Larry Levin's Blog : Crack Pipe

Be back with the daily day trading blog with Larry Levin, the topic for us to discuss today is about “Crack Pipe”. Just note down the latest news to guide your trading decisions!

Day Trading Blog : Crack Pipe

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Larry Levin's Blog : Stacked Deck

"Stacked deck" will be the topic that is shared in Larry Levin's blog today. As you know Staked Deck” is a deck of cards that are prearranged to be dealt so that a specific person will win. The man who stacked the “financial” deck is Ben Bernanke and of course the winners will be the banksters.

There was no good news Monday to speak of, but there was another MASSIVE rally on Fraud Street. What’s more, the volume was once again abysmal so I guess it is getting back to normal.
Last Friday’s GDP report was horrible, a recession warning indeed. Monday’s rally was a continuation of Friday’s.
Personal income & outlays were slightly worse than expected.
Pending home sales were 30% worse than expected.
The Dallas Fed Survey was much worse than expected, coming in at -11.4 instead of -2!

And yet, the equity indices went higher tick, after tick, after tick. As mentioned above, Monday’s volume was pathetic, coming in 36% LOWER than the recent 10-day average and 50% lower than the 20-day average! Additionally, the aggressive buyers ended the day trading a net of nearly 3% more than the aggressive sellers despite the news above.

Oh, but there was one other piece of news: Hurricane Irene was a dud – New York wasn’t destroyed. This is good news to be sure, but is it worth today’s massive rally? The clueless clowns that litter the media, and I just heard this on the local news, would have you believe that today’s explosion was a “relief rally” due to the tame weather.

Sure. Whatever. Question: wouldn’t there have to be a steep decline PRIOR to the “relief rally” if it were true? Why yes, there would be. After all, what else is a relief rally? But what happened Friday? Looking at the charts we see there was a…rally! So this was a “relief rally” from a rally. The media no longer “reports” – it simply regurgitates whatever it is told to say.

The financial media started to get the real story out near the end of the day, which brings us back to Ben Bernanke and his stacked deck of cards. Despite Bernanke’s non-admission of QE3 on Friday, the market is pricing it in now.

Remember, whatever the banking mafia wants the banking mafia gets – and it wants QE3. There is no “free market” but rather a market that is being hand delivered to the powerful few. Witness today’s ridiculous rally despite BAD economic data and wretched volume.

I’m just glad I know the score: it’s stacked against the average guy, but I’m not an average guy. I know how the game is played and I’m just trying to enlighten as many others as possible.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Larry Levin's Blog : Europe

Although there is a lot of important economic news coming out of the US each day this week, the market may get more volatility from European news. Greece is still a major drag on Europe (but gee, it was bailed out at least twice) and several other countries are growing tired of it.

From the Wall Street Journal we learn the following and the whole article can be found here…

http://online.wsj.com/article/SB10001424053111904199404576536362512060274.html?mod=googlenews_wsj

Greece has moved away from attempting to reach a bilateral deal with Finland, under which it would have provided collateral in exchange for fresh aid, Ms. Merkel told German newspaper Bild am Sonntag.

“The creditworthiness of the country would suffer further” if some aid is collateralized and other aid isn’t, Ms. Merkel was cited as saying by the paper on Sunday.

The proposed bilateral collateral deal between Finland and Greece was effectively taken off the table last week after several euro-zone member states, including Germany, opposed it. Officials from the 17-member currency bloc held talks last week in an effort to find a new solution that would be acceptable to all euro-zone members. Talks are expected to continue this week.

Finland’s collateral demands have opened a new rift within the currency bloc, threatening to derail a second €109 billion bailout package for Greece. Under the bilateral deal, Greece would provide several hundred million euros’ worth of cash collateral to Finland in exchange for the Finnish contribution to the bailout.

CSU leaders are set Monday to discuss a paper co-drafted by CSU General Secretary Alexander Dobrindt that rejects a so-called common “economic government” for the euro zone as recently suggested by French President Nicolas Sarkozy, and implied in Ms. von der Leyen’s proposals.

