12/4/12 or 3/1/3…buffetted again?

Bloomberg Quote of the Day: “Science is what you know; philosophy is what you don’t know.” – Bertrand Russell…or in some cases: science is what you ignore; ideology is what you do.

Bloomberg Top Stories:

*Banks Discover Money Management Again as Profit From Risk Trade Diminishes

*Stocks Rise With Italian Bonds as Ministers Meet; Dollar, Commodities Fall

*Carney Inheriting Potent Pound Won’t Have Currency’s Help to Spur Growth

*Hedge Funds Poised to Gain After Europe Agrees to Pay More for Greek Bonds

*EU Nations to Press Toward Common ECB Bank Supervisor Amid German Doubts

*Top Wall Street Banks Losing Hammerlock on Junk Bond Sales – it took 25 years!!!

*SocGen Like Credit Agricole Expects Drop in French Debt Sales

*Osborne Urged to Invest for Growth as BCC Cuts Outlook for U.K. – we should too!

*Microsoft-Intel Tablet Push Sputters With Products Slow to Shelves – unlike Apple!

*Most Accurate Forecaster Shapiro Predicts Lethargic U.S. Expansion in 2013

*House Republicans Counter Obama Deficit Plan With Entitlement Program Cuts – a surefire path to recession…and distrust of government, but hey, their backers win!

*Cohn Said to Join Lasry as White House Meets Wall Street on Fiscal Cliff – look out!

*Hague Says Assad Using Chemical Weapons Would Cause Change in Syria Stance

Total NYSE volume fell way back to 3.07B shares from Friday’s big 3.94B shares, the new normal??? All indices were down and the only thing that can comfort us is that a down day on low volume is inconclusive. REAL volume on the NYSE floor also plunged back to a weak 658M shares from 1.18B shares, highest since 9/21, near the low of 633M shares last week – making 9 of the last 10 sessions <800MAdvance/declines and breadth were modestly neutral. The VIX however rose to 16.64 vs 15.87! It has been below 17 for 10 straight sessions (12 mo. ave. 18.37). Caution again advised!

Bond market closed slightly better but is off again overnight: 10 yr note 1.63%, 30 yr 2.80% -1/2. 3 mo. Libor steady at 0.31%, 6 mo. 0.53%.

Gold was up $10 (on an inside day following a negative key reversal), at $1721.10 but remains well below the 40/50 day moving averages,while Crude gained just 18 cents to $89.09 with an intraday high of $90.33, highest since 10/22 above both the 40 day and 50 day m/a’s. Overnight Golds is off $19.70 to $1701.40 with a session low of $1698.50 –lowest since 11/6!!! Crude is off 89 cents putting it between the 40/50 day again!

- – –  . . .  – – -

…ah we all know about Warren Buffett and his secretary who pays a higher tax rate than he does…after all, isn’t that the crux of our current problems? Then there is his son, Howard, a farmer…and a very wealthy one…but like his sibling concerned with the problems of the world. You see, neither of these men is preoccupied with wealth…those that have it never are…and both have created charitable foundations.

Warren merged his with Bill Gates but said he isn’t going to put most of his into the joint venture because he can earn more on it so it grows even larger. In other words, he too is caught up in the ‘I want to be wealthier than you’ syndrome. Nothing different than ‘he who dies with the most toys wins’ except that Buffett has few things that most would set him apart from you or me. OK, a private jet, but heck we all have to have something.

Let’s contrast Warren to Rotary International’s Paul Harris Foundation. Named after the founder it is unique…to TB’s knowledge…in that rather than boast its size (also it is not a 501(c) and therefore donations are not tax-deductible), is that on a rolling three-year calendar, the donations are invested and at the end of that time they are spent with only the income remaining. Of course, over the years it has grown to a huge foundation, but not by hoarding (sadly, the income of all foundations has declined sharply over the last four years, first by the stock market bust and then the low yields on income based investments thanks to the mini-depression we have suffered…mini?). Two of its better known projects were eliminating world-wide polio (they have succeeded, joined by the Gates Foundation – his dad was a Rotarian – in all but three countries: Afghanistan, Pakistan and Nigeria…due to wars and last year three Rotarians volunteering to deliver the vaccine were killed), and digging wells in impoverished nations which has saved countless lives of babies and small children. That folks, is a charitable foundation!

