the only games in town now, and destined to fail spectacularly.
The daily charts and the massive monetary infusions (a $7.8 billion POMO today) tell the entire story: stocks ramp up in the morning, closing off gains for all but insiders, then meander lazily to an insignificant close. This pattern has been the most prominent over the past four months and continued in grand style today.
Dow 11,670.75, +93.24 (0.81%)
NASDAQ 2,691.52, +38.65 (1.46%)
S&P 500 1,271.87, +14.23 (1.13%)
NYSE Composite 8,043.96, +79.94 (1.00%)
As expected, advancers overwhelmed declining issues, 4948-1661. NASDAQ new highs: 296; new lows: 6. On the NYSE, there were 375 new highs and only 2 new lows. These numbers, if not there already, are at extremes and shorting would normally be child's play were it not for the unusual state of US equity markets, pumped daily with new money. There will be an unwinding, but it may be very slow and gradual, killing one's patience and probably most profits. The best position remains cash and equivalents, gold, silver, rarities, arable land and tools of trades.
The continued low levels of trading indicate that individual investors have not returned to the market and some may stay away permanently. If a large enough segment of those fleeing stocks and bonds is made up of Baby Boomers at or nearing retirement, it could spell doomsday for Wall Street, though with approximately 10,000 Boomers retiring every day, the fresh influx of pension and Social Security monies could induce a good deal of foolish speculation, much of it by retirees not secure enough with their monthly take even though it's more than enough upon which to exist.
NASDAQ Volume 1,809,840,875.00
NYSE Volume 4,730,662,000
The front-end crude contract seems to have hit a wall at $92. Anyone with a functioning brain realizes that pushing gas prices over $4/gallon will kill any recovery or chance of the consumer-led economy doing anything but stalling around as fuel prices steal from all other spending. Still, the verdict on the oil barons is still out and their game will continue. $100 or higher for crude could happen, but it seems only sensible that driving and energy use would be curtailed severely by cash-strapped consumers. Oil finished at $91.55, up just 17 cents on the day.
Gold and silver were sporting nice gains until about 2:00 pm, when they turned radically lower, about the same time the Obama administration announced that 13 select drillers would be allowed to resume deep-water drilling in the Gulf of Mexico, halted in the wake of BP's Deepwater Horizon gusher last year. Gold was last seen down $7.50, at $1414.10. Silver lost 23 cents, to $30.68.
And, for the most absurd trade of the day, Bank of America (BAC) rose 85 cents, to 14.19 (a gain of 6.37%) on news that the bank had agreed to a $4.1 billion settlement with Fannie Mae and Freddie Mac to repurchase soured loans issued by Countrywide (purchased by BofA in 2008) the GSEs had backed.
And, now, on to Fearless Rick's Fabulous Preview of 2011...
Soothsayers of antiquity were revered and honored, but in the crowded world of today, there's no shortage of predictions, prognostications, and outright guesses on what the future will bring.
Most predictors are amateurs, not skilled in the art of actually hanging on a limb, due to fear of being wrong. Fearless Rick knows no such fear, having been wrong so often that it's become a fixture to some degree. What is presented here is not so much a final saying on what, where and when some events may occur, but rather a proximate attempt to use experience and empirical values to arrive at a kind of whole world experience.
The dominating theme of 2011 will be VALUE. The pricing of assets will be challenging due to a continuation of monetary policies which may or may not be alleviated by fiscal controls expected from newly-minted Tea Party Republicans in congress. By Spring, the US government will be approaching the debt ceiling and a battle over whether or not to raise it will begin in some form. The betting is that it will be raised again - out of necessity - but Republicans will issue stern warnings or attempt to tie the vote to more austerity measures. The rhetoric on Capitol Hill will be more raucous than ever, but eventually, the Tea Partiers will be put into line by the status quo centrists who prefer slow death rather than the pain of an operation to actually address the greatest concern of our day, the burgeoning federal debt.
It may be difficult to assume that the world will not end, nor will the existence of the Federal Reserve, in the present year though it will not be without significantly-large challenges. Despite indications from our runaway stock market, the US employment situation is not going to get materially better in 2011. In fact, even using the greatly-flawed BLS figures that get trotted out the beginning of each month, the Obama administration will have no option other than to take its lumps and admit that the economy is just not recovering at all. By June or earlier, the "official" unemployment figure will be over 10%, and shock waves will reverberate throughout the affected areas, mostly the South, Southwest and West, prompting more give-away programs from the administration and certain congressional factions.
Pressure for another stimulus bill will be large, spurred on by liberals who cannot get too much of a free lunch, but will ultimately be small, if passed at all. Stimuli has become a permanent factor in federal government, though, so some free money will certainly flow from the seat of power.
Residential Housing is going to be worse than ever, with prices falling in areas that weren't hard hit the first time around. With banks lending only to the super-clean credit risks there will be a continuing glut of houses on almost every local market. Coupled with interest rates that should moderate, overall activity will be at a snail's pace, similar to what was seen in 2010. Knowledge of local markets may result in windfalls for some, misery for others, especially those in homes with Alt-A or 5/30 or 5/20 mortgages that are resetting in 2011 - a motherload of them by Spring. The expectation is for residential housing prices to drop another 6-10% during the year, with larger decreases in the NorthEast and MidWest.
(TO BE CONTINUED)
As expected, traders - con men all - made sure 2011 got off to a roaring start, with a gap up at the open sending the Dow Jones Industrials up almost 100 points moments into the session. While the gains were outsized as compared to recent run-ups, trading volume remains a viable concern, both short and long-term. Today's volume, while a 60% improvement over those of the last week, is still averaging a size that were the stock market a real roller coaster, volume couldn't get on the ride due to being too short.
It should also be pointed out that the estimates made here - wholly on anecdotal presumptions - have now been duly christened by some valuable researchers - Smithers & Co. - which notes S&P listed stocks some 73% overvalued as of December 10. With the S&P up another 2.5% since then, this data suggests that the stock market is headed for a crash of epic proportions. Based on measurements that ceased functioning around the time of Ben Bernanke's Jackson Hole speech last summer (where he first mentioned QE2), many stocks could experience declines of 50% or more in coming months.