The paper contains other explosive ideas. CSU leaders, according to Der Spiegel, consider creating a bankruptcy procedure to kick out of the euro countries that aren’t willing to stick to the debt limits laid out in the euro zone’s Stability and Growth Pact.

Despite the internal squabbling, Ms. Merkel told Bild that her current center-right government will stay in power not only until the next elections in 2013, but beyond. The coalition currently trails the opposition Social Democrats and Greens by a wide margin in recent opinion polls.

Ms. Merkel also said she is confident she will persuade lawmakers from the CDU and from her junior coalition partner, the Free Democrats, to approve changes to the euro zone’s rescue fund.

Ms. Merkel also told Bild that common bonds for the euro zone are the wrong measure to overcome the current debt crisis.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Larry Levin's Blog : Interesting

To share burdens with traders and investors in day trading floor, Larry Levin keeps sharing the latest news around the markets with you guys. And so I'm here with you. The topic we can learn today sounds interesting. Yes, that's also "Interesting".

Day Trading Blog : Interesting

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Larry Levin's Blog : Operation Twist

I will not take much of your now. There will be many things for us to take note from Larry Levin's blog today: "Operation Twist".

In just two days the S&P500 has rallied ~5.3% from its recent low, or nearly 60-handles. Yesterday I reminded folks of this Friday’s latest “super meeting” in Wyoming where I said “Apparently the news was so bad that the hyenas of Fraud Street went into a feeding frenzy – eating as many short sellers as the pack could tear apart. And why would the nasty hyenas do such a thing? The answer lies with Ben S. Bernanke and the J-Hole symposium of the central banking mafia.”

The market is clearly expecting the soon-to-be-released vapors emanating from the J-Hole conference of the banking mafia to yield some form of QE3. Apparently the recently announced ZIRP policy extension of another 2 YEARS isn’t good enough. Fraud Street wants more. One idea that has gained a lot of traction came from Dave Rosenberg’s idea of the Fed revisiting its “Operation Twist” policy of 1961.

From Breakfast with Rosie:

Since just about everything that has to do with the economy is either directly or indirectly priced off the 10-year part of the curve, it stands to reason that this is the segment that matters most for the economy. The 10-year part of the curve is the oxygen tank for the market and macro backdrop, yet the Fed in its latest QE round centered its efforts more on the front- and mid- part of the curve.

There is little doubt that the housing market is suffering from a variety of obstacles, but what is clear from the consumer survey data is that households do not believe that interest rates will come down any further. The Fed can only do so much to deal with a de facto vacancy rate of 10% for the homeownership sector (double the norm) but every little bit helps at the margin and certainly it can do a much better job at influencing affordability levels to stimulate some demand growth.

People need to be convinced that once they make the decision to finance a purchase that they won’t run into a period of rising rates that could impede their debt-servicing capabilities. This is where the Fed can play a role in influencing expectations and it is critical (this is particularly true for borrowers who are up for variable-terms mortgages).

Look, we know that: (i) Bernanke is a disciple of Milton Friedman, and (ii) one of Friedman’s classic pieces of economic research pertained to the ‘permanent income hypothesis’, which postulated that it is changes that are deemed to be permanent, not temporary, that induce a permanent change in economic behavior. This is why the “permanent” Bush income tax cuts in 2000 worked so much better than the temporary rebates unveiled in early 2008.

Therefore, at the margin, in order to do even more to solve the ongoing depression in the housing market, which continues to pose as a dead-weight drag on the entire economy, it may well behoove the Fed in its next round of stimulus, whenever that may occur (but it will, just not at 1,330 on the S&P 500), to signal to the public its intent to take down and hold down the most critical interest rate of all for the mortgage market —and that is the 10-year note.

