Tuesday, July 28, 2009

Painting the tape...

Greetings good citizen,

It is now after midnight here on the East Coast where Wall Street’s trading day ended almost nine hours ago.

Um, the markets traded ‘sideways’ right up until the last ten minutes of the day then spiked near vertical just before the closing bell. Oddly, the spike didn’t amount to much, the Dow tacked on 15 points, the S&P added 3 and the Nasdaq a shade over a single point.

The PPT, (plunge protection team {now verified to be none other than Goldman Sachs}), takes it’s job of maintaining ‘positive’ market sentiment very seriously.

One need only look at the very end of the tape to know somebody ‘painted’ it so it would finish in positive territory.

You can add to that the other ‘positive’ news story on everyone’s lips; that ‘housing sales’ were 11% higher than they were…wait for it…last month!

Understand that most people were unaware this increase isn’t a ‘year over year’ measure, worse, most folks have no idea whatsoever of the timeframe involved! For all we know the increase could have been week over week!

Imagine that ‘headline’…they sold 11% more houses this week than they did last week! Hell, if you’re gonna torture the data looking for good news to report they could start comparing data on a daily basis. If they sold two today and three tomorrow there’d be a 33% increase, day over day!

The 11% uptick looks much less impressive when taken in the context that summer is the ‘busy season’ for people buying new houses. It’s preferable to move to a new school district when school isn’t in session.

So the 11% ‘spike’ in home sales now looks like whoop-de-ding-dong-dang! This isn’t a housing market recovery as much as it is the time people ‘normally’ buy houses.

But I’m being a ‘killjoy’ again…

How many of you painted a big smile on your lips when you heard that statistic and your mind jumped to the conclusion that you now had another sign that the recession was almost over!

I got bad news for you, this recession is just getting started and you’re going to be fed signs that it is ‘almost over’ for a real long time…if you don’t want to look like an idiot, keep your mouth shut.

We’re almost into the second year of this disaster and pretty soon it will be year over year figures that are showing ‘improvement’…the problem is the improvement will be miniscule.

Most people don’t have any money and that’s not changing anytime soon.

Thus forewarned, we proceed to tonight’s offering (which, PS, by the way, has been revised from the version that appears below!)

Wall Street Spends Afternoon Treading Water

Published: July 27, 2009

A rally that carried major stock indexes 10 percent higher over the last two weeks leveled off on Monday, as Wall Street struggled despite some encouraging news from the housing market.

Weaker earnings reports from the health insurance, telecommunications and retail sectors eroded a brief spike in stock markets that followed a government report showing an unexpectedly large increase in new-home sales. Shares then spent the day in negative territory until mid-afternoon, when the Dow and the Standard & Poor’s 500-stock index gained some momentum.

At 2:40 p.m., the Dow Jones industrial average and the broader S.&P. were a couple of points higher, while the Nasdaq was a couple of points lower.

Shares of Aetna fell after the health-insurance company reported a 28 percent decline in profit and reduced its outlook. Verizon Communications reported a 7 percent drop in profit, yet its results met Wall Street expectations. Verizon said, however, that it planned to cut another 8,000 jobs.

Shares of major home builders rose slightly after the Commerce Department reported that sales of new homes rose 11 percent in June to a seasonally adjusted rate of 384,000, a sharper increase than the 3 percent rise economists had been expecting. Sale prices fell for another month, to a nationwide median of $206,200, the government reported. [Oddly, the price drop was not part of the ‘headline’, so once again we have ‘good news’ tempered by ‘bad news’.]

In Europe, the major markets closed slightly higher, following another day of strong performances on Asian markets. In afternoon trading, the DJ Euro Stoxx-50 index, a barometer of euro-zone blue chips, rose 0.72 percent, giving the index a gain for the year of 6.28 percent. The CAC-40 in Paris rose 0.18 percent, and the DAX in Frankfurt was up 0.42 percent. [You may note that neither of these ‘increases’ resulted in ‘gains for the year’ of any amount.]

The FTSE-100 index in London ended 0.21 percent higher, as Ryanair weighed on European airline shares. The Irish carrier beat the market’s second-quarter profit expectations, but it warned that demand was falling, and it cut its full-year guidance. Its shares fell 9.2 percent in London. British Airways fell 2.9 percent, while Air France-KLM fell 1.9 percent in Paris.

Shares in most major markets have rallied on the last two weeks, primarily fueled by a renewed sense of optimism that the economy has bottomed out and on better-than-expected earnings in the United States.

