Brian Sack’s Window Dressing Farewell Gift To Wall Street


Stocks opened around 2% gap higher this morning after the late-night headlines from Europe made many think that the tooth-fairy and Santa are real once again. S&P 500 e-mini futures saw some selling into the open but then stabilized amid a very narrow range for much of the rest of the day – leaking higher on low volume-driven short-covering. The news from Germany of ESM ratification was greeted with absolutely no price movement as an indication of just how insane things are but the need to drive stocks up in the last few minutes was crazy. Into the close, volume exploded as ES rose 10pts in minutes from absolutely nowhere. Average trade size was very heavy during this period and delta skewed notably to block selling into the ramp though it is never that obvious. ES closed above its 50DMA back to its highest since 5/8.

The Window-Dressing Roadmap

It would appear that the No ‘New’ QE from the FOMC on 6/20 left a lot of all-important funds long-and-very-wrong. Today’s rampfest miraculously lifted (window-dressing) Energy and Financials (two of the MOST sensitive sectors to QE) back to perfectly unchanged from the exact time of the FOMC announcement. Notably, since that exact time ‘safe’ sectors of Staples, Healthcare, and Utilities have outperformed as Tech, Materials, and Discretionary are underperforming (though all did their very best to end the month up (especially relative to the FOMC news moment)… fascinating eh?

 

Stocks were on their own with the last 10 points or so of the day as USD, Gold, and Treasuries all started to point south into the close (orange oval)…

 

Everyone enjoyed the day’s window-dressing escapades aside from JPM which dropped 3% from its opening levels and closed in the red. This chart is performance from the open of today…

While stocks exuded every bit of total insanity, Treasuries ended the week lower in yield across the whole complex (leaving Gold, the Long Bond, and the USD all almost perfectly +2.8% YTD). WTI is down 14.5% YTD to close Q2 thanks to a huge VW-like 9% squeeze higher today (that acounted in correlated risk terms for around half of equity’s performance) up to around $85. Equity and HY credit have recoupled but HYG is the most expensive relative to its fair-value in over a month. The USD plunged on EUR strength (and AUD carry trades) to end the week -0.66% but Gold and Silver more than doubled those implied gains ending the week +1.8%. VIX tested below 17% late on but ended above it (down 2.6 vols) closing at 6/20 closing levels. The main takeaway is that most risk assets recovered to last week’s highs but stocks turned the amplifier of insanity to 11 and pushed back to near two-month highs not to be outdone into quarter-end (wink wink).

Broadly speaking risk assets lost ground on the quarter with only the long-bond and USD up from 3/30. Interestingly, the Bond, Gold, and USD are all perfectly in line as we close Q2.

Equities surged above last week’s highs into the close as a combination of stop-runs and algos looking to tickle us for large block order exits (the blue bars in the chart) made the day just that little more exciting…

but WTI was the winner of the day in terms of multiple-sigma moves…

The S&P just had its best June since 1999 – makes perfect sense for all those funds that needed a good quarter…

now for the implementation of that ‘save-europe’ plan…

Charts: Bloomberg

Guest Post: The Face of “Don’t Ask Questions Of The Government”


Submitted by John Aziz of Azizonomics

The Face of “Don’t Ask Questions of the Government”

I know that’s hard to digest in a society where pregnancies and marriages of D-list celebrities make the cover of People magazine, but there comes a point where the public’s right to know needs to take a back seat to matters like national security and diplomacy.

 

Heads should roll because of the Fast and Furious debacle. We don’t need every detail of that operation to be made public in order for that to happen.

 

If it were an isolated sting, maybe. But it is at least the third incarnation of a gun-running scheme stretching across two administrations, which means we could be pressing to open Pandora’s Box. We do not want to open Pandora’s Box, not about this and certainly not about a bunch of other potentially scandalous things the federal government has been involved with.

 

Fast and Furious? Please.

 

Being told that something’s “none of your business” is slowly being characterized as rude, and if such a statement is coming from the government, it seems incriminating.

 

Times have changed. Yet, not everything is our business. And in the political arena, there are things that should be and need to be kept quiet. . . .

 

You see, freedom isn’t entirely free.

 

It also isn’t squeaky clean.

 

And sometimes the federal government deems it necessary to get its hands a little dirty in the hopes of achieving something we generally accept as good for the country.

 

And maybe it’s better for us not to be so nosy, not to know everything because, to paraphrase the famous line from the movie “A Few Good Men,” many of us won’t be able to handle the truth.

 

LZ Granderson, CNN Columnist

This is the kind of sophomoric anti-liberty trash that passes for journalism today? Shut your mouth, mind your own business, don’t ask questions of your loving government?

Granderson may be a rabid Obama apologist who would reflexively defend anything Obama says or does, and there’s no law against that. But this man is trying to pass himself off as a journalist!

Journalism is about asking questions that corporations, governments and establishments don’t want to answer. It’s about reporting the full-story, no matter how many toes you step on. It’s about opening up power to real scrutiny. And that is something that the propagandists in big media are often incapable of — which of course is why big media is slowly dying.

I get apoplectic whenever some hawkish deficit-happy foreign policy schmuck advocates American intervention in Syria (no matter how many archaic Turkish planes are shot out of the sky) even more than I did before America struck Iraq.

The utterly bizarre imperative of American intervention in the middle east is thrown into stunning contrast against the background of utter lawlessness and destruction on America’s own border with Mexico as a direct result of the failed drug war. The clowns in successive administrations have spent so much time, effort and energy on policing the borders of Pakistan, Yemen, Afghanistan and Somalia, yet they have failed to check the growth of the drug cartels into massive, well-armed organisations.

By trying to obstruct the congressional investigation into the botched gun-running operation Fast and Furious, and instead hiding behind the phoney front of executive privilege Obama and Holder have shown that they have something to hide.

