Posts Tagged ‘Dow Jones Industrial Average’

Stock Shock: Why Barack Obama Is The King Kong Of Drug Dealers

by John Myers on Wednesday, June 26th, 2013

This is article 361 of 389 in the topic economy
Stock Shock: Why Barack Obama Is The King Kong Of Drug Dealers

PHOTOS.COM

“Lesson No. 1: Don’t underestimate the other guy’s greed. Lesson No. 2: Don’t get high on your own supply.” — From the 1983 movie Scarface

President Barack Obama is worse than the corner crack dealer who tells kids, “The first hit is free.” Instead of getting a neighborhood addicted to cocaine, he has the Nation hooked on cheap money.

It all worked out perfectly well — for Obama, that is. He won his Nobel Peace Prize, gave the economy its “fix,” was re-elected President and is assured of having inner city-schools named after him for the next century. Mission accomplished for the egomaniacal President.

For you and me, the nightmare is just beginning. And we will look back and say it began on June 19, when Federal Reserve Chairman Ben Bernanke suggested he is going to wean the economy off cheap cash.

Currently, the Fed is spending $85 billion every month to buy debt that Uncle Sam can’t sell to anyone else. Bernanke had the audacity to suggest the Fed may start winding down its stimulus program because the markets are strong enough to stand on their own.

Wall Street financiers are savvy. When they heard those words, they felt the way Charlie Sheen feels when walking into the doors of a rehab clinic.

The market understands that the days of high times are over. Its sudden awakening erased 500 points from the Dow Jones industrial average, which in one fell swoop reduced wealth by a couple of hundred billion dollars.

Our Stock Market Nightmare

Sigmund Freud, the father of psychoanalysis, pioneered the understanding of dreams.  He also had a cocaine addiction. He found that cocaine helped cure depression.

In an article for CNN, Howard Markel, M.D., Ph.D., author of An Anatomy of Addiction, wrote: “Like so many others, Freud suffered from the most maddening symptom of addiction: the stealthy process by which the addict’s mind conspires to convince that nothing, nothing at all, is askew or dangerous about something that most decidedly is.”

Millions of people went on to find the ecstasy and short-term cure of cocaine. I suspect that many people (perhaps even Obama during his college days) discovered that it worked wonders until they were flat broke and even more depressed then when they started. Perhaps cocaine was Obama’s inspiration to get America hooked to an even stronger substance: cheap money.

The Independent reported in 2009:

Money works like a drug on the human brain – and even just the thought of earning a higher salary gives us a physical buzz, a study has found.

Scientists have discovered that thinking about cash stimulates the reward centres involved in pleasure and the higher the salary – even if it is just imagined – the greater the pleasure generated in the brain.

The results of the study suggest that the human brain is innately susceptible to the illusion of wealth that money can bring. This is known in economics as “money illusion” – when people get fixated on the nominal value of money, rather than on its actual purchasing power.

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Sour Grapes Or Grapes Of Wrath?

by John Myers on Wednesday, November 14th, 2012

This is article 35 of 61 in the topic Finance
Sour Grapes Or Grapes Of Wrath?

PHOTOS.COM

The day after the re-election of President Barack Obama, the stock market tanked with the Dow Jones industrial average falling more than 300 points in the first two hours of trading and closing the day below 13,000 for the first time since Aug. 2. Oil prices also fell, losing almost $4 per barrel to less than $85 per barrel. Prices of every asset other than gold (which rose by $5 per ounce) also declined when the markets woke up to Obama’s second term. It is called deflation, and it is only going to get worse.

The markets are pure. They don’t have prejudices or preferences other than to make money in bull markets and retain money in bear markets. The day after the election, the markets voted — or, more to the point, stampeded — in a massive sale that saw every single stock in the Dow fall sharply in the first couple of hours of trading.

Democrats were quick to point out how the Dow almost doubled during Obama’s first term. The reason for that was an unprecedented amount of money injected into the capital markets and the policies of the Federal Reserve, which has effectively lowered interest rates to less than zero (yield on short-term Treasury bills pays less than the rate of inflation).

I expect more funds moving into Treasury bills despite their paltry rates of return. Investors, especially large mutual funds and even sovereign nations, are more worried about a return of their capital than the return on their capital.

For four years and with the Federal government now holding $16 trillion in debts, Obama has been playing for time with spending sprees that the Roman Emperor Nero could not have imagined.

