Friday, July 29, 2011

Traders Still Positive on Debt Limit Deal; Markets Spooked

It could have been so much worse.

US stocks took another tumble Friday, on revisions to 1st and 2nd quarter GDP and fears that the debt ceiling debate in Washington was running out of time.

An hour prior to the opening bell, the government reported its second revision to second quarter GDP, which came in at a measly 1.3%, but the greater shock was the revision to first quarter GDP, which was revised lower, from 1.9% growth to a frighteningly-low 0.4%. That sent shock waves through the futures market and US indices fell sharply at the open, hitting the lows of the day within the first 15 minutes of trading.

Just before 10:00 am EDT, Chicago PMI was reported to have fallen to 58.8 in July, lower than forecast, from 61.1 the prior month. That wasn't bad enough news, however, to shake off the nascent rally on rumors and hope that congress would decide on a debt ceiling increase by the end of the day or over the weekend.

As the session wore on, stocks moved sharply on any unfounded rumors, but eventually gave way late in the day, as lawmakers in the House of Representatives agreed, 236-186, to begin debate on House majority leader John Boehner's debt ceiling proposal, which had been in limbo since Tuesday because the measure did not have the backing of the Tea Party wing of the Republican party and - even if it did pass the House - was seen as almost certain to fail in the Senate. An actual vote on the measure is expected to come around 6:00 pm EDT Friday.

At the end of the day and end of the week, with no resolution on the debt issue and economic data overshadowing even the best corporate second quarter reports, the Dow finished lower for the sixth straight day, the S&P down for the last five, and the NASDAQ in negative territory for the fourth day out of the last five. On Thursday, the NASDAQ registered a gain of just over one-and-a-half points.

For the week, the Dow lost 538 points, a 4% decline. The S&P slipped 53 points, the NASDAQ shed 102 points and the NYSE composite fell by 328 points.

As bad as it was, stocks actually recovered half of their earlier losses on Friday. Still, it was the worst weekly performance for US indices in a year.

Dow 12,143.24, -96.87 (0.79%)
NASDAQ 2,756.38, -9.87 (0.36%)
S&P 500 1,292.28, -8.39 (0.65%)
NYSE Composite 8,079.44, -44.59 (0.55%)

Declining issues again dominated advancers, 4113-2476, and the gap between the expanding number of new lows and shrinking new highs worsened. On the NASDAQ, there were just 26 new highs, as compared to 114 new lows. The NYSE showed even worse, with just 16 new highs and 177 new lows. The combined totals of 42 new highs against 291 new lows is sending the strongest sell signal imaginable. Even if the congress does find a way to pass a debt ceiling increase by Tuesday, August 2, the damage for wasting time has been done the Moody's and S&P will likely downgrade US debt in short order, as they both have warned would occur if serious measures were not taken at this impasse.

Add to that the non-recovery "recovery" which has been represented by high unemployment and falling home prices and the recipe for further declines in equities is writ large.

Volume on the day was strong, another sign of a weakening stock market poised on the brink of turning losses into a major correction and a resumption of the bear market.

NASDAQ Volume 2,274,169,000
NYSE Volume 5,045,403,000

Among other interesting notes were the 10-year, which rose in price, but slumped in yield, down to 2.80%. The 30-year bond also hit a fresh low yield of 4.13%.

Oil took some losses, down $1.74, to $95.70. Gold made another intra-day high of $1637.50, before settling back to close at $1,628.30, up $14.90 for the day. Silver was up 31 cents, to $40.11 per ounce.

With the markets suffering their worst weekly losses in a year - coincidentally at the same time top economists are partying at their annual convention in Jackson Hole, Wyoming, the same place that Fed Chairman announced the launch of QE2 last summer - the onus is on the congress to come with a plan that appeases not only both parties but the ratings agencies as well.

While it is doubtful they would let the August 2 date pass without a debt ceiling increase, the chances of them passing a bill before then that actually cuts spending appropriately are still quite long.

The new store

Guest post from: Constance Rodgers

My new store did really well the first three years we were open, and then the recession hit. Since we were mostly a referral outfit things were great without much marketing at all but when the economy dried up, so did our business. We had to pour thousands of dollars into an advertising company so they could get things back on track and it turns out all we did was waste our money. I wish I had listened when my mother told me to save for something like this! Anyway, we’re still doing okay with the loyal clients we have but I’ve recently had to let two employees go and go to to start taking credit cards for the first time. I know this market has been tough on everyone but I can’t help feeling like we got it worse than most. Wish me luck in the coming months since only time will tell if our little business is able to survive this awful, awful time in American history.

Safeguarding Against Identity Theft

Because our world is so digitized, with everything from banking to credit cards to stocks and futures trading taking place over the internet, hackers have found a gold mine in digging up and exploiting personal data.

Everything from your social security number to automobile registration and brokerage account data is online, and it's only a few clicks or an inadvertent error away from falling into the hands of unscrupulous types who would do harm to one's financial and personal life.

In the increasingly complex world of internet security a few simple tasks can help one steer clear of the villain hackers who steal everything from credit scores and bank accounts to one's personal identity, and the outcomes of having insufficient identity theft protection can be consequential and painful.

Most online accounts, like banking and credit cards offer a level of encryption and security as a first line of defense. Some offer additional information to be imputed before access is granted to an account. The easiest ways to avoid being hacked is to use difficult passwords, especially using characters and numbers, and to use any secondary security - like additional questions to grant access - as a further safeguard.

Even more effective are online identity security companies, which monitor and scrutinize data flows to guard against unlawful intrusions. One such company is IdentityHawk, which offers a comprehensive solution including social security number monitoring, 24/7 identity security scanning, risk assessment via an identity health score and $1 million in identity theft insurance.

The company offers a 30-day, no-obligation free trial and also provides credit score monitoring and even can help in recovering one's identity if it's already fallen victim to identity theft.

While it pays to be thrifty and frugal in these turbulent economic times, a few dollars spent protecting ones identity and valuable assets should be money well spent.

Thursday, July 28, 2011

Hope Fades in Late-Day Selling

There really was no good reason for stocks to start the day higher, but they did, probably in response to initial unemployment claims falling below 400,000 for the first time in three months.

The actual figure was 398,000, and was probably significantly fudged and will almost certainly be revised higher next week, but in a market this tense, anything that even hints of being good news is taken and such, so off went the speculators and day-traders, looking for quick, easy, short-term profits.

Some were undeniably successful, as a good number of stocks made significant gains and the NASDAQ rebounded nicely, up more than 30 points, after Wednesday's debacle.

Highs of the day were right around noon, and form there it was all downhill, with an especially sharp decline at the 2:00 hour. With the exception of the NASDAQ, which finished with a gain of just over one point, all of the major indices finished in the red for the fourth straight session.

Dow 12,240.11, -62.44 (0.51%)
NASDAQ 2,766.25, +1.46 (0.05%)
S&P 500 1,300.67, -4.22 (0.32%)
NYSE Composite 8,124.03, -29.18 (0.36%)

Once again, declining issues led advancers, 3744-2735. NASDAQ new highs numbered a mere 18, with 83 new lows. On the NYSE, new highs were outnumbered by new lows, 25-107. This puts the combined total at 43 new highs and 190 new lows, screaming for continued selling. Volume was healthy for a change, though most of it was on the downside.

NASDAQ Volume 2,105,143,250
NYSE Volume 4,957,269,500

Commodities hugged the flat line for the most part. Crude oil was up just 4 cents, to $97.44. Gold slipped $1.70, to $1,613.40. Silver still is being suppressed by the likes of JP Morgan and HSBC, falling another 77 cents, to $39.79.

Kitco's Live 24-hour spot silver chart clearly shows that once silver is traded in the Hong Kong market, prices are relatively stable, but wild swings - mostly to the negative - occur with regularity during the NY GLOBEX and NYMEX daily sessions. The big banks have their shorts in place and have been waging a losing battle for the past three years. Despite their mendacious efforts at keeping the price of silver down, they have already failed miserably and it is only a matter of time before the entire global silver market comes unglued and price soars past $50, $60, even $70 per ounce.

Silver has been a top performer the past five years or so, and should continue to do well as the fiat currency regime comes crashing down. Price is quite high at the present, but eventually, holders will be rewarded.

It appears that there will be no debt ceiling solution before the weekend, leaving the fools in Washington with nothing else to do but pass a stand-alone debt ceiling raise, which is what should have been happening all along. The Republicans in the House have perverted and conjoined the debt ceiling with the budget and long-term finances, and they will look like the fools of the foolish when all is said and done come Tuesday.