Earlier in Tokyo, the Nikkei rose 1.5 percent to close at 10,088, its highest level in six weeks. It was also the ninth consecutive session of gains for the Nikkei, which is up 12 percent in July and 40 percent since March. The compiler of the Nikkei index reported that it was the best run for the Nikkei in more than 20 years. In February 1988, it recorded 13 consecutive sessions of advances. [Understand good citizen that the Japanese economy is in the toilet, just like ours is, so the Nikkei’s advance, like the Dow’s is pretty much meaningless, it’s simply ‘eyewash’.]

Financial analysts typically do not put much stock in round-numbered index levels, and there was clearly some skepticism about the “breakthrough” performances on Monday, especially that of the Nikkei. Several analysts said the index could be overheating.

“Japan is a very, very strange market, and there are a host of reasons to remain very negative on Japan,” said Stephen Davies, chief executive of Javelin Wealth management in Singapore. [See what I mean?]

Mr. Davies cited three worrisome factors — the negative impact of a relatively strong yen on Japanese exporters, depressed domestic consumption and what he called “political paralysis.”

“Japan remains,” he said, “a relatively moribund market and a relatively moribund economy.”

In Hong Kong, the Hang Seng index finished the day up 1.4 percent, closing at 20,251.62, buoyed in part by China Mobile, which jumped 2.9 percent on speculation that it could soon be allowed to sell shares in mainland China.

Three apparel makers posted significant gains on expectations of renewed strength in the Chinese economy. Bossini rose 11 percent and Giordano, both based in Hong Kong, rose 10.1 percent. Li Ning, the Beijing-based maker of athletic shoes and sports clothing, rose 5.7 percent.

The Shanghai Composite also finished up 1.9 percent to reach a 13-month high. The index is up 87 percent this year, the second-best market performance in the world, according to a Bloomberg News analysis of 89 indexes. Only Peru has done better.

The first public offering on the Shanghai exchange since last August created a sensation, with shares of Sichuan Expressway nearly tripling on Monday. Shares in the toll-road operator closed at 10.90 renminbi, or $1.60, a jump of 203 percent. The initial offering price had been 3.60 renminbi. At one point in the afternoon the share price had zoomed to 15.25 renminbi, which triggered a trading halt, one of two suspensions during the day.

Elsewhere in Asia, the Singapore index was up 1.8 percent, the Kospi in Seoul was 1.4 percent higher — reaching an 11-month high — and the ASX-200 in Sydney registered a 1.2 percent gain to close at its highest level since Nov. 4.

“The markets are still very volatile, and a couple bad numbers could certainly create a pause for reflection,” said Mr. Davies. “But I don’t think we’re in the position of re-testing the March lows.”

Financial stocks led the way Monday in Tokyo, notably Daiwa Securities, up 4.5 percent, and Nomura Holdings, Japan’s largest brokerage, which was 3.1 percent higher. Nidec, a maker of motors for disk drives, rose 3.5 percent.

Hitachi climbed 3.4 percent after the Nikkei business daily reported that the company firm would spend $3.2 billion to acquire five key affiliates in a broad-ranging corporate reorganization. Shares of Hitachi and the five subsidiaries were temporarily suspended from trading in the morning.

Macao casino stocks showed strong gains on the Hang Seng, notably Galaxy Entertainment, which was up 3.5 percent, and SJM Holdings, which rose 2.8 percent.

Stanley Ho, the SJM founder, is a strong backer of Fernando Chui, who was elected Sunday as the new chief executive of the Chinese territory. His pro-Beijing leanings are expected to bolster the gaming industry in Macao.

Crude oil prices were down slightly, 10 cents a barrel to $67.95 a barrel. [We’re still ‘swimming’ in oil yet prices continue to rise…]

Bond prices fell, with the yield on the benchmark 10-year Treasury, which moves in the opposite direction of the price, gaining three-hundredths of a point to 3.69 percent.

Does anyone else find the global expedition at the end of this piece ‘curious?’ What smacks you right between the eyes is the obviously ‘cherry picked’ data intended to lend credence to the impression that the global economy is on the mend…which couldn’t be further from the truth!

A few nitwits with cash in their pockets does not a global economy make.

Worse, a fool and their money are soon parted…you’re job: not to be that fool!

I’m more than a little, er, disturbed to see how many people regurgitated the highly misleading housing statistic as I went about my duties tonight. That alone tells me this thing is far from over…it won’t be over until nobody repeats the meaningless drivel spouted by the MSM without being sarcastic.

We’re talking some serious levels of ‘gullibility’ that are still in play good citizen.

Be chary of giving advice, the wise don’t need it and fools won’t heed it…that said, it is better to keep you mouth shut and have people ‘think’ you are a fool than it is to open your yap and ‘prove it’.

Thanks for letting me inside your head,


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