Bloomberg Top Stories:
*U.S. Industrial Production Rises 0.4%; Capacity at 78.1% from 77.8% – estimate + 0.5%
*Goldman Sachs Profit Drops 58%. Beats Analysts Estimates on Cost Reductions – oh joy!
*IMF Said to Seek $500 Billion Boost to Insulate Economies From Euro Crisis
*U.S. Stock Futures Advance Before Earnings as Euro, Commodities Strengthen
*Goldman Sachs Employee Compensation Cost Drops 21% Amid Job Reductions
*Global Demand for U.S. Financial Assets Rises More Than Forecast in Europe
*Bank of New York Mellon Quarterly Profit Fails to Meet Analysts’ Estimates
*Carlyle Seeks to Limit Shareholder Legal Rights as It Woes IPO Investors
*Irish Occupation of Empty Offices Escalates Fight Over Boom-to-bust Legacy
*Bullish Bets on Chinese Banks Increase to Record on Policy Easing
*Oil Inventory Climb Longest Streak Since April in Survey – then why is it above $100???
*Bank of America Shrinking Assets Puts $2.8 Billion Hole in Moynihan Target
*Two Hedge Fund Employees Said in Custody in Federal Insider Investigation
*Iraq to Use Its Role as OPEC Head to Seek Iran’s Assurance on Oil Shipping
Volume rose slightly to 3.89B shares from 3.65B on a generally positive session except Transports and some financial components. The big banks were hit hard, except Wells which rallied despite beating estimates by just a penny…which should always raise questions. Remembr Friday is options expiry! NYSE stocks executed on the Big Board slipped to 811M shares from 828M shares, still about 200 million short of the twelve month average and indicative of a lack of retail participation. 42 of the last 45 sessions have been less than 1B! Advance/Declines were modestly positive: +1.5:1 vs-1.9:1 vs +1.7:1 vs +1.2:1 vs +3.3:1 vs +1.8:1 on NYSE and +1.2:1 vs -2.1:1 vs +1.5:1 vs +1.5:1 vs +3.6:1 vs +1.3:1 on Nasdaq. Breadth was similar: +1.1x vs -3.2x vs +1.4x vs +2.1x vs +4.2x vs +2.1x vs on NYSE and +1.4x vs -1.8x vs +2.1x vs +1.4x vs +2.7x vs +1.9x vs on Nasdaq. New 52 week highs however jumped to 242 from 165 while new lows were off slightly to 47 vs 53. The ratio is now about 5x positive. The S&P VIX climbed to 22.23 +1.32 further confusing players…could have been roll to next months options.
Here are the results of the past five sessions: Dow +0.5% vs -0.4% vs +0.2% vs -0.1% vs +0.6%; Transports -0.1% vs -0.6% vs +0.3% vs +0.5% vs +1.4%; Dow Utilities +0.2% vs -0.1% vs flat vs -0.4% vs +0.1%; S&P 500 +0.4% vs -0.5% vs +0.2% vs flat vs +0.9%; Nasdaq Composite +0.6% vs -0.5% vs +0.5% vs +0.3% vs +1%; Nasdaq 100 +0.9% vs -0.4% vs +0.4% vs +0.2% vs +0.7%; Russell 2000 +0.2% vs -0.8% vs +0.4% vs +0.3% vs +1.5%! vs +0.5%; NYSE Financials +0.1% vs -0.8% vs +0.6% vs +0.6% vs +2%!!! vs -0.6% vs -0.9%. All the leading traders were financials and look how bad BofA and Citi got hit! BAC -2.1% vs -2.7% vs -1.2% vs +3.6% vs +5.7%!!! vs 1.5% vs -2.1% vs +8.6%; C -8.3%!!! vs -2.7% vs +1.1% vs +4.2%; JPM -2.9% vs -0.8%; WFC +0.7% vs flat; GE -0.7% and yes it is really a financial stock!
European equity markets weaker, Asia positive: FTSE -0.1% vs +0.9% vs -0.3% vs +0.2% vs -0.7% vs +1.3%; CAC40 -0.2% vs +1.6% vs +0.8% vs +1% vs -0.4% vs +2.5%; DAX +0.2% vs +1.9% vs +0.1% vs +1.2% vs -0.4% vs +2.7%; Nikkei +1% vs +1.1% vs +1.4% vs -0.7% vs +0.3% vs +0.4%; Hang Seng +0.3% vs +3.2%!!! vs +0.6% vs -0.3% vs +0.8% vs +0.7%; Korean KOSPI FLAT vs +1.8% vs +0.6% vs +1% vs -0.4% vs +1.5%; Indian Sensex -0.1% vs +1.7% vs +0.7% vs -0.9% vs +0.1% vs +2.2%. U.S. Futures little changed: DOW +16; SPX +2 ; NDQ +8. Bonds rallying again…yesterday they were up along with stocks? 10’s and 30’s still well below 2% and 3% respectively. 10 yr 1.84% +1/8. RECORD low 9/23 of 1.6855%; 30 yr 2.89% +1/4; Long TIP 0.65 +1/2. 0.57% at high. The 5 yr TIP yields MINUS 1.06%; 10 yr -0.24%. 3 mo. Libor 0.56%, and 0.79%, steady. Bills 0.01% 1 month; 0.03% 3 months, 6 months 0.06%.
