Market WrapUp (05-12-03)

Financial Sense Online ^ | 5/12/03 | Jim Puplava

[arete]

One problem all of this intervention is creating is the various anomalies that are now operating in the financial markets. You having rising bond prices that are now accompanying a falling dollar; you have lower interest rates with record trade, current account, and budget deficits; you have rising bond prices going along with rising commodity prices; and lastly, you now have rising stock prices that accompany poor and anemic earnings.

Jim has had it right for months now. Signs of both inflation and deflation are everywhere as the Central Planners try to control every aspect of the financial markets in their desperate attempts to keep the economic ship floating just a little while longer. This is all going to end very badly.

Richard W.

[arete]

Market WrapUp is Delivered!

11 am Roger Arnold Show

3 pm Roger Arnold Show

Richard W.

[RightWhale]

This is all going to end very badly.

It could. It could also just merge into a stagnation pattern. Look at the dollar and how the line is falling. If it continues to fall, it will hit zero very soon. Of course it won't continue to fall, it will bottom and rebound, and then who knows. With all that we have done collectively to drive our basic industries away, there is little hope that our economy will boom forever unless we encourage basic industries to return. Flipping burgers for each other doesn't seem like a suitable occupation for a great country with a great future.

[AdamSelene235]

Tommorrow should be interesting. I think the party is just getting started in Saudi.

[Steven W.]

That's only if you're a goldbug - otherwise Jim is as hyperbolic as ever and has it as wrong again as usual - trade deficits are coming into line because of the increase in exports with several of my companies reporting 100% or greater year-on-year, quarter over quarter improvements in profits, partially due to the preferential exchange rates. In fact, last night on CNBC Europe, one of the key European fund managers was saying he has no choice now but to double the amount of investment he'd considered making in US equity markets since the US economy is picking up steam and the exchange rates mean that US companies have all the advantages. As for CSCO, at 29 times forward earnings, while that's not cheap, but it's definitely not expensive either for a company whose share price is based on earnings vs. gold for which the price is solely based in levels of fear & absurdity. And, of course, Puplava is even further ignorant if not totally oblivious, for those buying CSCO in the $8-$11 range he was complaining about equally just some months ago, it was, in fact, cheap! ROFLMAO!

[JNB]

You know Steven, your arrogant tone only hides the fact you have no point. The fact is revenue growth has stagnated, and profits have grown only because of cost cutting. Thats a fact, look at IBMs and CSCOs results. THis is just another bear market rally based on BS.

[arete]

This isn't an America only problem. Japan, Germany, France and the UK are also having problems. The housing bubble is just starting to burst in the UK and may provide some insight as what we should expect. Right now, the government is encouraging the public to spend its savings (assets) and take on more and more debt. Puplava sees commodity prices rising and they are -- big time. Wheat, corn, soybeans and industrial metals are going thru the roof. We have a huge shortage of natural gas. Interest rates ought to be rocketing up and instead they are falling. The whole economy is on the brink. We live in interesting times.

Richard W.

[Fzob]

bttt

[arete]

Tommorrow should be interesting. I think the party is just getting started in Saudi.

Just a little welcome to Saudi Arabia for Powell. I don't think that it will get much media attention as everything must be painted as a positive.

Richard W.

[steveegg]

This is all going to end very badly.

It could. It could also just merge into a stagnation pattern.

I'm old enough (barely, but old enough nonetheless) to remember the last bout of stagflation. A repeat of that (even taking into account that the tail part of Carter's mess was caused by Iran) qualifies as ending "very badly".

[Starwind]

ROFLMAO!

This happens to you a lot and has resulted in a concussion.

You should consult a proctologist about a craniumanalectomy. But your symptoms are so deep you should just stop at the nearest firestation and have use the 'jaws of life'.

[arete]

Lot of that stuff going 'round lately.

Richard W.

[StockAyatollah]

Flipping burgers for each other doesn't seem like a suitable occupation for a great country with a great future.

Not to worry. Sooner or later our heroic MBAs will figure out how to ship the burger flipping jobs offshore too.

[Starwind]

Today's money flows.

Note the money flows out of QQQ's DIA's SPDR's, Cisco, SUNW, Dell,...prices went up as the greater fools bought and large positions unwound at greater fool prices.

That sound you heard was sheep getting sheared.

DJ Money Flow Table For Major U.S. Indexes And Stocks

.MONEY FLOW - UPTICK/DOWNTICK TRADING DOLLAR VOLUME
May 12, 2003, 4:00 p.m. Eastern Time

       MARKET                    MONEY FLOW (in millions)      RATIO
                                    TODAY     PREV DAY
       DJIA                        +213.9       +210.3        114/100
         Blocks                    +333.8        +89.2        150/100
       DJ US Total Mkt            +1363.2      +1050.7        114/100
         Blocks                   +1558.0       +558.1        138/100
       S & P 500                  +1115.5       +822.4        115/100
         Blocks                   +1602.1       +616.1        150/100
       Russell 2000                 +93.3        +61.3        107/100
         Blocks                     -20.7        -40.8         95/100