Don’t think for a minute that this not being discussed — Bernanke talked about embarking on such a scheme, if necessary, when he was still governor back in 2002:

Because long-term interest rates represent averages of current and expected future short-term rates, plus a term premium, a commitment to keep short-term rates at zero for some time — if it were credible — would induce a decline in longer-term rates. A more direct method, which I personally prefer, would be for the Fed to begin announcing explicit ceilings for yields on longer-maturity Treasury debt … Lower rates over the maturity spectrum of public and private securities should strengthen aggregate demand in the usual ways and thus help to end deflation. Of course, if operating in relatively short-dated Treasury debt proved insufficient, the Fed could also attempt to cap yields of Treasury securities at still longer maturities … Historical experience tends to support the proposition that a sufficiently determined Fed can peg or cap Treasury bond prices and yields at other than the shortest maturities. The most striking episode of bond- price pegging occurred during the years before the Federal Reserve-Treasury Accord of 1951. Prior to that agreement, which freed the Fed from its responsibility to fix yields on government debt, the Fed maintained a ceiling of 2-1/2 percent on long-term Treasury bonds for nearly a decade.

Ben Bernanke, Deflation: Making Sure “It” Doesn’t Happen Here, speech to the National Economists Club, Washington, D.C., November 21, 2002.

This was otherwise known as ‘operation twist’. There is certainly nothing preventing the Fed from targeting the 10-year Treasury-note any more than the Fed funds rate. But the funds rate is already near zero and as such there is no incremental move there that can benefit the economy. But targeting the 10-year note in much the same fashion is probably worth a try and if there is anything else we know about Ben Bernanke. It is that…

(i) he will be late, not early. So, by the time this comes the economy may well be back in recession, which in balance sheet cycles tend to occur every three years, so mark 2012 down in your calendar;

(ii) he is willing to be very aggressive when the time comes — he has certainly proven that. Back in 2007 or 2008 for that matter, who believed that short rates were going to vanish entirely and that the Fed would be buying assets by early 2009?

Now it is doubtful that the Fed would ever target the long bond. In fact, the Fed may even want it to be higher in yield to ease the pressure on radically underfunded pension funds. While the Fed can either target its balance sheet, which it has been doing with these QE measures, or target interest rates, it cannot do both at the same time. So the next ‘QE’ will not be called ‘QE’ but rather something else — maybe Operation Twist 2 (072 — you heard it here first).

The Fed would buy up all the 10-year notes needed to clear the market at the target “price” (yield). So depending on supply conditions and demand from the private sector, the Fed would basically lose control of its balance sheet, but if in return this policy is the one that blazes the trail for a turnaround in the housing sector and a durable revival in the economy, so be it.
If the Fed were to be concerned about the impact that any further balance sheet expansion could have on the U.S. dollar, it could always nudge the short end of the Treasury curve up in support of the greenback (short-term spreads matter more in the FX market). By doing this, the Fed would also lend some much-needed support to the troubled money market fund industry (for more on this front, have a look at Low Rates Put Pressure on U.S. Money Markets Funds on page 13 of today’s FT). So much can be accomplished with such a policy—the upside potential will be worth it.

However, politically, the Fed has to wait for the next downturn in economic activity and reversal in the stock market so that those on Capitol Hill that are lamenting the Fed’s interventionist efforts end up begging for more. This could come sooner than you think, but likely not until we see the whites of the economy’s eyes — and early signs are showing a visible sputtering in growth.

One last item to note. If, say, the 10-year note were to be capped at 2 1/2%, where it was at ahead of the QE2 program last fall, compared with the current 3%-plus level, the total return for a 10-year strip would come to over 10% in a 12-month span. Now put that in your pipe and smoke it!

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Larry Levin's Blog : Rally Time

Keep going on with Larry Levin's blog with such the informative news that much support for our trading! Today, the topic we will discuss will be about “Rally Time”. Just have a look at the slide show!

Day Trading Blog: Rally Time

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Larry Levin's Blog : Fed Kleptocracy

Are you still there in day trading market? If yes, just keep going with Larry Levin's blog! Today we will learn about "Fed Kleptocracy".