Naturally, nobody is talking about valuation, since the Fed and Wall Street have famously destroyed all methods of honest price discovery and computers are doing most of the trading these days, but stocks are already wickedly overpriced and heading higher. Notice how silent Bernanke is concerning the markets, with no "irrational exuberance" kind of talk. The Fed is desperate to get the moribund economy off its back and the banks back to health. Destroying the currency through money printing and the markets through wild speculation via HFT computers are the only games in town now, and destined to fail spectacularly.
The daily charts and the massive monetary infusions (a $7.8 billion POMO today) tell the entire story: stocks ramp up in the morning, closing off gains for all but insiders, then meander lazily to an insignificant close. This pattern has been the most prominent over the past four months and continued in grand style today.
Dow 11,670.75, +93.24 (0.81%)
NASDAQ 2,691.52, +38.65 (1.46%)
S&P 500 1,271.87, +14.23 (1.13%)
NYSE Composite 8,043.96, +79.94 (1.00%)
As expected, advancers overwhelmed declining issues, 4948-1661. NASDAQ new highs: 296; new lows: 6. On the NYSE, there were 375 new highs and only 2 new lows. These numbers, if not there already, are at extremes and shorting would normally be child's play were it not for the unusual state of US equity markets, pumped daily with new money. There will be an unwinding, but it may be very slow and gradual, killing one's patience and probably most profits. The best position remains cash and equivalents, gold, silver, rarities, arable land and tools of trades.
The continued low levels of trading indicate that individual investors have not returned to the market and some may stay away permanently. If a large enough segment of those fleeing stocks and bonds is made up of Baby Boomers at or nearing retirement, it could spell doomsday for Wall Street, though with approximately 10,000 Boomers retiring every day, the fresh influx of pension and Social Security monies could induce a good deal of foolish speculation, much of it by retirees not secure enough with their monthly take even though it's more than enough upon which to exist.
NASDAQ Volume 1,809,840,875.00
NYSE Volume 4,730,662,000
The front-end crude contract seems to have hit a wall at $92. Anyone with a functioning brain realizes that pushing gas prices over $4/gallon will kill any recovery or chance of the consumer-led economy doing anything but stalling around as fuel prices steal from all other spending. Still, the verdict on the oil barons is still out and their game will continue. $100 or higher for crude could happen, but it seems only sensible that driving and energy use would be curtailed severely by cash-strapped consumers. Oil finished at $91.55, up just 17 cents on the day.
Gold and silver were sporting nice gains until about 2:00 pm, when they turned radically lower, about the same time the Obama administration announced that 13 select drillers would be allowed to resume deep-water drilling in the Gulf of Mexico, halted in the wake of BP's Deepwater Horizon gusher last year. Gold was last seen down $7.50, at $1414.10. Silver lost 23 cents, to $30.68.
And, for the most absurd trade of the day, Bank of America (BAC) rose 85 cents, to 14.19 (a gain of 6.37%) on news that the bank had agreed to a $4.1 billion settlement with Fannie Mae and Freddie Mac to repurchase soured loans issued by Countrywide (purchased by BofA in 2008) the GSEs had backed.
And, now, on to Fearless Rick's Fabulous Preview of 2011...
Soothsayers of antiquity were revered and honored, but in the crowded world of today, there's no shortage of predictions, prognostications, and outright guesses on what the future will bring.
Most predictors are amateurs, not skilled in the art of actually hanging on a limb, due to fear of being wrong. Fearless Rick knows no such fear, having been wrong so often that it's become a fixture to some degree. What is presented here is not so much a final saying on what, where and when some events may occur, but rather a proximate attempt to use experience and empirical values to arrive at a kind of whole world experience.
The dominating theme of 2011 will be VALUE. The pricing of assets will be challenging due to a continuation of monetary policies which may or may not be alleviated by fiscal controls expected from newly-minted Tea Party Republicans in congress. By Spring, the US government will be approaching the debt ceiling and a battle over whether or not to raise it will begin in some form. The betting is that it will be raised again - out of necessity - but Republicans will issue stern warnings or attempt to tie the vote to more austerity measures. The rhetoric on Capitol Hill will be more raucous than ever, but eventually, the Tea Partiers will be put into line by the status quo centrists who prefer slow death rather than the pain of an operation to actually address the greatest concern of our day, the burgeoning federal debt.
It may be difficult to assume that the world will not end, nor will the existence of the Federal Reserve, in the present year though it will not be without significantly-large challenges. Despite indications from our runaway stock market, the US employment situation is not going to get materially better in 2011. In fact, even using the greatly-flawed BLS figures that get trotted out the beginning of each month, the Obama administration will have no option other than to take its lumps and admit that the economy is just not recovering at all. By June or earlier, the "official" unemployment figure will be over 10%, and shock waves will reverberate throughout the affected areas, mostly the South, Southwest and West, prompting more give-away programs from the administration and certain congressional factions.
Pressure for another stimulus bill will be large, spurred on by liberals who cannot get too much of a free lunch, but will ultimately be small, if passed at all. Stimuli has become a permanent factor in federal government, though, so some free money will certainly flow from the seat of power.
Residential Housing is going to be worse than ever, with prices falling in areas that weren't hard hit the first time around. With banks lending only to the super-clean credit risks there will be a continuing glut of houses on almost every local market. Coupled with interest rates that should moderate, overall activity will be at a snail's pace, similar to what was seen in 2010. Knowledge of local markets may result in windfalls for some, misery for others, especially those in homes with Alt-A or 5/30 or 5/20 mortgages that are resetting in 2011 - a motherload of them by Spring. The expectation is for residential housing prices to drop another 6-10% during the year, with larger decreases in the NorthEast and MidWest.
(TO BE CONTINUED)
Label:
2011 predictions,
Gulf of Mexico,
Obama,
oil
Thursday, December 23, 2010
Oil Surpasses $91/Barrel; Otherwise, a Whole Lotta Nothing
The major story today was in commodities, since equities were witness to the slowest trading day of the year. Oil spiked above $91/barrel as gold and silver slid, though not by much. A slew of mostly inconclusive economic data failed to move markets as traders peeled away for an early start to the holidays. US equity markets are closed on December 24.
Dow 11,573.49, +14.00 (0.12%)
NASDAQ 2,665.60, -5.88 (0.22%)
S&P 500 1,256.77, -2.07 (0.16%)
NYSE Composite 7,925.36, -6.40 (0.08%)
Decliners beat gainers, 3464-2990. The NASDAQ saw 127 new highs and 14 new lows. There were 146 new highs on the NYSE, to just 11 new lows.
