Thursday, January 21, 2010

Wall Street 'slips'...on a banana peel!

Greetings good citizen,

How about that stock market? Over the past two days the Dow has fallen more than 400 points! Is this the beginning of the ‘big reset’ many of the ‘perma-bears’ have been predicting, where the Dow ‘scissors’ back down to last year’s lows and beyond?

Dunno, can’t say for sure what the markets are going to do now that the ‘largely imaginary recovery’ is proving to be non-existent, no matter who proclaimed that the recession was over.

Once again we are seeing many firms continuing to beat Wall Street’s earnings expectations…so why is the market ‘retreating’? Could it be that investors are getting spooked because they know the continued ‘profitability’ of listed companies is coming not from sales but from slashing expenses, in some cases to the bone? Are investors, knowing how (badly) this will end, starting to head for the exits?

Which is to ask a more pointed question…how long can commerce survive while outgo exceeds income?

They continue to slash payrolls, so the situation isn’t about to turn itself around.

Perhaps we need to ask a different question as investors prepare to race one another to bankruptcy court to salvage what they can of their fortunes.

Is the hunt for the ‘greater fool’ on as we speak? There sure are a lot of VC firms out there bleeding to death because they got stuck ‘holding the bag’ on the last deals they entered.

Anyway, let’s proceed to tonight’s offering.

Wall Street Slips After Report on Manufacturing

Published: January 21, 2010

Wall Street shares tumbled on Thursday after the government offered a bleaker-than-expected snapshot of the job market and a second report suggested the recovery for manufacturing was tepid. [Um, this is the only mention I could find of a report concerning manufacturing, so maybe it wasn’t such a big deal after all and the markets are tanking for reasons they’d rather not discuss…]

The Labor Department said initial jobless claims unexpectedly climbed to 482,000 last week — the highest level in two months — up 36,000 from the previous week. A spokesman for the department, however, said the rise “did not reflect economic reasons,” and he pointed to a backlog of filings during the holidays. [Um, could this ‘uptick’ in ‘workforce whackage’ be due to companies trying to bring their books into line with Wall Street’s expectations before they are scheduled to report?]

Adding to investors’ concerns, a barometer of manufacturing activity in the Philadelphia region fell more than expected in January, to 15.2 from 22.5 in December (readings above zero indicate growth). That number signaled the fifth consecutive month of expansion but fell short of forecasts. [Seems as though no economic report would be complete without some factor (and usually several of them) ‘defying expectations’.]

On Wall Street, where any hint of a worsening picture for the jobs market is greeted with alarm, shares dropped sharply. [What the fuck is this? 99% of the time Wall Street IGNORES employment numbers, good, bad of indifferent…or maybe I’m confused, Wall Street pays attention to the ‘job market’ but doesn’t give a shit about ‘employment data’…yeah, that’s the ticket!]

In morning trading, the Dow Jones industrial average declined 163.46 points ,or 1.54 percent. The broader Standard & Poor’s 500-stock index dropped 15.49 points, or 1.36 percent, and the technology-dominated Nasdaq declined 20.31 points, or 0.89 percent. [The Dow closed down 213 points today…but the US wasn’t alone in bleeding red ink, all Western Markets dropped between 2 and 3 percent, all of them.]

Joseph V. Battipaglia, a market strategist for Stifel Nicolaus, said that so many companies were surpassing profit expectations that any good news had little effect. [Like I ask above, how long can they ‘tread water’? Apparently most investors don’t expect them to be able to hold out much longer.]

The focus on Wall Street, he said, has shifted to the strength of the recovery. “There is a growing expectation now that we will not have a robust recovery,” Mr. Battipaglia said. “The outlook has become more clouded. Any data point can shift a landscape.” [I suspect the landscape isn’t as murky as they are making it out to be, they’re simply reluctant to be frank about the grimness of the situation considering how much the taxpayer is on the hook for. There isn’t a good answer to the question, “Where did all of those trillions go?”]

Alan M. Gayle, senior investment strategist for RidgeWorth investments, said the disappointing jobless figures raised concern that the pace of layoffs might not be easing. Last month, the unemployment rate was 10 percent in the United States and 85,000 jobs were lost. [And we all know that number was off by a country mile.]

“It’s unlikely that the market’s long-term mindset will be turned on a dime with just this report,” Mr. Gayle said. “But people are now thinking about the next report. If it’s followed up with a weak report, then that will raise concerns that corporate America is going through a second major round of cuts.” [It’s hard to imagine where ‘deeper’ cuts will come from without permanently damaging commerce’s ability to meet demand.]

As companies continued to issue earnings reports on Thursday, there seemed to be no lack of rosy data. Goldman Sachs’s profit of $4.95 billion, or $8.20 a share, in the fourth quarter far outpaced expectations of $4.97 a share. Yet shares of Goldman Sachs fell 2.7 percent. [Um, it’s easy to see how ‘bandits’ like Goldman Sachs make money, they get to borrow at zero and lend at between 6 to 14%, that’s pure profit, even an idiot can make money with that kind of a spread.]

A string of companies reported stronger-than-expected profits. eBay said its earnings had tripled in the quarter, partly because of growth in the PayPal business and its sale of Skype. [Understand Dick Cheney called e-Bay the ‘new economy’, where people bought and sold junk out of their attics without ever asking the question, “Just how much junk is there in the typical attic?”

Xerox said profit in the fourth quarter was 25 cents a share, beating expectations of 22 cents a share. The company’s stock rose 4.27 percent. [Ahem, does it look to you like there is a serious shortage of ‘sound’ investment opportunities out there?]

Xerox said it had achieved its earnings through cost-cutting, which investors have begun to frown upon. Traders are expecting companies to show they have established lucrative revenue streams — not simply achieved savings by cutting cuts. [Um, this is easier said than done considering too few people/customers can be described as ‘solvent’…]

In the near term, analysts say the focus for investors will be on earnings. Several bellwether companies, including General Electric and McDonald’s, will release earnings on Friday.

It’s been a whole year good citizen and nothing of consequence has changed…for the average citizen. There have been numerous changes in the way business is, er, conducted/regulated.

Take the ‘abandonment’ of FAS 157, consider if you will that there isn’t a single ‘compliant’ financial institution in the US (or the rest of the world for that matter.)

Add in the multiple ‘liquidity channels’ and Special Investment Vehicles which banks as well as the government don’t have to include on their ‘balance sheers’…

Naturally, these little ‘alterations’ in our financial network have ‘bled’ into the ‘real’ economy.

While they’ll deny it until they’re ‘blue in the face’, the simple explanation here is the executives compensated themselves so well (for failing miserably) that they bankrupted the global economy.

Think about it, Chris Whalen says the investment banks have lost more money in the past three years than they’ve made in the last fifty…combined!

The closer you look, the ‘grimmer’ things appear…hard to say if the timeframe shortening is a good thing or a bad one, theoretically, the sooner the shit storm hits, the sooner it will be over. Left to our imaginations is what will come out of the other side…

Thanks for letting me inside your head,


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