Wednesday, July 27, 2011

D-Day Minus Six: Beware Falling Stocks; Dow, NASDAQ in Second-Worst Decline of 2011

It is now just six days from August 2nd, the day the government of the United States of America either passes a bill increasing the debt ceiling or begins defaulting on said debt, which is fast approaching $15 trillion.

Through accounting gimmicks and "borrowing" from the pension funds of federal employees, the government has thus far avoiding making either the commitment to borrow more or claim deadbeat status and suffer a beating at the hands of the ratings agencies in the form of credit downgrades and subsequent higher interest payments.

Make no bones about it, it is time for the American people to come to grips with the reality that the officials in Washington are not doing the jobs they are paid to do, nor have they represented the best interests of the American people for quite a long time (at least the past 11 years).

If the debt ceiling is not raised, calamity will surely ensue, which is why both sides - Republicans and Democrats, except for a few ardent Tea Partiers - have repeatedly expressed sentiment that the debt ceiling must be raised by August 2nd, no matter the outcome of budget negotiations. In truth, both sides are coming to the realization that their parties are far apart and that no budget issues or long-term spending should have become tied to the debt ceiling issue. They are separate matters which should be dealt with separately.

Nonetheless, the politicians continue their annoying Kabuki theatre while the American public seethes over their inability to compromise, act like reasonable adults and do what they were elected to do.

Wall Street has taken notice as well, logging losses in each of the first three days of this week, with no end to the selling yet in sight. To say that our "leaders" have taken a walk to the end of the plank would be putting it mildly. This issue should never have gotten to this point and those wishing to play fast and loose with the US economy should be given a hearly heave-ho and be dutifully shoved off the plank and into the drink.

What both parties have done - though especially the Republicans, who picked this fight - is shrink from their responsibilities, putting politics ahead of their oaths. It is a shameful chapter in American governance which should never be allowed to be repeated, though the general consensus is that more of the same will be forthcoming as the 2012 election season heats up.

The leaders of both parties should be henceforth removed from office for putting the stability and good faith and credit of America at extreme risk. After that, the herd of politicians being led by money from various lobbyists should be summarily removed from office. The entire congress could run better with many fewer members, preferably none of those presently constituting that formerly-august body.

The American public want change, need change and have been promised change, but all it has gotten is a sordid soap opera of bad politics and even worse outcomes. We have reached the brink and it is very nearly time to throw off the yoke of oppression by the governors and take matters in hand in a more efficient and direct manner. Nothing gets done in Washington any more; maybe it's time to shut it down.

The wealthy barons of Wall Street, those who funded the campaigns and lined the pockets of these moronic, imbecilic politicians, should also be brought to task, something Attorney General Eric Holder seems reluctant to pursue. After all, Wall Street keeps him in nice suits and fancy offices. He should be impeached.

Today's losses on the major indices were the second-largest of 2011 (except for the S&P, for which it was the third-largest), surpassing the 68 points the NASDAQ lost on January 28, but less than the 77 point decline on February 22, though more than the 66 point loss on June 1.

The Dow dropped 166, 179 and 279 points, and the S&P fell 23, 28 and 30 points on the same dates, respectively.

Dow 12,302.55, -198.75 (1.59%)
NASDAQ 2,764.79, -75.17 (2.65%)
S&P 500 1,304.89, -27.05 (2.03%)
NYSE Composite 8,153.21, -178.46 (2.14%)

Declining issues slaughtered advancers, 5875-804. New highs on the NASDAQ numbered only 15, while new lows expanded to 89. On the NYSE, there were 28 new highs and 105 new lows. The combined totals of 43 new highs and 194 new lows puts this indicator clearly in the "sell signal" category. Volume was dynamic and huge. Make no doubt about it: this was a rout.

NASDAQ Volume 2,310,879,750
NYSE Volume 5,074,647,000

Commodities were rather tame throughout the equity carnage. WTI oil fell $2.19, to $97.40, from an artificial and fully inflated high point. Gold dipped $1.70, to $1,615.10, while silver fell a modest 13 cents, to $40.57. The losses in the precious metals are temporary, likely the result of margin calls. Eventually, if stocks continue to take on water, money will gush into gold and silver.

The delay in raising the debt ceiling was not the only issue making for a horrible day on Wall Street. Durable goods orders fell 2.1% in June, further evidence that the economy is slowing.

Tomorrow's initial unemployment claims reading from the BLS could be the proverbial straw that breaks this market's back. Should the number come in above 420,000, stocks could pick right up where they left off today, severely to the downside.

Tuesday, July 26, 2011

No Debt Ceiling Deal Sends Stocks Lower Again

While the plutocrats in Washington dither away valuable time trying to figure out the most politically-expedient way out of their self-imposed debt ceiling crisis, the rest of the world goes on, mostly oblivious to the debacle in the capitol.

Stocks, however, as money substitutes, aren't taking the "no news" as good news. In fact, markets are absolutely terrified, not that the current congress and president will find a solution by the artificial August 2 deadline, but that their efforts will be so futile and pointless that the ratings agencies will lower the US debt/credit rating from its now pristine AAA sovereign status.

While the majority of people neither understand nor care about this delicious little surprise coming down the road like a 60-ton freighter, Wall Street and other governments are frightened out of their boots because a drop in the US rating would add something like $100 billion of cost - in interest - to the annual federal budget, which is already way out of whack.

Whether it be Obama's refusal to put a concise deal on the table, or the Tea Party wing of the Republican party insistence that there be no revenue enhancements in any kind of deal, the result will be the same as it has been for the past 12 years for congress and the presidency: abject failure, and a hike in interest rates.

Without poring over details of how the past three years have played out, we are approaching a seminal moment in the history of the United States of America and in the financial policies post-Bretton Woods. Nixon's closure of the gold window was the first inflection point, at which currencies were no longer backed by gold. The accumulation of nearly $15 trillion in debt and the failure of government to not only foresee the problem, but then to not be able to deal with it, is the second great event.

With just seven days until the government begins defaulting on some debt, markets are skittering about like schoolchildren at recess and there's nobody in his or her right mind who wishes to be exposed to inordinate risk at this point. With each passing day that there is not a deal and signed legislation increasing the debt ceiling, expect markets to recoil in terror. By Friday, we could be witnessing an all-out crash as many participants choose to sit on the side rather than engage in the dizzying dance of death.

The outflows from stocks were seen mostly at the end of the day, when the major indices peaked just after 2:00 pm EDT. From there until the close it was nearly free-fall, with all of the day's tiny gains wiped out in a flurry of near-panic selling.

One hates to beat a dead horse, but this debt ceiling debate is still alive and kicking, barely, and it will dominate financial news until something - anything - is done to rectify the situation. Absolutely nobody is holding their breath waiting for that, however.

Naturally, there were swing trades and day trades made during the session, but nobody is staking out new positions in the most uncertain market of the past two-and-a-half years.

Dow 12,501.30, -91.50 (0.73%)
NASDAQ 2,839.96, -2.84 (0.10%)
S&P 500 1,331.94, -5.49 (0.41%)
NYSE Composite 8,331.67, -25.90 (0.31%)

Declining issues overwhelmed advancers for the second straight day this week, 4096-2434. NASDAQ new highs 29; new lows: 36. NYSE new highs: 44; new lows: 46. Combined totals: 73 new highs, 82 new lows, a slight shift to the negative for that particular indicator. Volume was reliatively light, as expected.

NASDAQ Volume 1,716,556,125
NYSE Volume 3,988,655,750

Crude oil advanced modestly, up 39 cents, to $99.59. Gold racked up another record high, gaining $4.60, to $1,616.80. Silver notched a 38 cent increase, to $40.70.

The S&P/Case-Shiller Home Price index showed marginal gains of one per cent in the month-to-month numbers, but most of the 20 cites surveyed showed declines on a year-over-year basis.

New home sales sunk to 312,000 on an annualized basis in June. Some analysts were calling the number "unexpected," while the home construction industry has been in outright depression for more than three years.

Any further declines will be "expected" and those acting surprised will be executed by a firing squad of Mexican construction workers, as soon as they can be rounded up from immigration detention centers. (That's a joke, folks.)

Monday, July 25, 2011

No Debt Ceiling Deal for Now; Markets Jittery

Just in case anyone was keeping score, the United States of America - the world's largest creditor, by far - will begin defaulting on its debts on August 2, 2011. That is a date just eight days away and Wall Street seems to not be enjoying the drama one bit.

It's odd, considering how many of the professional politicians in DC have been hired, bought and paid for by the elite banking and corporate interests of Wall Street. Have the patsy politicians found a new sugar daddy? Are they just "acting out?" No matter the case, there's no deal on raising the debt ceiling, though there are competing scenarios and bills floating around the nation's capitol.

