Friday, August 26, 2011

Wall St Loves Bernanke's Non-Answer

It seems that Wall St. is convinced that the Fed will do something at the September FOMC meeting. They loved Bernanke's non-answer answer, and are convinced that more Fed support is just around the corner.

Extreme Volatility

Bernanke disappoints -- or does he?

GDP Weakness Edges U.S. Closer to Recession

Europe is literally right on the edge of recession, with GDP barely in the positive, and a likely next-month revision that will push them over the edge.

Here from Zero Hedge on US GDP:
The first revision to Q1 GDP printed at 1.0%, down from the preliminary Q2 GDP print of 1.3%, and as expected was worse than Wall Street consensus of -1.1%, although it was certainly not as bad as the miss to the preliminary number.

Stocks have dipped into the red as a result, but only moderately.

Next up: Ben Bernanke's Jackson Hole speech in just over an hour.

Thursday, August 25, 2011

Bears Win Today!

But there are still 15 minutes left in the session, and just about anything could happen today!

Extreme Swings

Extreme swings like these make it a time to sit aside until order returns.

TED Spread Forebodes Ill Market Winds

Hold onto your hat — it could get blustery in the financial markets.
Why? Because the so-called TED-spread is spiking.
It measures stresses in the banking system. The higher it is the more stress there is in banking system.
Be warned stress never just stays between the banks. It usually reaches the so-called real economy in fairly short order. That’s where you and I live.
Over the past month the TED-spread has risen steadily to 32 yesterday from 16 at the end of July, levels not seen in way more than a year. That’s still well short of the extreme levels seen in 2008-2009 when it reached 463.
Be warned though, it can expand quickly so keep a close eye on it.
This somewhat obscure metric is easily calculated. Take the 3-month LIBOR rate (the rate at which banks lend to each other) and subtract the 3-month t-bill rate (the rate at which the government funds its short term borrowings.)

Stocks Break Lower; Buffett's Bad Bet?

S&P futures down 20, Dow off about 150.

Choppy Market Searches for a Bottom

Once the 15-minute candle closes above the EMA, it will be time to go long again.

And Now, a Bounce

Selling Accelerates

I'm still expecting a bounce, but not holding my breath.

Classic Head Fake

Unemployment claims surged, but stocks attempted to surge also, in a classic head fake. It would be difficult to make a case for buying in that situation, but they will. I would be surprised if the buying doesn't continue today.

Wednesday, August 24, 2011

More Seesaw Action Pulls Stocks Positive Again

Stocks Go Negative

After S&P futures were up 15 points, stocks turn red.

Another Seesaw Day

Europe Woes Weigh, Defense Spending Cuts Affect NATO

Tuesday, August 23, 2011

Fed Rumor Sparks Powerful Rally

Rumors that the Fed is intervening in the S&P futures market has fueled a strong rally despite more negative economic news.

Margin Increases Hit Gold

More Bad News

But stocks are rallying now!

from Zero Hedge:

And so the double dip confirmation resumes, with the Richmond Fed printing at -10, the lowest since June 2009, well below consensus of -5, a collapse from June's -1, and the lowest since June 2009. From the report: "In August, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — declined nine points to -10 from July's reading of -1. Among the index's components, shipments lost sixteen points to -17, and new orders dropped six points to finish at -11, while the jobs index inched down three points to 1." And more: "Other indicators also suggested additional softening. The index for capacity utilization declined eight points to -14 and the backlogs of orders fell seven points to end at -25. Additionally, the delivery times index moved down twelve points to end at -4, while our gauges for inventories were virtually unchanged in August. The finished goods inventory index held steady at 17 in August, while the raw materials inventories index added one point to finish at 19." And the final nail in the economic coffin was New Home Sales which came at 298K, down from 312K upward revised prior, and missing the consensus of 310k: the lowest in 5 months. "Housing data over the past three months indicates that there is little appetite in the consumer sector to take on the risk of purchasing a home at a time when prices are likely to decline further,’’ says Bloomberg economist Joseph Brusuelas. As Bank Of America (RIP) said yesterday, one false word out of Beranke on Friday, and we will see what could possibly be the most epic market crash ever. For those wondering why stocks surged on this horrible news: look no further than the central planners in the Marriner Eccles building who are now expected to do "the right thing" for stocks.

Recurring Theme - Back to Flat

Collapse Continues

It will be interesting to see what happens when the market opens in a few minutes.

Is the Fed Buying the Stock Market?

If true, this would be an unprecedented market manipulation by the Fed. There is no free market left!

excerpt from Phoenix Capital Research via Zero Hedge:

I found it interesting that the New York Post published a story containing the following quote just 3 hours before the post-FOMC market ramp job started.

