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October, Tuesday 18, 2011

DOW + 180 = 11,577SPX + 24 = 1,225NAS + 42 = 265710 YR YLD – = 2.15%OIL +.39 = 86.77GOLD – 15.60 = 1656.10SILV +.24 = 32.14PLAT – 19.00 = 1535.00 Sometimes I wonder if I should even read the closing numbers – does it really matter that the Dow Industrials dropped a couple hundred points yesterday or that it bounced this morning? No; probably not. Maybe the daily scoreboard gives you some feel for the rhythm of the market, for the prevailing sentiment; then again, maybe not. Over the years, I’ve talked about trends in the market. One of my favorite phrases is that a trend in place is more likely to remain in place than it is to change – until it changes. Trends are not infinite. No pattern is perpetual. The greater the expectation, the more you should question the premise. And I’m reminded of the Mark Twain quote – History doesn’t repeat but it does rhyme. There’s a reason for this – it’s because we’re human and we have imperfect and selective memories. History rhymes because we put our unique human imprint on it, just enough to make minor alterations on the trajectory through time. You may remember a long ago wound, but a recent cut still stings and because it stings, it moves to the front of your thoughts and it colors your thinking; it might make you skittish; it might make you cautious; it might freeze you in your tracks; or maybe the …

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October, Monday 17, 2011

DOW –247= 11,397SPX –23= 1200NAS –52 = 261410 YR YLD – = 2.15%OIL – .11 = 86.27GOLD – 9.10 = 1671.70SILV – .36 = 31.90PLAT – 3.00 = 1559.00 Let’s start with a look at Wall Street. We start with a Merger Monday – normally a positive for Wall Street – today, not so much. Kinder Morgan agreed to acquire El Paso Pipeline Partners in a deal that valued the company for $20.7 billion and including debt at $37 billion. The deal is expected to close by the second quarter next year. The combined company is going to be one of the largest transporters of crude oil, natural gas and CO2. AmeriGas Partners agreed to acquire the propane operations of Energy Transfer Partners,for $2.9 billion. The transaction is expected to close in late 2011 or beginning of 2012. Brigham Exploration Company agreed to merger with Norway based Statoil ASA. Brigham will receive $4.4 billion in cashand the offer expected to commence by end of this month. With the purchase the company will extend its shale gas fields to Montana and North Dakota based fields and will deepen its involvement in unconventional oil exploration. Merger activity was not enough to lift Wall Street, in large part because we still have some problems in Europe. The G-20 was meeting in Germany over the weekend. They wrapped up their meeting saying they would likely adopt a five-point plan next weekend when they meet in Brussels. The plan would likely include recapitalizing banks and …

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October, Friday 07, 2011

DOW – 20 = 11,103SPX – 9 = 1,155NAS – 27 = 2,47910 YR YLD = 2.06%OIL – .84 = 81.75GOLD – 11.60 = 1639.70SILV -.66 = 31.37PLATINUM – 18.00 = 1502.00 The U-6 unemployment rate — including people who must settle for part-time jobs or have given up searching entirely — has SURGED to 16.5%, the worst this year! FORWARD LOOKING indicators of employment are deteriorating. Consumers just polled by the Conference Board said it was harder to find work now than at any point since 1983! And job placement firm Challenger, Gray & Christmas tracked more than 115-thousand corporate layoff announcements last month alone, the most since April of 2009. The headline unemployemnt rate held steady at 9.1%. The economy added 103,00 jobs last month. That is not enough jobs to lower the unemployment rate. The August number was revised from zero job gains to 57,000. In September, the private sector added 137,000 jobs — decent but nothing to write home about — while the government sector cut 34,000 jobs. Since January 2010, the private sector has added 2.556 million jobs while government has cut 503,000. In January 2010, 82.6 percent of payroll jobs were in the private sector; today, the total is 83.2 percent. Meanwhile, the Federal Reserve reported total borrowing dropped $9.5 billion in August. In July, borrowing increased $11.9 billion. The overall decline lowered total borrowing to a seasonally adjusted $2.44 trillion. Borrowing is just 2.1 percent higher than the recent low hit in September of …