I have written a lot about the Fed and its once-secret lending programs. Today, however, Bloomberg ran a piece on the Fed’s lending program that is a must read.

Citigroup Inc. (C) and Bank of America Corp. (BAC) were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits.

By 2008, the housing market’s collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret.

Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages.

It wasn’t just American finance. Almost half of the Fed’s top 30 borrowers, measured by peak balances, were European firms. They included Edinburgh-based Royal Bank of Scotland Plc, which took $84.5 billion, the most of any non-U.S. lender, and Zurich-based UBS AG (UBSN), which got $77.2 billion. Germany’s Hypo Real Estate Holding AG borrowed $28.7 billion, an average of $21 million for each of its 1,366 employees.

The largest borrowers also included Dexia SA (DEXB), Belgium’s biggest bank by assets, and Societe Generale SA, based in Paris, whose bond-insurance prices have surged in the past month as investors speculated that the spreading sovereign debt crisis in Europe might increase their chances of default.

Two weeks after Lehman’s bankruptcy in September 2008, Morgan Stanley countered concerns that it might be next to go by announcing it had “strong capital and liquidity positions.” The statement, in a Sept. 29, 2008, press release about a $9 billion investment from Tokyo-based Mitsubishi UFJ Financial Group Inc., said nothing about Morgan Stanley’s Fed loans.

That was the same day as the firm’s $107.3 billion peak in borrowing from the central bank, which was the source of almost all of Morgan Stanley’s available cash, according to the lending data and documents released more than two years later by the Financial Crisis Inquiry Commission. The amount was almost three times the company’s total profits over the past decade, data compiled by Bloomberg show.

The full article can be read here. http://www.bloomberg.com/news/2011-08-21/wall-street-aristocracy-got-1-2-trillion-in-fed-s-secret-loans.html

Very little has changed, nothing material to be sure, so another banking “crisis” can be (read: is) right around the corner.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Larry Levin's Blog : Corruption

If this isn’t corruption then I don’t know what is. As you will read, the banking mafia will stop at nothing to get what it wants.

Has Rep. Darrell Issa (R-CA) turned the House Oversight Committee into a bank lobbying firm with the power to subpoena and pressure government regulators? ThinkProgress has found that a Goldman Sachs vice president changed his name, then later went to work for Issa to coordinate his effort to thwart regulations that affect Goldman Sachs’ bottom line.

In July, Issa sent a letter to top government regulators demanding that they back off and provide more justification for new margin requirements for financial firms dealing in derivatives. A standard practice on Capitol Hill is to end a letter to a government agency with contact information for the congressional staffer responsible for working on the issue for the committee. In most cases, the contact staffer is the one who actually writes such letters. With this in mind, it is important to note that the Issa letter ended with contact information for Peter Haller, a staffer hired this year to work for Issa on the Oversight Committee.

Haller, as he is now known, went by the name Peter Simonyi until three years ago. Simonyi adopted his mother’s maiden name Haller in 2008 shortly after leaving Goldman Sachs as a vice president of the bank’s commodity compliance group. In a few short years, Haller went from being in charge of dealing with regulators for Goldman Sachs to working for Congress in a position where he made official demands from regulators overseeing his old firm.

The full story can be read here…

http://thinkprogress.org/politics/2011/08/18/298485/exclusive-goldman-sachs-vp-changed-his-name-now-advances-goldman-lobbying-interests-as-a-top-staffer-to-darrell-issa/

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Larry Levin's Blog: Bad Data

What's is the Bad Data? Now, just have a look at what Larry Levin wants us to note!

Larry Levin's Blog : Bad Data

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Larry Levin's Blog: Regulatory Capture

If you have wondered why the banking mafia is never found guilty of any wrongdoing of any kind, you probably haven’t heard of “regulatory capture.” After all, the regulators are the ones that are employed with the duty of bringing charges against the banksters.