In comparison to Obama, this information on Nero is interesting:

On July 18, 64 A.D. disaster struck, Rome was ravaged by a great fire that burned over three fourths of the city. Amid this disaster however Nero saw the opportunity to rebuild Rome greater than it had been before. His first task was the construction of a huge elegant palace. Some people believed that Nero started the fire so that he would have a place for his palace to be built. Nero saw himself losing favor with the public so he decided to blame the fire on the Christians.

Substitute Republicans for Christians and Obama’s insistence on blaming them for all of America’s ills, and you can see the parallel.

Yet while Nero’s taxes rebuilt Rome (until it was overrun by barbarians), the upcoming taxes from Obama — set to kick in Jan. 1 — will dismantle today’s modern empire, the United States.

There is growing pessimism over the prospects of Congress finding any common ground in order to stop a string of tax hikes and spending cuts from taking effect at the end of the year. Investors worry the so-called fiscal cliff scenario would send the economy back into a deep recession.

I don’t think that is going to happen. I believe the pyramid of money created during Obama’s first term plus the onslaught of taxes (his redistribution of wealth) and finally his insistence on green energy that is neither affordable nor practical are going to precipitate another depression.

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Bernanke Stands Ready

by Thomas E. Brewton on Monday, September 3rd, 2012

This is article 40 of 56 in the topic Federal Reserve

Federal Reserve Chairman Ben Bernanke, in his policy speech in Jackson Hole, Wyoming, re-asserted the Fed’s readiness to engage in yet another monetary policy round of quantitative easing.
What that means is pumping still more artificial, fiat dollars into the money supply.  Wall Street today greeted Bernanke’s affirmation that the Fed stands ready to bail out the stock market whenever necessary by a driving up the Dow Jones Industrial Average 90 points.

The Fed’s monetary policy has benefitted banks, stock brokers, money managers, and the United States Treasury.  Banks are awash with liquidity, and the profitable spread between returns on their loans and investments and their artificially low cost of funds, thanks to the Fed, is producing big profit rebounds.  The stock market has experienced a bull market surge for many months, and the Treasury is able to finance the government’s massive spending deficits with artificially cheap interest rates.

The rest of the economy remains essentially flat.  Unemployment has scarcely budged since 2008, contrary to promises of Keynesian economists.  Pay rates for those who have jobs remain flat or declining.  Retirees and others living on fixed incomes have been robbed by rates of return on their investments lower than the current inflation rate of ca. 3%.

When private businesses finally resume expansion in this country the stage will be set for a round of devastating inflation like that of the 1970s, when the rate of inflation surged to double digits.  Just as on the eve of the 1970s stagflation, Fed economists are confident that their superior intellects will enable them successfully to fine tune the economy.

Perhaps Mr. Bernanke and his economic planning nomenklatura really do possess that capability, but don’t bet on it.

Read Jim Grant’s opinion on the subject: Ben Bernanke should return the Fed to its golden roots.

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US Manufacturing falls for first time in almost three years

by Doug Powers on Monday, July 2nd, 2012

This is article 283 of 389 in the topic economy

“I’m here because the factory that’s being built behind me is an example of an America that is within our reach. An America that attracts the next generation of engineering jobs, an America where we build stuff, and make stuff, and sell stuff all over the world.” – President Obama, January 2012
*****

Brace for the creation of a brand spankin’ new “Federal Department of Making and Selling More Stuff” to get to the bottom of why this is happening:

U.S. manufacturing shrank in June for the first time in nearly three years, a troubling sign as evidence builds that economic growth is slowing.

The Institute for Supply Management, a trade group of purchasing managers, said Monday that its index of manufacturing activity fell to 49.7. That’s down from 53.5 in May and the lowest reading since July 2009, one more after the recession officially ended. Readings below 50 indicate contraction.

Production fell to a three-year low and a measure of new orders plummeted by the most in more than a decade, suggesting the weakness will likely persist in the coming months.

Stocks, which had largely been flat when the market opened, fell immediately after the report was released at 10 a.m. The Dow Jones industrial average dropped more than 70 points in morning trading.

The contraction can be partially attributed to aggressive pricing actions from Chinese manufacturers lowering demand for U.S.-made thingamajigs.

