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Everyone is being conditioned to accept that the US political class is going to be able to write big enough cheques to save the US financial system from collapse. As I have said before, if government spending and loose monetary policy worked, then folks would be writing books about how great life was in the great super-economies of Argentina in the 1980s and Zimbabwe today. (After all, everyone in Zimbabwe is a millionaire now... the downside to that is that bread costs $35 million a loaf)
The Cancer Fairy is in the throes of starting to bail out the carmakers - that bill will eventually be $200 billion or thereabouts, probably by the end of next year.
Once this 'gap funding for carmakers' bill is passed, the next lot of multi-millionaire mismanagers (M3) will turn up at the door of the Congress and demand their bailout.
Will it be the Airlines? Hotel chains? Agribusiness? Big Pharma?
One thing is absolutely certain - it will be someone. The US Congress is setting a very very bad example.
This stupid idea that the US is not going to let anybody fail, has its roots in the well-meaning idiocy that took hold of public schooling in the 1970s.
The idea went like this: kiddies would be so scarred if they failed at something, that everyone was basically given a pass ... in other words a 'pass' nowadays is actually a 'fail'. If you want proof, try leaving college with a three year, non-Honours degree.
Actually it's hard to leave a US university without honours: as I understand it about 70% of all degrees conferred are 'with Honours' in some form or other. Contrast that with my year, where there were only six students who got Firsts, and only about 20 who got Honours at all... in a graduating class of over 250.
I think perhaps the US Congress and the Fed have seen the the stats and are jealous... as I mentioned above, in Zimbabwe everybody is a millionaire. Congress thinks that the citizens of the unipolar hyperpower super-dooper Freedom and Liberty-spreader should also all be millionaires (at least)... so they are doing their level best to emulate Mugabe's brilliant millionaire-creating strategy.
Elsewhere, politicians continue to make their lives by fraud and force...
The Irish have discovered what 'democracy' means - it means that everyone gets a vote, which will count so long as the outcome conforms to what the political parasite class desires. If the vote fails to conform, then they get another burst of democracy... that is, they get to vote again.
It is high time someone unmasked this business of pretending that it is either desirable or beneficial for the populations of the constituent states, to install and fund the EU's new layer of bullshit artists and human tapeworm who get their rocks off by lording it over people, and who want a system with the largest pie possible so that they can steal in larger volume.
And the whole political superstructure - as with politics almost everywhere - is full of people like the Runt King, Sarkozy: folks who have never had careers that did not involve either theft from the public, or liaisons with organised crime.
Take Runtboy as an example: his bio bangs on about how he's a lawyer, but his 'legal career' cannot have been more than a year or so, because he was a politician at the age of 22. He graduated (sort of) in 1982 and was a councillor (and then Mayor) in Neuilly-sur-Seine from 1983-2002 (and was in the National Assembly from 1988 onwards)... where was the time for this legal career he was supposed to have had? What law firm did he work for? Was he part-time as a lawyer, or did he accept the public pay-cheque while working for a private law firm?
Anyway... let's just finish that thought by saying that the Runt King Sarko is a perfect example of the megalomaniacal parasitic scum who infest the political system in every developed country. Sarko backstabbed his way into the position of Mayor (he was in charge of organising the mayoral campaign of Charles Pasqua, and betrayed Pasqua the moment the opportunity presented itself) and his entire life has been formed along the same lines.
Back to economic considerations...
There is a reasonable case for a common currency as a means of reducing exchange-rate uncertainty in trade; the reality of that though, is that any means of exchange must in the end be spent in the domicile of the seller, and thus faces an implicit exchange rate anyway (the Euro has different purchasing power in different Euro-zone economies).
As far a monetary policy goes, it's six of one, half a dozen of the other. Localised monetary policy means that local politicians debase the coin; Europe-wide monetary policy means it's Eurocrats doing the coin-clipping. The end-game is always wealth destruction, because that's the only thing that bureaucrats ever accomplish.
Also, centralised monetary policy will always be set in such a way as to favour the economic development of the dominant country in the union (in the EU, that's Germany); that said, it's no different to having a uniform monetary policy for the whole of Australia - after all, there is at least as much difference between the economy of New South Wales and the Northern Territory, as there is between the economies of Germany and Spain.
But let's not fool ourselves - this is not about efficient government; it's about post-career sinecures for politicians. It's about more bureaucrats, extorting ever more pelf from the populace. It's about a bunch of human tapeworm who have precisely the same psychotype as the Borgia popes and their cardinals.
