This is the first shoe

Well now things are going to get interesting.  Cyprus has been offered a bailout but the terms of the bailout are that bank deposits are to be given haircuts or taxed, which ever you consider the proper term.  For accounts under 100,000 Euros, which are supposed to be guaranteed, they will lose 6.75% and those above the 100,000 Euro mark they will lose 9.9%.  Now Russia and its oligarchs are not too happy about this situation because this was supposed to be a nice tax haven but now there is risk in everything.  The next couple of days will be important to see how bad bank runs will be in other poor European countries, Greece, Spain, and Italy.  The US market is shrugging this off so far but we are at the beginning of a game changing experience.  This is going to be an interesting week.

Whale Watching

Friday March 15, 2013.  The Dow has had 10 days in a row of positive gains, none of them large but gains none the less.  Like I said earlier, the market just appears to be drifting along looking for some sort of catalyst to send it higher or lower.  The nations top big banks were given the go ahead by the Fed to pay out dividends and buy back stock.  The exceptions to this were Ally Bank, no surprise there, and BB&T, BBT, this one was a surprise.  I didn’t realize that things were still going that poorly down south.  The true entertainment today is the Senate hearing to investigate JP Morgan, JPM, and the London Whale trade that blew up and cost the bank around $6 billion.  While I don’t expect this hearing to change anything it will be interesting watching Jaime Dimon claim ignorance and ask for forgiveness.  There is a new phrase going around and it seems to ring true especially in this case: To Big To Jail and To Big To Fail.  

Sweet Wednesday

This is the fourth day in a row with light volume and it appears that we might see the beginning of a sell off.  The news around the world is trending negative.  The Chinese stock market has been down 5 days in a row and is now negative on the year.  The Chinese are also dealing with a dead pig problem.  In the Huangpu River they have fished out 6,000 dead pigs, they are not saying where they came from.  There has also been 50 carcass’ found in the Hubei River.  If we are hearing these numbers, one can only guess what the real numbers are.  The USDA is also considering buying 400,000 tons of sugar to stave off loan defaults of $862 million in loans that were given out 9 months ago.  That is ridiculous. Again the government is interfering with the free market and will try to keep sugar prices artificially higher than they should be and those costs will be passed on to the consumer.  You gotta love the government.

Bouncing along the ceiling

Same pattern different day.  The market is up small and everyone is waiting for the Fed POMO buying to send the markets slowly higher.  Costco, COST, had great earnings last night and the stock is near its 52 week high and should break through and continue higher.  Today Congressman Paul Ryan, former VP candidate and current Wisconsin Republican House member, delivered his version of the government budget.   It claims to balance the budget in 10 years with no new taxes and spending cuts.  His spending cuts would be to most social programs, Medicaid, grants and increasing a portion the patient pays in Medicare, while this is not technically a tax it has the same effect, increases for tax payers.  He also is working on Repealing Obamacare, good luck on that one.  Tomorrow will be the Democrats turn and you can expect a tax increase on the wealthy and more aid to social programs.  I am still amazed that the Democrats have not gone after the Defense budget, have both parties turned into war mongers?  I will be interested in what they put forth.

Monday 11th

A quiet beginning to the week.  Markets are up slightly and news flow is low also.   This sure seems more like the middle of summer as opposed to the beginning of spring.  So far the only interesting news that I can find is that the former mayor of Detroit, Kwame Kilpatrick, is guilty of several racketeering charges and should go to jail for a very long time.  I can only hope that HBO does a series similar to The Wire about Kilpatrick Enterprises just to give the rest of the country a view into the city of Detroit and how the former mayor treated the place as his kingdom.  The other notable news is that hedge fund manager John Paulson is considering moving to Puerto Rico to avoid paying several hundred million dollars in taxes.  The only notable economic news that I can find coming out this week is the CPI and Industrial Production on Friday but even these numbers seem unimportant because Bernanke just keeps printing money and never allowing even a 5% correction.  Oh Well, have a good week.

Jobs Friday

The day of reckoning is here and it appears that the news is good.  Payrolls increased 236,000 In February and the unemployment number came down to 7.7%.  Not all of the news was good as the January number was revised from 157,000 down to 119,000, that’s a fairly large revision, but today I am sure we will focus on the positive.  As I am writing this the S & P’ s are up 6 points but I would have expected that to be up at least 10, so maybe we will just get a smooth and steady climb all day instead of an initial ramp and then level off.  The market is at or near all time highs and it is looking for something to give it traction up here and this number just might be that catalyst, we’ll see how it play out.  The sequester continues to muddle along but it seems like everyone has already forgotten about it, which is good, I am tired of politicians crying that the world is going to end if they don’t get what they want.  Have a good weekend.

All Time High

The Dow Jones Industrial Average has hit a new all time high, 14,300. The S & P 500 is also close to a new all time high at 1542. Congratulations Mr. Bernanke, you have done it, you have shown the world how a central bank can continue to print money and force assets up, similar to a bubble but if it run by the government it must be good, correct?  All pessimism aside, I hope somebody is making money off of this rally outside of the primary Fed dealers.  Everyone I have spoken to is sitting on the sidelines because they don’t trust a rigged market.  This new market high is also not doing the President any good either.  He needs a good old fashioned sell off to show how these evil sequester cuts are killing the fragile economy.  Hugo Chaves died yesterday and I wonder how things will play out in Venezuela, more than likely another military dictator that will do his best the people.   There is a new frightening development with our own US Government.  It appears that Eric Holder, US Attorney General, believes that under certain extreme circumstances that it would be acceptable to us drone strikes on US soil on US citizens.  This is an outrage and I implore everyone to contact their Congressional representatives and ask them what happened to due process in this country.  We are watching the Constitution being ripped to shreds in the name of our safety.  So everyone who has been clamoring about their rights to bear arms out to make sure they understand that you can bear your arms but if you are deemed a threat the government believes it doesn’t actually have to prove you are a threat before eliminate you. 

