As year end is approaching, many market participants are beginning to leave the market to draw an end to this year's work. Market manipulators have covered most of the short positions. The net profit is significant and they outperform the majority of market participants with their selling strategy starting from market peak in the year. Some individual investors are able to track market manipulators and sell the way down to recent bottom. However, the majority of individual investors are too late to follow the selling strategy. And many have sold at the bottom. Institutional investors also suffer significant loss after the market sell-offs. Fortunately, investors remain calm despite repeated sell-offs. Thus the pressure to liquidate portfolio to satisfy customer redemption is not severe.
Market participants remain cautious that market manipulators may create more market sell-offs. Therefore investors are still holding large amount of cash on hand. Many market participants have missed the opportunity to replenish the portfolio at the bottom as market opened sharply higher at the beginning of week from last week's recent bottom. The pessimistic investor sentiment in the market weaken the desire to purchase stocks but to wait for further decline from previous bottom. However there are no panic sellers to fulfill the desire to drive market further down. And a wave of buying triggers short covering from market manipulators and day traders to realize profit from earlier short selling.
Market manipulators and institutional investors are preparing for the year end vacation. However day traders and individual investors remain active on hope to recover some of the loss incurred from the market sell-offs in the past months.
It appears that there is strong support for market at recent bottom. However, many investors are still thin in portfolio and have plenty of cash to wait for market drop. On the other hand, holders of stock are not willing to dump at this level. Hot capital in the market will continue to create market turbulence which is also opportunity for speculators.
Bush tax cuts: The real endgame
Congress has a way of waiting to the very last minute to resolve big issues, so December is usually a busy month on Capitol Hill. This year will be no exception.
This December, for example, lawmakers will have to decide, among other things, whether to extend the payroll tax cut, long-term unemployment benefits, the Medicare "doc fix," Alternative Minimum Tax relief and a bevy of business tax breaks.
But that list -- worth less than $1 trillion -- will pale in comparison to the $5 trillion of fiscal decisions likely to be left for a lame-duck Congress during the seven weeks between the Nov. 6 election and New Year's Eve.
Bush-era tax cuts: If Congress does nothing, the 2001, 2003 and 2006 tax cuts will expire at the end of December 2012.
If they do expire, most Americans' tax bills would go up and the surge of additional revenue into federal coffers would greatly improve the deficit picture over the next decade.
"I expect a go-big, $3 trillion to $4 trillion deficit reduction plan," said long-term budget expert Stan Collender.
As with most presidential budget proposals, however, Congress won't adopt it in whole, or even necessarily in part.
Black Friday: Record $52.4 billion spent, according to NRF
Earlier than ever store openings and steep discounts helped retailers notch record sales this Black Friday weekend, according to early reports.
Total spending over the four-day weekend following Thanksgiving reached a record $52.4 billion, up 16% from $45 billion last year, according to a survey by the National Retail Federation released Sunday.
Cyber Monday could also notch a new record, according to online tracking firm ComScore. Online sales for 2011 are projected to hit $1.2 billion, up from $1 billion last year, Andrew Lipsman, ComScore's industry analyst, said.
While Black Friday marks the unofficial start of the holiday season, it is still too early to say whether this consumer spending momentum will continue until Christmas, noted NRF spokeswoman Ellen Davis.
Black Friday isn't the only game in town
"There are hundreds of promotions going on this time of year," says Steve Uline, head of marketing for Gander. "We needed to do something a little bit different."
"Black Friday," the day after Thanksgiving, in the 1960s became known as the point when merchants turn a profit or operate "in the black." Later, retailers began marketing it as the start of the holiday shopping season with earlier store hours and deep discounts of up to 70 percent off.
It's since become the busiest shopping day of the year. This past weekend, "Black Friday" sales were $11.4 billion, up 7 percent, or nearly $1 billion from the same day last year, according to a report by ShopperTrak, which gathers data from 25,000 outlets across the country. It was the largest amount ever spent on that day.
Marketers are hoping to strike gold again. Many are doing so by appealing to Americans who've become disenchanted with big business and commercialism.
