By Pam Martens and Russ Martens: September 25, 2014 Imagine historians 25 years from now looking back on one of the worst economic periods since the Great Depression and finding that the Wall Street Journal was calling this a “Goldilocks Economy” – “not too hot, not too cold.” (They can’t actually bring themselves to say “just right” to stay on script with the fairy tale.) On September 7, 2014 the Wall Street Journal went with this headline: “The Upside of August’s Jobs Report: A Goldilocks Economy.” The next day, in a blog post, this appeared: “Stocks rallied Friday following the disappointing jobs report as those hoping for a Goldilocks economy (not too hot, not too cold) cheered.” During the Great Depression, headline writers were admonished not to use the phrase “Great Depression” but to go with the more benign “hard times.” The theory behind the use of the phrase “Goldilocks … Continue reading →

By Pam Martens and Russ Martens: September 24, 2014 If there’s a bull market on Wall Street, somebody forgot to tell the small caps. The Russell 2000 index that measures the performance of smaller capitalized companies is down 3 percent this year versus the big capitalized companies in Standard and Poor’s 500 – which is up 8.9 percent year-to-date through the close yesterday. This divergence is a worrisome sign for those who look at historical charts. It becomes even more problematic when combined with the recent news that a good chunk of the buoyancy in the S&P 500 is coming from these big corporations spending billions to buy back their own stock – sometimes in unregulated dark pools operated by global banks on Wall Street. Clearly, smaller companies can’t borrow tens of billions in the debt markets in order to plow it into their own share repurchase programs. As we … Continue reading →

By Pam Martens and Russ Martens: September 23, 2014 In addition to hundreds of Federal bank examiners permanently stationed at Wall Street’s biggest banks by the Federal Reserve and Office of the Comptroller of the Currency in an effort to eradicate a serial crime spree, an unknown number of Justice Department moles are now roaming about the mahogany corridors of power, chatting up potential criminals around the water cooler and hoping to make it out alive before being detected. Avoiding detection as a mole becomes so much more challenging when the highest law enforcement officer in the land, U.S. Attorney General Eric Holder, comes to New York to address Wall Street’s lawyers and tells them, flat out, that he’s got moles stationed inside his Wall Street targets. (There were likely 100,000 text messages flying about Wall Street before Holder got to the next paragraph of his speech.) The revelation by … Continue reading →

By Pam Martens: September 22, 2014 In 30 years of watching Initial Public Offerings (IPOs) debut on Wall Street, I have to say that I’ve never seen anything remotely resembling the Alibaba episode on Friday. It’s one for the record books not just in size but in opacity. Alibaba is a Chinese e-commerce company whose large investment haul in the U.S. is not likely to brighten the tepid job prospects in this country one little bit. According to news out this morning, Wall Street underwriters exercised their option to boost stock in the deal by an additional 48 million American depository shares, bringing the IPO to the largest ever at $25 billion. The company began trading publicly for the first time on Friday on the premier stock exchanging in the U.S., the New York Stock Exchange, which is supposed to exercise some degree of regimen over what it allows to … Continue reading →

By Pam Martens and Russ Martens: September 18, 2014 Senator Orrin Hatch, Republican from Utah, is not the Chairman of the Senate Finance Committee. That post is held by Democrat Ron Wyden – whose party currently holds the majority of seats in the Senate. But this Tuesday, in a hearing that he was not even chairing, Senator Hatch appeared to be attempting to censor the speech of the witnesses before they testified by admonishing them not to use a list of specific words and phrases. The hearing was convened to take testimony on the retirement crisis facing millions of Americans because of the disappearance of corporate funded pensions and the inability of most Americans to build up a sufficient nest egg on their own because of stagnant wages and 401(k) fees imposed by Wall Street eating up their savings. Hatch, with a stern face, told the panelists: “What I hope … Continue reading →