Other than the usual market noise about earnings reports, there was little else to report from the global financial capitol, except that they were all waiting on some clarity from Washington.

Thus, a day which started badly and in the middle was looking good, ended badly, as stocks fell in the final hour of trading. So long as the clown show in Washington continues, putting the finances of the entire world in a cross between jeopardy and limbo, expect more of these kinds of days in stocks. Wash, rinse, repeat until the weekend.

Dow 12,592.80, -88.36 (0.70%)
NASDAQ 2,842.80, -16.03 (0.56%)
S&P 500 1,337.43, -7.59 (0.56%)
NYSE Composite 8,357.57, -50.63 (0.60%)

Losers dominated winners, with 1474 stocks up ad 5133 down. On the NASDAQ, there were 41 new highs and 26 new lows. Over at the NYSE, a similar scenario, with 58 new highs and 38 new lows. The combined total of 99 new highs and 64 new lows suggests a very soft market, struggling to justify value. Volume was at an even slower pace than normal, which is uncomfortable, to say the least, and downright discouraging, in a real sense.

NASDAQ Volume 1,585,768,125
NYSE Volume 3,560,761,250

With the dollar up strongly against the Euro, oil took a bit of a breather, losing 67 cents to finish the day at $99.20. With all of the uncertainty in global finance, gold investors are stocking up, sending the yellow metal to a record close of $1,612.20, up $11.20 on the day. Silver did not fare quite as well, but still managed a healthy gain of 24 cents, at $40.36 per ounce.

Thirty-two NFL player reps ratified a new labor agreement which will be presented to players for final approval, ending the 132-day lockout and settling one of the more thorny issues of the summer. Now, if congress could only act like responsible adults and do what the NFL and its owners and players have done...

UPDATE: After the closing bell, Netflix (NFLX) beat earnings estimates but came up short on total revenues, sending the stock down more than 8% in after-hours trading.

A new nominee has emerged for Analyst Moron of the Month as Randall Dishmon, portfolio manager for the Oppenheimer Global Value fund, explains why its time to get bullish on Citigroup (C) and Bank of America (BAC).

Dishmon, who desperately needs a new barber, says BofA is "wildly misunderstood" and that Citigroup is "one of the best, if not the best internatonal banking franchise ever assembled."

Among other Dishmon recommendations are Google (GOOG) - now that it's gone up 140 points in the past month - and Diagio (DEO), on the assumption that China and India want to imbibe regularly on their premium liquor brands. Diagio has nearly doubled in the past 18 months.

Maybe, just maybe, Dishmon should lay off the Diaigio booze and stick to plain old hookers and coke.

Friday, July 22, 2011

Week Ends with Split Decision; Gold, Silver on the Rise

After a week of ups and downs, it's probably appropriate the Friday ended with a bifurcated market: the Dow and NYSE down and the S&P and NASDAQ up.

It makes little sense to the casual observer, though the condition becomes more understandable if one is an insider, playing long and short, hedging positions, trading momentum and running super-fast computers in the 2011 version of "timing the market."

For the rest of us, forget it. Stocks have become nearly impossible to trade with any success unless one is truly gifted or just dumb lucky.

The White House and congress still haven't decided what to do about raising the debt ceiling. The Republicans' ploy of passing their ridiculous Cut, Cap and Balance bill in the House is a desperate and dangerous maneuver, costing more time as the ratings agencies and the rest of the civilized planet look on with alternate views of shock, horror and amusement. The continued stalemate virtually assures that the United States will receive a number of ratings downgrades no matter what happens from here on out.

By comparison, Europe appears far worse, though they have more than enough gall and arrogance to keep the media and the ratings agencies in check for the time being. With all of the Mediterranean nations in some sort of trouble or already having been bailed out, the European Union seems to be held together by duct tape and crewing gum.

There was nearly nothing worth reporting about this week, as the Ponzi schemers made it through another week without anybody receiving a subpoena or getting caught cheating. Score another one for the rich guys.

Dow 12,681.16, -43.25 (0.34%)
NASDAQ 2,858.83, +24.40 (0.86%)
S&P 500 1,345.02, +1.22 (0.09%)
NYSE Composite 8,408.20, -3.25 (0.04%)

Advancing issues narrowly beat decliners, 3293-3194. The NASDAQ showed 79 new highs and 23 new lows, while the NYSE registered 102 new highs and 24 new lows. The combined total of 181 new highs and 47 new lows is about par for the course in an upward-sloping market. Volume, however, dipped back into apathetic mid-summer malaise.

NASDAQ Volume 1,674,379,250
NYSE Volume 3,538,032,250

The commodity markets gave both good and bad news. Oil was up another 74 cents, to $99.87, which is bad news for everybody except oil company executives and Arab sheiks. The precious metals bore most of the good news, with gold up $14.50, to $1,601.50, and silver higher by $1.17, to $40.12. Silver appears ready to head into orbit, now that the new Hong Kong silver futures vehicle is offering some variation in pricing.

As the US economy becomes more and more bad theater, expect gold and silver to grind higher, with most of the explosive moves in silver, which is still underpriced at a 40-1 gold-silver ratio. The long-term trend is 16-1.

Today, House Republican "leader" John Boehner walked out of debt ceiling negotiations with the president, saying the two sides, "couldn't connect." No kidding, John, when you won't even allow for closing tax loopholes on millionaires and billionaires when we're suffering the worst depression of all time.

Boehner, and the rest of the "Tea Party" Nancies ought to be ashamed of what they're doing to the country. When the collapse comes, they should be handed the great bulk of the blame. President Obama has tried to deal with them, but it has become a losing battle.

God save us.

Thursday, July 21, 2011

Investment Ideas: Gold, Silver or Penny Stocks?

If you're young and brash, or even if you're old and still have some risk appetite, you may be looking around for new investment ideas.

Trouble is, you probably won't find any on CNBC, Fox Business or any of the traditional media outlets. You'll have to dig a little deeper, maybe even start researching financial blogs, but there are literally thousands of them. Finding the right kind of investing advice for your particular risk level can be as daunting a task as picking a particular stock out of thousands of those listed on the major exchanges.

For some, whose primary goal is to protect wealth, the answer is simple. Gold, gold and more gold, but make sure it's physical and you can keep it in your own possession. Playing around with the SPDR Gold Trust EFT (GLD) may bring you profits, but in the end you have paper, not gold. You want physical, and it's as easy to get as a trip to a local coin or precious metals dealer or from various international dealers such as AMPEX or KITCO, who generally can suit the needs whether you're spending $10,000 or $10 million.

Those same coin shops and dealers usually also do a brisk business in silver, which is a little more speculative, but carries the same kind of wealth protection as gold, but at a fraction of the cost (the current gold:silver ratio is right around 40:1, though it's traditionally been closer to 16:1).

Another place to buy silver and gold is - of all places - eBay, where there are hundreds, if not thousands of auctions for gold and silver every day. The prices are fair, usually around spot, often less, and the action is fast-paced and addictive.

For those who are tired of the mainstream stocks, many of which have been gyrating and grinding higher and lower without any regard to fundamentals, a more rigorous test of one's due diligence comes in the form of penny stocks, which are just what they sound like, small companies selling shares in a smaller, and consequently, less liquid, market, known in the trade as the "pink sheets" or simply, "the pinks."

Penny stocks are not for conservative investors; they carry a high level of risk. Many of these companies aren't even known to the general investing public and most of them are unprofitable or just barely turning a small profit. The key is to know which ones are actually going somewhere, have good management and are on their way to becoming the next Microsoft or Google. Most companies start small and penny stocks offer investors to get in on the ground floor, before their idea, application, service or product goes viral or mainstream.

Many of these companies are bought out by larger firms, resulting in hefty profits for shareholders, but finding the good ones takes time and research, to say nothing of an iron stomach.

There are dozens of sites offering penny stock picks but clicking the preceding link will take you to one that has a proven track record, offers quality content and does great research on companies you may have never heard of but could be regional powerhouses, national or global leaders years from now.

So, there you have it: three investments for three different levels of risk appetite. Low: Gold; Medium: Silver; High: Penny Stocks. And you don't have to watch a minute of CNBC for any of them.

Correlation Trade, Weak Dollar, Hot Air Boost Stocks

About the only thing hotter than stocks on this 21st of July, 2011, was the weather, with temperatures hovering around the 100-degree mark in much of the nation, but especially in the Midwest, Mid-Atlantic and East coast. But the correlation trade - short dollars, long stocks - was in effect throughout the session, which meant that stocks had to soar... and they did, closing in on the nearly three-year highs set back in late April.