Whatever they are trying to hide should be brought to light. You can’t have an accountable government without checks and balances, and the greatest check to tyranny is transparency.

We need to know the depth and width of Fast and Furious and the programs which preceded it: how was it authorised, how was it designed, how did it go wrong, who was to blame for it going wrong.

We need to know whether or not the widely-spread allegation that the Obama administration has sold guns directly to Los Zetas is true. We need to know whether or not El Chapo and the Sinaloa Cartel are working with the DEA and the Mexican government. (Both of these allegations are widely accepted as fact in Mexico).

We need to know why Obama has chosen to continue the failed drug war, even in spite of overwhelming evidence that the illegality of drugs is the very thing that empowers the criminal cartels, and in spite of the fact that Obama is a former drug user.

We probably won’t get our answers directly from politicians; while it is the responsibility of journalists to ask these kinds of tough questions, politicians will almost always deflect. But I am sure there are some conscientious people inside the DEA, inside the Mexican government, and inside the Justice Department who will blow the whistle sooner or later. Anyone who can answer these questions is serving the public good. We can handle the truth, no matter what LZ Granderson or Eric Holder thinks. We need to hold government to account for its actions.

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Mike Krieger: Where Food Stamps Go to Die


From Mike Krieger of Libertyblitzkrieg.com

Where Food Stamps Go to Die

Anyone who has the power to make you believe absurdities has the power to make you commit injustices.

No snowflake in an avalanche ever feels responsible.

Common sense is not so common.

I have never made but one prayer to God, a very short one: “O Lord make my enemies ridiculous.” And God granted it.

In general, the art of government consists of taking as much money as possible from one class of citizens to give to another.

The sovereign is called a tyrant who knows no laws but his caprice.

All murderers are punished unless they kill in large numbers and to the sound of trumpets. 

 

                  – All Quotes by Voltaire

 

Where Food Stamps Go to Die

We all know the economy sucks.  We all know we are headed in the wrong direction.  We all know our leaders are corrupt, immoral, greedy and violent.  You don’t need me to tell you that.  One thing that I have noticed recently while watching the financial markets is that despite the fact most stocks charts I pull up look awful, the major indices continue to hang in or grind higher.  While it is not new news that a few large cap stocks are holding the major averages up, I want to focus on one in particular.  Wal-Mart.  Yes we all know Wal-Mart.  Everyone has an opinion; whether you love it or hate it.  In this instance, I’m not so much interested in the company itself, the stores or disturbing images of some of the people seen shopping there.  No, in this case I want to take a look at the stock and ponder what it tells us about the state of affairs in both the U.S. and the global economy as a whole.

Wal-Mart’s stock is up 14% YTD, which is triple the return of the S&P 500.  The stock also packs a dividend yield of 2.3%, so the total return is even better.  In the last month or so the stock has become a real powerhouse as you can see in the chart below.  Crushing any and all shorts under the weight of its rapid appreciation.

 

Wal-Mart Three Year Chart

 

I think the above chart, in particular the move in the past month or so, speaks volumes to what is happening on a macro level.  First, from a purely flow of capital perspective, the U.S. economy was the last one to hit recession (most money managers still have no idea).  With Europe in a situation where monetary and political chaos appears likely here and now (and inevitable ultimately) and the BRICs in total free-fall, we have seen a rush into perceived safe havens.  We all know about treasuries and bunds, but at some point people don’t want to continue to funnel money to instruments yielding negative real returns.  So what has apparently happened is global money managers have been allocating more dollars to very large cap U.S. shares as an alternative to treasuries and bunds.

There’s more to it of course.  Nothing exemplifies the ghetto status of the U.S. economy more than the success of Wal-Mart in the face of the ongoing destruction of what was once a vibrant and strong middle class.  In case you missed it, Marion Nestle, Professor in the Department of Nutrition, Food Studies, and Public Health at NYU, came out with some interesting tidbits regarding the food stamp program.  One of them is extraordinarily disturbing.  She shows that Wal-Mart’s gets as much as 25% to 40% of revenue at some stores from food stamp dollars.  This says it all folks.  Food stamps are or course the perfect business for Wal-Mart and JP Morgan, which as I pointed out previously makes a lot of money running the program and keeping the populace in perpetual serfdom.  Meanwhile, guess what another of the best performing stocks this year is?  Corrections Corp of America, ticker CXW, up 41% YTD!  Guess what they do?  Yep, you guessed it.  They lock up the serfs that get out of line.  This is the Bloomberg description of CXW.

Corrections Corporation of America provides detention and corrections services to governmental agencies.  The Company owns correctional and detention facilities in the United States and the United Kingdom. Services include design, construction, ownership, renovation, and management of new or existing jails  and prisons, as well as long distance inmate transportation services.

There you have it folks.  What sectors are leading the American economy in the “recovery”: Food stamps and Prisons.  They are actually perfectly complimentary.  If the food stamps don’t work the prisons will.

Meanwhile, in the real economy we have the latest earnings blowup.  Ryder System, a company involved in the leasing, rental and logistical business of trucking lowered its forecast and the shares were smashed.  Too bad you can’t lease a truck with an EBT card, although who knows, that might be in the next stimulus package.

Ryder Three Year Chart.  Thanks for Playing!



The global economy is currently staring into a cyclical recession in the midst of the biggest structural debt and derivatives ponzi scheme that mankind has ever witnessed.  The desperation to keep things looking decent into the election continues at a frantic pace and now there are only four more months left.  As I have said before, if they do not allow pressure to be released until after the elections the comeuppance is going to be way more awful than I care to think about.  Prepare accordingly.

Peace and wisdom,

Mike

Gossip and views about privacy, gold, wealth, asset preservation