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October, Tuesday 04, 2011

DOW + 153 = 10,808SPX + 24 = 1,123NAS + 68 = 240410 YR YLD = 1.78%OIL + 2.47 = 78.14Dec Gold + 11.70 = 1627.70 Dec Silver + .27 = 30.11 You’ve probably heard that old rhyme – “Sell in May and go away”. The thinking is that May through October represents the six worst months in the market. If you took $10,000 and invested in stocks 60 years ago and you just invested from November to April, your investment would have grown to $527,288. If you invested from May through October, you would have lost $474. So, today’s lesson is “do not invest when stocks go down, but its okay to invest when stocks go up. Wow. This investing stuff is easy. The S&P 500 hit a high of 1370 on April 29, today it closed at 1096 – marking a 20% decline; the technical definition of a bear market. The explanation offered daily is the European situation is what’s taking a toll on Wall Street. David Goldman, the former head of credit research at Bank of America says the situation in Greece is hopeless, but not serious; yea, that’s a good line. Ha ha. He contends this is not a rerun of the Lehman Brothers collapse in 2008. Nobody knew then what lurked on the balance sheets of major banks in terms of mortgage derivatives, least of all their chief executives, who were particularly clueless. Really? I remember when Dick Fuld , the former CEO of Lehman …

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October, Friday 14, 2011

DOW + 166  = 11644SPX  + 20 = 1224NAS +47 = 266710 YR YLD +=2.23%OIL +3.11 = 87.34GOLD +13.20 = 1680.80SILV +.34 = 32.26PLAT + 23.00 = 1557.00 Reminder: Financial Balance with David Harris starts Wednesday. Open Phone Friday. Eat the Bankers – buy the book before they make it into a movie Sunday – Hard Money Watch with guest Jim LilesMonday – Our scheduled guest on the Review will be Dr. Ravi Batra The Commerce Department said retail sales rose 1.1 percent in September, with strong auto purchases providing a big boost. Sales for August and July were revised higher as well. The University of Michigan Consumer confidence survey dropped to 57.5 for October – down from 59.5 in September. The G-20 finance ministers and central bankers are meeting for the next couple of days in Paris. The expectation is that they will not completely resolve the European economic crisis, but they won’t allow everything to implode. One idea being floated was to double the size of the IMF’s bailout fund. Treasury Secretary Timothy Geithner and his Canadian and Australian counterparts poured cold water on the idea. The IMF’s dominant shareholders, including the United States, Japan, Germany and China are content that the fund’s $380 billion worth of resources is enough. It looks like the plan is to make the Euro-banks accept bigger losses on the Greek debt and then leverage the EFSF to recapitalize the banks. The more the banks lose, the more they’ll get bailed out. Standard and …

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October, Thursday 13, 2011

DOW – 40 = 11478SPX – 3 = 1203NAS + 15 = 2620 10 YR YLD – = 2.16%OIL – 1.10 = 84.47GOLD – 7.90 = 1666.60SILV – .76 = 31.92PLAT – 16.00 = 1539.00 It’s earnings season and today it felt a little like rabbit hunting season. Today’s rabbit was JPMorgan Chase; the first major bank to report. They posted profit of $4.3 billion, or $1.02 per share, topping estimates of 91 cents per share but down from $4.4 billion in profit from the third quarter a year ago. Apparently, profit of more than $1 billion per month just isn’t enough. Of course, I look at the big banks’ earnings and I just don’t believe what I see any more. Part of JPMorgans earnings was largely due to an accounting quirk related to the bank’s debt falling in price. According to the Financial Times, the so-called debt value adjustment added 29 cents a share to JPMorgan’s after tax earnings, boosting its net earnings to $1.02 per share. Are the earnings based on mark to market or mark to make believe? Do we really have any idea what the true liabilities are? How many toxic assets still remain on the books? What is their true exposure to a European contagion? Do they just make this stuff up? What would happen if the Occupy Wall Street protesters swarm over Jamie Dimon’s house like a swarm of locust? Fitch Rating placed bank of America, Morgan Stanley, and Goldman Sachs on review for …

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October, Wednesday 12, 2011

DOW + 102 = 11,518SPX + 11 = 1,207NAS +21 = 2,60410 YR YLD + + 2.22%OIL – .84 = 84.73GOLD + 11.30 = 1675.50SILVER  + .44 = 32.68PLAT + 27.00 = 1555.00 Did you see them this morning? I did. I spotted one at the gas station. I stopped at the post office and saw a couple there. Stopped for a coffee and there were a couple of tables full of them. They’re easy to spot – their eyes have that glazed over look; their faces are scrunched in a desperate frustration; their hands shake and their fingers twitch; they talk but no one answers them. Yes, this is the horrible fate of Blackberry smart phone users – Research in Motion confirms there has been a service disruption – they claim the problem started in Europe, some switch that didn’t switch properly, there was a failure, and then like so many dominos falling, the European contagion spread to the United States. Why does that sound so familiar? European Commission President Jose Barroso called for a reinforcement of crisis-hit banks, the payout of a sixth loan to Greece and a faster start for a permanent rescue fund to master Europe’s debt woes. Barroso urged a “coordinated approach” to deliver a “significantly higher capital ratio of highest quality capital” for banks, while offering government funds only as a last resort. Slovak parties reached an agreement to approve Europe’s enhanced bailout fund, paving the way for a repeat vote in the coming …

