Bloomberg Quote of the Day: “Confusion is always the most honest response.” Marty Indik…who also said, “Half of analysis is anal.”
…that may be what Friday’s rally might be for someone who bought in to it. Here is an excerpt from the market summary TB wrote late that afternoon…pretty interesting:
The Dow it was up 598 points on the week breaking a four week losing streak and gaining back all but 50 of the points, but here is something unheard of: IBM was the biggest index point gainer in the Dow for three straight sessions and look at the index points: +36, +26, +20…a total 82 points or 14% of the Dow’s gain for the week! Now we’ll do something TB never does…look at IBM: while it is up 15% from the July 7 close (and gapped up today), for the highest close since 9/30/08, it is still DOWN 15% from the 7/24/08 high! The high and close today were just 1 point shy of the 23.6% Fibonacci retracement from that high and there as a load of congestion right there…caution! On the same three weeks there were three different second place stocks (AXP, MMM, JPM) combining for a total of just 48 points…and it drops off sharply from there…the only broad gain day was Wednesday with 10 stocks scoring 10 index points or more. Thank you, IBM!
Not only that but despite it being options expiry total volume was just 1.29 billion shares with 470 million coming on the close…in other words it was just 918 million right before the bell which was the lowest since July 2’s 2009 low of 733 million shares. You all know how TB has been breaking out the volume leaders…three stocks with two constants, BofA and Citi, that comprise more than 50% of NYSE volume each and every day. Look at Friday as this is another first:
CIT/BAC/C were EACH 35% of total NYSE volume but that includes electronic trading networks (ETN’s) where those mega trades are being done that are attracting so much attention from the regulators. In other words at the bell each was 50% of NYSE volume or 150% of the trading of the entire exchange that was done on the floor, and it took that extra 470 million shares on the close to bring it back to a total of just 105%! Is this a sign of a healthy market? You decide!
The dollar is in the tank overnight yet stock futures are up on all those stocks with lowered bar earnings estimates beating….not so for Halliburton (HAL) whose profit plunged 48%…guess it isn’t so easy when your former CEO isn’t doling out all those luctrative contracts! Also, look at these two headlines from Bloomie overnight:
*Stocks, Oil Rise on Optimism Earnings to show Economic Slump is Bottoming
*Leading Indicators Index May Signal U.S. Economy Nearing End of Recession
Honk if you believe this is anything more than a pipe dream! HONK!!! HONK!!! Have we taken total leave of our senses??? How about that ‘green shoots’ response to last weeks weekly jobless claims which plunged…indeed they did on faulty seasonals caused by the auto makers furlowing early due to the GM bankruptcy…we are SICK! Deal with it! Those two headlines show just how desperately Wall Street is seeking a bottom…and why not? The value of their homes in the Hamptons is plunging, their condos in Manhattan are doing likewise…even winemakers tell TB that sales of wine to New York and surrounding areas is dwindling. More desperation:
*Bernanke May Hold Rates Down by Showing He Can ‘Forcefully’ Reverse Course
This is an obvious response to the cry that the Fed needs an ‘exit strategy.’ Do tell…but when will they need it? 2015? The biggest fear TB has and you…especially if you own a home should have is deflation and if the Fed tightens too early as they are being urged by the supply-siders, not only will they but WE the people regret it and pay a heavy price!
Now along with this comes the following: IF the Fed has an exit strategy they must think the economy is doing well…remember the stock market is always six months ahead of everything including sound logic! Especially nowadays when we are turning over every stone, rock and boulder looking for those elusive green shoots…isn’t pond scum green?
So off we went last week, half-cocked by listening to half of what Meredith Whitney, and Nouriel Roubini said: JPM is NOT the entire financial sector…the best is NOT yet to come for financial stocks, and while Roubini sees the recession ending in six months he doesn’t see a ‘V’ shaped recovery, no sir…he sees slightly better than an ‘L’ with a risk of a big ‘W’…but let’s not quibble…borrow and buy…even as the world continues to deleverage and deleverage it must! Will someone please explain how an economy can expand when the major financial institutions are doing this and so are consumers???
Who owns Barron’s? Dow Jones…what else does DJ own? The Wall Street Journal. Now who owns Dow Jones? News Corp…and who is the Chairman and principal shareholder, of the VOTING shares, that is? Rupert Murdoch. Murdoch whose newspaper has been routinely using deception to view personal information on key politicians and celebrities. The Journal has always supported business…such as during the Milken affair when their investigative reporters were filling the front page with who, what, when, where, and why, while the editorial page, run by the late Jude Wanniski was praising Milken and talking about how he was being unfairly tried. (TB was at a meeting with Wanniski once where he abruptly left to “have lunch with Mike at Pleasanton (the jail)” So perhaps Alan Abelson can be forgiven for defending Goldman two weeks in a row and saying that any and all written about their shady dealings is just unfounded sour grapes. Funny, Goldman has been awfully quiet about those allegations. Then there is the defense of Henry Paulson who stammered through hours of Congressional testimony last week…and why should he be blamed…after all he was listening to the Goldman consulting firm that was advising Treasury!
At least Abelson did one good thing…remind us that while Goldie and JPM paid back their TARP funds they and other banks still have those TGLB bonds out there for which the government is on the hook and that they are paying a pittance of interest on …especially at the time they issued them…if memory serves, Goldman was first out of the chute there too…just as they were with issuing debt on their own so they could pay back the TARP funds. But pay back TGLP…are you nuts? They had to pay 5% interest on the TARP and give up some options and a lot of control…especially about that which they care most about…their own salaries and bonuses! But this is a freebie…how special!
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Hope you all had a pleasant weekend…TB did as he spent Saturday with his friends and neighbor’s at their vineyard, Lamborn Family Vineyards in the mountains just east of Napa Valley…Howell Mountain to be precise…and overlooking the Pope Valley which is also becoming filled with vineyards. We had a wonderful lunch while quaffing the unreleased 2007 Lamborn zinfandel and their cult wine cabernet which with breathing was excellent. It was interesting as everyone else was involved in the wine industry while TB has always been on the fringe and moved in closer years ago when he met Mike’s dad, Bob…a great guy and fun. Check out their website at www.lamborn.com
TB believes that Bob was the first to incorporate ‘family’ into the name on a wine label. Amazing how many have followed since…and many top producers!
A lot is going on in the wine industry but sadly most of it is not good due to the economy…and the reluctance of the banks to lend these days.
Hope you got to see the one hour special on Walter Cronkite last night replacing 60 Minutes. Sorry Katie…you are no Walter Cronkite…but then, who is…and that’s the way it is…
Last week a friend sent an article about a law professor who is joining Obama’s team to control what is said on the internet…but what they are trying to do is to stop irresponsible people from defaming etc. with no accountability…on Friday, TB heard an interview with Cronkite where he said his greatest fear was misuse of the Internet…he did not advocate censorship but accountability…when was the interview? 1997!!!
Have a great day and week!
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, © July 20, 2009.