(h/t JWF)

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Planes, Trains And Stock Markets

by John Myers on Wednesday, September 21st, 2011

This is article 216 of 389 in the topic economy

Planes, Trains And Stock MarketsAutumn is nearly here, and I am reminded of stock market crashes and one near plane crash.

The September equinox marks the anniversary of when my Uncle Richard and I took off from the homestead runway in his Cessna 172. No sooner were we airborne than we heard the stall horn howl inside the cockpit. The ear-piercing squeal told me something I already knew: Our airplane was falling from the sky. In scant seconds the plane’s landing gear slammed onto the wheat field.

No sooner were we down than the airplane bounced skyward. A lucky gust of wind grabbed at the wings; and, almost as quickly as we fell, the plane began to climb.

Later, I realized how fortunate we were. It wouldn’t have taken much to turn that propeller into a plow.

I haven’t had such a close call since, yet I have a lot of anxiety these days — not about flying, but about the stock market.

The first thing I do each morning is turn on the business channel to see if the Dow Jones industrial average is having another bad day.

You don’t have to have an MBA to know that the air keeping the stock market aloft is growing frightfully thin. Worse yet, the people flying “our” plane are acting reckless. So, each morning, I brace myself for the bad news that Wall Street’s stall horn is blaring. There won’t be a damn thing the President, Congress or corporate leaders can do about it.

Brace! Brace! Brace!

The one good thing about the terror I felt that day in the plane is that it was over quickly. The worries I pack around with me nowadays are different because I can’t shake them.

I suspect that some of you feel like I do: that with President Barack Obama at the controls, the country is spiralling out of control.

But our problems are deeper than having Obama as President. The economy is providing no lift to the stock market, and the nation is carrying so much debt that I don’t believe changing pilots will help much. I don’t think that a true Conservative or a Tea Party candidate in the White House in 2012 will save us. So hold on tight; we are going down.

The Fear of Flying

While I am no engineer, I understand a few things about airplanes. They have to be flying fast enough or else they stall. Right now, the stock market — a leading indicator — is telling us that the economy is stalling.

The Credit Crunch has ended but the Debt Disaster is pushing uncertainty strong upNotice the graph above. It measures the volatility of the U.S. stock market over the past 21 years. As you can see, equity investors have only had one worse case of the jitters since 1990, and that was in the midst of the credit collapse in 2008. Last week, the EconoMonitorcommented on the current investment and economic climates:

The past summer has been filled with bad news, the current economic slowdown, financial stress and political tensions in Europe and the U.S. are in fact the logical extension of the first leg of the crisis that hit in 2008-2009. There is one major difference, though: the policy tool box to deal with financial and economic shocks is now significantly smaller than it was in 2008.

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Stock Selloff Hammers Blue Chips

by Donald Douglas on Friday, August 19th, 2011

This is article 205 of 389 in the topic economy

At WSJ, “Slowdown Fears Slam U.S. Stocks.”

Stocks tumbled amid growing fears of a global recession, as investors confronted a grim mix of U.S. economic data and fresh concerns about Europe’s banks.

The Dow Jones Industrial Average ended down 419.63 points, or 3.7%, to 10990.58. The Standard & Poor’s 500-stock index dropped 53.24 points, or 4.5%, to 1140.65, while the Nasdaq Composite lost 131.05 points, or 5.2%, to 2380.43.

In the flight to safety, investors piled into gold, which jumped to a new record of $1,818.90 a troy ounce, up 1.55%. In the Treasurys market, the yield on the benchmark 10-year note briefly dipped below 2% in intraday trading for the first time since at least 1954, as investors sought refuge in U.S. debt.

“If it’s not a recession, it sure feels like one. And if it feels like one, it doesn’t matter if you can prove it with statistics or not,” said John Hailer, president and CEO of Natixis Global Asset Management in the U.S. and Asia.

RTWT.

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Snap Back: Stock Crash!

by John Myers on Wednesday, August 10th, 2011

This is article 20 of 522 in the topic Government Spending
Snap Back: Stock Crash!

PHOTOS.COM American stock indexes vaporized $2.5 trillion in assets over five days last week.

Stock indexes went postal on Washington’s debt deal celebration. Last Thursday, the Dow Jones industrial average declined more than 500 points, its worst setback since the Crash of 2008. Then on Friday, Standard & Poor’s downgraded America’s debt from AAA to AA+. In response, the market suffered an even greater setback on Monday, with the Dow Jones industrial average falling 643 points.

