Wednesday, February 10, 2010

Unstable Ground

Greetings good citizen,

After yesterday’s rally, today’s markets traded ‘sideways’ for the better part of the day, with the Dow closing down only 20 points.

In contrast to that, exchanges around the rest of the world posted modest gains (except Mexico, who joined us in negative territory.)

Bizarrely, yesterday’s rally was credited to ‘rumors’ that the crisis in Greece had a pending solution…so it’s a little disturbing to see today’s mid-day plunge attributed to the same source as yesterday’s rally…

Ya know; it’s really amazing that both the MSM and Wall Street aren’t suffering from a huge ‘credibility gap’…or are they?

Anyway, onward to tonight’s offering

Shares Slip on Bernanke Comments and Greek Crisis

Published: February 10, 2010

Hopes that a brewing debt crisis in Europe was headed for a resolution faded slightly on Wednesday, as a wave of conflicting headlines and stern denials did little to reassure investors that the crisis would soon be contained.

Stocks on Wall Street fell modestly, a day after a boisterous rally across the globe. The downward momentum intensified as the chairman of the Federal Reserve, Ben S. Bernanke, outlined plans to wean the economy off extraordinary stimulus efforts. [Hmmn…’Extraordinary efforts’ there were no sign of on Main Street…which is to say there is no chance that this recession is anywhere close to being over…]

By midday, the Dow Jones industrial average was down 0.32 percent, or 31.82 points, a day after rising 1.52 percent. The Standard & Poor’s 500-stock index declined 0.36 percent, or 3.85 points, and the technology-dominated Nasdaq index fell 0.44 percent, or 9.53 points.[ Um, Maybe a blind person would miss the fact that all of these figures are less than a single percent so what is the ‘big deal’ here?]

Investors on both sides of the Atlantic said they were still confident that European leaders would put forth a plan to help Greece pay its debts. But details remained scant, and it remained unclear how soon a rescue effort could materialize. [The ‘rumor-mill’ says Greece, Portugal et al would be ‘saved’ just as soon as the Euro fell to a more competitive level with other major currencies…apparently no easy task because when denizens of the EU lose purchasing power, they tend to riot…]

The leaders of the 27 European Union countries are scheduled to meet on Thursday, and investors are expecting the group’s wealthier members to support a bailout of Greece and potentially some of the Continent’s other struggling countries, including Portugal and Spain. A German government official told Dow Jones Newswires on Wednesday, however, that aid for Greece was not on the agenda for Thursday’s meeting. [So, what WAS behind yesterday’s rally?]

“Investors are wanting to get some sense of stability — some sense that the problems in Greece and Portugal and perhaps Spain are not going to spread and pull down the entire euro-zone and with it the global economy,” said Bruce A. Bittles, chief investment strategist at Robert W. Baird & Company. [?] “What hurts the market most often is uncertainty.” [Since we can be certain that the world’s finances are being robbed right out from under our noses I guess THAT doesn’t ‘hurt’ the market…even if it has destroyed the economy.]]

European markets eked out small gains as investors were cautiously optimistic that European leaders would help Greece, which faces a deficit of 12.7 percent of gross domestic product. The FTSE 100 in London rose 0.15 percent, the CAC-40 in Paris climbed 0.31 percent, and the DAX in Frankfurt gained 0.52 percent. [Um Greece is the size of Kentucky with the population of Los Angeles, how much trouble could they be in?]

The euro slid against the dollar, reaching $1.3697, after making gains during Tuesday’s broad rally. Economists fear a default by Greece or other weak countries on the fringes of Europe could jeopardize the Continent’s monetary union. [Um, actually the EU is bigger than the US (and in considerably better shape!) which is to say our own ‘inaction’ is more worrisome to the rest of the world that the plight of a few ‘teacup economies’.]

In the United States, investors were also shaken by signs that the government may begin to reduce emergency stimulus efforts. [The recession is far from over, that said, there is only so much the government can do on its own…]

In written testimony intended for a House hearing, Mr. Bernanke signaled that short-term interest rates would eventually rise and the Fed would need to rein in costly programs to buy assets like mortgage-backed securities and even credit card and auto loans. [Which, as I’ve stated before, leaves our debt-driven economic system in pretty sorry shape. Too much is owed and too few can afford to pay! This is a situation I see no way out of.]

While he did not provide a firm timetable, and his testimony offered little in terms of new information, his words still rattled investors, who have bristled at any talk of withdrawing the very efforts that have helped fuel the market’s fast-paced rise in the last year. [The economy can not remain on ‘life-support’ indefinitely. Sadly, too little has been done to ‘revive’ the real economy.]

“There is a moment of reckoning coming where we learn if the economy, without any artificial stimulation, is as strong as it seems to be,” a founder of First Coverage, Randy Cass, said. [How many of you want a couple of hits off of whatever the hell he’s smokin’?] “The market is evenly divided between those who think the growth is real and sustainable, and those who believe that once the artificial enhancers are taken away, it will stumble.”

Also weighing on the market on Wednesday was a report on the trade deficit in the United States, which widened more than expected as demand for imports surged. The deficit was $40.2 billion in December, up 10.4 percent from November. That was far above Wall Street’s expectations of a $35.8 billion gap.

Um, why do you suppose there was a ‘surge in the demand for imports?’ Could it be due to the fact that NOTHING is made here? Why imports ticked up in December is indeed mysterious…some of it could have been last minute holiday restocking…in fact, it isn’t unreasonable to think most of it was JIT ordering.

I guess the disappointing part of this ‘revelation’ is the knowledge that the holiday season still wasn’t particularly robust even though they outperformed last year.

The economy, such as it is, continues to ‘limp along’…the question we don’t have a good answer to is how long can it keep limping until something gives?

Not only have we lost millions of jobs but the prospects for those jobs to return are very slim indeed…and the old ‘get a job you bum! Doesn’t fly anymore…not that it ever did…we have now reached a point where half of all working aged adults are redundant…this isn’t any profitable employment available for them.

Left to our imagination is whether or not the largely female workforce can thumb its nose at the largely unemployed male portion of society?

They most certainly ‘can’ but I don’t see such a move ending well.

Thanks for letting me inside your head,


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