Holding pattern

The Dow continues to flirt with multi year highs, 14,162.  I can’t help the nagging feeling that we are at the top of the hill on a roller coaster and the question we have to answer is how big of a dip is ahead of us?  We did get some good news out of Qualcom today, they raised their dividend and are doing a $5 billion buy back.  They have navigated Apple and the Iphone better than any of the other suppliers, well done.  Google, GOOG, is making new all time highs, slow and steady.  An interesting development is going on over in Europe.  The tiny nation of Cyprus needs a bank bailout of around $17 billion, not a lot these days but it is who the money is going to that is causing the real problem.  Cyprus is a well know tax haven for all the Russian Oligarchs and the money will be used to make them whole.  Now if you are any of the countries that are preaching austerity, Greece, Italy, Spain, to name a few, are you going to send a Euro to Cyprus to make someone whole who is gaming the system?  I don’t think so, but can Europe afford to upset the Oligarchs and risk having important services, specifically natural gas, shut off?  The new game of commoners backstopping big institutions is getting very interesting and I really don’t know how this will play out.  

All is quiet

So far another quiet trading day.  It seems like everyone is watching and waiting for something, not sure what.  Apple, AAPL, make another new 52 week low at $422.  If you are looking to buy you should be able to get in at $400 but I still think you should wait.  The Euro has broken the 1.30 level versus the dollar, a new 3 month low.  President Obama appears to be saying the right things to get the ball rolling on the sequester, specifically that social programs may have to be cut, they will.  The main driving forces this week will be PMI, purchasing managers index, several central banks meetings and at the end of the week the Friday’s US jobs data.  The expectation is 166,000 new jobs were created in February, similar to the number in January. As a side note we need a much larger number to truly get the economy running again but if this number is significantly smaller there will be a sell off.

New month same story

Well so far we have an ambivalent market, it doesn’t really care about the sequester.  There are a couple of interesting things going on anyway.  Apple, AAPL, is at a 52 week low, which raises several questions but the most important one being: Is the cult of Apple finally done?  The stock is definitely in bear territory but will it have a round trip reminiscent of 2001?  I am not sure where it will stop but I think Apple’s world domination is over and they will again become a niche company with very loyal core customers.  The President is upset with the Republicans because they won’t cave in today and give him what he wants.  Mr. President just give it a few days of complaints and hysteria and you will come to a compromise that will do nothing for the country but allow both sides to claim victory, we’ve seen this story before.  So the story looking forward will be how television stokes the fire this weekend to see if it has an impact on the market. There is still a lot of veteran market pessimism and while I won't be long this market, I certainly won't be short.  I have had my face ripped off enough times that I have learned to never short something making multi year highs.

The wait

The market continues to go higher, today the Dow is over 14,125 and the S & P is over 1,520, but there are a lot of market veterans that don’t trust this rally.  The Italian elections have thrown Europe into chaos, but they did manage to do a decent bond auction.  Walmart, WMT, is even having problems with its supply chain, so how well can the rest of the US be doing.  Japan is raising wholesale wheat prices by 10%, kind of like the rise in gasoline prices in the US.  JC Penny, JCP, and Groupon, GRPN, are both getting hammered due to terrible earnings but all anyone is really concerned about is what John Boehner will do.  Come the stroke of midnight the cuts begin and we will be living with the minute by minute update of how our country can’t function without an additional $85 billion.  People love to watch car wrecks as long as they are not involved but the American public is not sure if they are the driver, passenger, or spectator in this race.   We are about to find out.

The Sequester

The sequester will begin on Friday March 1, 2013 and some and somehow I am supposed to be concerned with an immediate government spending cut of $85 billion.  We are currently running deficits annually of over $1 trillion and this is supposed to grab my attention.  I am tired of the current state of politics in this country.  I have no faith in the current government and even less faith that my representatives will do the right thing to get the country back on track.  I have been a lifelong conservative and for better or worse, especially lately, I have been identified by my peers as a Republican.  It is obvious that the Republican Party sold out to big business starting in 2008 and has no intention of working to my best interest unless I am a lobbyist.  The Democrats continue to try and buy their votes with generous welfare benefits that continue to hamper the economy and make it difficult for small business, the country’s true life blood, to function properly.  The simple fact is that eventually taxes are going to have to increase and social programs are going to have to be cut, even a fifth grader can figure out basic math.  The Republicans are going to have to accept defense cuts and tax increase.  The democrats are going to have to accept Social Security and unemployment cuts.  On a side note, 2 years of unemployment benefits is counterproductive for employers and workers, there needs to be an incentive to get into the work force.  These are all just basic starting points and I am sure none of them will be addressed in the next week.

Why I'm here

I am a former trader.  One of those nasty market makers from the 90's who was cheating and stealing and completely fleecing the public if you remember what was written and believed of us.  Actually I am a very good trader, more right then wrong, and I have a different view of the world then most.  I have been replaced by an algorithm that can get you the volume weighted average price (VWAP); so you are never better then or worse then average. I have been replaced by central bankers bent on keeping the markets going higher, no matter what the cost or the reality of the economic situation.  I will be sharing my thoughts and experiences from the past and present.  Hopefully this will add a new perspective and give you a laugh as well.  I am looking forward to this, thanks for stopping by.