The Rising Cost of Free Shipping
Shoppers may have more incentive to buy online this year: the sales are as big as -- if not better than -- in-store offers and many retailers are offering free shipping. The catch, say experts: Shoppers have to spend a lot more.
A growing number of sites automatically offer free shipping on orders of a certain amount, no coupon code required, Knowles says. In the past year, JC Penney, Macy's, L.L. Bean, Gap and Nordstrom all moved to that model. Such offers let shoppers grab free shipping and still use a coupon code (or two) to further reduce their total.
Annual compensation could fall 30 percent at Wall St firms
Annual compensation for employees at big Wall Street firms could fall 27-30 percent from a year earlier to the lowest level since the 2008 financial crisis, the Wall Street Journal reported, citing a compensation study conducted by the Options Group.
Bonuses, which constitute a substantial part of many finance workers' pay, are on track to decline 35-40 percent, on average, according to the forecast by Options Group, an executive search and consulting firm, the Journal said.
How the Fed Rescue Benefited Banks
A report by Bloomberg News offers a new way of quantifying the Federal Reserve's vast efforts to save financial companies from collapse during the crisis that peaked in 2008.
The central bank provided emergency loans, asset purchases and other aid totaling roughly $7.8 trillion during a two-year period ending in March 2009, easily the largest component of the government efforts to bulwark the financial system.
In an article in the January issue of Bloomberg Markets, published online Sunday night, Bloomberg offers an estimate that the aid allowed financial companies to book profits of roughly $13 billion during that period, largely by borrowing from the Fed at low interest rates and then using the money to make loans and investments with higher rates of return.
The estimate may well overstate the direct value of the Fed's loans, as banks used much of the money for short-term purposes that tend to have lower profit margins. Importantly, however, it also greatly understates the broader value of the loans: The money helped many recipients to survive.
Citigroup is a case in point. Bloomberg estimates that the Fed's loans increased the bank's profits by $1.8 billion. The real story, of course, is that government help saved the troubled bank from collapse.
Top central banks move to avoid global liquidity crunch
Central banks from the world's leading developed economies said on Wednesday they will take coordinated steps to prevent a lack of liquidity in the global financial system, as the euro zone attempts to find a way to stem its debt crisis.
The surprise coordinated move by central banks was aimed at preventing global financial markets from coming under pressure that could potentially lead to a seizing up of credit.
"The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity," the banks said in typically stilted language.
Don’t Hate the Game and Don’t Call It a “Sucker’s Rally”
A day after coordinated central bank action sent financial markets screaming higher, Thursday was shaping up as a day of rest and reflection -- and a little bit of giveback.
But don't call the gains this week (remember, Monday was a big up day too) a "sucker's rally", says my Breakout colleague Jeff Macke.
"You can't describe it as 'sucker's rally' because we had negative numbers today," Macke says. "Data for the whole week has just crushed...been so good, so positive," including a big jump in consumer confidence, a strong ADP employment report, a very positive Chicago PMI report, as well as today's generally solid November same-store sales data.
Of course, housing data remains punk and third-quarter productivity was revised down but the data provide "strong evidence the American economy, like it or not, is improving," Macke says.
"Like it or not" may be the operative phrase when it comes to the rally itself. As I mentioned in our Twitter-chat last night, people hate "manipulated" markets -- myself very much included. The idea the Fed is rescuing Europe -- by providing liquidity the ECB refuses to make available -- is "loathsome," as Macke says.
But that doesn't mean the market can't keep rallying.
To Macke, "we still have structurally the ingredients for a bull market" with the professionals under-invested or net short and retail investors largely on the sidelines.
"There's a lot to hate about what the economy and Fed have been doing since at least 2009; but you can't stay short stocks forever because of what 'should' happen," he says. "The higher we go -- if we hold these gains...it's going to get hideous if you're hugely short."
Along with easy money, fund managers' fear of underperforming their benchmarks and their peers -- a.k.a. "performance anxiety" -- are the two most powerful forces on Wall Street.
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