Regulatory capture refers to the fact that government regulators often become more concerned with protecting an industry than protecting the public that the regulation was designed to protect. Additionally, these government workers OFTEN leave their jobs, once they have “cosseted” these industries (think banksters), and take jobs with them as a payoff for looking the other way.

If you’re not familiar with this concept, please read the full article from Matt Tiabbi at Rolling Stone http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – “Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation’s worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff,” as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency’s records – “including case files relating to preliminary investigations” – are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term “Orwellian,” devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation. Amazingly, the wholesale destruction of the cases – known as MUIs, or “Matters Under Inquiry” – was not something done on the sly, in secret. The enforcement division of the SEC even spelled out the procedure in writing, on the commission’s internal website. “After you have closed a MUI that has not become an investigation,” the site advised staffers, “you should dispose of any documents obtained in connection with the MUI.”

Oh yeah, it’s “free market” alright…free to loot and steal as much as the banking mafia wants from the US Treasury with the approval of Tax-Cheatin-Timmy, Ben Bernanke, and Mary Shapiro of the SEC.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Larry Levin's Day Trading Blog: Regulatory Capture

Besides day trading techniques, as you see we can learn news or information around day trading futures from Larry Levin. This is not strange to us any more. As usual, today we will have another topic to learn about: Regulatory Capture.

If you have wondered why the banking mafia is never found guilty of any wrongdoing of any kind, you probably haven’t heard of “regulatory capture.” After all, the regulators are the ones that are employed with the duty of bringing charges against the banksters.

Regulatory capture refers to the fact that government regulators often become more concerned with protecting an industry than protecting the public that the regulation was designed to protect. Additionally, these government workers OFTEN leave their jobs, once they have “cosseted” these industries (think banksters), and take jobs with them as a payoff for looking the other way.

If you’re not familiar with this concept, please read the full article from Matt Tiabbi at Rolling Stone http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – “Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation’s worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff,” as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency’s records – “including case files relating to preliminary investigations” – are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term “Orwellian,” devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation. Amazingly, the wholesale destruction of the cases – known as MUIs, or “Matters Under Inquiry” – was not something done on the sly, in secret. The enforcement division of the SEC even spelled out the procedure in writing, on the commission’s internal website. “After you have closed a MUI that has not become an investigation,” the site advised staffers, “you should dispose of any documents obtained in connection with the MUI.”

Oh yeah, it’s “free market” alright…free to loot and steal as much as the banking mafia wants from the US Treasury with the approval of Tax-Cheatin-Timmy, Ben Bernanke, and Mary Shapiro of the SEC.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Larry Levin's Day Trading Blog: The 13th Floor

Learn to trade, we now continue with Larry Levin's blog to keep up with the markets we care. Today, the topic talked about is: "The 13th Floor".

Many people believe that the media is biased in favor of the left or the right, depending on which television station you’re watching, which is certainly true. One thing seems to be clear though, BOTH the left and the right sides of the media are dismissing the Libertarian running for president: Ron Paul.

The left hates his smaller government stance, while the right abhors his no war policy.

Time Magazine said this about the issue…

The sheer, smug dismissiveness with which the political press treats the libertarian Congressman in these clips is really something. And it’s yet another example of political media winnowing the pack in advance by deciding who is a “serious” candidate and who isn’t—in this case, seemingly, by deciding that Paul’s beliefs are too far out there or, maybe more likely, simply don’t easily fit the left-right narrative.

I’m not, by the way, making the argument that Paul would have a serious shot at the GOP nomination in any case. That hardly matters, though; a candidate with obvious significant support can still have a serious effect on the race, and its ideas, and that’s news. Or it should be, if the horserace handicappers didn’t insist on deciding their news angles in advance.

Jon Stewart displays the amazing dismissiveness here

http://www.thedailyshow.com/watch/mon-august-15-2011/indecision-2012—corn-polled-edition—ron-paul—the-top-tier

In other news, the European “emergency meeting” ended with no new news. Nothing in Europe was fixed but since it was discussed, it is no longer an issue.