Back in October 1989, a guy named Robert Heller, who had just quit his post as a Fed governor, suggested that the government should purchase stock index futures contracts to calm the markets in times of distress.

"The Fed could support the stock market directly by buying market averages in the futures market, thus stabilizing the market as a whole," Heller wrote in an op-ed piece in The Wall Street Journal after saying the same thing in a little-noticed speech. "The stock market is certainly not too big for the Fed to handle."…

This is a rather odd turn of events… a former Fed official urges the Fed to step in and buy the stock market… just three hours before the markets mysteriously reverses and rallies hard on no real news of note.

This begs the question… did the Fed buy the market to put a floor under the collapse? There’s no telling for sure. But it’s rather odd that this article came out just three hours before the market magically reversed and exploded higher

If the Fed did actively buy the stock market to try and put a floor under it, we can assume three things:

1)   The Fed is becoming truly desperate
2)   The Fed realizes QE isn’t helping
3)   QE 3, if it arrives, will be coming later down the line

If the Fed did in fact buy the market two weeks ago, then the Fed is getting extremely desperate. We know the Fed has been supplying juice to key Wall Steet firms who then bought the market, but never before has it been so obvious that the Fed itself may have been buying the market.

Remember since March 2009, QE has been the primary tool the Fed used to deal with the Financial Crisis. QE 1 was something of a success in that in restored investor confidence in the system. However, as I’ve noted in previous articles, by the time we got to QE 2, the negative consequences of QE (inflation) far outweighed the positive consequences (stocks rising).

So the fact the Fed did not announce QE 3 two weeks ago but chose to buy the market (at least it looks that way), indicates then we’re are DEFCON 1 RED ALERT for the entire financial system as it indicates that the Fed is abandoning its more traditional monetary tools and simply trying to buy the market it means the Fed is losing control of the system in a big way.

It also indicates that the Fed realizes that the benefits of QE come at too high of a cost for it to engage in more of this for now. Instead, the Fed will save QE 3 for a little further down the road as a final Hail Mary pass.

Which brings me to the most important point from yesterday’s Fed FOMC: there were three dissenting votes (an 18 year high). This tells us that Bernanke’s “inflate or bust” mentality is coming up against serious friction at the Fed. And it also tells us that there will be fierce resistance to QE 3 if the Fed chooses to unveil it down the road.

The take home point here is that the Fed is not as market friendly as before. There is growing dissent amongst Fed officials. And we’re beginning to see signs of desperation.

In plain terms, the situation in the markets right now is very VERY dangerous. It is easily the most dangerous market I’ve ever seen. We are going to see greater losses and sharp rallies. But the overall trend is now down.

Sure LOOKS Like Another Bull-Bear Day!

Gold Breaks Through $1900 Barrier, Backtracks

Gold is trading this morning around $1875.

Another Bull-Bear Day?

This appears to be a theme and variation in the past few days. Throughout the night, the bulls are in charge, but when the market opens, the bears are in charge.

Monday, August 22, 2011

Consumer Confidence "Deteriorated Sharply", Expected to Fall Further

Is it any wonder that stocks have stagnated today?

(Reuters) - Consumer confidence has fallen further after weeks of intensified economic concerns and broad stock market declines, and Conference Board data due later this month could be even weaker than current projections suggest, Consumer Edge Research said on Monday.
Readings from high, middle and low-income consumers all deteriorated sharply, due mainly to dramatic declines in outlook, the independent equity research firm said.
The firm's Consumer Economic Index is now at 45.4, down 10 percentage points from July and down 1.5 points from the 46.9 level it reported on August 10. Two days after that report, the Thomson Reuters/University of Michigan's preliminary August reading showed that U.S. consumer sentiment had fallen to its lowest point since May 1980.
The 45.4 reading is the lowest since Consumer Edge Research began its index in March 2010.
Consumer Edge Research forecast that the Conference Board's full-month Consumer Confidence Index would deteriorate 8 to 10 percentage points from an unadjusted 59.5 in July when its report is issued on August 30.
As of Friday, consensus was calling for a 2.5 percentage point decline, "so we believe there is downside risk to current expectations," Consumer Edge Research said.

Back to Dead Flat for the Day!

S&P has given up 25 points!

Selling Continues

Say It Ain't So! Selling At the Open?

Gold Blasts Old Record, Sets New One

Just under $1900/oz.

Near Overthrow of a Dictator is the Only News, So Likely to be Another Meltup Day

Since the only news is that of Gaddafi near overthrow, and not much else, the market is using this as an opportunity buy again. S&P futures are up about 20 points on just the news of imminent ouster of the Libyan dictator. Even Europe loved the news, rallying at the beginning of the European market open. They are getting a one-day reprieve from their woes. However, nothing can save them from the fact that they have dug for themselves a debt bottomless pit.