NASDAQ Volume 1,272,585,375.00
NYSE Volume 2,831,742,000
February crude oil futures on the NYMEX spiked $1.03, to $91.51, just in time to raise gas prices on one of the busiest travel weekends of the winter. Gold fell $6.90, to $1,380.50, while silver shed 6 cents, to $29.33. If anything, the precious metals are screaming "buy, buy, buy" at the tops of their lungs. Gold, silver, platinum and palladium have stalled out at elevated levels and are consolidating.
In addition to oil over $90/barrel a death stroke for any kind of economic recovery, the precious metals once more appear to be in a very sweet spot, within percentage points of recent highs, and in the case of gold, an all-time high. They could explode to the upside without any advance notice from their current plateaus. If oil remains persistently above $90 per barrel, watch the PMs advance quickly.
That's all there is. Stocks are a fool's game and fools and their money are soon parted, as the old saw suggests. Gold, silver, arable land, collectibles and rarities and tools of trades are the only safe investments (yes, and canned foods).
Merry Christmas!
Dow 11,573.49, +14.00 (0.12%)
NASDAQ 2,665.60, -5.88 (0.22%)
S&P 500 1,256.77, -2.07 (0.16%)
NYSE Composite 7,925.36, -6.40 (0.08%)
Decliners beat gainers, 3464-2990. The NASDAQ saw 127 new highs and 14 new lows. There were 146 new highs on the NYSE, to just 11 new lows.
NASDAQ Volume 1,272,585,375.00
NYSE Volume 2,831,742,000
February crude oil futures on the NYMEX spiked $1.03, to $91.51, just in time to raise gas prices on one of the busiest travel weekends of the winter. Gold fell $6.90, to $1,380.50, while silver shed 6 cents, to $29.33. If anything, the precious metals are screaming "buy, buy, buy" at the tops of their lungs. Gold, silver, platinum and palladium have stalled out at elevated levels and are consolidating.
In addition to oil over $90/barrel a death stroke for any kind of economic recovery, the precious metals once more appear to be in a very sweet spot, within percentage points of recent highs, and in the case of gold, an all-time high. They could explode to the upside without any advance notice from their current plateaus. If oil remains persistently above $90 per barrel, watch the PMs advance quickly.
That's all there is. Stocks are a fool's game and fools and their money are soon parted, as the old saw suggests. Gold, silver, arable land, collectibles and rarities and tools of trades are the only safe investments (yes, and canned foods).
Merry Christmas!
Label:
crude oil,
oil,
oil futures
Wednesday, November 17, 2010
A Fairly Quiet Day Awakens Warren Buffett
Ireland didn't accept the EU or IMF offers for a bank bailout, nor did they default on their debt, and the mortgage/housing/foreclosure problems also didn't go away because the AGs of 50 states are in negotiations on a settlement with the banks.
But Warren Buffet's fawning praise for the worst scoundrels in the government, published today as an op-ed "letter" from "Nephew Warren" to Uncle Sam raised more than just eyebrows around the financial world and in the public conscience.
Buffet, one of the world's richest men, benefitted greatly from the 2008 bank bailouts, snatching up a piece of Goldman Sachs (about $5 billion worth) and Wells Fargo, putting the Oracle of Omaha clearly in the camp of the serial monetary abusers atop our grand government/industry pyramid.
His effort at humor or insight was simply lost on most people, especially those wh have been kicked out of their homes, lost jobs or simply are having trouble making ends meet in the worst economy since the Great Depression. Buffet singled out Hank Paulson, Sheila Bair, Tim Geithner, George W. Bush and Ben Bernanke for acting with "courage and dispatch" amidst the evolving crisis.
The piece came as somewhat of a surprise from Buffett, normally fairly apolitical, expressing thanks from a government of which he is often critical.
Other than that, the Fed pumped another $7..9 billion into the primary dealers and stocks stalled once again. So far, even though it's still early in the game, the Fed's QE2 hasn't amounted to much of anything, and since the money goes to banks, who will likely keep it rather than lend it, it isn't going to do anything. In truth, QE2 is nothing more than a backdoor bailout for the banks suffering with heavy real estate losses both on and off their books. But, who's looking?
Dow 11,007.88, -15.62 (0.14%)
NASDAQ 2,476.01, +6.17 (0.25%)
S&P 500 1,178.59, +0.25 (0.02%)
NYSE Composite 7,488.76, +16.13 (0.22%)
Advancing issues led decliners, 4719-2726, and new highs took back the advantage from new lows after relinquishing control for a day, yesterday, 179-80. There's quite a bit of pumping in individual issues keeping the lows and highs separated at this point. Obviously, with options expiration just two days off, there's plenty of arbitrage between stock prices, puts and calls to call this any kind of "orderly" market. It is anything but.
Volume continued in the doldrums as it has for the entire year.
NASDAQ Volume 1,836,918,250.00
NYSE Volume 4,508,769,500
Oil continued to nosedive, losing another $1.90 on the day, to $80.44. It had been nearly 90 just a week ago. Gold fell $1.50, to $1,336.90. Silver bucked the trend, up 28 cents, to $25.51.
But Warren Buffet's fawning praise for the worst scoundrels in the government, published today as an op-ed "letter" from "Nephew Warren" to Uncle Sam raised more than just eyebrows around the financial world and in the public conscience.
Buffet, one of the world's richest men, benefitted greatly from the 2008 bank bailouts, snatching up a piece of Goldman Sachs (about $5 billion worth) and Wells Fargo, putting the Oracle of Omaha clearly in the camp of the serial monetary abusers atop our grand government/industry pyramid.
His effort at humor or insight was simply lost on most people, especially those wh have been kicked out of their homes, lost jobs or simply are having trouble making ends meet in the worst economy since the Great Depression. Buffet singled out Hank Paulson, Sheila Bair, Tim Geithner, George W. Bush and Ben Bernanke for acting with "courage and dispatch" amidst the evolving crisis.
The piece came as somewhat of a surprise from Buffett, normally fairly apolitical, expressing thanks from a government of which he is often critical.
Other than that, the Fed pumped another $7..9 billion into the primary dealers and stocks stalled once again. So far, even though it's still early in the game, the Fed's QE2 hasn't amounted to much of anything, and since the money goes to banks, who will likely keep it rather than lend it, it isn't going to do anything. In truth, QE2 is nothing more than a backdoor bailout for the banks suffering with heavy real estate losses both on and off their books. But, who's looking?