Coming off a string of recent earnings report beats by the likes of Google (GOOG), Apple (AAPL) and IBM, one would have expected the NASDAQ to lead the way, but it was the S&P and Dow Industrials which showed the greatest percentage gains of the day.

It's obvious to anyone with more than a passing interest that the banks have been at their manipulative best of late as financial stocks have led the way each of the past two sessions, even as these very banks put in quarterly earnings showing losses, pay no dividends, are largely insolvent and the nation lurches ever closer to a debt default and ratings downgrade, the latter being all but inevitable after the well-rehearsed clown show in Washington, DC.

One can hardly blame the elitist banking class for boosting their own portfolios at this juncture. After all, its been proven that whatever risks they take will be guaranteed to win, since the US government is back-stopping the whole TBTF crowd. They might as well take while the taking is good. It may not be the same in a fortnight or so.

For the rest of us, the alternative for the day was to find air-conditioning, drink plenty of fluids and watch the circus from afar. The risks of trading in stocks is far too high for the average plebeian. And so it goes, that the rich get richer. The poor, and, especially those stuck in the middle, may get the ultimate revenge as more and more people turn their backs on the world's most corrupt system of governance and finance and default in record numbers on school loans, car loans, mortgages, credit cards and all manner of financial obligations.

The end to this grand farce of fiat money is coming, regardless of the degree of normalcy bias built into us all from TV and the media. The waiting, admittedly, is a royal pain. Either way, it's death by deflation or inflation (which seems to be winning lately), or both.

Dow 12,724.41, +152.50 (1.21%)
NASDAQ 2,834.43, +20.20 (0.72%)
S&P 500 1,343.80, +17.96 (1.35%)
NYSE Composite 8,411.45, +129.62 (1.57%)

As one would expect, advancing stocks beat back decliners in a big way, 4901-1692. On the NASDAQ new highs reached 88, while new lows came in at 25. The NYSE had even more of a pronounced bias, with 154 new highs and 20 new lows. The combined total of 242 new highs and 45 new lows would seem to suggest that the rally has legs, though one never knows when or if Europe will fall completely apart at the seams, sending the Euro lower, the dollar higher and stocks down. Volume was actually quite fantastic. Perhaps some new suckers (investors) were brought into the foray.

NASDAQ Volume 2,253,718,500
NYSE Volume 4,812,432,500

As goes the dollar, so - in the opposite direction - goes oil, and with the dollar down, WTI crude leapt back over the $100/barrel mark in the early part of the session, but backed off to close up only 73 cents, at $99.13.

Naturally, gold and silver were hammered to death, with gold losing $9.90, to $1,587.00, and silver falling 61 cents, to $38.95 per ounce.

The conditions are about to change - for silver, at least - as the Hong Kong Exchange will introduce a silver futures trading mechanism at the open of business on Friday, which will be shortly after 8:00 pm EDT. By this time tomorrow, the price in Hong Kong may be $44 per ounce and quite a bit lower here in the states.

We shall see soon enough.

Wednesday, July 20, 2011

No Follow-Through Off Tuesday Smash-Up; Hong Kong to Trade Silver Futures

Stocks lingered near the flat line for nearly the entire session, eventually succumbing to selling pressure late in the day, making Tuesday's low-volume rally appear more spin than substance. As usual, in a stunning reversal of fortune, financial stocks were the top-performing sector, up 1.02%, while six of the twelve sectors showed losses and the highest percentage gainer among the six winners - outside of financials - was basic materials, up 0.45%.

The big beat by the banking sector was highly attributable to the fact that the majority of trading on Wall Street is handled by these very firms, proving once more that the too-big-to-fail banks operate without scrutiny from the SEC or any other regulatory body, as self-dealing and insider trading runs rampant.

Sizing up the market as a whole, one could surmise that it is in desperate straits, stuck above the 200 and 50-day moving averages and just below the nominal highs of late April. A steady diet of sideways trading should be of benefit to the high frequency and momentum hedge funds and day-traders, but it's a difficult balance to maintain, especially when one is highly leveraged, as most of the larger firms are.

Having reached the midpoint of earnings season, it is notable that the major indices are less than one per cent higher than when second quarter earnings began in earnest on July 11 and lower than where they were just prior to the onslaught of corporate reporting. It's an amusing scenario, even as most companies have met or exceeded expectations, albeit, for many firms, lowered ones.

With the debt ceiling debate in Washington nearing end-game, stocks seem to be running in place, pacing off the worry of just what kind of stunt the clowns in congress will pull off next, the latest rumor calling for a short term interim raising of the debt ceiling, or having President Obama employ his powers under the 14th amendment, which, according to Bill Clinton, gives the president authority to raise the debt limit without requiring congressional approval.

The key take-away is 10 words from section 4 of the amendment, which says, “The validity of the public debt shall not be questioned."

In typical obstructionist fashion members of the Republican party have already begun questioning the assumption that the president could go solo on a debt ceiling raise, with some members mentioning impeachment and lawsuits.

If nothing else, invoking the constitution on shaky legal grounds would no doubt wind up under the purview of the Supreme Court, take months to wrangle over and eventually end up with a nice downgrade in the US credit rating and higher interest rates for all. That would effectively defeat the whole intent of the Republican and Tea parties for starting this fight, as losses to the Treasury in terms of increased spending to cover higher interest on borrowings would cause even deeper deficits in years to come.

As it is, Moody's and S&P have already raised eyebrows and issued warnings about taking the debt ceiling issue too far afield, and there's a chance that even if an agreement is cobbled together, a rating downgrade could already be in the cards.

After a while, this entire escapade of Washington Gone Wild becomes a futile, badly-managed fiasco. The debt ceiling should never have been tied to budget considerations in the first place. In the end, the Tea Party wing of the Republican party has to be seen as the unwise villain in this sordid, sick affair.

Dow 12,571.91, -15.51 (0.12%)
NASDAQ 2,814.23, -12.29 (0.43%)
S&P 500 1,325.84, -0.89 (0.07%)
NYSE Composite 8,281.83, +27.45 (0.33%)

On the day, winners and losers were nearly split evenly, with 3289 advancing and 3241 declining. On the NASDAQ, there were 71 new highs and 34 new lows. New highs led new lows, 95-19 on the NYSE. The combined total of 166 new highs and 53 new lows is a positive sign for marketeers, though comparisons will be harder to beat come September, October and November, as stocks scored heavy gains in those months last year. Volume was the same as every other day this year: sluggish.

NASDAQ Volume 1,874,350,375
NYSE Volume 3,767,229,500

WTI crude oil was down for much of the session, but finished 64 cents higher, at $98.14. Gold was off $4.20, to $1,596.90, and silver dropped 66 cents, at $39.56, though it traded below $38.50 earlier in the day.

Tomorrow will mark the final day of singularity for the COMEX silver market as Hong Kong will begin trading a dollar-denominated silver futures contract on July 22, tapping into rising demand for all metals coming from China. This could potentially create an enormous run-up in the price of silver, as the Hong Kong exchange will be seen as an offset to COMEX (and Anglo-American) hegemony.

It will be interesting to watch the vicious price swings once the exchange gets its feet wet and orders begin flowing from not only China, but India and other Pac-Rim nations as well. Many are hoping that the Hong Kong exchange will operate in an honest fashion, exposing the manipulative ways of the COMEX and the shorting strategies of JP Morgan Chase and HSBC.

A new player in the global silver trade might be just what the doctor ordered for holders and hoarders of silver.

Tuesday, July 19, 2011

Markets Soar on New Gang of Six Debt Ceiling Proposal

Supposedly, the government will fix everything by changing the way the CPI is measured, which means that Social Security recipients are about to get whacked by way of inflation.

If ever there was an inept government being led around by its nose by financial masters, this one is it. Whatever Wall Street wants, Wall Street gets. As for the general population - the ones who pay all the bills and pay for bailouts and frauds - they receive the shaft.

The current legislation under proposal, offered by the Senate's Gang of Six, promises %3.7 Trillion in savings, some of it - about $1 Trillion - supposedly to come from increased revenues. House Republicans have already started making noise about it, since the plan calls for some tax increases. While President Obama seemed to be thrilled about the plan at a 1:30 press conference, party leaders Harry Reid and Mitch McConnell seem to have been cut off at the knees after working on an alternative plan to both save face and raise the debt ceiling.

Nonetheless, Wall Street acted as though manna was being dropped from the heavens, boosting stocks an additional 100 points on top of the bogus 100-point, low-volume, morning melt-up.