Let's move on before I pop a vein in my forehead...Economic News
Nuthin'
Headline Indices
The Dow Jones Industrial Average index (DJI) gained 298.76 points (3.46%) to 8934.18 points. The index high for the day was 9025.05, while the low was 8637.49.
Total volume traded in the 30 components of the index was 1.44bn shares. Advancers outpaced decliners by 3.1 to one, with 22 advancers to 7 decliners. Advancing volume exceeded declining volume by 1.26bn to 172.05m shares The biggest gainers (percentage-wise) were -
- General Motors (GM) +0.85 (20.8%) to $4.93 on volume of 66.21m shares;
- Alcoa (AA) +1.43 (17.5%) to $9.58 on volume of 38.92m shares;
- Bank Of America (BAC) +2.6 (17.1%) to $17.84 on volume of 161.82m shares;
- American Express (AXP) +2.66 (12.2%) to $24.44 on volume of 20.35m shares; and
- Caterpillar (CAT) +4.16 (10.9%) to $42.42 on volume of 25.45m shares.
The S&P500 index (SPX) advanced 33.63 points (3.84%) to 909.7 points. Total volume traded in the 500 components of the index was 5.26bn shares. Advancers outpaced decliners by 5.2 to one, with 404 advancers to 77 decliners. Advancing volume exceeded declining volume by 4.51bn to 641.67m shares. The biggest gainers (percentage-wise) were -
- Genworth Financial Inc. (GNW) +0.66 (41.8%) to $2.24 on volume of 44.75m shares;
- ProLogis (PLD) +2.01 (41.2%) to $6.89 on volume of 24.62m shares;
- Developers Diversified Rlty (DDR) +1.8 (36.3%) to $6.76 on volume of 10.19m shares;
- AK Steel Holding Corp. (AKS) +1.84 (25.7%) to $8.99 on volume of 10.01m shares; and
- United States Steel Corp. (X) +7.03 (24.4%) to $35.79 on volume of 15.85m shares.
The Nasdaq Composite rose 62.43 points (4.14%) to 1571.74 points and the Nasdaq100 rose 47.19 points (4.01%) to 1225.06 points. Total volume traded in the 100 components of the index was 1.09bn shares. Advancers outpaced decliners by 5.1 to one, with 82 advancers to 16 decliners. Advancing volume exceeded declining volume by 935.46m to 153.38m shares. The biggest gainers (percentage-wise) were -
- Steel Dynamics (STLD) +1.86 (22.8%) to $10.01 on volume of 13.01m shares;
- Foster Wheeler (FWLT) +3.51 (16.3%) to $25.03 on volume of 8.02m shares;
- Joy Global (JOYG) +2.99 (16%) to $21.69 on volume of 5.09m shares;
- Autodesk (ADSK) +2.31 (14.4%) to $18.35 on volume of 5.16m shares; and
- Leap Wireless International (LEAP) +3.32 (13.8%) to $27.43 on volume of 2.56m shares.
Volatility
The CBOE Volatility Index lost 1.44 points (2.4%) to 58.49 points and the CBOE Nasdaq100 Volatility Index declined 1.79 points (3.04%) to 57.17 points.
Breadth and Internals
A total of 3953 issues traded today on the NYSE; today's total volume was 3.04bn shares. A total of 3061 stocks posted gains for the day, and volume in advancing issues totalled 1.93bn shares. Exerting downwards pressure on the index were 825 losers, which accounted for a total declining volume of 1.04bn shares. 21 stocks made new 1-year highs on the NYSE, while 74 shares plumbed new 52-week depths.
