Traderbill's Financial Markets Weblog

TB’s Quotes of the Day: “I hasten to laugh at everything, for fear of being obliged to cry.” – The Barber of Seville, ACT 1, Scene 2

“You can’t fool all of the people all of the time.” – Abraham Lincoln…”but you can fool enough of them to get rich.” – TB

“The country is not in good condition.” – Calvin Coolidge, January 20, 1931  

…you are driving in the morning and you hear that the FBI has been warning every police department in the country to be on the alert for terrorist attacks at stadiums and malls – then when the press gets wind of it says it was not a specific warning just keeping them on their toes. Then the evening news is filled with the story of a suspected terrorist who was captured and admitted he planned to blow up something…and that he was acting alone. Larry Kudlow was very worried asking if this might derail the great stock market rally. Well, overnight stocks are mixed but doesn’t seem to be a concern.

Then there is HR 3548, a bill to extend jobless benefits by 13 weeks in states with more than 8.5% unemployment – that would be 27 states and counting. Why is the southeast quadrant of the U.S. representative of the entire country? First, we had a South Carolina Republican scream out “you lie!” at the President as he appeared before both houses of Congress. He immediately apologized profusely and ever since has been doing everything but call him a liar. So now Rep. Geoff Davis (R) Kentucky says that extending benefits is a sign of the ‘failure’ of the Obama administration to stimulate the economy. Yep, it is all Obama’s fault…just like it was all Herbert Hoover’s fault in 1929.

Five million people, nearly one-third of the unemployed have been out of work for more than six months, highest since they started keeping records in 1948. Yep, must be Obama’s fault. A CNBC poll yesterday shows 51% approve of the job Obama is doing, and get this: 21% are at least ‘somewhat satisfied’ with the economy. But we know that at least 50% are bullish on stocks – with the other 50% decidedly bearish. That is because the stock market climbs a wall of worry…until it doesn’t!

So let’s look at yesterday. Volume was just 1.27 billion shares but that is up from 1.22B on Monday. Most indices squeaked out slight new highs and infinitesimal new rally high closes. Now let’s look at the five most active NYSE stocks which, including their ETN trades comprised 106% of NYSE volume:

Citigroup(C): 657M shares (52%) but up from 477M Monday after averaging 980M shares since August 20 and at times being more than 70% of NYSE volume. It was up 4.7% yesterday for no apparent reason but when 21 cents moves you that much, so what?

CIT Group(CIT): Rallied 14.3% – to $1.68 –  on 166M shares (13%); short-covering ahead of the debt restructuring…the bonds went to the moon, Alice – the moon. Two Citi analysts said the move in low-credit issues is “starting to become a bit ridiculous.”

BofA (BAC): Up 2.2% or 38 cents to $17.63 despite the woes of the bank and its fearless leader Ken Lay…oops, Lewis. Volume was 155 million shares (12%)   

AIG: 122M shares and the most volatile stock of the day. It rallied to $54.40 – or $2.72 pre the 1:20 reverse split, then closed down 4.8% at $46.07 ($2.30) down $2.23 or 4.8%. The news was all negative except a WSJ article saying the stock is preferred by hedgies?

Fannie Mae(FNM): 106M shares (8%), stock was up one penny to $1.69 or 0.8%. Nothing specific but home prices rose 0.3%.

What a cast of characters the above list is. The gang that can’t shoot straight.

Gold rallied yesterday after gapping down on Monday due to renewed dollar weakness or so they say…TB thinks it is just specs moving in and out and there is more downside risk than upside.

About the dollar: we have been told that a weak dollar is good for stocks and it is – to a point…but not in a plunge. Overnight, it fell to 75.89, tying the September 22, 2008 low. Below that is a freefall that eventually leads to 70-71 and that won’t be good for stocks.

Friday is now just two days away and with it the end of the quarter for the hedge funds. Will they drive the market down starting then or Monday or be content with the status quo? Most likely they won’t be buying after that. You have to think that most managers have their portfolios positioned where they want them to be for quarterend – or where their clients expect them to be!

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TB was late by one day paying his Capital One account and got hit with a $29 late payment fee plus $4 in interest – at 29%…that’s $33 on a total bill of $176 that is 18.75% for one day!…or 684% annualized! So he called and after asking for a supervisor was told they would not reverse the charges…so he did what we should all do: closed the account paying off that final $46.20. This morning he read that JPMorgan is revamping their overdraft charges to be more user friendly…somewhat.

Anytime you have this happen to you – do the same! Be ‘mad as hell and not going to take it anymore!”  Let’s leave the banks and credit card companies to earn paper profits on accounts that cannot pay while giving away services to those who can. Be vocal!

Now for some more quotes from Oh Yeah? The compilation of newspapers clipping that was published in 1931:

“Tariff walls erected too rapidly by European nations and the demonetizing of silver by Great Britain were the two chief causes of the world depression.” – Julius H. Barnes, President U.S. Chamber of Commerce, November 7, 1930

“One of the most powerful influences working toward business recovery is the tariff act which Congress passed in 1930.” Reed Smoot, Chmn Senate Finance Comm. 4/18/1931

Dr. Julius Klein, Assistance Secretary of Commerce:

“The stock market crash affected approximately only 1 million persons, the speculative element.” Jan. 10, 1930…this was before pension funds, IRA’s and 401(k’)s – TB

“Business is gradually but unmistakably coming out of the depression…”  May 21, 1930

“There seems to be a fairly good chance that the United States will be out of the current economic depression by the end of October.” September 26, 1930

“We may confidently expect unfavorable corporation reports from various industries, but it must be borne in mind that these reports will refer to conditions which are behind us and will have little relation to actual conditions at the time they are made public. They should not be allowed to set up an fictitious pessimism.

Following the publication of these reports during the opening months of the new year, conditions will steadily improve all along the business front.” December 31, 1930

 

“The long decline has at last been halted.” March 19, 1931

 

“The depression has ended. The valley usually runs across six or seven months. If history repeats itself, this means that in July up we go.” June 9, 1931

“At the fag-end of a year and a half of business trials, the value of a vacation as a reconstructive expedient is indisputable. June 19, 1931 – was that capitulation??? TB

Dr. Klein was a cock-eyed optimist to put it bluntly…or a fool…Larry Kudlow and his Bush Administration senior Elaine Chou (“I am smarter than you, I have an MBA from Harvard”) must have studied his comments.

Have a great day!

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, © September 23, 2009.