Dow 11,007.88, -15.62 (0.14%)
NASDAQ 2,476.01, +6.17 (0.25%)
S&P 500 1,178.59, +0.25 (0.02%)
NYSE Composite 7,488.76, +16.13 (0.22%)
Advancing issues led decliners, 4719-2726, and new highs took back the advantage from new lows after relinquishing control for a day, yesterday, 179-80. There's quite a bit of pumping in individual issues keeping the lows and highs separated at this point. Obviously, with options expiration just two days off, there's plenty of arbitrage between stock prices, puts and calls to call this any kind of "orderly" market. It is anything but.
Volume continued in the doldrums as it has for the entire year.
NASDAQ Volume 1,836,918,250.00
NYSE Volume 4,508,769,500
Oil continued to nosedive, losing another $1.90 on the day, to $80.44. It had been nearly 90 just a week ago. Gold fell $1.50, to $1,336.90. Silver bucked the trend, up 28 cents, to $25.51.
Label:
gold,
oil,
Warren Buffett
Friday, November 12, 2010
Bernanke Steers QE2 Over Cliff
All week pundits, economists and investors have been concerned about the effects of the great Federal Reserve experiment, Quantitative Easing, Round 2, A/K/A QE2, which got underway this morning with an $8 billion injection of fresh scads of cash delivered through repurchasing of Treasuries from Primary Dealers.
While for weeks and months the arguments have centered around how high the additional liquidity would take the stock markets and how low yields on bonds would go, today's efforts resulted in exactly the opposite. Stocks were hammered across the board and bond yields rose to multi-month highs. The Fed's expressed purpose was to lower bond yields to induce more house buying, using the completely flawed logical argument that lower rates would kick-start housing.
Just a few words for Mr. Bernanke (as opposed to the words Donald Trump would use: "you're fired"): people need money and jobs to buy houses. Even if interest rates were zero (oh, I'm sorry, they already are), they're not buying, because they can't afford to and the banks won't lend BECAUSE THEY HAVE NO JOBS AND NO MONEY.
Now, even a moron, a simpleton, a dunce could see this is the case in America, where real unemployment hovers around 18-22% nationally, and in some places, like most of California and Southern Florida, it's even worse. Without people earning paychecks, how, pray tell, are they going to buy homes?
No, I'm afraid that what I warned about yesterday, that if the stock market didn't make gains, that if bonds yields didn't go lower, that if gold and silver didn't rise, then all bets are off because this is just more of a massive fraud, the same one denied and overlooked by the Fed for years. The housing menage is what's fueling all of the madness and the money from QE2 is going directly into the coffers of Bank of America, JP Morgan Chase, Wells Fargo and Citigroup to cover up massive defaults and losses in mortgage backed securities.
The Justice Department - if we had one - should be investigating the banks and the Fed for malfeasance, fraud, securities fraud and treason, for they are surely the biggest national security risk on the planet, yet they go on their merry way, printing money to cover up their crimes while the rest of the world is supposed to just play along with them.
I say it's OVER! It's high time for the Congress to step in and shut down the Federal Reserve and all of the aforementioned banks. Obviously, Mr. Bernanke either doesn't have a clue as to what he's doing or he knows exactly what he's doing and is lying to the congress and the public. Or he's telling the congress and they're all lying to the public. And, in case somebody happens to know the whereabouts of of our invisible Attorney General, Eric Holder, please call 1-800-WAKE-THE-F--K-UP!
Let's see stocks lose more value next week when the Fed starts pumping more money on a daily basis into the primary dealers (those aforementioned banks again) and they invest it in repairing their bottom lines. Or maybe they'll make the stock market go up a little to quiet everyone down. Of course, they can always claim that it's those damn Europeans - the Irish, Italians, Spaniards and Portugese, to say nothing of the lay-about Greeks - or the Chinese, who won't devalue their currency and are running inflationary policies, that are causing all the dislocations in the market.
Ben Bernanke should be behind bars with Henry Paulson, Tim Geithner and the heads of all the largest banks. There's no good outcome to their policies, except to make life tougher for most Americans while covering up the crime of the century, the housing/mortgage/securitization/foreclose scam that's been at the heart of the US and global financial problems since 2007.
It's time to put down the trading tools and pick up the handcuffs. Unfortunately, nobody is home at DofJ and the other regulatory agencies are likely equally complicit. It's getting to the point at which some very drastic and draconian measures are going to need to be taken by the American people - if we can find a few with enough courage - to fix this mess before it goes any further.
The longer the Fed is allowed to print money out of thin air and cover up its own crimes and those of many of its member banks, the worse the solution will be. We don't have until 2012 to wait for the election of Ron Paul as President. We probably don't even have another six months before the United States of America is reduced to a pile of stinking rubble by a gang of criminals masquerading as bankers in suits. It's completely disgusting.
Market action needs few words. Here are the results for today:
Dow 11,192.58, -90.52 (0.80%)
NASDAQ 2,518.21, -37.31 (1.46%)
S&P 500 1,199.21, -14.33 (1.18%)
NYSE Composite 7,623.24, -100.00 (1.29%)
The headline numbers hardly tell the real damage show by the internals. Advancers were absolutely routed by declining issues, 5283-1193, a better-than 4:1 ratio. New highs continued to descend, but remained somehow ahead of new lows, 211-64. Volume was again a joke, hardly enough to entertain more than a small brokerage. The entire market is being manipulated by the Fed and primary dealers (the banks), down to the high-low figures. If, however, these turn around, with the lows overwhelming the highs, that would serve as a clear sell signal (for the three guys still trading in these absurd markets), but would also raise warning flags - as though there aren't enough of them already - about the US and global economy and the likelihood of a double dip, as soon as this quarter.
With the housing market about as screwed up as a an ADHD head-banger on ecstasy because of the foreclosure moratorium, which started in October and has not really ended, the drain on the economy will be evident in 4th quarter GDP. If the government claims anything better than 1% growth for the 4th quarter (we won't know until the end of January, which is likely to already be too late), it will be another statistical lie, like most of the others they produce.
