Bear Mountain Bull

It’s time again for a little BMB R&R, especially with the market behaving as bizarrely as it’s been. Maybe if we stop watching it start to behave a little better…

Posting will be very light and variable over the course of this week, but we’ll put up an open thread each market day for our readers to comment on the day’s market activity or to post any interesting links they might run across.

Check the space below for whatever the latest might be during this ‘off’ time, and please visit the various sites in the ‘Links’ and ‘Regular Stops’ for up-to-date market news and analysis.

BMB will be back in full swing by next weekend.

Headline at MarketWatch:

INDIA - Inflation rise surprises central bank

How long have central banks been around? Then they certainly they know that inflation is, first and foremost, a monetary phenomenon. I mean, supply and demand is pretty much Econ 101, or earlier, isn’t it? Too much money leads to higher prices for everything…duh. I’m not a central banker (maybe I should be), and I can clearly see that.

Yet they keep printing money and printing money, and are “surprised” when inflation is the result. What is with these people? Of course, they’re already a little whacked, since their “comfort zone” is 5%. Then again, maybe they’re a little more realistic in their inflation measurements than we are here in the US…

This seemed somewhat fitting, what with the PPI number coming out this morning and the tortured CPI number due out tomorrow morning.

John Rubino, at DollarCollapse:

…the May Harper’s just hit the newsstands with a cover story by veteran political analyst Kevin Phillips on how the U.S. government has been systematically distorting the economic numbers it reports. Here’s his opening:

“Almost four decades have passed since the United States scrapped its last currency ties to precious metals. Our copper and nickel coinage still retains some metallic value, but not nearly enough for the purpose of currency tampering–the historic temptation of inflation-plagued or otherwise wayward governments, including, at times, our own. Instead, since the 1960s, Washington has been forced to gull its citizens and creditors by debasing official statistics: the vital instruments with which the vigor and muscle of the American economy are measured. The effect, over the past twenty-five years, has been to create a false sense of economic achievement and rectitude, allowing us to maintain artificially low interest rates, massive government borrowing, and a dangerous reliance on mortgage and financial debt even as real economic growth has been slower than claimed. If Washington’s harping on weapons of mass destruction was essential to buoy public support for the invasion of Iraq, the use of deceptive statistics has played its own vital role in convincing many Americans that the U.S. economy is stronger, fairer, more productive, more dominant, and richer with opportunity than it actually is.”

According to Phillips, this misinformation campaign began under LBJ, continued under Reagan, took off under Clinton, and was refined by Bush. So the enterprise is bi-partisan. And it’s not just one statistic. Our leaders lie about unemployment, inflation, growth and the deficit. Because Social Security payments are indexed to inflation, government statisticians suppress reported inflation, and thus their need to increase monthly SS checks, by arbitrarily eliminating from their calculations products that are rising too quickly in price. If they were adjusted for the true cost of living, today’s Social Security checks would be 70% higher and the Federal deficit would be exploding. (Questions for seniors: Why haven’t you burned down the White House? Are you waiting for the Baby Boomers to do it?)

After listening to the John Williams interview at FSN (link to mp3 file) over the weekend, I could see how the Boomers might just get to that point…

Even if you were to limit yourself to what seems like one of the ’stronger’ areas — like energy — you still can’t just throw darts. After all, there are some good ones, and there are some bad ones:

Charts courtesy of StockCharts.com

Another uninspiring day, as the market faked a run for the upside at the open, gave that all back my mid-morning, then worked its way back up throughout the afternoon. But there wasn’t much power in the move, in either direction, and the indices were left with token gains, helped by a couple of quick pops in the last half-hour.

The Transports managed to outgain the broader indices, in spite of new record highs in both crude oil and gasoline:

Treasuries slipped, and yields were higher across the board:
6-month: 1.44%    2-yr: 1.84%    5-yr: 2.68%    10-yr: 3.59%    30-yr: 4.43%.

Internals were mostly positive, and volume increased slightly from yesterday’s pathetic levels. Advances/declines were 11 to 8 on the NYSE and 10 to 9 on the Nasdaq, with up/down volume 3 to 2 on the NYSE but just below flat on the Nasdaq. New highs/lows remain pretty shaky, especially on the Nasdaq - highs/lows were 60/68 on the NYSE but a poor 16/155 on the Nasdaq.

