News & Analysis
Stock Market Tapped Out?
Pandora shares make spectacular plunge below IPO ... It didn't take long before Pandora went from music to investors' ears to the stock market's version of fingernails on a blackboard. The money-losing online music service became the latest initial public offering to "break," or fall below its offering price. The stock closed its second day of trading at $13.26, undercutting its $16 offering price, so even the privileged investors who bought into the IPO now have losses — if they didn't sell in time. – USA Today
Dominant Social Theme: It is not a trend. Stocks are a good buy and always have been.
Free-Market Analysis: The Pandora IPO came out higher than expected and then went up on the open until it was US$10 more than the initial US$16 offering. The excitement was tremendous. Bloomberg TV literally covered the price action of Pandora every 15 minutes or so for the entire day. The entire episode represented a kind of sub dominant social theme: "Stock trading is back, baby, and the action is hot!"
The Pandora IPO may have provided us with the last gasp of activity in what may soon be a prolonged bear market. The results of QE2 are fading and without more monetary inflation the US stock market is probably doomed to collapse like a gradually deflating paper bag, which is inevitable anayway BECAUSE of all of the monetary inflation to begin with. It is just a matter of WHEN the music stops, that's all.
Granted, the price action for Pandora was feverish but the desperation with which Bloomberg focused on this relatively tiny stock was even moreso. Constant interviews on the NYSE trading floor, confabs between anchors on the Bloomberg set, phone and video interviews with analysts – all created a picture of significant interest. What it also signaled, inadvertently, was that the health of stock trading in the US is questionable to say the least.
In fact, Pandora is now trading under its IPO by a significant margin; the over-enthusiasm directed at this under-reported enterprise is symptomatic of the problems that the NYSE and stocks in general are facing in the early part of the 21st century. The NYSE has merged several times lately, with the most recent merger with German-based Deutsche Boerse that will create a huge, world-spanning conglomerate
But size does not create interest. Europeans generally do not trade stocks with the gusto of American investors and thus as big as modern exchanges get, the amount of mom and pop investors involved is likely lessening, overall. In the United States it is surely true that interest in stock trading likely peaked in the late 1990s with an explosion of interest in day trading and a plethora of mainstream media available to explain different "opportunities."
The efforts of the powers-that-be to reignite stock trading have sputtered in the 2000s after an obvious uptick in mainstream interest in the markets before the financial crisis of 2007. Ever since, US markets in particular have struggled. The "quantitative easings" of the past two years have certainly boosted share prices, but now with this final easing fading, so is the American stock market, which is a kind of bellwether for markets around the world.
As the US stock market fades once again, the hype surrounding the stock market picks up. The Pandora example is a good one. Pandora is a software facility that lets the user customize his or her playlist over time, so that the music being played increasingly conforms to the exact taste of the listener.
Pandora's gross revenue was about US$140 million this past year and losses were only US$1.2 million. But it received the cherished single symbol, "P" on the Big Board and there were, apparently, high hopes that Pandora could turn around investor sentiment.
The USA Today article (excerpted above) gives us some of the context for what happened with the Pandora IPO. It seems to be a fairly predictable story. Thirty-one of this year's 73 offerings have broken below their IPO prices and 41 are trading below their first-day closing prices. IPOs are increasingly breaking below their offering prices for three reasons: Broad market woes; Lofty valuations and hype; and heightened sensitivity to risk.
According to the article: "While investors were willing to look past companies' problems a month ago, macroeconomic concerns are prompting them to take a closer look and demand lower prices now. If the stock market continues to slide, expect IPO prices to fall further and more companies to shelve plans to go public, says Darren Fabric of IPOX Schuster. 'Risk has come back into the market," he says. IPO 'prices will come down.'"
The US stock market's general malaise is already stimulating calls for a QE3. Bank analyst Dive Bove has been promoting the idea that banks should release the approximately US$1.3 trillion in reserves that they have not yet lent out. It is unclear how this might be accomplished.