The sky is falling. If you don’t believe me, check what happened to the stock market just last week. American stock indexes vaporized $2.5 trillion in assets over five days last week, and the likelihood of a crushing depression now looms large. The only good news out of any of this is that Congress — that useless bunch of imbeciles — has gone on vacation. Good riddance.

The world is waking up to the reality that President Barack Obama and Congress have agreed only to waste more of our money. Investors get it: America is a runaway train headed for bankruptcy. Traders finally understand that Obama’s vision of Big Government is grinding the world’s greatest nation into a second-rate power at best. America, with all its debts, is being stretched past the breaking point.

Congress needs to own up to some of this mess. Just scant hours before the deadline of deadlines, Washington voted to pass a bill that would raise the U.S. debt limit by at least $2.1 trillion and cut spending by about half that amount over the next decade… or so says Washington.

This has created a big stir with the popular media, yet the government has not done its job. All this hubbub, and Big Government (just the way the Democrats want it) goes on.

But Republicans share some of the blame. The useless agreement involved wrangling, threats and even name-calling by our elected officials. The only reduction in deficit spending set in stone, for now, calls for the government to trim $900 billion in spending during the next decade. Other cuts may be made, but it is uncertain under the agreement.

Put that in perspective: Concrete spending reductions amount to $90 billion per year. Washington is expected to spend roughly $1.4 trillion this year, which it can finance only by further borrowing. These so-called cuts amount to only about 6.4 percent of the current deficit.

It is like a gambler who promises his wife to blow the family paycheck only at a discount resort in Lake Tahoe rather than Caesars Palace in Las Vegas. Remember, the Federal government has promised to reduce spending more times than Charlie Sheen has promised to quit smoking crack.

The U.S. dollar continues to slump while gold has reached all-time highs, prices that were incomprehensible a couple of years ago. The once-unassailable U.S. dollar is sitting on death row. Washington has given it only a short reprieve — and judging by the reactions of the stock markets, a very short one at that.

Equity investors finally understand that the cinching sound they hear every time America raises its debt ceiling is the sound of impending doom.

I know from experience that all things — from debt to barbed wire — can be stretched only so far.

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Happy Birthday Mr. President; In Related News, Dow Plunges

by Jason Whitman on Friday, August 5th, 2011

This is article 195 of 389 in the topic economy

President Barack Obama

 

Today is the President’s 50th Birthday and what a great way to celebrate with a massive plunge in the Dow Jones Industrial Averages and the NASDAQ. Apparently the debt-ceiling debate wasn’t the reason businesses have been staying in cash on the sidelines. As Noel Sheppard points out in this article, the yield curve on U.S. Treasuries has dropped indicating that confidence in U.S. debt has increased. This clearly indicates a significant flow of capital into U.S. Treasuries. Unfortunately, there has not been a concomitant increase in business confidence to invest in new plants or equipment.

Today’s 512 point (4.31%) plunge in the Dow Jones Industrials was the largest point drop in the Dow since September of 2008. There had previously been 9 days of downward movement by the Dow.

The last time the Dow Jones Industrial Average DJIA -4.31%  did that, in fact, was Feb. 22, 1978, when Jimmy Carter was president and the country was struggling to come to grips with a period of anemic economic growth and high inflation.

A 30 point recovery on Wednesday prevented the Dow from closing down for the 9th straight day. This is hardly a sign of an economy in recovery mode, yet Democrats and the MSM continue to perpeutuate the myth that our economy is headed in the right direction. GDP growth has been utterly anemic with the most recent report indicating quarterly GDP was a paltry 1.3%. David Callaway with MarketWatch wrote a piece today indicating he believes that stocks are pricing in a recession.

the eight-day decline in the Dow Jones Industrial AverageDJIA -4.31%  — snapped Wednesday with a paltry almost 30-point gain — shows that investors are discounting a new recession next year.

This is clearly not good news for the President’s re-election campaign, and is even worse news for the millions of unemployed Americans who keep hoping, in vain, for a recovery. The good news is perhaps the President will be joining the ranks of the unemployed on January 21, 2013. Between now and then, expect the uncertainty created by the Democrat’s class warfare and Obamacare, to keep American business on its knees.

