…but just like on Thanksgiving, you feel the pain after that big dinner. On Friday’s shortened session, the stock market managed a rally…not that it mattered because nobody was home! That is how the Dow tacked on 1.2% on volume of just 788M shares or about half a normal session. The S&P 500 was also up 1% but the Nasdaq Composite barely rose as did Dow Transports (on an inside day), while the Nasdaq 100 fell 0.6% on an inside day. Energy also had an inside day falling 0.9%, as did the SOX which fell 1.5% to take honors as worst performer. Oddly, the Russell 2000 managed to climb 0.9% by 2:1? Also losing were Oil Services, Housing and the Nasdaq Composite.
The overnight markets are a shambles. Why didn’t anyone ask on Wednesday AND Friday why the stock market rallied amid a major terrorist attack in Mumbai, India? Does that make sense, folks? Honestly, TB does not understand this markets day to day gyrations but if one looks at the overall trend it makes sense: we are in the greatest deleveraging in the history of the world! Overnight, we learned that Paul Tudor Jones’ $10 billion hedge fund BVI suspended withdrawals while Blue Bay is shuttering its long/short fund after suffering over $600 million in losses…that sounds like a good reason for a rally, right?
Meanwhile, the treasury market is even pulling TIPS with it after a couple of weeks of worrying about deflation…who cares? At least it is a positive return…and if not it is safe! Speaking of safe, the Swiss are in a world of hurt, they with the soundest banking system in the world…or it was until Credit Suisse stupidly bought UBS. Look at these yields:
1 mo. T-Bill: 0.01%
3 mo. T-Bill: 0.04%
2 yr T-Note: 0.96% vs 1.15% at Tuesday’s close
10 yr T-Note: 2.87% vs 3.08% at Tuesday’s close
30 yr TIP: 2.89% vs 3.08% at Tuesday’s close
Furthermore, Commodities, including energy AND GOLD are tanking again while the Dollar is rallying. Dec Crude is now $51.77 yet the spread to the Dec ’15 contract is still $33, near the record posted last week…what gives? Gold after looking like it was finally out of the woods failed overnight after going sideways for three days and is now $793.
So you can believe in Santa Claus and his accompanying rallies if you like, but not TB. The Dow was up 10% for the weak…near the levels of three weeks ago, but is still -4.8% for the month and 33.4% ytd…note that Friday’s high missed the 40 day moving average by ONE point! Here are the other indices:
S&P 500 -7.2%,-39%; Nasdaq Composite -10.6%, -39%; Nasdaq 100 -11%, -43.1%; Russell 2000 -11.8%, -38.2%; Dow Transports -9.3%, -23.2%; AMEX Composite -6.9%, -43.4%; NYSE Energy -1.6%, -36.7%; Philly Semiconductor -16.9%, -51.4%. Financials are -54.8% ytd also.
If it helps, here is how the rest of the world is faring: UK -46.2%; France -35.1%; Germany -43.3%; Japan -45%; Hang Seng -49% while Mainland China is -63%; Korea -44.2%; INDIA -56.4% (note they also rallied Friday despite the terrorist attack but lost 2.8% last night. Mexico is down 30% and Brazil -43%.
There is no place in the world that has been safe…and you can thank the U.S. for first creating then exporting those subprime mortgage derivatives and then to compound it all by allowing manipulation of the commodities market by the BIG banks thru unlimited buying of commodities contracts so they could sell commodities swaps to commodities index funds which the consultants cheerfully told the pension funds to buy! Whew! Imagine…$60 billion of so of pension funds creating explosive global inflation and the experts were so blind as to blame it on increased global demand for energy…come on guys, get a grip…sometimes you have to think not just read what your computer says!
Now the new, new thing: first, private equity funds started drawing down commitments made by pension funds and others seeing great buying opportunities in depressed companies. This after investors had been hammered in their hedge fund investments and forcing withdrawals…even from the ones that were making money. Now Harvard is leading a group of major universities trying to dump those private equity investments and that is now driving those prices down. Also AIG and Lehman had commitments and those are now being dumped by the trustees. This is not a pretty picture!
TB will leave you with those thoughts as you ponder whether to be a bull or a bear. That is your choice but you better not forget that Friday is unemployment, Friday December 22 is options expiry…a quatdruple witching…AND Dec. 26 is last day for T+3 settlement this year…look for major hedge fund selling after that date which will further depress prices for year end…as it did a year ago and at the end of each and every quarter since then…it could be different this time, right? Right…You decide! It’s your money…
You have to be shocked…shocked… TB says. Online Poker is fixed! Can you believe that? Not by the purveyors of product (or are they?) but by breaking the codes so that the hackers or whatever you want to call them can play and see every hand on the table! One expert on 60 minutes said it was a 15 sigma event to be able to do this…the equivalent of six consecutive big payoff slot jackpots (by the way that can’t even happen with slots as they are programmed to use a random number generator but not truly random numbers). TB’s son in law, bless him, along with other poker players, told TB who was a skeptic, that it would never be rigged as they would be out of business…yet at least one of the culprits is a former World Series of Poker winner…as W.C. Fields would say “never give a sucker an even break.” Aren’t you glad you are playing in a fair circus…er….stock market? Where shorts can be made and not covered till the cows come home or the stock moves the way you want it to, and where massive leverage can overpower technical analysis, fundamentals, etc?
Don’t take any wooden nickels!
TB
Trader Bill thinks it is clear to anyone reading these missives that they are merely commentaries…as he sees it…and do not necessarily reflect the views of anyone other than his own. Information is gathered from sources he has found reliable, but no guarantees of accuracy are implied. These are merely observations of events in the marketplace offering in an attempt to offer a non-mainstream viewpoint. Hope you find it useful. Copyright TBD Capital LLC December 1, 2008.
