Beat Down

 

 

by Larry Levin

The equity markets were served a beat down Wednesday.  It was like watching Cain Velasquez beat down Brock Lesnar in a UFC match: brutal.  The S&P was ground-n-pound -30.65 points lower; the Nasdaq was choked out with a -66.11 point loss; and the Dow tapped out from an arm bar with a -279.65 point loss.  
 
The financial media told us all day that it was due to this morning’s bad reports, and that’s all.  When has the market ever reversed like that on ONE day’s news?  Never!  The truth is that all of the heretofore ignored news simply can no longer be ignored and here is a recent list...
 

1. May 16th, Empire State Mfg Survey: it was extremely bad, far worse than expected & ignored.
2. May 17th, Housing Starts: it was very bad, worse than expected & ignored.
3. May 17th, Redbook retail survey: it was extremely bad, far-far-worse than expected & ignored.
4. May 17th, Industrial Production: it was extremely bad, far worse than expected & ignored.
5. May 19th, Weekly Jobless Claims: it was again worse than expected with revisions poorer than originally reported & ignored.
6. May 19th, Philly Fed Survey: SHOCKINGLY BAD & ignored.
7. May 19th, LEI: worse than expected & ignored.
8. May 24th, New Home Sales: better than expected – not ignored – used as a reason to rally.
9. May 25th, Durable Goods Orders: worse than expected & ignored.
10. May 25th, FHFA House Price Index: not as bad as expected but still poor showing falling home prices & ignored.
11. May 26th, GDP: far worse than expected & ignored.
12. May 26th, Weekly Jobless Claims: it was worse than expected again with revisions poorer than originally reported & ignored.
13. May 27th, Pending Home Sales: much worse than expected & ignored.
14. May 31st, S&P Case-Shiller Index: worse than expected, guaranteeing double dip in the housing market & ignored.
15. May 31st, Chicago PMI: MUCH worse than expected & ignored.
16. May 31st, Consumer Confidence: terrible & ignored.
17. June 1st…today…ADP Employment Report: DEVESTATINGLY bad but what is the true shock this time is that it can no longer be ignored.
18. June 1st…today…ISM Manufacturing Report: PLUMMETS over 11% in one month and can no longer be ignored.

 
Additionally, there is news that China is slowing, the Australian housing bubble has found a pin, and as we all already know: Europe is a complete mess.  
 
So why has the market ignored all of that horrible news above?  The Federal Reserve Bank of the USA and Ben Bernanke.  There is no need to worry if the Fed Chairman will backstop everything that ails the market…until it won’t.  QE2 is ending and the market doesn’t like it.  Therefore, like the petulant children that they are, the bankster class will scream, yell, and stomp their collective feet for QE3 (or whatever Ben decides to call it) until they get it.
 
Frankly, a very cynical person could even think that the Fed is now hoping for a market correction of at least 10%, because at that time even those that are now critical of QE2 will clamor for it.  Congress will drop all pretense of cutting spending.  Congress will boycott any notion of a real audit of the Federal Reserve.  
 
…and the bankster cartel will be bailed out again in time for year-end bonuses. 

 

 

Trade Date: 6/1/11

E-Mini S&P Trades*

(before fees and commissions):

1. No “Secrets” trades filled.
2.  Algorithm positions (4)
3.  “Reading the Tape” positions (4) …combined Secret’s, Algo, & “Reading the Tape” total… +9.00 

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