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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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October, Thursday 06, 2011

DOW +183= 11,123SPX + 20 = 1,164NAS + 46 = 250610 YR YLD 1.98%OIL  + 2.75 = 82.43GOLD + 6.10 = 1648.70SILVER + 1.43 = 31.94PLATINUM + 20.00 = 1507.00 The ECB increased aid to cash-strapped financial institutions today, but disappointed those expecting more drastic measures to combat slowing growth and address a deepening bank emergency. The E.C.B.’s restraint came in contrast to the action of the Bank of England, which announced another round of bond buying to support the slowing British economy. BOE is upping its quantitative easing from $200 billion to $275 billion.The pound fell against all major currencies after the announcement; the euro rose against the dollar. During his last news conference as E.C.B. president, Jean-Claude Trichet said that members of the central bank’s governing council had discussed a rate cut before concluding “by consensus” that inflation in the euro area — at 3 percent — was still too high. Mr. Trichet said the central bank expected “very moderate” growth ahead in “an environment of particularly high uncertainty.” The E.C.B. claims it does not have the power to save failing banks like Dexia or address deeper problems in the banking system, and its reserves that are too thin to absorb potential losses. That task belongs to governments. Bank stocks in Europe and the U.S. rallied. Treasury Secretary Timothy Geithner told a Congressional panel that U.S. financial firms had a “very modest” exposure to Europe’s debt problems. BACMS In the U.S., the Labor Department said the number of new …

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October, Wednesday 05, 2011

DOW + 131 = 10,939SPX + 20 = 1,144NAS + 55 = 2,46010 YR YLD = 1.90%OIL + .08 = 79.76DEC GOLD + 4.50 = 1646.10DEC SILVER + .17 = 30.52 Economic news: The September ISM Non-manufacturing index was at 53.0%, down from 53.3% in August. The employment index decreased in September to 48.7%, down from 51.6% in August. Note: Above 50 indicates expansion, below 50 contraction.  ADP reports private sector employment gained more than expected rising 91,000 in September. Economists had expected a gain of 75,000. Meanwhile, Challenger, Gray & Christmas says the number of planned layoffs at U.S. firms in September jumped to 115,730 last month, the highest in more than two years. The figure was more than double August’s total of 51,114. The reports come ahead of Friday’s monthly jobs report. The report might show a slight improvement as Verizon workers returned to their jobs, but otherwise, there is a strong chance the report will continue to disappoint. Let’s look at today’s banking news:  Three law firms are seeking participants in a class action law suit seeking damages from 13 lenders for alleged fraud against borrowers seeking Veterans Administration (VA) home loans.  The suit charges that the lenders charged fees for their loans which were unallowable under VA mortgage rules, an action that technically, according to the suit, invalidated the VA guarantee. The premise for the suit rests on a VA rule that certain fees typical to a real estate transaction i.e. attorneys’ fees or settlement closing fees are not allowed in closing a …

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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, Monday 03, 2011

DOW – 258 = 10,655SPX – 32 = 1,099NAS – 79 = 233510 YR YLD = 1.78%OIL – 1.09 = 76.52DEC GOLD + 7.70 = 1665.40DEC SILVER + .71 = 30.83 Stocks closed at the lowest levels in a year. Let’s start with some economic news here in the USA.  A report from the Institute for Supply Management showed stronger growth in. The index went from 50.6 in August to 51.6 points in September, showing expansion — a reading over 50 — for the 26th consecutive month; so a half year of expansion in manufacturing. But the index was still lower than a year ago and new orders contracted slightly, hinting at continued troubles ahead. Construction spending increased 1.4 percent in August, driven largely by gains in the public sector – mainly state and local government building projects. General Motors, Ford and Chrysler reported increases in sales of new vehicles last month, one of few areas of sharp growth in the domestic economy.GM – .45 = 19.73F – .30 = 9.37 Airlines were clobbered today. Some airline analysts came out with a fairly obvious observation; if the economy slows, then we might see a cutback in flying and the airlines might struggle. AMR, the parent for American dropped -.98 = 1.98; losing about one-third of its value today and looking like a candidate for bankruptcy.  UAL Continental – 2.27 = 17.11; US Airways – .87 = 4.63 (almost a 16% drop). So the economic news was decent, certainly not terrible, yet the …

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September, Friday 30, 2011

DOW – 240 = 10,913SPX – 28 = 1,131NAS – 65 = 2,41510 YR YLD = 1.92% OIL – 3.39 = 78.75DEC GOLD + 5.00 = 1622.30DEC SILVER – .43 = 30.08 The third quarter is history, ugly history. Let’s go to the Score Board: The MSCI All Country World Index is down 17% for the quarter. Stoxx Europe 600 down 17% for the quarter. The German, French and Spanish market indexes also recorded their biggest quarterly losses in nine years. The Dow Jones Industrial Average lost 12% for the quarter, the biggest percentage decline since the first quarter of 2009. The S&P 500 Index is down 14% for the quarter, and the month of September saw a 6% drop. The Nasdaq Composite lost 13% for the quarter. Some of the top performing sectors over the past 3 months include U.S. Pharmaceuticals – (This just makes too much sense; how many people have reached for the Zantax or Prilosec in the past 3 months? Wouldn’t you love to have the Pepto-Bismol franchise in lower Manhattan? ) New Zealand gained. Other sectors that posted positive results: Global healthcare, consumer staples, the Developed European countries (a little surprising maybe), Switzerland (although the past month has been down), Germany, Indonesia, Biotechnology, and US Consumer discretionary. Losing sectors included Peru, also global timber, clean energy, US broker dealers, North American Technology & Multimedia, Silver, China Small Cap and Israeli Small Cap. The S&P GSCI, the Commodities Index dropped 11% in the third quarter, and …

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September, Thursday 29, 2011

DOW + 143 = 11,153SPX + 9 = 1,160NAS – 10 = 2,48010 YR YLD 1.95%OIL +.84 = 82.98DEC GOLD – .80 = 1,617.30DEC SILVER + .38 = 30.52 Once again, Wall Street started the day with optimism and enthusiasm; the Dow Industrials jumped up about 260 points. Then the index slipped into negative territory. Then rallied into the close. The German parliament approved a revamped euro bailout fund. Under the plan, the EFSF will be enlarged to €440bn. The actual price tag will be much higher. It will also be given the ability to give “precautionary loans” to struggling European countries, buy EU government debt, and provide funding to shore up the capital reserves of European banks – you know the same banks that were 100% capitalized last week. Seven more euro countries still need to vote on the bailout, and the voting won’t finish until the end of October. For things to improve, a whole host of things need to go right but even a single mis-step could worsen the crisis even more.  A new Bloomberg survey shows 93% of investors think Greece will eventually default. It is widely accepted that the EFSF will be inadequate and will require radical enhancement virtually as soon as it’s approved. Last weekend US treasury secretary Tim Geithner was demanding a huge increase in the EFSF’s €440bn firepower. So, very soon, we’ll start to  hear about expanding the guarantees or insurance the EFSF will offer for creditor countries and even talking about …

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