Ben Bernanke, meanwhile, has indicated that a QE3 is probably not going to any time soon. According to hedge fund manager David Tepper, Bernanke might change course if the equity environment turns seriously ugly. "If the S&P500 falls 200 points ... that would be more than enough to get the Fed's attention, at which point, the oil price might be back in the $80 range with gasoline prices barreling back toward $3 a gallon and Ben Bernanke will have adequate cover in the renewed concern over deflation."
The larger issue is the one we are interested in. The power elite relies on fear-based promotions to create a constant cash flow. They create memes like global warming and then market them through an intricate process that involves think tanks, white papers, mainstream media and eventually NGOs and domestic and global legislation.
As the "problem" is marketed, the elites begin to create solutions, well funded private companies that appear to be brainchildren of alert entrepreneurs. In some cases they are; in other cases, the elites may have, initially, a direct hand in the creation of the companies; they are certainly involved in the venture capital funds and hedge funds that provide funding to these start ups.
Eventually, these companies are directed toward stock exchanges and the initial, elite partners cash out. The cash-outs is then directed toward markets where it can be swapped for more substantial assets like real estate and gold. The real estate may be held or exploited; the gold is stored in countries like Switzerland using elaborate off-the-books accounting methods. Many such banks work directly for the elites; their other businesses are just for "show." This seems to be how it works.
This methodology is well beyond the understanding of most people, unfortunately. The scale at which it operates is almost inconceivable. It involves recognizing that most companies and most exchanges are to some degree under the active control of the Anglosphere elites. One can likely confirm it, however, by tracking the ownership of the Fortune 500 and supervising bodies such as the EU, World Bank, etc.
At the top, the names often turn up in several places. There is a good deal of interchangeability among global institutions, top universities and business schools, legal firms, corporate boards and even top politicians. These individuals are not the final controllers, of course. They are intermediaries.
It is also true that securities exchanges are consolidating at a rapid rate. This is another evident plan for globalization, in which all securities instruments are eventually to be traded on only a few worldwide exchange. The profits that can be made from a single exchanges with multiple instruments are astronomical, especially if one controls the regulatory authorities that are supposedly providing oversight.
These plans along with the elite's wider efforts at globalization are in our view threatened by the rise of the Internet, which has exposed much of what is taking place now. When it comes to the stock market, America was a prized example of how to involve individual investors in the larger elite-controlled casino, but now due to the financial crisis and subsequent Internet Reformation (as we have taken to calling it) investors around the world and especially in America have begun to turn away from investing, especially equity investing.
The sovereign debt crisis may do the same thing for bonds that the financial crisis has done for stocks; sour people on paper holdings. This is a direct threat to the profitability of elite investment strategies. If the larger masses do not believe in "investing" and its outcomes, then the ability of the elites to extract wealth from the masses via the inevitable business cycle upturns and downturns is compromised. This is taking place now and it is a fundamental threat to elite control and the money-making paradigm they have come to rely on.
Conclusion: The stock market's linkage to Fed stimulation is more obvious than ever these days. But with the entire dollar-reserve system gradually collapsing, stock markets around the world are increasingly in disarray. A collapse of American markets will have a significant impact. Whether Bernanke attempts a QE3 at this point seems almost irrelevant. Numbers one and two haven't worked. So why should number three?
Posted by amanfromMars on 06/19/11 01:53 AM
Oh I don't know, Hugh, for what is discussed there .....
"was to support a foreign policy within a new world order that was to feature the United States as the leading power - a programme defined by the Rockefeller Foundation as 'disinterested', 'objective' and even 'non-political'... The construction of a new internationalist consensus required the conscious, targeted funding of individuals and organizations who questioned and undermined the supporters of the 'old order' while simultaneously promoting the 'new'." .... Click to view link
....is no different from commenting chatter here on the Daily Bell ......
