September 10th, 2012
in Gary's blogging
Midday Market Commentary For 09-10-2012
At one point the HFT elevated the markets up where the DOW was up 17 points on falling volume of course. Otherwise the markets have remained flat and unresponsive and will continue to be so today.
Trying to ignore the current political arena and the fisticuffs battle royal is impossible lately. I have said several things in the past months that go hand in hand with what Ron Paul is saying and not political. Politically, I am not certain either of the candidates have what it takes to 'fix' our financial plight.
Having said that the first thing is that Government meddling, ie QE's, and has done more harm than good when looking at the entire picture which includes large banks and other company bailouts, TARP and loose talk of 'printing' more money. Two, Keynesian financial philosophy which sometimes works when NOT taken to extreme, which it has. Three, I have spoken endlessly regarding the High Frequency Traders using their EVIL and mindless algo computers. The HFT algos are wrecking the investing marketplace one mini-crash at a time . . . there will be more, count on it.
These 3 things have driven the cash crowd out of the markets and have literally destroyed the markets. The King, Dr. Ben Bernanke, and his band of dovish monkeys are clearly out of touch confusing the economy, employment and the stock market. Chairman Banana has literally printed himself into a corner. If he sobers up and sees the 'light', the marketplace will crash. If he continues reckless printing via QE's, energy, unemployment and the rising debt will crash the economy.
Former Reagan OMB Director David Stockman was 'allowed' on CNBC this morning - much to their chagrin now we suspect - and espoused his own brand of truthiness, starting with this epic tirade: "Ron Paul is the only one who is right about the Fed, and the Fed is the heart of the problem.
They have destroyed the capital markets and the money markets; interest rates mean nothing; everything is trading off the Fed and Wall Street isn't even home - as it's now a bunch of computers trading word-clouds emitted by this central banker and that"
In this environment, he goes on, everyone is being given the wrong signal - i.e. the Ryan/Romney campaign is [about] restoring vibrant capitalism; how can you do that when the financial markets are dead - the lifeblood of a capitalist system.
And that is the problem today: "The Fed (and the lunatics that run it) are telling the whole world untruths about the cost of money and the price of risk." Must watch clip.
The RRR**, as it has been for weeks, was very narrow at the opening bell and any trades will probably end up on the unprofitable side as long as this market remains flat and continued low volume. Swing trading is at your own risk and being the market is at a crossroads of sorts, I would prefer to sit on my hands rather than risk guessing incorrectly.
The DOW at 12:00 is at 13312 up 5.00 or 0.05%.
The 500 is at 1437 down 0.84 or -0.06%.
The $RUT is at 842.06 down 0.21 or -0.02%.
SPY is at 144.29 down 0.02 or -0.01%.
The trend is up and the current bias is neutral.
WTI oil is at 96.28 trading between 95.38 and 96.60 and the bias is neutral.
Brent crude is at 114.60 trading between 113.98 and 115.05 and the bias is neutral.
Gold is down today at 1731.12, trading between 1740.00 and 1727.50 with a neutral bias.
Dr. Copper is at 3.68 up from 3.64 earlier.
The US dollar rose from 80.14 earlier to 80.55 and is currently trading at 80.41.
EUROPEAN SESSION UPDATE: The German High Court will announce tomorrow if it will proceed to rule on Wednesday, as scheduled; Greek PM currently meeting with Troika delegates…
Let's hope Ms Merkel's new-found compasion for Greek pain is shared by the Troika. Greek Finance Minister Yannis Stournaras said the country has submitted its €12bn austerity programme to its international creditors.
"A discussion and an evaluation are taking place," said Mr Stournaras. "The measures are difficult. We are trying to convince them (the troika) that our arguments are correct."
The Troika - or the The Men in Black as they have been referred to in Greece - is expected to remain in Athens for several weeks as they determine whether Greece will be able to receive a much-needed €31bn instalment from its €130bn EU-IMF rescue loans.
Matthias Mors from the EU, Klaus Masuch from the European Central Bank and Poul Thomsen from the International Monetary Fund, who arrived in Athens last week, had their first meeting with Greek PM Antonis Samaras on Monday.
Angela Merkel, according to the Der Speigel on Monday, has done a "surprising" U-turn of a Grexit. It claims in an article that the German chancellor now wants to stop Athens from leaving the euro zone at all costs - even if it means massaging the figures in the upcoming Troika report.
The article argues: Don't believe Ms Merkel's mantra on Greece, which tranlates as: "We are waiting for the troika report."
One doesn't need to be a rocket scientist to see through Merkel's manoeuvre: The chancellor wants to buy time. She hopes to calm the general public and the notoriously nervous financial markets through meditative repetition - and ultimately create the impression that it actually matters what the troika finds out during its mission to Greece.
But it doesn't. In reality, Merkel has already made up her mind. After long hesitation, she has sided with French President François Hollande and the European Commission. The report from the troika - which consists of the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB) and which departed on its fact-finding tour last week - will undoubtedly conclude that Greece can remain in the euro zone.
They said the German leader is desperate to avoid the consequences of a Greek exit before national elections next year. She has supposedly been influence by the so-called "domino theory" - If Greece falls, one country after the other could then be in danger of toppling. Also, domino theorists claim "catastrophic" damage from a Grexit and a €62bn bill for Germany - the sum Greeks and their central bank owe the Germans.
"The form of any return to QE is less clear. The issue is not so much whether the Fed buys Treasuries or agency mortgage-backed securities; we are pretty sure that any new program would be primarily focused on agency MBS purchases. These should have a somewhat bigger per-dollar effect on private-sector demand and are probably less controversial with the public than Treasury purchases. They can be framed as help for homebuyers to achieve the American Dream, which sounds better than help for the government to run large budget deficits."
** RRR = Risk Reward Ratio
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Written by Gary