Tuesday, July 14, 2009

The banks will lead us to prosperity!

Greetings good citizen,

How about those markets? Here in the wake of reports that investment banks are screwing the public with software designed to ‘front run’ the markets…oh, wait a minute! It’s not the investors who are acting like idiots, it’s the flippin’ investment banks demonstrating what their software can do!

I mean, who else is ‘soft’ enough to buy financials when foreclosures and loan/credit card defaults are going through the roof at a higher rate than ever?

Worse, guess whose money they’re using to do it?

This is almost as bad as the ‘unemployment numbers, where we have 650,000 a WEEK being laid off and yet the ‘MONTHLY’ number comes in at around 400,000…what the hell do you suppose happened to the 2.5 million people that didn’t show up in the report?

Did they all start their own businesses? Because that’s what the BLS expects you to believe!

That or they all succeeded in landing other jobs. The ‘local rag’ has a circulation of roughly a half a million and they run, on average, nine, yes, nine freaking jobs a day…which may add up to fifteen ‘unique’ jobs over the course of a week.

Is this just me or does anyone else notice that these numbers don’t add up?

Okay, I’m back, it’s after midnight and I learned on my ride home that it is now official, today’s big winner was…Goldman Sachs, what a surprise!

I’ll try to rein it in a couple of notches and proceed directly to tonight’s offering

Stocks Move Higher Ahead of Bank Earnings

Published: July 13, 2009

Investors drove stocks higher on Monday as optimism over the coming bank earnings reports spread through the wider market.

Shares of Goldman Sachs rose more than 7 percent and Bank of America posted a similar gain to lift the market despite some weakness in the energy sector. Investors were encouraged after the prominent banking analyst Meredith Whitney gave Goldman a “buy” recommendation. The New York Times reported over the weekend that the firm recorded more than $2 billion in trading profits in the second quarter, a stunning rebound just half a year after the financial crisis crippled Wall Street.

After an early dip, the stock market moved ahead briskly as confidence spread from financial stocks to just nearly everything else. Hedge funds and institutional investors, not wanting to be caught on the wrong side of a bet, quickly covered their short positions after hearing the news from the financial sector.

By Monday afternoon, the Dow Jones industrial average was up 148 points, or 1.8 percent, while the Standard & Poor’s 500-stock index was up 2 percent. [The Dow ‘closed’ at 185.]

The market’s rally came as welcome news after several weeks of losses threatened to dash Wall Street’s hopes that the Obama administration’s $787 million stimulus plan would be adequate to revive the economy. A slew of strong earnings reported in the coming days would deflect some of those doubts. [Yes they would…but it ain’t gonna happen.]

Among the companies announcing their results this week, Goldman Sachs is set to report on Tuesday and JPMorgan Chase on Thursday. Bank of America and Citigroup wrap up the week on Friday.

Investors will also look to results from blue chips Johnson & Johnson, I.B.M., Intel and General Electric for clues on the economy’s direction. [What do these four companies have in common? That all do a bulk of their business overseas…not that this will ‘save’ them.]

And while Goldman may clearly emerge to be Wall Street’s best performer in the last quarter, analysts sense a good week ahead for financial companies. [If you set aside the landslide of losses that are due to hit them very soon.]

“The bar has been set pretty low so it would seem there’s a better chance of an upside surprise,” said Alan Gayle of Ridgeworth Capital Management. “But a lot of focus is going to be in the details.”

Investors will be paying attention to how efficiently lenders are generating profit while covering for potential losses.

“They want to know who can generate sales in a tough environment,” Mr. Gayle said. “That’s where you’re going to see the separation of the wheat from the chaff.”

Meanwhile, shares of the CIT Group was down about 7 percent, after falling more than 20 percent earlier in the day. The New York-based lender urged regulators over the weekend to allow it to issue F.D.I.C.-backed debt to stave off a looming liquidity crisis, but the government appears unconvinced that CIT’s collapse would widely damage the economy. Treasury Secretary Timothy F. Geithner told reporters in London that he was monitoring the situation and that the federal government had “the authority and the ability” to confront the issue.

Gold surged briefly in late-day trading after investors emboldened in the equities market pulled out of dollar-denominated bonds. The dollar often moves inversely with the precious metal. Gold for August delivery rose $10, to $922.50 an ounce, on the New York Mercantile Exchange’s Comex division.