Gold surged and closed well above the 200 day ($1637) and has been above $1600 for five straight sessions. It closed at $1655.60 +$24.80. The high was $1668! highest since 12/13 and it is now $1652.60 -$3.50. The record high is $1923.70, a buying climax on 9/6. RES is $1665, the 40 day and $1680, the 50 day m/a. Crude closed SHARPLY higher after two weak sessions at $100.71 +$2.01! It is now $101.08 +.37. Support is $100, then the 40 day (99.12) and the 50 day (98.76), major support.
…the ‘gap’ of course is not the clothing store but the wealth gap. It is atrocious. Of course, free market capitalists say so what…Herman Cain blames laziness…but it is a fact and one that we should heed. The wealth gap in this country between the top 1% and bottom 1% has never been this wide…indeed TB would argue between the top 10%, or at least 5%, and the other end of the scale. Socialist! Redistribution of wealth…no a simple statement that has been used by forecasters for decades to determine where political instability will arise next. Back in the 1980’s TB was watching one of the Sunday Morning talk shows…probably Meet the Press…where they interviewed a consultant to the CIA who said that they used this measure to predict the next ‘hot spot.’ Indeed, it would have been apparent in Egypt, where one of the candidates criticized us for not supporting our ally…that is clearly 60’s thinking…and is how the problems with Iran began.
But the problem in the U.S. is much more daunting. The backers of the SuperPAC’s seem unaware that this is a democracy…one they can only manipulate to their advantage for so long before an uprising begins…not a violent one…our Constitution provides for it with our election system. Again, Cain said if you don’t like it vote them out…how do you beat a SuperPAC with $350 million or more? You don’t…until a breaking point is reached. TB believes we are near that point…not for this election but probably in four more years especially if some economists like Lacy Hunt and Van Hoisington are right. So before you declare TB to be a socialist or worse, his concern is that the backlash will not be good for the majority of Americans…or at least the top 20%. This is not the America we grew up with, or our grandparents who lived thru the Great Depression and understood compassion. Nor is it a government that prosecutes those who have committed crimes. Consider that since the crisis began not one CEO has been brought to trial under Sarbanes-Oxley. That includes Angelo Mozillo who at the least was guilty of insider trading, and instead fined civilly by the SEC, rather than prosecuted…or Vikram Pandit who clearly knew the financials were not stated correctly…if not them, who? No, instead we are going after a few hedge funds…and Martha Stewart for insider trading while members of Congress continue to do so without consequence. In December 6, the House Financial Services Committee held a one day hearing on insider trading by members of Congress chaired by Spencer Bacchus who spends his time day trading and sees nothing wrong with it…is this America?
So is it any wonder Americans besides believing by 84% that Congress is not representing them, are shunning the stock market and fleeing mutual funds in droves? Why pay a manager when you can do as well as they can, right? Think about it.
In yesterday’s trading, note that while NYSE Financials rose 0.1%, following a 0.8% decline, the highest volume stocks where all financials…if you add in GE which derives at least 50% of its income from financial activities and who by acquiring WMC Financial, a subprime lender, added to the crisis and despite whistleblowers warnings, conducted faux inquiries while bad loans continued to be generated. This on the watch of Jeffrey Immelt, who Obama felt should chair a committee on small business…despite the damage his own company was doing and that GE is as far removed from small business as is possible. Free market capitalism is a myth, we are living in crony capitalism and need to stop it…now!
. . . – - - . . . note that the same old SOS applies…perhaps more so!
TB heard yesterday that social conservatives do have compassion for the unfortunate but feel that churches and other charities should provide it…they can’t! TB hears over and over from charities that they are not only overwhelmed but that that former donors are now in line for help.
This is similar to the argument that the states no better their needs…on some things yes, but as South Carolina illustrates, their education is near the bottom of the ladder. Other states, due to cronyism allow few health insurers in and due to insurance laws that differ by state, few choices are available. This is why the federal government should control insurance…at least health insurance.
TB had to have a stress test the other day…$5,500 was billed. The insurance companies paid about $2,200 and he only paid $156. But if he wasn’t insured and couldn’t pay they would file a claim for the entire amount. TB has long said that hospitals and health insurers (both of whom should never have been allowed to become for-profit), have no idea how much services should cost. Also, those who argue against mandatory health insurance ignore the costs of not having it, such as emergency room treatments which is what the indigent use most. Medicare is failing because of a failure to be ‘allowed’ to control costs; Part D, prohibited Medicare from negotiating prescription drug costs, enriching the Senator who wrote it…actually the lobbyist did it for him…and making him head of the lobby. That is why we can’t control the costs!
As for social security it was purposely written to not include means testing so as not to be criticized as being for the poor only…that and inflation adjustments need to be modified.
Unfortunately, in this presidential year, even more so than the last, gridlock will prevail, the deficits will get worse and we will have at best a stagnant economy…or worse a double-dip.
God bless the United States of America…nobody else will.
TB