On the Nasdaq 3021 tickers traded today; total Nasdaq volume was 2.29bn shares. A total of 2095 stocks posted gains for the day, with aggregate volume of 1.94bn shares changing hands in the day's winners. The red zone of the Nasdaq exchange comprised 812 losers, and total declining volume was 0.33bn shares. 8 Nasdaq-listed stocks hit new 52-week highs, while 90 shares dipped to new 1-year lows.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 8934.18 | +298.76 | 3.46% |
| S&P500 Index | 909.70 | +33.63 | 3.84% |
| Nasdaq Composite | 1571.74 | +62.43 | 4.14% |
| Nasdaq100 | 1225.06 | +47.19 | 4.01% |
| CBOE Volatility Index | 58.49 | -1.44 | -2.4% |
| CBOE Nasdaq100 Volatility Index | 57.17 | -1.79 | -3.04% |
Dow Darlings
- General Motors (GM) +0.85 (20.8%) to $4.93 on volume of 66.2m units
- Alcoa (AA) +1.43 (17.5%) to $9.58 on volume of 38.9m units
- Bank Of America (BAC) +2.6 (17.1%) to $17.84 on volume of 161.8m units
- American Express (AXP) +2.66 (12.2%) to $24.44 on volume of 20.3m units
- Caterpillar (CAT) +4.16 (10.9%) to $42.42 on volume of 25.4m units
Dow Duds:
- 3M Co (MMM) -2.47 (4.1%) to $57.38 on volume of 14.1m units
- McDonalds (MCD) -1.8 (2.9%) to $60.92 on volume of 16.9m units
- Wal-Mart (WMT) -0.65 (1.1%) to $57.56 on volume of 27m units
- United Technologies (UTX) -0.36 (0.7%) to $48.65 on volume of 10m units
- Home Depot (HD) -0.15 (0.6%) to $24.25 on volume of 28.8m units
Most Traded Dow stocks:
- Citigroup (C) +0.76 (9.9%) to $8.47 on volume of 228.7m units
- Bank Of America (BAC) +2.6 (17.1%) to $17.84 on volume of 161.8m units
- General Electric (GE) +1.03 (5.8%) to $18.88 on volume of 131.1m units
- Microsoft (MSFT) +1.14 (5.7%) to $21.01 on volume of 107m units
- JPMorganChase (JPM) +3.14 (9.4%) to $36.49 on volume of 83.9m units
Precious Metals
Precious metals futures advanced solidly - another close above $750 in Gold and the target will be $820-odd.
| Precious Metals Futures | |||
| Index | Close | Gain(Loss) | % |
| Gold | 774.5 | 22.3 | 2.96 |
| Silver | 10.03 | 0.6 | 6.36 |
| Palladium | 177.3 | 14.6 | 8.97 |
| Platinum | 841 | 53.8 | 6.83 |
The Gold Bugs index (XAU) rose 7.7 points (8.79%) to 95.28 points. Total volume traded in the 16 components of the index was 134.65m shares. Advancers outpaced decliners by 15 to one, with 15 advancers to 1 decliners. Advancing volume exceeded declining volume by 133.84m to 0.81m shares The biggest gainers (percentage-wise) were -
- Freeport McMoran (FCX) +3.21 (19.1%) to $20.01 on volume of 36.57m shares;
- Coeur d'Alene (CDE) +0.07 (12.7%) to $0.62 on volume of 9.91m shares;
- Gold Fields Ltd (GFI) +0.93 (12.4%) to $8.45 on volume of 7.07m shares;
- Silver Wheaton (SLW) +0.35 (11%) to $3.54 on volume of 8.39m shares; and
- Kinroos Gold (KGC) +1.39 (10.3%) to $14.95 on volume of 9.91m shares.
Energy Complex
Energy futures started to claw back come of the ridiculous recent decline -
| Energy Futures | |||
| Commodity | Close | Gain(Loss) | % |
| Crude Oil | 44.06 | 3.25 | 7.96 |
| Heating Oil | 1.4915 | 0.065 | 4.56 |
| Natural Gas | 5.592 | -0.15 | -2.61 |
| Gasoline RBOB | 0.963 | 0.0618 | 6.86 |
| Ethanol | 1.468 | 0.07 | 5.01 |
The Oil Services index (OSX) gained 8.72 points (8.17%) to 115.39 points. Total volume traded in the 15 components of the index was 134.01m shares. Advancers outpaced decliners by 0 to one, with 15 advancers to 0 decliners. Advancing volume exceeded declining volume by 134.01m to 0m shares The biggest gainers (percentage-wise) were -
- Global Industries (GLBL) +0.66 (27.5%) to $3.06 on volume of 2.15m shares;
- Weatherford International (WFT) +1.04 (11.6%) to $10.02 on volume of 20.25m shares;
- BJ Services (BJS) +1.08 (11.5%) to $10.47 on volume of 9.48m shares;
- Nabors Industries (NBR) +1.18 (10.8%) to $12.13 on volume of 9.19m shares; and
- Smith International (SII) +1.93 (9.8%) to $21.71 on volume of 6.06m shares.
