After year of stock records, a weak start to 2014

[Omaha Steve]

Source: AP-Excite

By STEVE ROTHWELL

NEW YORK (AP) - Investors may already feel a little nostalgic for 2013.

The Standard & Poor's 500 index began the New Year with its worst performance in three weeks as energy and technology companies pulled down the stock market.

Stocks started the year at lofty heights after a combination of rising company earnings and economic stimulus from the Federal Reserve pushed major indexes to record levels in 2013. The S&P 500 surged almost 30 percent, its best year since 1997, and the Dow Jones industrial average climbed 26.5 percent, the most since 1995.

"The market was grossly overbought and needed to pull back," said Peter Cardillo, chief market economist at Rockwell Global Capital. "But fundamentally everything is looking pretty good."

FULL story at link.


Read more: http://apnews.excite.com/article/20140102/DAB2TNR02.html

---

What happened to the DUer that used to post the "before the bell" every morning in LBN before the market opened?




Stock trader Gregory Rowe works at the New York Stock Exchange, Thursday, Jan. 2, 2014, in New York. Stocks are opening lower on Wall Street as the market comes off of its biggest annual gain in nearly two decades. (AP Photo/Mark Lennihan)

[Deny and Shred]

1. Merely portfolio rebalancing.

This isn't financial armeggedon. Institutions are too short-term focused for that. The Put is still in place. I've had some rough news lately, and need to vent. Peace unto DU.

Bear in mind that the Fed, previously Benanke's and soon to be Yellin's money supply tool, has been pumping, for years, $85 Billion (WITH A B) every month, 'into the economy'.

Hank Paulson's Oct 2008 $700 billion seemed unfathomable at the time. Its been eclipsed several times over in the interim.

Half of that monthly sum, $40 some-odd billion, has gone to buying 'mortgage backed securities' for several years. These are securities that traded amongst financial institutions as easily as bonds or commercial paper a decade ago. That came to an end in '08. Since then, not a single institution would buy a cent of MBS. Why? Because they know! The mortgages are worthless!!! The balance sheets of EVERY Western financial institution holds these securities, or relies on their once high value in the form of insurance against these securities dropping in value.

If the financial system acknowledeged the drop in value of these assets, the whole system would collapse within a week. We are talking about individual $100,000+ mortgages for properties that have been abandoned for several years at this point. Many pilfered for copper piping, set on fire in Detriot or other cities, rotting on the outskits of Vegas or never inhabited in Florida. Condo developments that never found buyers, etc.

Instead, the Fed buys the assets. Do we know at what price? No. Financial institutions doing due dillengence won't touch them, but the Fed buys them, every month, $40 B worth. The fix is in. They are worth what the firms say they are worth, and the Fed buys supposedly at the quoted price, in the hopes that clearing these 'toxic assets' off their books will spur lending and GNP growth.

The other monthly 40 billion over the last few years has seen at least a portion make its way into the stock market. How else can the S&P rise be explained??

The public printing of the M3 (the Money Supply upon which inflation is computed) was suspended in March 07. Inflation is no longer in the realm not of intellectuals nor academics, but behind the veil. Some folks somewhere knew what was coming. I imagine they've made a killing.

The Koch Bros' fortune grew from $10 Billion to $40 B in that time. Must be a coincidence, right? Who would ever want to object to businessmen making a profit? T'would be downright Un-American, or so I've heard.


Edit:Spelling

[CatholicEdHead]

2. Check the Economy Form

That is where Stock Market Watch went in the latest DU redesign.

[mitty14u2]

3. Oil prices tumble on signs of Libyan comeback

NEW YORK: Oil prices Thursday fell sharply on news that a major Libyan field could come back on line later this week.

US benchmark West Texas Intermediate for February delivery fell $2.98 to $95.44 a barrel on the New York Mercantile Exchange.

In London, Brent oil for February delivery tumbled $3.02 to $107.78 a barrel in London.

A spokesman for the Libyan National Oil Corporation (NOC) told AFP Thursday that the 330,000 barrel a day El Sharara field is expected to resume normal output within two or three days, once protesters who have blocked production pull out.

http://www.channelnewsasia.com/news/business/international/oil-prices-tumble-on/941534.html

[7962]

4. We're all gonna die! nt

[melm00se]

5. the financial world will completely

collapse based upon 1 day's worth of trades.