By Pam Martens and Russ Martens: September 17, 2014 Yesterday the Senate Finance Committee convened a hearing to chew on one humdinger of a new report from the Government Accountability Office (GAO). The GAO report found that 314 taxpayers have squirreled away at least $25 million in their Individual Retirement Account (IRA) for an aggregate of $81 billion for all 314 taxpayers. That puts the average account within the $81 billion at an astonishing $258 million. The GAO used 2011 data, the most current available to them from the IRS, and noted that since some of the tax returns were for joint filers, the term “taxpayer” may mean an individual or a couple. Still, even two IRA accounts tallying up to $258 million is off the charts. The figures are raising eyebrows in Congress. No one can say with any certainty how an IRA could grow to such astronomical sums. IRAs … Continue reading →

By Pam Martens and Russ Martens: September 16, 2014 The Wall Street Journal carries a story today which builds on a topic we have been reporting on since July: that corporations, themselves, have become the largest single participants in the stock market through the repurchase of their own shares. Using data from Birinyi Associates, the Journal reports that U.S. companies bought back a total of $338.3 billion in the first six months of this year, “the most for any six-month period since 2007.” The year, 2007, by the way, was the year before the stock market imploded. The workers of America, whose 401(k) plans represent their savings and hopes for a better, easier life one day in retirement, are increasingly buying funds indexed to the top 500 companies in America, the Standard and Poor’s 500. This is, effectively, giving a steady source of cheap capital to the biggest companies in … Continue reading →

By Pam Martens and Russ Martens: September 15, 2014  Last Friday, the Dow Jones Industrial Average closed down a mere 61.49 points or 0.36 percent, but the overall market breadth (number of stocks advancing versus those declining) was abysmal. At the New York Stock Exchange, there were 666 stocks advancing versus 2,515 declining. Nasdaq showed 893 advancers versus 1,834 decliners. Equally troubling for those who have jumped into stocks with both feet, Bloomberg News has a heart-stopper headline out today: “Record S&P 500 Masks 47% of Nasdaq Mired in Bear Market.” The article, by Lu Wang and Joseph Ciolli, advises that: “Beneath the U.S. Stock market’s record-setting gains, trouble is stirring. About 47 percent of stocks in the Nasdaq Composite (CCMP) Index are down at least 20 percent from their peak in the last 12 months while more than 40 percent have fallen that much in the Russell 2000 Index … Continue reading →

By Pam Martens and Russ Martens: September 12, 2014 Sometimes we have to pinch ourselves to make sure we are not sleepwalking in a Dickensian dream. Earlier this week we heard Senator Elizabeth Warren tell a Senate Banking session how JPMorgan’s CEO, Jamie Dimon, got a $8.5 million raise after craftily negotiating away all of the bank’s crimes with the payment of billions in shareholders’ money. (Two of those crimes, by the way, were felony counts for aiding and abetting Bernie Madoff in his Ponzi scheme – also craftily settled under a deferred prosecution agreement with the Justice Department, which effectively puts the bank on probation for two years.) Last night, the Wall Street Journal informed the public that, apparently, none of this criminal activity at JPMorgan has dulled President Obama’s fondness for its CEO Jamie Dimon, who has recently been undergoing treatments for throat cancer.  The Journal reported: “During … Continue reading →

By Pam Martens and Russ Martens: September 10, 2014 Sparks were flying yesterday in what is typically a snooze-worthy Senate session. It felt like alien body snatchers had decided to remove the zombies and return the real U.S. Senators to their chairs on the Senate Banking Committee. Senators, right and left, asked tough, probing questions of the nation’s banking regulators, leaving many squirming in their chairs. The session was so unusual that Senator Elizabeth Warren, a Democrat from Massachusetts, and Senator Richard Shelby, a Republican from Alabama, closed out the session in complete agreement that there is something seriously broken about the justice system in America. Senator Warren told the hearing that in the past year, three of the nation’s largest banks — JPMorgan Chase, Citigroup and Bank of America — have admitted breaking the law and settled the claims for $35 billion. The Senator continued: “As Judge Rakoff of … Continue reading →