Too bad that sort of nonsense doesn’t work in real life. Imagine you bet everything on black in Vegas and lose; then hold an emergency meeting with a counselor, talk about the debt, and then somehow your financial problems go away. Yes, make believe would be great.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Larry Levin's Day Trading Blog: Back To Normal

After the serious increase in volatility of the last two weeks, things seem to be getting back to normal.

How does Larry Levin mean? Let's count the ways…

Very large ranges have already shrank to “nothing.” The vast majority of Monday’s range was put in within the first hour of the day.
Vast sections of the day traded in miniscule 3-point ranges or less.
The S&P rallied almost +20.00 points.
Volume dropped like a stone. Including the Globex session and the closing volume surge, the total for Monday was still 56% LESS than the recent average.
HORRIBLY bad economic news was released before the open. It was ignored.
The S&P rallied almost +20.00 points.
The Euro zone is in recession.
Hong Kong is in recession.
The S&P rallied almost +20.00 points.
News of last week’s Spain and Italian bond bailouts surfaced Monday. Yes, they are broke but the ECB is buying all their bonds.
The Dow rallied +213 points.

All of last week’s losses have been regained (snap fingers here) like that. Yes sir, the market is back to normal. All is well.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Larry Levin's Day Trading Blog: Italy

Last week’s economic data had some good news and some bad news. I would expect more of the latter in the weeks to come. That bad economic data (if materialized) can move the markets, especially if Italy continues to be in the headlines. This week the markets could be roiled by Italian protests organized by labor unions.

ROME (AP) — The leader of Italy’s largest union is threatening a general strike against an austerity package that Premier Silvio Berlusconi’s government hastily pushed through to balance the budget by 2013 and avoid financial collapse.

The threat came amid mounting criticism Sunday of the euro45.5 billion ($64.8 billion) package passed Friday in response to demands by the European Central Bank.

Critics say the package — a mix of spending cuts, job cuts and tax increases, including a “solidarity tax” for high-earners — will strangle Italy’s stagnant economy, which is now expected to grow by only about 1 percent this year.

…”We wouldn’t have gotten here if we had had Eurobonds,” Tremonti told reporters, calling for more “integration and consolidation of public finances in Europe.”

Notice Tremonti didn’t say if it wasn’t for tax evasion and overspending by the government “We wouldn’t have gotten here…” Uh huh, if only Italy had the ability to kick the can down the road via Eurobonds all would be well. Pathetic. The full article can be found here http://finance.yahoo.com/news/Italian-unions-threaten-apf-2642381265.html?x=0&sec=topStories&pos=4&asset=&ccode=

Will Italy become the next Greece and all the market upheaval that came with it?

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Larry Levin's Day Trading Blog: Downgrade

As you know there are many reasons, perhaps dozens, why the markets have been falling but the main reason was the downgrade of US debt by S&P. If the US was downgraded and there were no other reasons supporting it, surely the action would have been dismissed. But that didn’t happen. In fact everyone, even those griping about it, know that the US is insolvent but for the ability to default on its debts via devaluation of the currency.

Of course that reality will not stop the idiots in Congress from dragging S&P through the mud, as well as holding a circus on the Hill to grill its executives about the decision. When that happens I hope the S&P executives tell Congress that it’s lucky they don’t rate the US like they would a private bond, for it would be worthless.

In the meantime, the markets exploded for these dozen reasons: umm, ahhh, *cricket’s chirping.* http://www.soundboard.com/sb/crickets_sounds_audio.aspx (no reason was needed)

This article explains what I mean…http://mises.org/daily/5547/Day-of-Reckoning

The trigger that apparently caused the market meltdown was the ever-so-slight suggestion from Standard & Poor’s that the US government’s fiscal health might not be all it’s cracked up to be.
This was not a case of the little boy noting the emperor has no clothes. It is more like the little boy suggesting that the emperor’s clothes, while beautiful, might have been more carefully tailored to suit the imperial dignity. Hysteria followed, and the entire Obama cult called for the kid to be stoned.

