Monday’s markets: Stocks meander like a rudderless boat

Monday’s markets: Stocks meander like a rudderless boat

Plus, a closer look at Friday’s jobs numbers and at the quiet acknowledgment of the long-rumored international “crash protection team.”

Rudderless boat.
What happens when a rudderless boat is out on the sea too long. (Photo via Flickr by Ibraham Hussein Shibab, CC 2.0 license)

WASHINGTON, May 11, 2015 – We’re going to be mostly out of the office this morning, so we’re posting this short report before we take off for a meeting in downtown D.C. We’re not particularly worried that you’ll be lacking crucial trading information from this site. That’s because we don’t have much as of now, just like most of last week, which caught Wall Street back in its accustomed 2015 bipolar mode of huge declines on heavy volume alternating with slightly smaller recoveries on light volume.

That’s not particularly encouraging for modest traders and investors like the Maven, who prefer not to jockey around with their portfolios every day due to the violence and the volatility of the moves. This market is increasingly like our pictorial metaphor above. It behaves like a rudderless ship, tossed to and fro at the whim of rising and falling winds and/or the prevailing ocean currents.

Our boat has seen better days. And there have been many times already this year when we get that feeling about our portfolios. “Tempest tossed” is the term that comes to mind. We’ll see that this morning, with the market opening slightly down and, once again, lacking any real conviction whatsoever.

Last week, investors were alternately impressed and depressed by Friday’s April employment numbers. Unimpressive by any standard, as they have been since the start of the Great Recession, they look even lousier when you take the time to peek inside the tent.

According to a ZeroHedge article published this weekend, those already anemic job numbers are even less impressive upon closer examination.

“… the vast majority of new jobs were ‘part-time’ while U.S. total jobless is at record levels. This seemingly negative tone was not unknown (as we said, the Fed spins it as favorable recovery to give ‘cover’ for extracting policy from the corner they painted themselves into). What you had was … a ‘ramp’ higher [in Friday’s trading action] if the numbers were as they were; and the rationalization that will keep the Fed away from firming up.”

In other words, both the jobs number and the recovery continue to be a fairy tale masking this administration’s failure to do anything to improve the lot of the average Joe and Josephine in flyover country, both of whom remain either unemployed or chronically underemployed in one of those low-level or part-time jobs, the latter of which were created in abundance via the stupidity of Obamacare statutes.

But the media will never tell you this. They continue to report this fabricated non-recovery as a recovery, and there you have it. Smoke and mirrors.

Likewise the stock market, where corporate earnings continue to get juiced by stock buybacks, a genuinely non-productive use of profits that should be going toward R&D. By the time this country actually figures this out, the U.S. will have lost its entire technological edge to other, less friendly, countries. That’s the way this administration “supports the middle class.” Or what’s left of it.

SNB US Stock holdings Q!, 2015.
SNB Q1 holdings of U.S. common stocks. (Via ZeroHedge)

The other fun story coming out last week was a shockingly candid report from the Swiss National Bank (SNB), giving credence to at least a portion of the mysterious “crash protection team,” aka the “plunge protection team” we’ve long felt was orchestrated and led by central banks around the world.

Tucked into its current report was a chart (reproduced above) indicating the huge positions SNB held in U.S. stocks in the last quarter. If you wonder why market crash attempts over the last five years or so, take a look at this chart, which shows an unprecedented ownership of common stocks by a single country’s central bank.

While finally owning up to this longstanding international price-propping cartel, it’s clear that it’s not only the SNB that’s been playing this game with taxpayer money. The Fed, the Eurobank and God knows who else are also in on the scheme to inflate asset prices, creating the illusion that Western economies are “recovering.” They’re really not, at least in terms of real, private-sector generated growth.

The clear evidence of this long-standing effort of mass market manipulation via smoke and mirrors and (likely) planted headline stories has to give every investor pause. What happens when even Joe and Josephine finally figure out that everything in this life has become a shell game and they’re not allowed to play?


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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17