Currency Futures
Currency futures have behaved in line with our central thesis - that USD buying is finished and that the major beneficiaries will be EUR and AUD.
| Currency Futures | |||
| Index | Close | Gain(Loss) | % |
| U.S. Dollar Index | 85.675 | -1.515 | -1.74 |
| Euro FX | 1.295 | 0.0262 | 2.06 |
| Swiss Franc | 0.8309 | 0.0128 | 1.56 |
| Soybeans | 820 | 37 | 4.73 |
| Australian Dollar | 0.6671 | 0.023 | 3.57 |
| Canadian Dollar | 0.798 | 0.0166 | 2.12 |
| Japanese Yen | 1.0755 | 0.0006 | 0.06 |
| New Zealand Dollar | 0.5469 | 0.0143 | 2.68 |
Bellwethers
The nine-stock group that makes up the Rant bellwethers advanced on average by 3.7%. The fallout occurred as follows:
- General Electric (GE) +1.03 (5.77%) to $18.88 on volume of 131.07m units.
- Citigroup (C) +0.76 (9.86%) to $8.47 on volume of 228.67m units.
- Wal-Mart (WMT) -0.65 (1.12%) to $57.56 on volume of 26.97m units.
- IBM (IBM) +4.27 (5.3%) to $84.86 on volume of 11.14m units.
- Intel (INTC) +0.65 (4.89%) to $13.94 on volume of 77.74m units.
- Cisco Systems (CSCO) +1.31 (8.22%) to $17.25 on volume of 82.06m units.
- Google (GOOG) +18.12 (6.38%) to $302.11 on volume of 8.11m units.
- Fannie Mae (FNM) -0.03 (3.45%) to $0.84 on volume of 36.04m units.
- Freddie Mac (FRE) -0.02 (2.33%) to $0.84 on volume of 18.33m units.
Other Indices of Interest...
The Banks index (BKX) added 2.61 points (5.52%) to 49.93 points. Total volume traded in the 24 components of the index was 741.99m shares. Advancers outpaced decliners by 6.7 to one, with 20 advancers to 3 decliners. Advancing volume exceeded declining volume by 727.63m to 14.36m shares The biggest gainers (percentage-wise) were -
- Bank Of America (BAC) +2.6 (17.1%) to $17.84 on volume of 161.82m shares;
- Citigroup Inc (C) +0.76 (9.9%) to $8.47 on volume of 228.66m shares;
- JPMorganChase (JPM) +3.14 (9.4%) to $36.49 on volume of 83.92m shares;
- Wells Fargo (WFC) +2.72 (9.1%) to $32.66 on volume of 70.51m shares; and
- Wachovia (WB) +0.53 (9.1%) to $6.38 on volume of 48.91m shares.
The Semiconductor index (SOX) added 3.59 points (1.86%) to 196.15 points. Total volume traded in the 18 components of the index was 265.25m shares. Advancers outpaced decliners by 5 to one, with 15 advancers to 3 decliners. Advancing volume exceeded declining volume by 222.87m to 42.39m shares The biggest gainers (percentage-wise) were -
- Teradyne (TER) +0.26 (7.1%) to $3.93 on volume of 2.9m shares;
- Intel (INTC) +0.65 (4.9%) to $13.94 on volume of 77.74m shares;
- Broadcom (BRCM) +0.52 (3.5%) to $15.46 on volume of 13.24m shares;
- Taiwan Semiconductor (TSM) +0.22 (3.3%) to $6.94 on volume of 17.48m shares; and
- Sandisk (SNDK) +0.28 (3%) to $9.51 on volume of 8.86m shares.
The ChildKiller ("Defence") index (DFX) advanced 9.4 points (3.85%) to 253.55 points. Total volume traded in the 17 components of the index was 175.88m shares. Advancers outpaced decliners by 7 to one, with 14 advancers to 2 decliners. Advancing volume exceeded declining volume by 164.15m to 11.73m shares The biggest gainers (percentage-wise) were -
- Boeing (BA) +3.32 (8.4%) to $42.85 on volume of 13.07m shares;
- Gencorp (GY) +0.23 (8.3%) to $2.99 on volume of 0.6m shares;
- Esterline Tech (ESL) +2.06 (5.9%) to $36.97 on volume of 0.27m shares;
- General Electric (GE) +1.03 (5.8%) to $18.88 on volume of 131.07m shares; and
- Rockwell Collins (COL) +1.78 (5.4%) to $34.88 on volume of 1.14m shares.