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The Debt Deal’s Three Biggest Winners and Losers

by John Lott on Wednesday, August 3rd, 2011

My newest piece starts this way:

With a debt ceiling agreement finally in place and the Senate on track to approve it today congratulations are being handed out all around. Armageddon and catastrophe has supposedly been averted. And politicians are rushing to put the best face on the deal.

Unfortunately, the new agreement does not accomplish as much as many had hoped, or as much as it should have, in terms of curbing spending and continued deficits. This explains why stock markets continued to fall despite the supposedly “good” news. The reason is because, once again, politicians are continuing to push the problem to the future.

Here’s a look at the winners and losers in the aftermath of the “catastrophe” that’s just been averted:

The Winners:

1. Stimulus Recipients and Big Government: President Obama’s “Stimulus” was supposed to just be temporary. Alas, the debt agreement locks in big government and the extra spending President Obama initiated will continue.

After government spending soared by 28 percent from 2008 to 2011, the debt deal only starts cutting a meager $22 billion next year. That is an incredibly trivial cut — just 0.6% of expenditures planned for next year. The cuts agreed on are heavily back-loaded towards the end of the 10 year budgeting cycle, when President Obama and many members of Congress will be out of office.

Short of a constitutional amendment mandating balanced budgets, . . .

UPDATE: So what happened to the market today? They fell in Asia, Europe, and the US:

The Dow Jones Industrial Average plunged 265.87 points, or 2.19 percent, to end below the psychologically-important 12,000 mark at 11,866.62. The last time the blue-chip index declined for eight-consecutive days was in October 2008.

The S&P 500 plummeted 32.89 points, or 2.56 percent, to close at 1,254.05, slipping into negative territory for the year.

The tech-heavy Nasdaq tumbled 75.37 points, or 2.75 percent, to finish at 2,669.24. The S&P 500 and Nasdaq are both below their 200-day moving averages. . . .


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What Now?

by Bob Livingston on Monday, May 16th, 2011

This is article 31 of 389 in the topic economy

What Now?

Over the past several months, we have seen rioting in some Arab and European countries. The riots were sparked by the high costs of food, government austerity measures and government oppression.

We have some of the same dynamic going on in the United States. But through a system of bribery, the U.S. government has succeeded, at least temporarily, in preventing Americans from rioting in the streets.

The number of Americans now on food stamps is 44,082,324 as of December 2010, up 13.1 percent from a year ago. This is more than 14 percent of the U.S. population. Unemployment is at 9 percent, and President Barack Obama and Congress have extended unemployment benefits to 99 weeks.

The Dow Jones Industrial Average stands at about 12,700. It first hit this mark in late 2007 — more than four years ago. Of course, because of the bursting of the housing bubble, the Dow could be much worse. It dropped to 7,063 in December of 2008. But the political elites threw money at the Dow in order to prop it up, to give America a sense that things were alright. After all, a rising Dow means prosperity… right?

But Americans are too busy and distracted playing with their iPad 2s and gossiping on Twitter about Charlie Sheen’s rants to have any time to protest in Washington, D.C.

As a result of QE2, the Federal Reserve is now “buying” 70 percent of U.S. Treasuries. You can believe it or not as you wish, but the U.S. government is in a state of collapse.

Precious few are prepared. You are warned: We have alerted you for many months. Now this is a flashing red alert.

Please remember that in the coming inflation, food stamps and all U.S. entitlement programs will come to a complete halt.

For those millions on Social Security and/or other entitlements, I do not believe that these will be stopped or cut per se. But the same effect would come about through inflation of the currency. My friends, you will get your money, but it will be so worthless that it won’t buy anything.

So what’s new? We have experienced this for years.

We have warned for years to buy silver and gold and store food and water. Ha, doesn’t sound so way out now, does it?

Please keep your gold and silver and food in your personal possession. It amazes me how quickly people will trust someone else with their gold and silver. Don’t do it!

Is it too late to buy gold and silver? The answer is “No, no and no!” As the Fed destroys the U.S. dollar, you will look back at how cheap gold and silver are now.

Stocks? Yes, gold and silver stocks and energy stocks — concentrate mostly on oil stocks.

Buying gold and silver and oil stocks and storing food and water are the only ways Americans can survive the chaos we are now in.

You ain’t seen nothing yet. Be alert!!

Should you sell your gold and silver as it corrects down? Never! If you do, you will be painfully sorry.

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