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October, Tuesday 11, 2011

DOW – 16 = 11,416SPX + a fraction = 1,195NAS + 16 = 258310 YR YLD +=2.16% OIL – .57 = 85.24GOLD – 12.70 = 1664.20SILVER + .10 = 32.24PLAT – 5.00 = 1525.00 Wall Street lost its focus today. Instead of a laser-like concentration on the Rumor of the Day, Wall Street started thinking about Earnings Reporting Season where hope springs eternal and Alcoa takes its proper alphabetical position as the market leader. The aluminum producer posted net earnings were $172 million, or 15 cents per share, compared with $61 million, or 6 cents per share, a year earlier. Not bad, but income from continuing operations was also 15 cents per share, but down from 28 cents per share in the second quarter. Revenue rose 21 percent to $6.4 billion from a year earlier, but was 3 percent lower than the second quarter of this year as metals prices slumped sharply. Today, Alcoa was up .21 = 10.30, but in after hours trading Double-A slipped .50 = 9.80. So, earnings reporting season is underway; a reflection of the economy; and the market gave us a nice little rally over the past few days – just enough for you to get your shorts on.  Meanwhile, the Euro-Rumor of the Day didn’t find a good rumor to lift the markets. The European Stability Financial Stability Fund must be ratified by all 17 eurozone countries; so far 16 have signed off; today Slovakia’s government lost a confidence vote on the plan; so …

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October, Monday 10, 2011

DOW + 330 = 11,433SPX + 39 = 1194NAS + 86 = 256610 YR YLD += 2.07%OIL +2.77 = 85.75GOLD + 37.20 = 1675.90SILVER +.77 = 32.14PLAT + 29.00 = 1523.00 I must admit, they are rather strange; the little rallies we’ve seen lately. With every little rumor of the day, the markets jump up. There is the old saying: the market climbs a wall of worry. What’s the worry? The overriding worry has been that Europe will fall over and destroy the world economy. According to the Sir Mervyn King, Governor of the Bank of England we are in the midst of the most serious economic crisis we’ve ever seen. King holds the comparable job to Ben Bernanke, head of the British Central Bank. King explained why the Bank of England decided last week to pump money into the economy. (clip – http://www.telegraph.co.uk/finance/financialcrisis/8812260/World-facing-worst-financial-crisis-in-history-Bank-of-England-Governor-says.html) And by pumping money into the economy we mean flying a helicopter above the City and shoveling out Pound notes on investment bankers. That is the only thing England could do, a fresh round of quantitative easing. If not then the entire world would have been paralyzed in fear. (Obama clip – Fear) The pure serendipity to survive the most serious economic crisis ever, to not just survive the weekend but enjoy a little football – that alone would be reason enough for a one hundred point gain on Wall Street – but then we got the Daily Rumor. German Chancellor Angela Merkel and French President …

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October, Friday 07, 2011

DOW – 20 = 11,103SPX – 9 = 1,155NAS – 27 = 2,47910 YR YLD = 2.06%OIL – .84 = 81.75GOLD – 11.60 = 1639.70SILV -.66 = 31.37PLATINUM – 18.00 = 1502.00 The U-6 unemployment rate — including people who must settle for part-time jobs or have given up searching entirely — has SURGED to 16.5%, the worst this year! FORWARD LOOKING indicators of employment are deteriorating. Consumers just polled by the Conference Board said it was harder to find work now than at any point since 1983! And job placement firm Challenger, Gray & Christmas tracked more than 115-thousand corporate layoff announcements last month alone, the most since April of 2009. The headline unemployemnt rate held steady at 9.1%. The economy added 103,00 jobs last month. That is not enough jobs to lower the unemployment rate. The August number was revised from zero job gains to 57,000. In September, the private sector added 137,000 jobs — decent but nothing to write home about — while the government sector cut 34,000 jobs. Since January 2010, the private sector has added 2.556 million jobs while government has cut 503,000. In January 2010, 82.6 percent of payroll jobs were in the private sector; today, the total is 83.2 percent. Meanwhile, the Federal Reserve reported total borrowing dropped $9.5 billion in August. In July, borrowing increased $11.9 billion. The overall decline lowered total borrowing to a seasonally adjusted $2.44 trillion. Borrowing is just 2.1 percent higher than the recent low hit in September of …

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