Tuesday, January 19, 2010

It's Magic...

Greetings good citizen,

If you recall, the markets dropped 100 points last Friday, mostly due to the sheer lack of evidence that the economy is recovering.

Today, the market tacked on 115 points…for no reason whatsoever.

How many of you believe that investors (other than the trading desks of the large Investment banks, who use their own money, even though they actually borrow for zero interest from the government, and the money is really yours…) are actively taking part in this seriously overbought market?

We all know if these bastards were required to comply with ‘honest’ accounting standards, they’d all declare bankruptcy tomorrow.

The only reason our banking system continues to tread water is due to the ‘fiction’ we call ‘money’. Which is to say we are currently engaged in an extremely dangerous game of ‘let’s pretend’.

Why is this dangerous? Because most of you don’t are unaware that your ‘debts’ only exist ‘on paper’. You’re being held out of the 40th floor window, which is actually only 2 inches off the ground.

You don’t really owe anybody anything…but they can’t afford to admit that. If they admit you don’t owe, they can’t justify helping themselves to the best while denying you your share.

They also can’t justify their lavish pay scale, which they use to justify their lavish lifestyle.

This brings us full circle to how banks can pay out more in bonuses than they earn in profits…how the fuck does that work?

Short answer, it doesn’t…but notice how nobody calls them on this?

Naturally, this is another ‘accounting problem’ that doesn’t have a simple answer…because mere mortals don’t comprehend ‘criminal math’.

It should tell you something when Mother Nature doesn’t understand it either, if you hear what I’m saying…

Understand good citizen we live I a world totally devoid of magic, this is proven to us over and over in many different ways…and it isn’t even such a bad thing, but.

When those who hold power over the rest of us start to insist that magic exists, that there are things they know which we are not intelligent enough to comprehend…er, that’s where the trouble begins, because there’s no such thing as magic.

More importantly, denying the incredible is what lays the foundation for a ‘just’ world. It forces us to stop accepting the ‘exceptional/miraculous’ when the true answer lies with the criminal.

Case in point, the ‘Goldilocks Economy’ wasn’t a miracle, it was in fact, criminal.

Uh, let’s give this subject a rest and move on with tonight’s offering which, like many of the stories I choose, went ‘unclaimed’ by a NY Times reporter and ultimately disappeared from the list of today’s news offerings.

Wary of Earnings Reports Wall Street Opens Softly

Published: January 19, 2010

Shares opened quietly Tuesday after Citigroup’s fourth-quarter earnings report kept investors uneasy during this first big week of corporate earnings reports.

Many are wary about bank earnings after a disappointing report from JPMorgan Chase on Friday helped send stocks sharply lower. [Bizarrely, stocks recovered all that and more today, will this be credited to the sudden turnaround in the Cadbury-Kraft merger? Why would the market celebrate the consolidation of market share which can only result in higher prices?]

Citigroup’s earnings came in as expected. The bank reported a fourth-quarter loss of $7.6 billion, or 33 cents a share, with the bulk of that shortfall the result of expenses related to its repayment of $20 billion in government bailout money.

But the report, like JPMorgan Chase’s, reflected consumers’ struggle to repay their loans. Citigroup set aside $8.18 billion to cover bad loans during the quarter.

In early trading, the Dow Jones industrial average was about 46.8 points, or 0.12 percent higher, while the Standard & Poor’s 500-stock index was 5.1 points higher. The Nasdaq was up 17.15 points, or 0.39 percent. [All of the indexes went up but there isn’t a plausible explanation as to why, the few people who are doing well in this shitty economy aren’t generating enough business to ‘move the markets’, there are far too few of them. So is the explanation, dare I say it…magic?]

In Europe, the FTSE 100 was down 15 points, or 0.27 percent, while Germany’s DAX fell 13.11 points, or 0.37 percent. The CAC-40 was 0.37 percent lower.

News that Kraft Foods and Cadbury agreed to a $18.9 billion deal appeared to push Cadbury to the list of risers on the FTSE 100, gaining just under 4 percent to 837 pence a share, more or less in line with the offer price of 840 pence a share.

In Asia, Japan’s Nikkei stock average fell 0.8 percent to close at 10,764.90. However, Hong Kong’s Hang Seng was up 1 percent, to 21,677.98, while Shanghai index rose 0.3 percent, to 3,246.87. JAL shares, which have lost more than 90 percent of their value over the last week, tumbled 20 percent Tuesday to 4 yen before finishing flat at 5 yen. [This paragraph reads like a horror show but it wouldn’t be the first time the markets rose on absolutely hellacious news. You know, it’s magic! Perhaps the only thing you need to know is when the markets close higher, the shareowners finish the day richer, it’s really that simple.]

Wall Street was poised for a subdued start to the week after being closed Monday for the Martin Luther King public holiday.

In the run-up to Wall Street’s open, investors will be turning their attention to the next batch of fourth-quarter corporate earnings. Besides Citigroup, other big banks reporting earnings this week include Wells Fargo, Morgan Stanley and Goldman Sachs.

Over the week, 65 companies in the S.&P. 500 will post their results. As well as the banks, earnings from Google, I.B.M.. and McDonald’s will be closely monitored. [What do you suppose the ‘trend for the week’ will be, given the one thing you need to know?]

Over all, earnings have been fairly mixed, with upside surprises from the likes of Intel offset by disappointments elsewhere, most notably the aluminum maker, Alcoa. [Um, more than those two (besides the banks) reported? Who knew?]

Meanwhile, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged from 3.68 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.07 percent from 0.05 percent.

The dollar mostly rose against other major currencies, while gold prices also rose.

Odd observation to end the piece with, that the dollar-stock link is broken again. It’s a bit more ominous that the dollar-gold link is also ‘broken’, it is extremely ‘counterintuitive’ for gold to rise in tandem with the dollar.

The only logical explanation isn’t even remotely good. If gold gains while the dollar also goes up it means really means the dollar is falling against the price of gold…it’s hardly ‘good news’ that other major currencies are falling faster, our ‘purchasing power’ is still getting a haircut regardless.

It’s like asking which you’d prefer to get clobbered with, 250 pounds of feathers or 250 pounds of nails? The point isn’t feathers or nails, the point is it’s still 250 pounds!

Perhaps more worrisome is the price of equities are also rising, albeit, for no good reason.

Understand good citizen, there is no such thing as magic…so if something isn’t acting like it should, the most likely explanation isn’t a miracle, chances are you’re being screwed!

Think about the stock market and what its behavior means for the rest of the ‘non-financial’ world.

You work to get money so you can obtain what you need to survive. If the value of money is ‘questionable’ at best, where does that leave you?

Thanks for letting me inside your head,


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