Jobs aren't being created, incomes aren't rising, and the economy limps along on the back of transfer payments like social security, veteran's benefits, disability payments, welfare and food stamps. The private sector is reeling already and a poor Christmas season could be the final knife-thrust that makes the economy tilt over and die.
NASDAQ Volume 2,039,983,750
NYSE Volume 4,865,655,000
The good news is that oil was also slammed to the earth, losing $2.93 (3.34%), to $84.88. Most other commodities also suffered deep declines, such as cotton, live hogs, corn, wheat, soybeans and live cattle. It's almost as though the force of deflation came back with a vengeance in opposition to the policy missteps of the Federal Reserve. Real damage was seen in the precious metals, though these moves were more likely caused by JP Morgan meddling in silver and profit taking in gold. Silver was last quoted at $26.05, down $1.63, a huge move. Gold fell $40.30, to $1368.60.
If, on Monday, the sun rises in the East and the markets are open, we may be in for more downside, the result of decades of corruption and fraud coming home to roost. Or, the manipulators in charge could just manufacture a rally out of thin air.
They print money, don't they?
While for weeks and months the arguments have centered around how high the additional liquidity would take the stock markets and how low yields on bonds would go, today's efforts resulted in exactly the opposite. Stocks were hammered across the board and bond yields rose to multi-month highs. The Fed's expressed purpose was to lower bond yields to induce more house buying, using the completely flawed logical argument that lower rates would kick-start housing.
Just a few words for Mr. Bernanke (as opposed to the words Donald Trump would use: "you're fired"): people need money and jobs to buy houses. Even if interest rates were zero (oh, I'm sorry, they already are), they're not buying, because they can't afford to and the banks won't lend BECAUSE THEY HAVE NO JOBS AND NO MONEY.
Now, even a moron, a simpleton, a dunce could see this is the case in America, where real unemployment hovers around 18-22% nationally, and in some places, like most of California and Southern Florida, it's even worse. Without people earning paychecks, how, pray tell, are they going to buy homes?
No, I'm afraid that what I warned about yesterday, that if the stock market didn't make gains, that if bonds yields didn't go lower, that if gold and silver didn't rise, then all bets are off because this is just more of a massive fraud, the same one denied and overlooked by the Fed for years. The housing menage is what's fueling all of the madness and the money from QE2 is going directly into the coffers of Bank of America, JP Morgan Chase, Wells Fargo and Citigroup to cover up massive defaults and losses in mortgage backed securities.
The Justice Department - if we had one - should be investigating the banks and the Fed for malfeasance, fraud, securities fraud and treason, for they are surely the biggest national security risk on the planet, yet they go on their merry way, printing money to cover up their crimes while the rest of the world is supposed to just play along with them.
I say it's OVER! It's high time for the Congress to step in and shut down the Federal Reserve and all of the aforementioned banks. Obviously, Mr. Bernanke either doesn't have a clue as to what he's doing or he knows exactly what he's doing and is lying to the congress and the public. Or he's telling the congress and they're all lying to the public. And, in case somebody happens to know the whereabouts of of our invisible Attorney General, Eric Holder, please call 1-800-WAKE-THE-F--K-UP!
Let's see stocks lose more value next week when the Fed starts pumping more money on a daily basis into the primary dealers (those aforementioned banks again) and they invest it in repairing their bottom lines. Or maybe they'll make the stock market go up a little to quiet everyone down. Of course, they can always claim that it's those damn Europeans - the Irish, Italians, Spaniards and Portugese, to say nothing of the lay-about Greeks - or the Chinese, who won't devalue their currency and are running inflationary policies, that are causing all the dislocations in the market.
Ben Bernanke should be behind bars with Henry Paulson, Tim Geithner and the heads of all the largest banks. There's no good outcome to their policies, except to make life tougher for most Americans while covering up the crime of the century, the housing/mortgage/securitization/foreclose scam that's been at the heart of the US and global financial problems since 2007.
It's time to put down the trading tools and pick up the handcuffs. Unfortunately, nobody is home at DofJ and the other regulatory agencies are likely equally complicit. It's getting to the point at which some very drastic and draconian measures are going to need to be taken by the American people - if we can find a few with enough courage - to fix this mess before it goes any further.
The longer the Fed is allowed to print money out of thin air and cover up its own crimes and those of many of its member banks, the worse the solution will be. We don't have until 2012 to wait for the election of Ron Paul as President. We probably don't even have another six months before the United States of America is reduced to a pile of stinking rubble by a gang of criminals masquerading as bankers in suits. It's completely disgusting.
Market action needs few words. Here are the results for today:
Dow 11,192.58, -90.52 (0.80%)
NASDAQ 2,518.21, -37.31 (1.46%)
S&P 500 1,199.21, -14.33 (1.18%)
NYSE Composite 7,623.24, -100.00 (1.29%)
The headline numbers hardly tell the real damage show by the internals. Advancers were absolutely routed by declining issues, 5283-1193, a better-than 4:1 ratio. New highs continued to descend, but remained somehow ahead of new lows, 211-64. Volume was again a joke, hardly enough to entertain more than a small brokerage. The entire market is being manipulated by the Fed and primary dealers (the banks), down to the high-low figures. If, however, these turn around, with the lows overwhelming the highs, that would serve as a clear sell signal (for the three guys still trading in these absurd markets), but would also raise warning flags - as though there aren't enough of them already - about the US and global economy and the likelihood of a double dip, as soon as this quarter.
With the housing market about as screwed up as a an ADHD head-banger on ecstasy because of the foreclosure moratorium, which started in October and has not really ended, the drain on the economy will be evident in 4th quarter GDP. If the government claims anything better than 1% growth for the 4th quarter (we won't know until the end of January, which is likely to already be too late), it will be another statistical lie, like most of the others they produce.
Jobs aren't being created, incomes aren't rising, and the economy limps along on the back of transfer payments like social security, veteran's benefits, disability payments, welfare and food stamps. The private sector is reeling already and a poor Christmas season could be the final knife-thrust that makes the economy tilt over and die.
NASDAQ Volume 2,039,983,750
NYSE Volume 4,865,655,000
The good news is that oil was also slammed to the earth, losing $2.93 (3.34%), to $84.88. Most other commodities also suffered deep declines, such as cotton, live hogs, corn, wheat, soybeans and live cattle. It's almost as though the force of deflation came back with a vengeance in opposition to the policy missteps of the Federal Reserve. Real damage was seen in the precious metals, though these moves were more likely caused by JP Morgan meddling in silver and profit taking in gold. Silver was last quoted at $26.05, down $1.63, a huge move. Gold fell $40.30, to $1368.60.