The groups were mixed again, with a few of the recently-weak groups getting a little bounce, led by the brokers (+1.7%), insurance (+1.7%), HMOs (+1.7%), homebuilders (+1.5%), natural gas stocks (+1.4%), commodities (+1.3%), REITs (+1.2%) and gold and silver stocks (+1.2%). Leading the losers were the airlines (-4.3%), banks (-3.0%) and biotechs (-1.6%).

Energy prices continue to cruise. Crude oil gained two bucks to hit another new record, closing at $113.79/barrel. Gasoline joined in with a record high of its own, at $2.88/gallon, having gained a dime in the past three days. Natural gas moved up $10.21/mmBTU. The dollar index bounced slightly, up to 72.05. Gold and silver both edged just a big higher, gold to $927/ounce and silver to $17.79/ounce.

BMB Note:   This market is still going nowhere, and now it’s even doing a lot less ‘wandering’ than it was. Today doesn’t change much of anything. Still the only places to be are in some of those commodity areas, solars, etc., but even those are bound to take a rest sooner or later.

The airlines dumped right back down, the banks are stinking it up something awful, and the semiconductors look like they’re ready to crawl right back under the rock they were hiding under for a few months. There just isn’t a lot of good stuff going on here. Volume was light again, though just a bit higher than yesterday, which was the lightest day of the year thus far. Nonetheless, the lack of enthusiasm for stocks has been pretty noticeable. And the internals on the Nasdaq just continue to look disturbingly weak, as new lows easily outnumber new highs on a daily basis, and the advance/decline line looks like it may be resuming its downward slide.

Movement in the commodities, aside from gas and oil, has slowed too, as has the movement in the currencies. There just isn’t a heck of a lot moving these days. So, boring as it is, I guess I’ll just continue to watch from the sidelines until the action starts to pick up, assuming it does someday. That’s better than beating my head against the wall trying to trade this mess — and it’s better than losing money.

The market rushed out of the gate, with the Dow pushing up about 70 points, but it didn’t last. The indices are now pulling back to the flat line, and A/D lines are near flat as well. The groups are split again, with HMOs, gold and silver, natural gas and paper leading the green team, while the banks are getting hit again, along the airlines, semiconductors, biotechs and homebuilders.

Treasuries are mostly lower, yields higher. Energy prices are still teasing record highs. The dollar index is a bit higher, gold and silver higher as well.

…That yesterday’s trading volume was the lightest volume day of the year? Gary Kaltbaum mentioned it on his radio show last night, and Deron Wagner talks about it in his column this morning:

Curiously, volume in both the NYSE and Nasdaq fell to its lowest levels of the year. Total volume in the NYSE declined 10% below the previous day’s level, while volume in the Nasdaq eased 16%. In both exchanges, it was the lightest full day of trading activity since December 28, a typically low-volume holiday period. Further, it’s been nearly a month since volume in the Nasdaq has even exceeded its 50-day average level. The NYSE volume has done so just once. Institutional participation has really been drying up lately, indicating the “smart money” has been primarily on the sidelines. When mutual funds, hedge funds, and other institutions eventually jump back in the market, the momentum should be pretty swift, but the big question is which direction will they take the market? Astute traders should remain on the sidelines as long as the institutions do. Overtrading in a light volume market is a sure way to give back profits from choppy price action in both directions.

PPI numbers out, and what a surprise!! Prices have been moving higher! Who knew?!?!?

Wholesale prices surged 1.1% in March, led by rising energy and food prices, the Labor Department reported Tuesday. Energy prices rose 2.9% in March, while food prices gained 1.2%. The core producer price index, which excludes volatile food and energy, rose 0.2%. Economists surveyed by MarketWatch had expected the PPI to rise 0.4% and the core to rise 0.2%. Year-over-year, the PPI is up 6.9%. The core PPI is up 2.7% over the same time period.

YOY up almost 7%. Not a huge surprise to me, as I sit here and look at crude oil above $113, gasoline above $2.85 in the futures market.

This report has people on CNBC asking if the Fed is going to cut rates in light of these inflation figures. Let’s not kid ourselves. This Fed is going to cut rates.

In other news, the Empire State index was back to flat after a minus-23 in March.