       ISSUE GAINERS     EXCH   CLOSE PRICE   MONEY FLOW       RATIO
                                            (in millions)
       Viacom B           (N)       45.38       +718.2       1759/100
       BiotchHLDRs        (A)      103.30       +349.8       1603/100
       IBM                (N)       89.00        +72.2        136/100
       SBC Comm           (N)       24.64        +69.9        205/100
       McDonalds          (N)       18.29        +59.6        395/100
       RetailHLDRs        (A)       79.88        +59.0        755/100
       WalMart            (N)       56.70        +52.5        153/100
       Nokia              (N)       17.59        +48.5        317/100
       HrtfrdFnl          (N)       46.50        +45.2        165/100
       AmExpress          (N)       40.42        +37.7        172/100
       AOL Time           (N)       13.32        +33.6        169/100
       KLA Tencor        (Nq)       43.63        +33.5        129/100
       KohlsCp            (N)       54.80        +33.0        161/100
       NtlSemi            (N)       22.99        +33.0        235/100
       CapOneFnl          (N)       46.65        +32.4        145/100
       WstnDgtl           (N)       10.48        +31.3        334/100
       SemiCon Hldrs      (A)       28.55        +31.3        192/100
       Pfizer             (N)       33.25        +30.5        117/100
       CardnlHlth         (N)       58.41        +29.8        235/100
       AltriaGp           (N)       33.10        +29.0        131/100

 ISSUE DECLINERS   EXCH   CLOSE PRICE   MONEY FLOW       RATIO
                                            (in millions)
       Nasdaq 100         (A)       28.84        -63.7         90/100
       Microsoft         (Nq)       26.21        -57.0         82/100
       SPDR               (A)       94.88        -37.7         97/100
       Diamond            (A)       87.34        -23.2         91/100
       DellCptr          (Nq)       31.90        -23.0         89/100
       SunMicrsys        (Nq)        4.21        -21.2         83/100
       CiscoSys          (Nq)       16.67        -20.2         95/100
       Clorox             (N)       42.32        -18.8         58/100
       Intuit            (Nq)       38.88        -17.5         73/100
       iPayment          (Nq)       21.00        -16.3         67/100
       iShrRu2000         (A)       83.34        -15.9         66/100
       ForestLabs         (N)       49.79        -14.7         71/100
       ElectroArts       (Nq)       61.60        -12.9         84/100
       SmithInt           (N)       38.02        -12.1         43/100
       CIGNA              (N)       51.49        -11.8         55/100
       NtwkApplnce       (Nq)       16.38        -11.2         75/100
       Intel             (Nq)       19.99        -11.2         96/100
       Qualcomm          (Nq)       31.12        -10.8         90/100
       DadeBehring       (Nq)       24.50        -10.6         36/100
       BaxterInt          (N)       22.73        -10.3         69/100

[steveegg]

Not to worry. Sooner or later our heroic MBAs will figure out how to ship the burger flipping jobs offshore too.

For those who've seen the White Castle burgers in the local 7-11's freezer, we know it's already possible. All that would have to be done here is for the burger to go in the microwave.

[dalereed]

"All that would have to be done here is for the burger to go in the microwave."

I'm sure that for such a simple operation, they are already working on a robot to do the flipping, assembly, and delivery to the ex-flipper customer!

[Soren]

From lemetropolecafe:

From The King Report:

Barron’s Michael Santoli writes that for 2002, the gap between reported earnings and operating profits on the S&P 500 showed the widest disparity in recorded history. Operating profits were 40% less than reported earnings…Michael also notes that Investor’s Intelligence shows there are more than 2 times as many bulls as bears. Chris Johnson of Schaefer’s Investment Research tells Michael that this level of extreme optimism has "been indicative of near-term weakness for the market"; the S&P has fallen >5% over the 4-5 weeks after 2-1 bulls to bear readings…ISI notes that operating earnings are within 1% of year ago earnings even though reported S&P earnings are +14.7% y/y.

[Soren]

From Sinclair's site (jsmineset.com):

Morning Commentary


Seven major international investment banking firms, through bankruptcy-shielded subsidiaries, hold 94% of the estimated $142 trillion of non-regulated derivatives.

When in financial difficulty because of their derivative exposure, these banks will, in my view, invoke the main principle of the "Art of the Steal" which teaches that if you are the largest borrower from the bank your loan cannot be called even if it is non-performing without breaking the bank making the call.

Therefore, you do not have to service your loan if you are the largest borrower from the bank. Similarly, the major derivative dealers cannot go broke without breaking the world's banking system. Warren Buffet on the other hand said last week that derivatives can bring down the international banking system.

The Fed and the Euro Central Banks will have to produce the monetary aggregate liquidity in world economies to sustain the major derivative dealers in order to avoid bank failures of the past. Therefore, dear comrades of the Gold Community "you know who" can't go broke.

Gold will therefore trade at $410 to $416 in the very near future. I say this without any doubt in my mind. I say this regardless of the vicissitudes of technical analysis which will set reactions in motion from time to time. I say this with the same confidence that lead to my major purchase of US Treasuries 10 year instruments in 1981 in the mid 50 cents on the dollar after which they went to over 100 cents on the dollar yielding 12 7/8 while you waited for the capital gain

[Ahban]

Click! Great post. For the first time I understand why the bond markets are not punishing the FED for monetizing the debt.

Those people must be REALLY scared.

[arete]

Arnold was talking about PM's on O'Briens show. Suddenly have gold bulls everywhere. Some see Greenspan as being completely cornered and just printing money and creating debt in a wild manic attempt to prevent a crash. Snow-job was all over the talk shows yesterday. I think more people are going to start asking if anyone sane is in charge or is the FED operating in pure panic mode.

Richard W.