"built upon just the easy instant supply of obscene wealth in any of its liquid forms, whilst it can be immaculately wise and compelling and beautifully effective, is it only so whenever it is delivered to those who would ready, willing and able to rebuild a failed protocol which reveals its zeroday vulnerabilities and systemic weaknesses, and would monitor and mentor with novel algorithms, its successor programs." ....Posted 06/18/11 01:07 AM
In digital virtual parlance is that a SMART Future Parallel for Command and Control Leverage ...... for Remote Conscious Manipulation of Universal Perception.
Is that a Western toy or an Eastern joy or an Alien Asset of Indeterminate and Immaculate Origin for Rapid Supply of Unified Future Needs and Feeds ..... Source Seeds and Lode Ore for Applied Intellectual Property Fields augmenting Reality for Live Operational Virtual Environment Researchers ...... and a Product for Immediate Delivery to SMARTer Great Game Players at whatever compass bearing?
Posted by Hugh on 06/18/11 02:00 PM
Even though it's not quite on point, I felt that this article was too insightful not to share:
Click to view link
Posted by amanfromMars on 06/18/11 08:11 AM
Oh, and the very obvious fact that the mainstream media do not carry any interesting news on fabulous and entirely new and completely different programs for the utilisation of global wealth and novel intellectual property, shows and proves that Power Elite Intelligence is an oxymoron to match its Military Intelligence stable mate, and is as dead as a dodo is in extinction.
And now do they have a problem, for others see their nakedness and inadequacies and would steal their clothes and toys to parade as their own as well earned spoils from a easy battle in wars and with words against halfwits which renders the full suite of absolute powers to truth seekers .... Enlightened Master Pilots and Magic Path Finders.
And the problem only gets progressively worse, increasingly quickly, as it is denied as being the problem for eradication, even as you fight against the truth, which is discovered, from being revealed and lauded as .... well, an Emperor with no Clothes Program is the Ponzi Program which old hands and sick heads are running instead of a Elite Power System in a Novel and Noble and Fundamentally Improved and Radically Approved Brave New World Order.
Posted by amanfromMars on 06/18/11 01:07 AM
In a mad, mad, mad world, it is the perfectly insane who would think that to prosper is to rule the roost, whereas in a crazy, lazy, hazy Cloud Command Operation does SMART Anomalous Intangible Stealth reveal Said Sad Beast that Burdens and Controls you with the Woes and Tribulations of Enslaving Artificial Debt .... for the Mass Slaying and Feasting upon.
There is a very good reason why the Staus Quo are so intent on preventing Intelligence flowing, and that is because the Intelligence they are using is then shown to be Stupid Sub-Prime and a Systems Main Framework for a New World Order of Great Game Power Elite Players built upon just the easy instant supply of obscene wealth in any of its liquid forms, whilst it can be immaculately wise and compelling and beautifully effective, is it only so whenever it is delivered to those who would ready, willing and able to rebuild a failed protocol which reveals its zeroday vulnerabilities and systemic weaknesses, and would monitor and mentor with novel algorithms, its successor programs. ......... Click to view link
Posted by Col on 06/17/11 05:05 PM
Blaming the poor or working class for not being able to pay off their mortgages (which was/is untrue) & causing the WFC is another faux social construct foisted on the public by the elites.
Don't be fooled.
The real reason is exposed here by independent investigative reporter Judd Bagley here : Click to view link
Posted by Pete 8 on 06/17/11 01:46 PM
Bitcoin from a security perspective:
Click to view link
Have a GG day all.
Posted by amanfromMars on 06/17/11 11:42 AM
Well worth a read and a ponder ...... Click to view link ... George Washington telling it like it is with this new fangled, entangling IT Machine.
Posted by Jackson on 06/17/11 10:27 AM
The fuel that drives inflation is currency creation by credit.
When the government opened the door to unlimited credit through the Community Redevelopment Act, it set the stage for the housing bubble. I believe that whenever government creates money and drops it into a particular sector it must necessarily create a bubble in that sector. When that bubble inevitably burst, the government was faced with a choice between widespread deflation or some attempt at re-inflation.