Forget TV dramas and soap operas. The best one is being played out right on CNBC every day with the fraudulent bankers running the politicians in a light-hearted farce known as the US economy.

Dow 12,587.42, +202.26 (1.63%)
NASDAQ 2,826.52, +61.41 (2.22%)
S&P 500 1,326.73, +21.29 (1.63%)
NYSE Composite 8,254.38, +118.85 (1.46%)

Advancing issues led decliners by an unhealthy margin, 5167-1418. On the NASDAQ, there were 68 new highs and 34 new lows. The NYSE showed 79 new highs and 32 new lows. The combined total of 147 new highs and 66 new lows completely reversed yesterday's dour numbers. Volume was as pathetic as it gets, especially on a 200-point Dow move.

NASDAQ Volume 1,842,038,625.00
NYSE Volume 4,228,335,000

Commodities changed direction on the day as well, which is not surprising for WTI crude oil, which continued it's up-and-down daily fluctuation, rising by $1.57, to $97.50. The lowered prices for gold (-$1.30, to $1,601.10) and silver (-0.12, to $40.22) are also in line with the corrupt rigging in those markets.

The best news of the day came from the financial sector, which was offering its own version of "recovery summer." Bank of America (BAC) posted a loss of 90 cents per share in the second quarter, mostly attributed to mortgage put-backs and side deals with note-holders. The stock traded as low as 9.40 following the pre-market release of second quarter results, ending the day down 0.15, at 9.57, another new 2-year low in a recent string of them.

Goldman Sachs (GS) also released fiscal first quarter results before the bell and came in with numbers in-line with analyst expectations, .

From the article linked above:
Revenue in Goldman's core fixed-income trading division fell 63% sequentially and 53% year-over-year due to reduced trading activity and economic uncertainty. That, along with weakness in its lending-and-investing division, led to an 18% year-on-year decline in overall firm revenue.

Doing "God's work," huh, guys? God must be angry.

Monday, July 18, 2011

Stocks Drop, Metals Pop, BofA a Major Flop






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


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






Friday, July 15, 2011

Last Hour Rally Salvages Gains, Though Markets Down for Week

A tumultuous week came to a very anti-climatic conclusion on Friday, as the President issued a challenge to congress to come up with the "framework" of a deal within the next 24 to 36 hours to solve the wrangling over the debt ceiling and budget issues.

President Obama's 11:00 am new conference did little to move the matter in a more positive direction, and stocks languished throughout the day, finally putting together a half-hearted momentum rally in the final hour of trading.

In Europe, 82 of 90 banks passed the European banking Authority stress tests, but eight failed - four of them in Spain - and 12 more received barely passing grades.

Citigroup posted better-than-expected second quarter results, but still finished in the red for the day. Taking its cue, Bank of America (BAC), which reports on July 19, fell below $10 per share, finishing exactly at 10.00, after trading as low as 9.88, the lowest in more than two years.

The entire day was rather disjointed and purposeless, as stocks drifted around until the ramp-up at the close.

For the week, the Dow shed 177 points, the NASDAQ fell 70, the S&P gave back 27 and the NYSE composite dropped 183 points.

The late rally made little sense, unless one gives credence to the thought that it was a positive sign from the markets that a debt ceiling deal would be hatched by Monday.

Dow 12,479.73, +42.61 (0.34%)
NASDAQ 2,789.80, +27.13 (0.98%)
S&P 500 1,316.14, +7.27 (0.56%)
NYSE Composite 8,227.04, +35.91 (0.44%)

Advancers led decliners, 3945-2570. The NASDAQ offered 40 new highs and 34 new lows, while the NYSE had 62 stocks make new 52-week highs and 51 reach new lows. The combined total of 102 new highs and 85 new lows is cutting the margin rather closely and is reflective of the choppiness inherent in current markets.

NASDAQ Volume 1,825,291,125
NYSE Volume 4,370,969,000

A swath of economic data points offered no suggestion of improvement. The CPI fell 0.2%, the Empire Index returned a -3.76, industrial production and capacity utilization were both stagnant at 0.2% and 76.9%, and the Michigan consumer sentiment fell from 71.5 in May to 63.8 in June.

Crude oil continued on its zig-zag path, gaining $1.55, to $97.24. Gold hit another record, up 80 cents, to $1,590.10. Silver was up 38 cents, at $39.07 per ounce.

The NFL lockout continued, but both sides seem intent on reaching a deal, saying they would continue working over the weekend in order to conclude talks as early as possible without jeopardizing the preseason or regular season.

Maybe congress should take a hint from the players and owners. The American people have had about as much stalling and posturing as they can handle.

Thursday, July 14, 2011

Italy Settles Down, But Stocks Slide Again; Google Amazes

With the continuing debt crisis in Europe taking an unusual day of rest, US stocks opened on the upside but could not maintain momentum as stalled talks over the US debt ceiling weighed heavily.

It's almost a certainty that the government clowns in Washington will come to a compromise solution similar to the budget deal in May - too little, almost too late, and sure to not address the most pressing US issues, those being housing, jobs and our very own burgeoning debt crisis.

With both sides still at odds over the scope and details, the nation is paralyzed by indecision, regulations and a tax policy that has - like the rest of the federal government - gone off the rails.

In Italy, austerity measures were passed, allowing the Italian government to issue much-needed 5-and-15-year bonds to finance continuing operations. The plan has many facets, and should (though it won't) serve as a blueprint for US measures.

That did not, however, help traders in US equities, which has this week given back much of the gains made over last week's spectacular five-day rally. Markets hate uncertainty, and even in the midst of earnings season, US stocks are very much a mixed bag of tricks, teetering on the brink of collapse.

It was a fine day for Google (GOOG), though, as the giant internet search and service company boasted profits well above Street estimates. Reporting after the closing bell, the company reported $6.92 billion in net revenue in the second quarter of 2011 and non-GAAP earnings per share of $8.74 on expectations of $6.54 billion in revenue and earnings per share of $7.87. The stock was trading up 12% in after-hours, up more than 63 points.

Dow 12,437.12, -54.49 (0.44%)
NASDAQ 2,762.67, -34.25 (1.22%)
S&P 500 1,308.87, -8.85 (0.67%)
NYSE Composite 8,191.13, -55.67 (0.68%)

Declining issues beat back advancers, 5019-1495. Though the headline numbers were hardly spectacular, except for the NASDAQ, which lost 1.22% on the day, selling was broad-based. NASDAQ stocks showed 56 new highs and 35 new lows, while the NYSE posted 46 new highs and 45 new lows. The combined total spread of 102 new highs and 80 new lows continues to deteriorate. Volume on the day was relatively solid, though that should be bearish for investors.

NASDAQ Volume 1,923,346,875
NYSE Volume 4,298,657,500

Economic data was mixed and uninspiring. Initial unemployment claims dropped to 405,000, though it was the 16th consecutive week above 400,000, another non-encouraging sign. Retail sales for June came in at plus 0.1%, and the PPI actually fell 0.4%, though the core number, which excludes food and energy, rose 0.3%. Business inventories were up 1.0% in May, as companies cited slack demand.

Commodities were also mixed. WTI crude oil fell sharply, down $2.36, to $95.69. Gold, though, set another new record high, gaining $3.40, to $1,589.30. Silver added 54 cents, gaining to $38.69 per ounce.

With the week drawing to a quick conclusion, Friday's data features the June CPI reading, the Michigan survey of consumer confidence and earnings from Citigroup (C).

Wednesday, July 13, 2011

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tuesday, July 12, 2011

No Rest for the Wicked; Stocks Fall Again

Conditions in Europe have not really changed much since yesterday's news of a crisis in Italy's continuing funding, except that Greece - before even receiving all of its most recent bailout money - already has put out its hand for more.

The word for the deepening debt crisis in Europe most-bantered about these days is contagion, the likelihood that issues of underfunding and failing to meet obligations by sovereign governments will spread. Here's a tip: contagion is already in effect. A few years ago Iceland defaulted on debt, refused to take austerity and cash from the IMF and is well on its way to a newfound prosperity without the rigors of international finance and fractional reserve banking.

However, on the continent, Ireland, Greece, and now Italy are suffering strains of the same disease - that of over-promising (mostly on government employee pensions and benefits) and failing to pull in enough revenue in taxes, fees and levies to pay out promptly and graciously. Portugal and Spain are not far behind, and the tiny nation of Belarus has already defaulted and devalued its currency. Belgium is also a basket case.

Contagion is here and its happening now.

What this really means is two things: 1) The European Union is in its death throes after just 11 years of existence, and, 2) Many of the largest banks in Europe are nearing the end of their government-supplied rope and will hang.