However, “conditions were a bit thin,” noted James Steel, a commodities analyst at HSBC.

Trading volume in European equities was similarly slow on Monday, with many investors taking a long weekend before the French national holiday of Bastille Day on Tuesday. [Sell in May then go away…]

The DJ Euro Stoxx 50 index, a barometer of European blue chips, gained 2.8 percent, while the FTSE 100 index in London rose 1.8 percent. The CAC-40 in Paris rose 2.3 percent, and the DAX in Frankfurt gained 3.2 percent.

Philips, the Dutch electronics and lighting manufacturer, was among the notable gainers after the company posted a stronger-than-expected profit and said it saw signs of improvement in its business. Its shares rose 7.3 percent in European trading.

Asian shares were sharply lower. In Tokyo, the Nikkei 225 stock average dropped 2.6 percent. The decline left the Japanese market benchmark up just 2.2 percent for the year, after it had been up as much as 12 percent in June.

The main Sydney market index, the S.&P./ASX 200, fell 1.5 percent. In Hong Kong, the Hang Seng index dropped 2.6 percent, and the composite index in Shanghai was off 1.1 percent. Taiwan’s benchmark index and the Kospi in South Korea fell 3.5 percent each.

Bond prices fell on Monday afternoon. The yield on the benchmark 10-year Treasury note, which moves in the opposite direction of the price, rose to 3.35 percent, from 3.30 percent late Friday.

In the commodity markets, crude oil futures for August delivery fell 19 cents, to $59.70 a barrel.

The dollar was mixed against other major currencies. The euro rose to $1.3987 from $1.3936 late Friday in New York, while the British pound edged up to $1.6218 from $1.6212. The dollar rose to 92.76 yen from 92.54 yen, and it fell to 1.0830 Swiss francs from 1.0865 francs.

A real revival in global financial markets could take some time to unfold, analysts said.

“We are fairly confident on balance that we are on the brink of a cyclical upswing which should boost the global economy through to 2010,” Jan Amrit Poser, chief economist at Bank Sarasin in Zurich, wrote in a note. [A note to whom, we can only wonder?]

“Whether this will develop into a self-sustaining recovery will only become clear in 2010,” he wrote. “The return to positive growth from the second half of 2009 onwards should not, however, be misinterpreted as a sign that the worst economic crisis in 80 years is finally over. For the inventory cycle to revive, end-consumer demand must stabilize first.”

Sentiment was damped by a report from the Organization for Economic Cooperation and Development showing that the unemployment rate in its 30 member countries averaged 8.3 percent in May 2009, up 0.3 percentage point from April and 2.4 points higher than in May 2008. The jobless rate in both the United States and in the 16 countries of the euro zone stood at 9.5 percent in May 2009.

This is a pretty bizarre turn around here good citizen as most so-called experts are forecasting unemployment to keep increasing until the end of 2010. I think a more ‘telling’ sign is the lack of ‘capitulation’ in the stock markets.

Stocks won’t ‘bottom’ until you can’t give them away. While we should already be there by now there is another factor to consider, too many billionaires have their fortunes tied up in…you guessed it, stocks.

Until the major players succeed in converting their stocks into hard assets the markets will continue to ‘defy gravity’.

Woe be unto them who fail to find a safe place to hide. They can’t stuff it in Real Estate because they may not live long enough to see prices return. They can’t put it in gold because there isn’t enough ‘real’ gold to go around and even a modest buy would push up the price significantly.

They ‘tried’ to put it into oil futures but demand fell through the floor. Alternative energy has tons of potential but too few customers.

Honestly good citizen, where do you park a billion bucks where you stand even half a chance of getting half of it back?

Dangerous times indeed…yet they media is ready to launch into another round of ‘cheerleading’ intended to inspire the public into believing the economy has bottomed, it's all ‘up’ from here.

I sincerely hope most of you have planted a large garden or have at least been stockpiling non-perishable food against the day when you won’t be able to buy any.

Re-read my commentary at the beginning of this piece and ask yourself if you honestly believe the banks are poised to lead us to prosperity?

If you do believe this twaddle then you must ask yourself when the banks have ever lead us to prosperity before, because this will be a ‘first’.

Thanks for letting me inside your head,


No comments:

Post a Comment