If, on Monday, the sun rises in the East and the markets are open, we may be in for more downside, the result of decades of corruption and fraud coming home to roost. Or, the manipulators in charge could just manufacture a rally out of thin air.
They print money, don't they?
Label:
Ben Bernanke,
Federal Reserve,
gold,
oil,
silver
Monday, November 01, 2010
Thank Heavens the Elections Are Almost Over
Tomorrow, millions of Americans will go to the polls to elect another batch of worthless hooligans, crooks, thieves of all variety and generally people who can't do anything else but steal and spend other people's wealth.
The American system of representative democracy is so completely and irrevocably broken that there's little hope of it ever being repaired. People who are "elected" (make that "selected" by those in control of voting machines that don't produce a paper trail and are easily hacked) are supposed to represent the people of their district, city, town or state.
Sadly - and this has been an ongoing feature for quite some time - both newly-minted and re-elected representatives will be representing not the people, but the interests of the people who gave to their campaigns, mostly corporations or rich donors seeking special treatment. And they will get it, no matter the detriment to the public.
Anyone who cannot see that this is the operative nature of our politics is either not paying very close attention or is blinder than blind.
Essentially, the "big" races are those for control of the House of Representative and the US Senate. The Republican party, largely responsible for the fiscal calamity that is the US government and economy, is already claiming victory in the House, on the uncertain claim that they will restore "American values." It's the same old line that seems to be trotted out every couple of years, by both parties, both equally corrupt and useless.
Any change that occurs will no doubt be to the detriment of the majority of Americans, especially those known as middle class, now an endangered species.
Thank heavens this election cycle is finally coming to an end. Maybe the American public will have peace for a few weeks, or even days. We'd be better off if all the politicians just went home and stopped making so much noise.
In an apparent vote of no-confidence in anything, the markets today staged an incredible about-face on the back of a $2.5 billion POMO, otherwise known as quiet QE by the Fed. Stocks soared in the early going. Just after 10:00 am, the Dow was up almost 125 points, but spent the remainder of the session declining, actually going red for a short time, before a late-day rally boosted it back to break-even.
The S&P also ended marginally in the money, though the NYSE and NASDAQ weren't quite so fortunate. For those of the ilk that the Republicans will deliver peace, prosperity and zillions of new jobs, today's action was hardly reassuring. The market knows the economy stinks and congress will do little to change that. We are in the midst of a depression, one which neither party is willing to take blame for, though the truth is that both caused it.
Dow 11,124.62, +6.13 (0.06%)
NASDAQ 2,504.84, -2.57 (0.10%)
S&P 500 1,184.38, +1.12 (0.09%)
NYSE Composite 7,509.21, -4.14 (0.06%)
NASDAQ Volume 1,922,047,000.00
NYSE Volume 4,461,449,000
Oddly enough, declining issues far outweighed advancers, mostly on the NASDAQ, 3521-2915. New highs stretched to 540, against a mere 80 new lows. Volume was normal, meaning poor.
Crude oil was up $1.52, to $82.95. Gold fell $7.00, to close at $1,350.60. Silver lost a penny, finishing at $24.55.
Two things are for certain: 1. The USA is in a heap of trouble economically, and 2. looking to congress for answers is a huge mistake.
Is it too late to just cancel the elections and start over?
The American system of representative democracy is so completely and irrevocably broken that there's little hope of it ever being repaired. People who are "elected" (make that "selected" by those in control of voting machines that don't produce a paper trail and are easily hacked) are supposed to represent the people of their district, city, town or state.
Sadly - and this has been an ongoing feature for quite some time - both newly-minted and re-elected representatives will be representing not the people, but the interests of the people who gave to their campaigns, mostly corporations or rich donors seeking special treatment. And they will get it, no matter the detriment to the public.
Anyone who cannot see that this is the operative nature of our politics is either not paying very close attention or is blinder than blind.
Essentially, the "big" races are those for control of the House of Representative and the US Senate. The Republican party, largely responsible for the fiscal calamity that is the US government and economy, is already claiming victory in the House, on the uncertain claim that they will restore "American values." It's the same old line that seems to be trotted out every couple of years, by both parties, both equally corrupt and useless.
Any change that occurs will no doubt be to the detriment of the majority of Americans, especially those known as middle class, now an endangered species.
Thank heavens this election cycle is finally coming to an end. Maybe the American public will have peace for a few weeks, or even days. We'd be better off if all the politicians just went home and stopped making so much noise.
In an apparent vote of no-confidence in anything, the markets today staged an incredible about-face on the back of a $2.5 billion POMO, otherwise known as quiet QE by the Fed. Stocks soared in the early going. Just after 10:00 am, the Dow was up almost 125 points, but spent the remainder of the session declining, actually going red for a short time, before a late-day rally boosted it back to break-even.
The S&P also ended marginally in the money, though the NYSE and NASDAQ weren't quite so fortunate. For those of the ilk that the Republicans will deliver peace, prosperity and zillions of new jobs, today's action was hardly reassuring. The market knows the economy stinks and congress will do little to change that. We are in the midst of a depression, one which neither party is willing to take blame for, though the truth is that both caused it.
Dow 11,124.62, +6.13 (0.06%)
NASDAQ 2,504.84, -2.57 (0.10%)
S&P 500 1,184.38, +1.12 (0.09%)
NYSE Composite 7,509.21, -4.14 (0.06%)
NASDAQ Volume 1,922,047,000.00
NYSE Volume 4,461,449,000
Oddly enough, declining issues far outweighed advancers, mostly on the NASDAQ, 3521-2915. New highs stretched to 540, against a mere 80 new lows. Volume was normal, meaning poor.
Crude oil was up $1.52, to $82.95. Gold fell $7.00, to close at $1,350.60. Silver lost a penny, finishing at $24.55.
Two things are for certain: 1. The USA is in a heap of trouble economically, and 2. looking to congress for answers is a huge mistake.
Is it too late to just cancel the elections and start over?