And maybe there's a third link to the disaster that is modern Europe: people will cheat, steal, riot, and eventually revolt. Forget collecting taxes. Government officials will be happy if they escape with the clothes on their backs and a few thousand Euros to see them safely out of their respective countries. Whether or not the contagion has enough virulence to travel across the Atlantic Ocean and infect the United States is a matter for politicians and their media lackeys, because the United States is the world's largest debtor with a total debt (on the books, not including the unfunded liabilities of Social Security, Medicade and Medicare) well beyond its annual GDP, making the United States the worst of all nations with a debt-to-GDP ration of over 100%.

Not only is the USA a basket case gone full retard, the debt is growing larger every day, and every day the Obama administration and the congress dithers over raising the debt ceiling (they all agree that the US cannot default), the situation worsens. We are in the midst of the most enthralling and frightening economic condition of all time. Many, many grave errors have occured over the past thirty years, not the least of which was the hollowing out of our industrial base which provided good jobs for millions of Americans. Those jobs went to Mexico and then to Southeast Asia and China. They are gone, many for good, and there is no way to bring them back soon.

It brings up an interesting proposition, supposing that the mindless cretins we call our "leaders" in Washington haggle and argue right up to the August 2nd deadline. Who gets stiffed in the case of a default? Would the US actually stop paying its military? Social Security recipients? Food stamp mouth-breathers? How about China?

There are no good answers, only bad and horrible conclusions. The answer is China. Stiff the Chinese on their $1.8 billion or so in bond holdings and go to war, as war solves all problems in a way. Both countries get decimated in a protracted struggle or blow each other and the rest of the Northern Hemisphere away in a nuclear holocaust. The first way is slow, painful and regrettable. The second is quick and completely devastating, and since neither side would likely opt for MAD (mutually assured destruction), the first choice is rather obvious.

Will it happen? Hopefully not. And there's the very good chance that the politicians, controlled by the banking and industrialist interests, would opt on stiffing seniors. What the heck, they're old and going to die soon anyway, why not just accelerate the process. And wipe out the food stamp class as well. They contribute nothing, so starve them to death. Nice scenarios, no?

Whatever happens over the next few weeks, nothing is really going to be solved. Even if the government officials decide on a compromise of $3 trillion in budget cuts over ten years, the annual deficit will probably be close to a trillion dollars each and every year. They're only cutting $300 billion a year out of the budget. It's kind of like using a sponge to empty a bucket. It works, but not very well. By 2022, the national debt will have grown to over $24 trillion, and that's if they work out a compromise that cuts some of the deficit and tax revenues remain steady for the next ten years, two possibilities that are not very good bets.

In other words, you, me, your kids, their friends, your neighbors and their neighbors are royally screwed unless we begin taking off the rose-colored shades and rid ourselves of the infliction known as normalcy bias pretty soon. Normal is going away. Austerity, poverty and desperation will become rampant, as they're already spreading across the land and are in place in Europe.

Not to sound like the whack-job on the street corner, shouting, "prepare or die," it is time to hunker down and get serious about the issues plaguing the globe, most of which start and end at your local bank branch, which is probably a Chase, Bank of America or Wells Fargo. They're the problem, have been the problem and will continue to be the problem until they are forced to meet their realities and be broken up, though that will not happen. We're beyond that, and, with the politicians thinking more about elections in 2012 rather than whether or not there will be a nation and an engaged electorate at that time, the chances of complete systemic breakdown are greater than they were in 2008, when the unthinkable almost happened. This time, there will be no bailout, because it will be the government going under.

Whether that's a good thing or not will be for historians to judge, but one thing's for certain: we cannot continue along this path much further without some kind of catastrophe. It's coming faster than anyone can imagine.

As for the markets, the major indices bounced along the flat line for most of the session, with the NASDAQ (where the highest risk stocks reside) taking the worst of it. There was a slight bounce after the Fed released the minutes from the last FOMC meeting, in which it was revealed that the Fed governors were torn between more stimulus and raising rates. There cannot be a greater divide of opinion, which, at such a critical time, is a very, very bad omen and portends more mistakes by the Fed straight ahead.

That bounce lasted only a few minutes as stocks fell to their worst levels of the day into the close. It was truly ugly and sets up some very dicey trading for the remainder of the week. Even as earnings are rolling out from a variety of companies, interpreting economic data is going to be a challenge. PPI is out on Thursday along with initial unemployment claims, and Friday, a veritable stew of data comes forth: CPI, Industrial Production, Capacity Utilization, the Empire Index for NY state and the Michigan gauge of consumer sentiment. Things could get very messy down on the trading floors. Good time to stock up on tissues and handkerchiefs because there's likely to be a bit of sweating and some crying before the week is out.

Dow 12,446.88, -58.88 (0.47%)
NASDAQ 2,781.91, -20.71 (0.74%)
S&P 500 1,313.64, -5.85 (0.44%)
NYSE Composite 8,192.75, -35.98 (0.44%)

Declining issues outpaced advancers, 3806-2726. There were 56 new highs and 37 new lows on the NASDAQ. The NYSE showed 46 new highs and 37 new lows. Combined, there were 102 new highs and 74 new lows. Not much margin for error as the tide seems to be turning very bearish, very quickly. Today's volume was a bit perky, with much of it occurring in the final two hours' rush for the exits, another disturbing sign.

NASDAQ Volume 2,028,997,125
NYSE Volume 4,215,946,500

For those of us who drive combustion engine vehicles, another knife in the back from our friendly oil producers, who drove the price of WTI crude up another $2.28, to $97.43. Gold, however, made a new all-time high at $1,562.30, gaining $16.20 on the day. Silver added 35 cents to $36.10.

With gold and silver rising, stocks falling, and, by the way, the 10-year note down to a yield of 2.87% - from 3.12% a week ago - all signs point to a very rough patch dead ahead. The flattening of the yield curve is happening at an unprecedentedly rapid pace. The clowns in Washington better come to a deal soon, like tomorrow, because financial armageddon awaits. The same goes for the millionaire players and billionaire owners of the NFL. People are tired of gamesmanship and waiting.

Now is the time for decisive action.

Monday, July 11, 2011

Problems Abound: Jobs, Italy, Greece; Stocks in Retreat

Quoting from Friday's post: "Monday may, in fact, turn into a real blood-bath."

Well, it may not have been real blood, and it was more of a dousing rather than a bath, but stocks got hit pretty hard on Monday, following the less-than-impressive sell-off after the dismal non-farm payroll report which ended last week's rally in rather abrupt fashion.

The poor start to the new week was blamed - according to most pundits and exclamatory TV barkers - almost entirely on debt issues related to Italy, though there are more issues and problems popping up every day. The scapegoat Italians seem to be having the same problem most Western nations are: too much debt and not enough revenue.

What has the EU concerned is the not the size of the bailout which might be needed to shore up Italy's evolving debt crisis, it is the size of Italy's economy, the third largest in the European Union. Halping out smaller countries like Greece or Ireland are mere child's play by comparison. Italy is a nation of 60 million people, or, about 1/5th the size of the United States. That's a big problem, akin to having Texas, New Mexico, Arizona, Colorado, Wyoming and Louisiana all threaten to default on public debt at once.

The absolute fact of the matter is that the EU simply cannot go about printing up more Euros to bail out nation after nation. Sooner or later, the currency will become worthless and the nascent "grand experiment" of a unified Europe will fall completely apart. Already, there are signs of trouble in Germany, which has been acting - along with the US Federal Reserve - as the main funding source for bailout money, but in the end the major European banks will become victims of their own Ponzi scheme.

You see, money really doesn't grow on trees and just whipping it up out of thin air makes for instability and eventual anarchy. This is the situation in which we all are headed, and in a hurry. Would the financiers of the leading nations have confessed to their sins during the Lehman debacle in 2008, much of this would not be occurring, but, being the type of people who are prone to lie and cover up crimes and major blunders, world leaders would rather play this silly game of bailout rather than face the music (and jail time or guillotines).

Eventually, it's all going to implode into a global depression, rivaling or exceeding the pain and suffering of the 1930s. By some accounts, parts of the world, such as the Middle East, the Horn of Africa, certain counties in Georgia and Florida, along with Greece and Ireland, are already in a deep, never-ending depression. All that's keeping the rest of the world from falling apart is the non-stop printing of US dollars and the helping hand of uncle Ben Bernanke at the Fed.

While there are those who believe we in America will suffer a bout of hyper-inflation a la the Weimar Republic, the fact remains that wage growth is stagnant, money supply is insufficient to handle all claims in a mass default and the other income-producing part of the great capitalist triangle (money, labor, materials), that being materials, are still rather abundant.