Bernanke clearly attempted to avoid the dreaded deflation by providing more credit currency to banks who could restore their balance sheets by making direct investment in stocks. They did so and stopped the crash. When the market recovered from the lows of 6000, the banks showed tidy profits (and their managers got tidy bonuses).
Bernanke's present challenge is how to maintain the bubble in the face of the additional overall inflation he has unleashed. His problem is compounded, of course, by the fact that his prevention of across the board deflation has done nothing to cure the deflation in housing. You cannot escape the fact that the current stock market is a bubble.
Posted by bionic mosquito on 06/17/11 07:50 AM
Where has all the QE gone?
This article from ZeroHedge sheds some light:
Click to view link
"In summary, instead of doing everything in its power to stimulate reserve, and thus cash, accumulation at domestic (US) banks which would in turn encourage lending to US borrowers, the Fed has been conducting yet another stealthy foreign bank rescue operation, which rerouted $600 billion in capital from potential borrowers to insolvent foreign financial institutions in the past 7 months. QE2 was nothing more (or less) than another European bank rescue operation!"
While I don't agree with all of the conclusions drawn in the article, the factual data presented tells an interesting and worthwhile story, and potentially a politically flammable one for Bernanke.
Reply from The Daily Bell
Yes, this was quite an intriguing article! But a bit too cynical. No matter the foreign angle, Bernanke has every reason to want these programs to work domestically.
Posted by bionic mosquito on 06/17/11 06:54 AM
"The US stock market's general malaise is already stimulating calls for a QE3. Bank analyst Dive Bove has been promoting the idea that banks should release the approximately US$1.3 trillion in reserves that they have not yet lent out."
Stop to consider the illogic of this mainstream economic thought process. First, if QE1 and QE2 are sitting on the banks' balance sheets, why would there be any discussion of QE3? The money already created is not being lent out, so why create more? To whose benefit is it to give the banks more money, and for the money to just sit there with the banks? (Hint: to ask the question is to answer it).
Perhaps it is solely so the Fed can pay the banks more interest on the excess. More likely it is because the excess reserves aren't excess at all. If the assets on the banks' books are overstated (a reasonably safe assumption given the opaque nature of the accounting), then could "excess" reserves truly be "excess"? Or are the so-called excess reserves just enough to keep the banks liquid and solvent?
Call QE2 a pre-emptive, under-the-radar bailout; one without the political nuisance of having a treasury secretary on his knees in front of the house speaker. And call every future QE the same - unless you see the banks lending the excess.
But wait, that is a problem as well: what of getting the banks to release the $1.3 trillion of excess reserves they now hold (assuming the banks could, and assuming the borrowers wanted it)? If you think you have seen inflation to date, you ain't seen nothin' yet!
Posted by GeorgeSilver on 06/17/11 05:58 AM
Interesting thought provoking articles spoilt by the annoyance of the constantly distracting "Latest Daily Bell Articles" and "Feature Videos" flashing across the page. Anyway of stopping these?
Posted by forbestop10 on 06/17/11 03:25 AM
On the first day of the IPO; the owners or the lucky few who wer given the opportunity to access the IPO and those who already owned the PANDORA IPO...the owners were not allowed to sell on the first day. That was to stop people from doing a pump and dump taking the money and running leaveing the IPO in the tank.
THe stock market did a roller coaster hi and lo during the 1929 stock market crash period. People thought; Oh the markets coming back...let's all get back in and make ah bunch of money. Ya never know what could tank the market. It could be a solar wave from far off that knocks out all the worlds communications. ya never know.
QE3 will usher in the confirmation;that gold is going to be a pretty good alternative to depreciating paper currencies. China is having its problems will bonds to increase their own cash flow;not that a goliath like Communist Capital inclined entreprenurial China could stop itself from success.
THe American FOREVER Stamp. Its better than paper money. THis stamp will continue to go up in value as the postal expenses increase over the years, the decades and for life. It can beat the U.S. Dollar devaluations. It might even beat other world currencies; this FOREVER STAMP. Anyhow; its a thought not uncommon;but thought it would be nice to share.