Thursday, October 07, 2010
Obama Defies Banks with Pocket Veto
You know it's a slow news day when all there is to report on is what didn't happen, and that would be President Obama not signing HR 3808, the Recognition of Notarizations Act, which would have forced federal and state courts to recognize notary signatures - including digital signatures - from other states, and was widely seen as an attempt by the banking lobby to do an end run around the "robo-signing" foreclosure mess they've created by having bank and processing firms' employees sign off on enormous rafts of affidavits without reading them.
In the midst of a foreclosure moratorium by Ally Bank, JP Morgan Chase and Bank of America, the timing of the passage of the bill raised eyebrows and brought forth derision from homeowner advocates.
The bill was passed by the House and Senate and presented to Obama on September 30. The bill had failed to pass the senate on two previous occasions, but spurred on by last-minute wrangling by senators Pat Leahey (D-VT) and Jeff Sessions (R-AL) the measure passed the senate without debate on a voice vote by unanimous consent. No record of the vote in either house was recorded, so the criminal congress, which gets much of its funding from the criminal enterprise known as the Too Big To Fail Banks, gets a free pass on this one with plenty of plausible deniability.
Though the bill was unlikely to ease the pain of the banks as they wade through hundreds of thousands of foreclosures, many of which will now be contested since their paperwork has been exposed as faulty at best and outright fraudulent at worst, the President opted to send the bill back to the congress, citing, in Press Secretary Robert Gibbs' words, "unintended consequences," obviously referring to the foreclosure scandal that's been accelerating over the past two to three weeks.
That was big news for homeowners in foreclosure in the 23 states that are defined as "judicial" foreclosure states, who will likely be allowed to remain in their homes without having to pay their mortgage nor be hounded by the servicing banks for up to a year or longer, according to sources such as Business Week.
Originally downplayed by the banks, the extent of the fraud - with much of the underlying paperwork in the affidavits referring to title and ownership, and thus, standing in foreclosure at fault, attorneys general from a handful of states have already called on the banks to halt foreclosures. Ohio AG, Richard Cordray, has already started a lawsuit against Ally Bank (formerly GMAC) and is close to suing Bank of America and JP Morgan Chase.
Late Wednesday, US Attorney General Eric Holder, after being prompted by House Speaker Nancy Pelosi and other prominent Democrats, has ordered an investigation into foreclosure practices under the auspices of the financial fraud enforcement task force, formed last year in the aftermath of the market meltdown, TARP and the associated issues stemming from the original subprime crisis in 2008.
All of this didn't move markets much at all, though both JP Morgan Chase (JPM) and Bank of America (BAC) were lower at session's end.
For the most part, traders were patiently awaiting the release of the September Non-Farm Payroll report from the Bureau of Labor Statistics, due out Friday morning at 8:30 am ET. Consensus estimates are for a gain of 60,000 jobs between the private and public sectors. On Wednesday, ADP reported a September loss of 39,000 private sector jobs in their monthly survey.
Dow 10,948.58, -19.07 (0.17%)
NASDAQ 2,383.67, +3.01 (0.13%)
S&P 500 1,158.06, -1.91 (0.16%)
NYSE Composite 7,425.01, -23.32 (0.31%)
NASDAQ Volume 1,856,212,625
NYSE Volume 4,056,364,500
Declining issues held a small edge over advancers, 3114-2568. New highs led new lows, 423-37. Volume was anemic, the worst in two weeks, and the past two weeks haven't been particularly strong. Equities have been hovering around their highs for most of the week, so the jobs report Friday may provide some direction to this listless market, though it would be no surprise to see it just languish within a tight range until after the midterm elections on November 2nd, which also coincides with a FOMC meeting at which the Fed is widely assumed to announce some new QE plan, thrusting billions of dollars into the moribund credit system.
After weeks of rallying higher, commodities performed an abrupt change of direction on Thursday, with crude oil futures hammered $1.56 lower, to $81.67 at the close on the NYMEX. The latest print for gold was at $1333.60, down $15.50, though it traded as high as $1365 on the day. Silver also took a header, losing 69 cents, to $22.50.
Chartists and fundamental analysis predicted some kind of easing in the precious metals especially, as they have been on an historic tear since the middle of August without so much as a 3% pullback. Oil also had escaped its longtime range between $70 and $80, though the move above the high end might be nothing more than naked speculation as supply-demand dynamics do not support higher prices. Mostly, the move up in oil was tied to the decline of the US dollar, which has fallen 14% in the past three months against other major currencies.
Not bad for a slow news day.
In the midst of a foreclosure moratorium by Ally Bank, JP Morgan Chase and Bank of America, the timing of the passage of the bill raised eyebrows and brought forth derision from homeowner advocates.
The bill was passed by the House and Senate and presented to Obama on September 30. The bill had failed to pass the senate on two previous occasions, but spurred on by last-minute wrangling by senators Pat Leahey (D-VT) and Jeff Sessions (R-AL) the measure passed the senate without debate on a voice vote by unanimous consent. No record of the vote in either house was recorded, so the criminal congress, which gets much of its funding from the criminal enterprise known as the Too Big To Fail Banks, gets a free pass on this one with plenty of plausible deniability.
Though the bill was unlikely to ease the pain of the banks as they wade through hundreds of thousands of foreclosures, many of which will now be contested since their paperwork has been exposed as faulty at best and outright fraudulent at worst, the President opted to send the bill back to the congress, citing, in Press Secretary Robert Gibbs' words, "unintended consequences," obviously referring to the foreclosure scandal that's been accelerating over the past two to three weeks.
That was big news for homeowners in foreclosure in the 23 states that are defined as "judicial" foreclosure states, who will likely be allowed to remain in their homes without having to pay their mortgage nor be hounded by the servicing banks for up to a year or longer, according to sources such as Business Week.
Originally downplayed by the banks, the extent of the fraud - with much of the underlying paperwork in the affidavits referring to title and ownership, and thus, standing in foreclosure at fault, attorneys general from a handful of states have already called on the banks to halt foreclosures. Ohio AG, Richard Cordray, has already started a lawsuit against Ally Bank (formerly GMAC) and is close to suing Bank of America and JP Morgan Chase.
Late Wednesday, US Attorney General Eric Holder, after being prompted by House Speaker Nancy Pelosi and other prominent Democrats, has ordered an investigation into foreclosure practices under the auspices of the financial fraud enforcement task force, formed last year in the aftermath of the market meltdown, TARP and the associated issues stemming from the original subprime crisis in 2008.