We should all be preparing for the "great reset" in which everything becomes worth less than it was the day before, except maybe food, for that is the only requisite commodity essential to sustaining human life. One hates to be the messenger for bad news, but starvation and death may indeed become preferable, for some, to living under the thumb of a global police state in a condition of abject poverty. It's coming, and, as today's evidence and that of the past three years can attest, it's gaining momentum.

Incidentally, only eight stocks in the S&P 500 were winners today, and all 30 Dow components finished on the downside. Financials led the way, with Bank of America (BAC) and Morgan Stanley (MS) hitting new 52-week closing lows.

Here are the sad facts from fat-cat Wall Street:

Dow 12,505.76, -151.44 (1.20%)
NASDAQ 2,802.62, -57.19 (2.00%)
S&P 500 1,319.49, -24.31 (1.81%)
NYSE Composite 8,228.73, -181.46 (2.16%)

Losing issues trampled gainers, 5494-1122, the largest margin of losers to winners in quite some time, probably not since 2008. On the NASDAQ, there were, hard to believe, 49 new highs and 32 new lows. On the NYSE, a little closer to reality, 34 new highs and 30 new lows. The combined total of 83 new highs and 66 new lows masks the fact that many of the new highs were nothing but bear funds, inverse, triple leveraged ETFs and other derivative products. Even looking through the listings of new highs on the NYSE shows most stocks finishing well below their stated 52-week high. Surely, we can trust the Rupert Muchdoch-owned Wall Street Journal to not fudge statistics, right?

Volume was pretty weak, even for a massive down day, though this low level of trading has by now morphed into a new normal, so lower and lower volume figures should not be cause for alarm as market participants exit or are destroyed.

NASDAQ Volume 1,778,419,250
NYSE Volume 3,843,530,000

WTI crude oil traded down again, losing $1.05, to $95.15. Gold gained $7.60, to $1,549.20, close to an all-time high, though silver was punished once more for attempting to be regarded as money, dipping 85 cents, to $35.70 per ounce.

Not all the news was bad... well, yes it was, as Alcoa (AA) reported after the bell that it missed LOWERED estimates by a penny, at 32 cents per share as opposed to the consensus of 33 cents. Share were lower all day, preceding the after-hours announcement and continued to slide.

That is not a good way to kick off 2nd quarter earnings season.

Friday, July 8, 2011

Dismal, Huge Miss on Payrolls; Market Response: So What?

Normally, a NFP (non-farm payroll report like the one released today would have sent investors fleeing for a place to hide and stocks into a free-fall, but, since the people who manage YOUR money could care less if any American has a job or whether or not America even survives as a country, the response from market participants was a wide-open yawn.

Following Thursday's overly-rosy ADP private payroll report (+157,000 on expectations of +70,000), the BLS could produce a report showing only 18,000 net new jobs created in the month of June. Expectations ranged from as high as 125,000 (Mark Zandi) or (175,000) Joe Lavorgna to a low of 88,000 (Rick Santelli), though both proved to be too high by orders of magnitude.

On top of the already dismal-sounding report for the current month, the numbers for April and May were also revised lower, by a total of 44,000 more jobs that were not created. Adding to the catastrophe were the lower readings on hourly earnings, which fell 0.01, and average workweek, which dropped from an already low 34.4 to 34.3. So, not only are there not enough new jobs being created to even keep pace with nominal growth in the labor force, the jobs people do have are barely able to provide sustenance and are getting worse.

The immediate response was for the Dow futures to reverse, from +35 to -123 in a matter of minutes. The 10-year note fell from 3.18 to 3.05 in a flash. However, the pre-market shock and awe were the worst the market would feel from one of the worst post-crash jobs reports ever, and incidentally, the second in a row.

Markets opened lower, but not dreadfully, and as the day wore on the Dow sank by as much as 150 points but recovered over the course of the afternoon to close down a mere 62 points. This, after a two-week run-up of over 900 points on the Dow and similar percentage gains on the other major indices.

It should come as no surprise that Wall Street is a crooked place run entirely by deceitful individuals whose only purpose is to pad their wallets. This shameful example of market manipulation ought to serve as a wake-up call to those not already fully aware that when anyone in Washington talks about a "recovery", they mean it only for bankers, their clients and the corporations listed on the exchanges and not the average working man or woman.

Simply put, Wall Street and the US economy are a complete farce.

Dow 12,657.20, -62.29 (0.49%)
NASDAQ 2,859.81, -12.85 (0.45%)
S&P 500 1,343.80, -9.42 (0.70%)
NYSE Composite 8,410.19, -65.94 (0.78%)

Declining issues did lead advancers, 4520-1998, though on the NASDAQ there were 62 new highs and only 22 new lows. There were 57 new highs and 15 new lows on the NYSE, which puts the combined total at 119 new highs and 37 new lows, a far cry from the overly positive figures just yesterday. Volume was absolutely destitute, close to being the worst of the week, in a week that was already under-traded. The volume numbers attest to the fact that there are fewer and fewer market participants every day and only those who chose to sell today after the opening minutes of trading were the real losers, though in the end, with manipulated, tightly-controlled markets, nobody ends up a winner. Monday may, in fact, turn into a real blood-bath.

NASDAQ Volume 1,576,445,500
NYSE Volume 3,554,617,250

It was a good day for automobile drivers as the price of crude oil fall sharply, down $2.67, to $96.20. It was also profitable to be in gold, as the price increased $11.00, to $1,541.60, but not so great for silver holders, as the price is again highly suppressed, gaining only a penny, to $36.54.

The lesson to be learned from today's tenor of trading is not only that numbers cannot be trusted, but those who use them can be trusted not at all.

Thank goodness it's the weekend and we can forget all the thievery, trickery and false hope for at least a few days.

Thursday, July 7, 2011

ADP Surprise Sends Stocks Into Stratosphere

At 8:15 am today, it was game, set, match for the bulls, because the ADP employment report for June showed an increase of 157,000 jobs, more than double the 60-70,000 most economists were expecting. A surprise this large occurs seldom, despite the fact that economist "experts" are generally nothing more than professional guessers, so, the futures leapt forward and stocks opened the trading day strong to the upside.

Incidentally, initial unemployment claims came in at 418,000, the 13th straight week over 400,000, though the market shrugged that data off completely the moment it was released.

They stayed in positive territory for the remainder of the session, stretching the latest ramp-job bill run to eight days, though Tuesday and Wednesday of this week did see some deterioration.

With the government's non-farm payroll data due out at 8:30 am on Friday, there was little to fear into the close, as US markets put in another stellar performance. Stocks finished the day approaching the highs of the year (which are also three year highs, and in the case of the NASDAQ, nearly a four-year high), just two weeks after the gloom and doom crowd seemed to have set the tone for the rest of the year.

Now, this set-up, coming directly prior to earnings season, could be a mammoth double or triple top, but if it's not, expect the markets to go careening upwards without much resistance. Dow 13,000 is well within sight and there's nothing the Fed and the banks and the federal government would like to see more than some record-setting gains on the major indices.

Never mind that the equities game is as crooked and manipulated as they can possibly be, the idea is that the "wealth effect" will create more confidence in the average Joes and Janes, leading to more spending and a more robust economy. It actually could work, though there are doubters, especially the 15 million Americans who cannot find jobs, or the millions who have been foreclosed upon and subsequently lost their homes, or the 45 million on food stamps.

With those groups in consideration, there seems to be a massive disconnect between Wall Street and Main Street and it is precisely why a growing number of Americans have pulled out of stocks entirely and are investing in more down-to-earth investments like back-yard gardens, gold, silver and ammunition. This crowd does not trust the bailout queens of Wall Street nor the Sugar Daddies in the nation's capitol. Instead, they see a hollowed-out shell of a nation, pinning its hopes on paper pushers and overpriced, over-hyped securities that derive a major share of their profits outside the United States.

While a rising stock market may look good on paper, the inner workings of the US economy are badly damaged goods. States are struggling to meet budgets and there's been little to nothing done to address the root causes of the national slow-down: housing and jobs. we are living in a bifurcated economy and nation, and it is not likely to sustain itself well without some serious setbacks. But, for the time being, the status quo has carried the day, though its proclamations of recovery and prosperity (nobody actually saying that yet) don't ring true to many people.

Dow 12,719.19, +93.17 (0.74%)
NASDAQ 2,871.95, +37.93 (1.34%)
S&P 500 1,353.07, +13.85 (1.03%)
NYSE Composite 8,474.88, +78.40 (0.93%)

Advancing issues absolutely buried decliners on the day, 5126-1473. On the NASDAQ, 227 new highs and just 22 new lows. The NYSE had 287 new highs and 8 new lows, making the combined total 514 new highs and 30 new lows. These are the kinds of numbers that would signal a renewed bull market, indicating that there is more upside in the very near future, despite the low volume, which was at its high point of the week, not saying much.

