June 12th, 2012
in Gary's blogging
Closing Market Commentary For 09-12-2012
The 'dipper's' and DaBoyz made a mad dash to the finish line ruining up the market under low volume. If you believe in the tooth fairy, then you are permitted to believe that this is the start of a new bull run. Otherwise consider buying some shorts if you haven't already done so.
The outlook for the rest of the week could very well look like today. Unexpected I will admit, but not exactly surprising the way 'hopium' seems to work upon the uninformed.
At 3:50 the run-up started with earnest but it appeared to be weak. Our shorts have suffered a 0.20 loss, but not enough to consider cutting our losses short. The bears were there in sufficient numbers to keep the green volume from moving up too quickly, but the Pros, DaBoyz and the HFT crowd went ahead and moved things up so the 'sheeples' can be fleeced in the morning. The question now are the market going to continue going up tomorrow? Follow up:
The markets will most likely start off down in premarket action and unless the financial reporting of Advanced retail Sales for May (high), USD Producer Price Index Ex Food & Energy (YoY) (MAY), USD Producer Price Index (YoY) (MAY) and USD Retail Sales Less Autos (MAY) come in low. My thinking is that the 'Autos' will come in high and the others will be weaker. There are no charts today as they really do not show much.
The DOW closed at 12573 up 162 or 1.31%.
The 500 closed at 1324 up 15.25 or 1.17%.
The $RUT closed at 761.53 up 10.52 or 1.40%.
SPY closed at 133.15 up 1.73 or 1.32%.
The short term trend is up and the current bias is up.
WTI oil is at 83.44.
Brent crude is at 97.38 trading in the middle of its range today.
Gold is up today at 1613, trading between 1587 and 1617 with a positive bias.
“Crude Oil futures are lower for the fourth consecutive session, as many traders are not buying into the Spanish bailout. There is some optimism that the bailout of Spain may give the nation time to restructure its banking sector.
However, there is little hope that it will stop debt contagion throughout the region. Saudi Arabia has hinted that OPEC may need to raise its output levels. The figure that has been thrown around was an increase of 500k barrels a day, which equates to an increase of roughly 1 2/3 percent.
In addition to the economic fears and possible OPEC output increase, many traders are expecting the highest level of gasoline inventories in 5 weeks."
The U.S. federal budget deficit came in at $124.6 billion in May, compared with $57.6 billion a year ago. For the 2012 fiscal year, the budget gap is running at $844 billion, compared with $927 billion in a comparable period in fiscal 2011.
An excellent article and recommended reading. There will be a test!
Once upon a time (today), in a land not so far away (USA), there lived a trio of economic wizards (economists), whose names shall remain anonymous (Paul Krugman, Greg Mankiw, Ben Bernanke).
Three Schools of Economic Wizardry
- Keynesian School of Fiscal Voodoo and Witchcraft
- Monetarist School of Monetary Voodoo and Witchcraft
- Austrian School of Sound Money, Sound Economic Principles and Common Sense.
- Keynesian wizards believe governments can spend their way to economic health and although fiscal deficits may matter at some point in time, they never matter now, in practice.
- Monetarist wizards believe money will cure any and every problem if enough is dropped from helicopters and interest rates held low.
- Austrian wizards believe that economic problems are created by unsound money, haphazard loans, excessive debts, and government manipulations.
- Keynesian and Monetarist wizards believe in the voodoo principle "the problem is the solution if only you do more of it". The former relies primarily on fiscal voodoo, the latter relies primarily on monetary voodoo.
- Austrian wizards do not believe "the problem is the solution", no matter how many times it is repeated.
- Paul Krugman is the economic "Grand Poobah" of the Keynesian wizards.
- The "Grand Poobah" of Monetarist Voodoo is Fed chairman Ben Bernanke.
- Murray Rothbard, no longer alive, was the last great proponent of school of Sound Money, Sound Economic Principles, and Common Sense.
Mankiw proposed that purposely making money go worthless over time would be of great economic benefit.
The average non-wizard, living in the real world, with an education level beyond 2nd grade, would quickly see the ridiculousness of making money go worthless.
Unlike non-wizards, modern-day economic wizards do not live in the real world, in real cities. Instead, they live in ivory towers in secret villages for wizards only, typically tucked away in obscure corners of major U.S. universities.
Collectively, these secret villages are known as "Academic Wonderland".
"Academic Wonderland" is strictly off limits to non-wizards with the exception of "Dark Arts" wizards-in-training. It is even off limits to those few aspiring wizards who believe in Sound Money, Sound Economic Principles, and Common Sense.
No "Dark Arts" wizard worth his weight in salt would ever propose that any country live within its means.
In modern-day ivory towers, with voodoo economics, debt is never a problem. The only thing that matters is GDP.
One might think that a Nobel prize winner would figure out that government spending will make GDP rise by definition (government spending is part of the equation) and the debt must be paid back. However, one would be wrong.
Please remember the voodoo motto: If it doesn't work, keep doing more of it, even if that is what got you in trouble in the first place!
Wizards in ivory towers have not completely figured out that money to pay public unions has to come from somewhere (namely taxpayers in general). Of course liberal Keynesian wizards (the worst kind) have an answer for that as well: take from productive members of society and slosh it around to public unions.
To contact me with suggestions or deserved praise:
Written by Gary