All of this didn't move markets much at all, though both JP Morgan Chase (JPM) and Bank of America (BAC) were lower at session's end.
For the most part, traders were patiently awaiting the release of the September Non-Farm Payroll report from the Bureau of Labor Statistics, due out Friday morning at 8:30 am ET. Consensus estimates are for a gain of 60,000 jobs between the private and public sectors. On Wednesday, ADP reported a September loss of 39,000 private sector jobs in their monthly survey.
Dow 10,948.58, -19.07 (0.17%)
NASDAQ 2,383.67, +3.01 (0.13%)
S&P 500 1,158.06, -1.91 (0.16%)
NYSE Composite 7,425.01, -23.32 (0.31%)
NASDAQ Volume 1,856,212,625
NYSE Volume 4,056,364,500
Declining issues held a small edge over advancers, 3114-2568. New highs led new lows, 423-37. Volume was anemic, the worst in two weeks, and the past two weeks haven't been particularly strong. Equities have been hovering around their highs for most of the week, so the jobs report Friday may provide some direction to this listless market, though it would be no surprise to see it just languish within a tight range until after the midterm elections on November 2nd, which also coincides with a FOMC meeting at which the Fed is widely assumed to announce some new QE plan, thrusting billions of dollars into the moribund credit system.
After weeks of rallying higher, commodities performed an abrupt change of direction on Thursday, with crude oil futures hammered $1.56 lower, to $81.67 at the close on the NYMEX. The latest print for gold was at $1333.60, down $15.50, though it traded as high as $1365 on the day. Silver also took a header, losing 69 cents, to $22.50.
Chartists and fundamental analysis predicted some kind of easing in the precious metals especially, as they have been on an historic tear since the middle of August without so much as a 3% pullback. Oil also had escaped its longtime range between $70 and $80, though the move above the high end might be nothing more than naked speculation as supply-demand dynamics do not support higher prices. Mostly, the move up in oil was tied to the decline of the US dollar, which has fallen 14% in the past three months against other major currencies.
Not bad for a slow news day.
Label:
Bank of America,
FOMC,
foreclosures,
gold,
JP Morgan Chase,
Obama,
oil,
President Obama,
silver
Thursday, September 09, 2010
Small Gains in Nowhere Market
Stocks continue their September dance, going nowhere fast, admirably marking time between Labor Day and the mid-term elections. November 2 cannot get here quickly enough for most of the remaining participants in the market. There's no upside to either the market or the economy in sight and lingering fears of a stagnation or limited growth potential in the US have investors, traders and casual players on the sidelines.
The slow pace of the market is making for some dull reporting - this blog included - and the days of "everybody's an investor" seem to be officially and permanently gone. The ownership society has given way to a nation of savers, worriers and soon-to-be-retirees.
For the second straight day, stocks ramped up at the open and sold off throughout the day. Even though the major indices have recorded gains in five of the past six sessions, there's an unmistakable, unsustainable feeling to it all.
Dow 10,415.24, +28.23 (0.27%)
NASDAQ 2,236.20, +7.33 (0.33%)
S&P 500 1,104.19, +5.32 (0.48%)
NYSE Composite 7,034.17, +34.23 (0.49%)
Advancing issues led decliners again, though the margin has narrowed, 3331-2352. New highs remained well ahead of new lows, 378-59, and volume was, again, sub-par. It's gotten to the point that reporting on the lack of volume in the markets is not even news. It is really becoming the "new normal."
NASDAQ Volume 1,602,241,250
NYSE Volume 3,365,649,250
Oil fell 42 cents, settling at $74.25. The precious metals failed to sustain their elevated levels for a day, with gold down $6.70, to $1,248.90, and silver off by 16 cents, to $19.81. There seems to be a surplus of everything except new credit unless one is a major corporation with a AAA rating, from cash to oil to homes to stocks. There's even evidence of a worldwide oil glut developing.
The effects of cheaper oil - some say as low as $40-50 per barrel would certainly fit into the deflationist argument, though the Fed and European central bankers are doing everything they can to avoid such a scenario. If deflation becomes inevitable, while a boon to middle and lower classes, the effect on paper wealth - in stocks, bonds and derivatives - could be devastating.
Despite what experts are saying about inflation running rampant, it's still a difficult concept to embrace when unemployment remains at record levels, consumers are more concerned about paying down debt than buying new things and home prices may begin a second leg lower.
Oversupply is inherently deflationary, but the force of the central banking cartel continues to push against reality.
The slow pace of the market is making for some dull reporting - this blog included - and the days of "everybody's an investor" seem to be officially and permanently gone. The ownership society has given way to a nation of savers, worriers and soon-to-be-retirees.
For the second straight day, stocks ramped up at the open and sold off throughout the day. Even though the major indices have recorded gains in five of the past six sessions, there's an unmistakable, unsustainable feeling to it all.
Dow 10,415.24, +28.23 (0.27%)
NASDAQ 2,236.20, +7.33 (0.33%)
S&P 500 1,104.19, +5.32 (0.48%)
NYSE Composite 7,034.17, +34.23 (0.49%)
Advancing issues led decliners again, though the margin has narrowed, 3331-2352. New highs remained well ahead of new lows, 378-59, and volume was, again, sub-par. It's gotten to the point that reporting on the lack of volume in the markets is not even news. It is really becoming the "new normal."
NASDAQ Volume 1,602,241,250
NYSE Volume 3,365,649,250
Oil fell 42 cents, settling at $74.25. The precious metals failed to sustain their elevated levels for a day, with gold down $6.70, to $1,248.90, and silver off by 16 cents, to $19.81. There seems to be a surplus of everything except new credit unless one is a major corporation with a AAA rating, from cash to oil to homes to stocks. There's even evidence of a worldwide oil glut developing.
The effects of cheaper oil - some say as low as $40-50 per barrel would certainly fit into the deflationist argument, though the Fed and European central bankers are doing everything they can to avoid such a scenario. If deflation becomes inevitable, while a boon to middle and lower classes, the effect on paper wealth - in stocks, bonds and derivatives - could be devastating.
Despite what experts are saying about inflation running rampant, it's still a difficult concept to embrace when unemployment remains at record levels, consumers are more concerned about paying down debt than buying new things and home prices may begin a second leg lower.
Oversupply is inherently deflationary, but the force of the central banking cartel continues to push against reality.
Label:
Fed,
oil,
supply and demand
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