NASDAQ Volume 1,793,291,000.00
NYSE Volume 3,860,334,750

Crude oil galloped ahead to the tune of a $2.02 per barrel gain, finishing at $98.67, which ensures high gas prices through the remainder of summer unless there's a sudden reversal (don't count on it). Gold posted a slight gain of $1.40, to $1,530.60; silver was up 62 cents, to $36.54, though it still seems range-bound and probably is, with the shorts still in control.

The gain in crude has outstripped the gains in the precious metals today, though it's difficult, if not impossible, to draw any sound conclusions from this except that the global central bank cartel likes higher oil prices much more than they like gold or silver. If they had it their way, gold and silver would not have any value at all.

Friday's non-farm payroll report should prove interesting, especially if it's an "official lie" of over 150,000 new jobs.

Wednesday, July 6, 2011

Market Struggles for Gains; Gold, Silver Continue Higher

US equity markets are, in a word, blah.

They struggled on low volume for a second consecutive day to find smallish gains, with nothing much to go on other than the Challenger, Gray and Christmas report on planned layoffs, which came out prior to the market open.

The report showed that planned job cuts were up by 5.3% as compared to June, 2010, another sign that the US job market is weak and may be deteriorating further.

With the ADP private employment report pushed back to Thursday, that's all investors, speculators and traders had to go on, which really wasn't much, but still managed to pull out gains in all but the NYSE Composite.

Things should get a bit more interesting in upcoming days and weeks, as first, the ADP report comes out prior to the market opening Thursday, then the big one, the BLS non-farm payroll survey on Friday. Following the weekend, it's straight into 2nd quarter earnings reports, kicked off by Alcoa (AA) following the close on Monday, July 11.

Of course, nobody wants to talk much about the stalemate in Washington over the debt ceiling. Republicans have tied it to a demand for deep budget cuts and no new taxes, while the Democrats seek to salvage their favorite hand-out, er, entitlement programs, financing them with an increase in taxes on top wage earners and the elimination of some tax loopholes.

These issues will remain in focus until somebody blinks, and it appears that everybody in the nation's capitol have their eyes wide shut whilst the nation careens into another recession, or, at best, an era of slow to no growth. Naturally, neither side will admit that the bigger issues of Medicare and Social Security need to be dealt with now, rather than later, but the usual posturing on both sides will almost certainly prevent any substantive discussions on what's eventually going to bankrupt the country.

Nonetheless, traders trudged on to moderate gains on Tuesday.

Dow 12,626.02, +56.15 (0.45%)
NASDAQ 2,834.02, +8.25 (0.29%)
S&P 500 1,339.22, +1.34 (0.10%)
NYSE Composite 8,396.48, -8.15 (0.10%)

Advancing issues led decliners, 3464-2920. On the NASDAQ, new highs led new lows, 143-28, and the same setup appeared on the NYSE, with new highs ahead, 159-12, putting the combined total at an unworldly 202-40. Volume, again, was very, very, excruciatingly weak.

NASDAQ Volume 1,602,326,250
NYSE Volume 3,613,122,000

Oil shed 24 cents on the NYMEX futures market, to $96.65, but the precious metals were where the action was for the second straight session. Gold finished $16.50 higher, at $1,529.20, while silver tacked on 51 cents, to $35.92. Seems there are people out there still who haven't bought into the whole "recovery" story we've been spoon-fed since Spring of 2009.

That's about all there is to know, that it's dreadfully slow, consumers are avoiding both shopping and stocks, and it's the middle of Summer. Head for the beach.

Tuesday, July 5, 2011

Stocks Stall While Precious Metals Soar

Well, that week-long, pre-holiday buying rush seems to have come and gone now that the three-day weekend has passed, which really isn't surprising, considering how vaporous and baseless the entire five days rally was.

Low volume, as usual, was the telling factor in the melt-up last week and now it's gone, maybe for good. There are no more suckers in the market, or at least not as many as there were a few years ago. One look at today's volume numbers will stamp that as fact. Today might go down as the lowest volume trading day of the year, though there have been so many, it may not, and besides, nobody's keeping score.

One the other hand, precious metals did astonishingly well. There seems to be another shift to safety underway and nothing is safer than gold, and maybe silver, if the price manipulation would ever cease.

Other than the obvious, there was little to report from the exchanges. One wonders how the CNBC anchors manage to stay awake on days like this.

Dow 12,569.87, -12.90 (0.10%)
NASDAQ 2,825.77, +9.74 (0.35%)
S&P 500 1,337.88, -1.79 (0.13%)
NYSE Composite 8,404.63, -20.85 (0.25%)

Advancing issues had a slim advantage over decliners, 3278-3231. On the NASDAQ, there were 149 new highs and 27 new lows. The NYSE new highs beat new lows, 173-7. Combined new highs: 322-34. As mentioned, volume was dismal.

NASDAQ Volume 1,569,571,875.00
NYSE Volume 3,676,082,750

The real action was in commodities. Oil surged again, gaining $1.95, to close the day at $96.89. Gold was boosted $30.10, to $1,512.70, while silver gained an inordinate $1.70, to finish at $35.41.

The world still waits for the congress and president to decide on whether or not to raise the debt ceiling. Both houses remain in session, even though the week is usually reserved for yet another undeserved week-long vacation. With any luck, congress will allow the government to borrow to its heart's content before the NFL settles their issues.

Truthfully, more people are concerned about the NFL season than the debt limit. Obviously, one can live without a functioning currency, but Sundays without pro football is an unthinkabel reality that nobody seriously wants to consider.

Friday, July 1, 2011

What a Week for Stocks; Metals, Not So Much

Once word that the Greek government was going to pass the severe austerity measures on its people, so as to get another $17 billion in loans from the EU/IMF, stock traders were treated to a rare "all green" week of trading, as though risk had been taken entirely out of the equation.

Even the end of QE2 and the regime of free money for primary dealers didn't slow down the express train to the upside in equities. It was truly one of the best weeks ever for US markets in terms of gains, logging in five straight days of positive returns.

Here's how they fared.

S&P 5001,268.451,339.67+71.22
NYSE COMP7,974.728,425.46450.74

On Friday, after closing out the second quarter with very positive vibes, stocks continued to rally on the first day of July and the third quarter with the best performance of the entire week, in hopes that there will not be many more natural disasters - such as Fukushima, Midwest tornadoes or Northwest floods - and that the messy situation in Greece is at least solved for now.

Apparently, there is little worry over when and whether congress will reach a deal on the debt ceiling, now that legislators have put off their usual Independence Day week-long recess, to supposedly work towards some kind of compromise on the matter.

Today's results:

Dow 12,582.77, +168.43 (1.36%)
NASDAQ 2,816.03, +42.51 (1.53%)
S&P 500 1,339.67, +19.03 (1.44%)
NYSE Composite 8,425.46, +106.36 (1.28%)

Advancing issues had their way, beating decliners, 5104-1468. NASDAQ new highs: 148; new lows: 26; NYSE New highs 168; New lows: 4. Combined: 316 new highs, 30 new lows. Volume was even softer than what has normally been a lightly-traded market, leading some to conclude (perhaps rightfully so) that the movements of stocks in the age of whirring computers and unsolvable algorithms are highly manipulated by the big brokerages.

NASDAQ Volume 1,604,401,500
NYSE Volume 3,721,877,750

While stocks were soaring along, commodities - with the notable exception of oil - took it hard. Crude oil futures declined 48 cents, to $94.94, after gaining most of the week. Gold finished at its worst level in six weeks, down $20.20, to $1,482.60, and silver was pounded down once more, losing $1.13, to $33.70, a loss of more than 3%.

By the way, just in case someone comes along and tries to tell you that oil is priced so high because we're running out of it, you do have the right to punch that person in the nose or kick in the groin, as appropriate. The worldwide collusion in the price of oil and gasoline to consumers has been going on for some time (a long time) and the "peak oil" theory is about as useful as science as an ace bandage is to a torn ACL.

In a word, it is "bunk." For more information, see and read the work of F. William Engdahl.

Seriously, do you really believe that those "fossil fuels" - coal, natural gas and oil - come from the remains of dinosaurs? Considering the amount that's been dug, mined, stripped, pumped and drilled out of the earth the past 200 years alone would lead one to believe that the Jurasic period was a shoulder-to-shoulder affair.