Finally the emperor himself spoke in defense of his raiment. That’s when the market crashed.
But the downgrading of a government’s debt from AAA to AA+ can only have triggered a market avalanche if the truth is in fact much worse, and most everyone knows it.

S&P doesn’t have clean hands, of course. It holds a government monopoly, wants higher taxes, and rated those crazed housing bonds AAA. But imagine, for just a moment, that US government debt were rated in the same way that municipal bonds or regular corporate debt are. Imagine that government bonds, like normal bonds, carried a default premium. Imagine, in other words, that the Federal Reserve were not in a position to pay everyone from welfare recipients to banksters with newly created money.

Under such actual market conditions, federal debt would not be rated as AA+. It would be worth even less than junk bonds. In fact, it wouldn’t even qualify for a market rating at all, because it would be utterly worthless: and the institution that issued it would be in default, and the whole rotten apparatus of the state would be seen to be bankrupt at its very core, in every sense.

We know this for one simple reason: there is no way that the government can fund its debt on taxes alone. There would be a revolution in this country in a heartbeat. And, probably, the entire American empire, domestic and foreign, would come crashing down, along with its banking and monetary systems.

If this actually happened, there would be no more “ongoing negotiations” about the budget and the debt. The cuts would be swift, extreme, gigantic. The federal government would have to behave like state governments, balancing the budget year to year. There would be no more plans for fake cuts in the planned increases, gradually phased in over ten years. The federal government would face actual market discipline. The S&P downgrade is only a slight taste of what would follow.

And let’s not just look at the downside. Hundreds of billions in resources would be freed from government control. The private sector would experience a huge infusion of energy. Interest rates would probably go through the roof, which means that people would actually be rewarded for saving; and saving is exactly what people would do while hundreds of banks went belly up, large portions of the business sector had their credit lines cut, and merchants of death had to close their bloody doors.

There would be wailing and gnashing of teeth, but there would be no turning back. Within a few months, we would start seeing massive resource shifts, and pockets of growth would return. New jobs would be available. New businesses would spring up. New financial firms would displace the old ones. Within a year or 18 months, we would be on a growth path, and this time it would be real and sustainable.

Of course, this is not going to happen. Instead, the powers that be will continue their long game of “let’s pretend” as the economy sinks deeper and deeper, incomes fall, and the United States gradually heads toward third-world, basket-case status.

It’s not only the government that is bankrupt, of course; it’s the entire ideological apparatus that backs the state and its eternal expansion. The New York Times struggled for something to say about the obvious failure of the second stimulus. All they could come up with was a cry to “shift every available resource toward jobs,” and a call for “increased investment in infrastructure,” more relief for homeowners, and another extension of unemployment benefits.

The only thing that this asinine editorial left out was the need to lower interest rates. And that’s because interest rates are already zero percent, which has killed saving, terminated growth, and denied the public the fundamental freedom to sock away money in time deposits and let it earn something in exchange. The Federal Reserve is completely out of policy options, unless it is ready to embrace the Zimbabwe-Weimar solution.

Of course, the whole theory that the government can stimulate through control and robbery is wrong and counterproductive. It only ends up rewarding government and its friends while the rest of us suffer. If we ever get out of this depression, it will be because government is forced to stop this nonsense, and the economy is really stimulated by taking a meat axe to the planning-spending-inflating apparatus.

This is the underlying reality that informed traders understand. The whole system is being propped up by the power to print, and by that power alone. No matter how many miracles some people think that paper money can accomplish, there is an underlying realization that the whole system is a hoax.

But don’t take my word for it. Let S&P and many more competitive rating agencies go to town on US bonds and rate them as they would any bond in the private sector or even the public sector not backed by a printing press. Let reality speak, and let us listen.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.