Now on to Howard, whose father Warren has named as his successor chairman of Berkshire Hathaway (nepotism?). He has taken on a project of eradicating hunger worldwide. First he began with global food programs and has now added the U.S. Last week, Parade magazine ran a feature story on him, just an aw shucks farmer. See: The Good Farmer

But not long ago 60 Minutes interviewed him and lo and behold not only does Howard have a big farm, but one big enough to collect $300,000 annually in farm subsidies! See how charitable we, the taxpayers have been in providing him funds to do god’s work?

Let’s see how it began and how it has morphed: it was originally to help farmers in the Dust Bowl in the 1930’s but big ag business figured out it was quite lucrative so they bought up farms (and continue to do so), getting more and more from the taxpayers. Sorry, Grover but these must go or be capped and limited to independent farmers. You won’t hear John Boehner offering this up will you? No sir! Not from big supporters. Before eliminating the ethanol subsidy in 2012, the size of that subsidy had reached $8 billion. The largest benefactor was Archer Daniels Midland (ADM) which during the period it was in effect earned a net $2 billion – their share of the subsidy and other subsidies was greater than their bottom line! So much for free enterprise – it may be an enterprise but is ain’t free!…hmmm, didn’t TB say similar about free market capitalism?

Fast forward to yesterday, when the battle of “you can’t be serious” swung back and forth between the Oval Office and the House Speaker who says his party offered up a very comprehensive plan which Obama countered with a ridiculous offer.

They even offered up a $2.2 trillion plan with $800B in increases in revenue from capping or limiting unspecified deductions and exemptions (note he did not use say ‘taxes’) in exchange for $900B ins spending cuts, mainly entitlements. Such a deal! Sorry folks, but Obama is in the drivers seat here having just been re-elected (despite the bleating by some Republicans of him winning by a smaller percentage than the first time), and a poll showing two-thirds of GOP conservatives who voted for Romney are opposed to cutting SS/Medicare! We are running out of time and it looks like a Hobson’s choice – meaning unless they get serious sequestration, aka the Fiscal Cliff kicks in.

Why is any GOP plan a non-starter? Because they have a scorched earth mentality of not raising marginal rates on the top 1% of incomes…this at the expense of party faithful who work for a living and thus have wages which are diminishing especially inflation adjusted, and also because without specifying the deductions which will be eliminated or capped, the House, which they firmly control will make whatever cuts it wants…most likely by capping deductions and guess where that burden will fall: squarely on the backs of the middle and upper-middle class. Isn’t that like a sports team that trades a player for an ‘unnamed player to be named at a later date?’ On the other hand, Obama’s interest lies with the lower half of incomes, thus the middle class is left out in the cold…no place to hide.

They could agree to disagree and kick the can down the road to the Spring, but also coming into play is a battle that the Tea Party definitely wants: another battle over the debt ceiling which will cause immeasurable harm and disruption.

How can the GOP call them the party of business…well, they are partly: while professing to protect small business they respond only to big business…which of course holds a lot of sway with the Democrats too. About all we can hope for is that Obama cares more about his legacy than compromise, because if he does the plutocracy/meritocracy group wins. You know who they are, right? The ones who succeeded on their own and it had nothing…nothing…to do with being in America that allowed their success. You decide!

Have a great day!

TB

. . .  – – –  . . . (SOS!)  . . .   – – –  . . .  (SOS!) . . .   – – –  . . .  (SOS!)

Volume fell back to a weak 3.07B shares vs 3.94B vs 3.34B. NYSE shares executed without the aid of the ETN market plunged back to 658M shares vs 1.18B vs 682M shares. There have been just 20 700M+ days since 8/3. The high ytd was 9/21’s 1.8B shares – due to a quadruple witching and an S&P rebalancing. Since 6/29 just 18 sessions have surpassed 800M shares, mostly down days. The average since 8/1’s 1.03B is just 675M. The average for 2012 is just 763M shares and since 6/29 just 691M shares– WEAK!!! 123 of the last 167 sessions have been less than 800M shares (74%!). Since 2/29 there have been just 27 ‘average’ days (mostly down!), and just 22 have been above 900M – 773M is the 12 month average. Since 11/1/11 there have been just 18, 1B share days…14 in 2012! Since 2/6 there have been 74 sessions less than 700M shares. 239 of the last 262 sessions have been less than the 12 mo ave (91%)! Play elsewhere!

Advance/Declines were modestly negative: -1.5x vs +1.2x vs +2.5x vs +2.3x vs -1.3x on NYSE and -1.2x vs 1:1 vs +2.7x vs +1.4x vs -1.2x on Nasdaq. Breadth was slightly worse: NYSE: -2x vs +1.3x vs +3x vs +4.2x vs -2.2x on NYSE and -1.9x vs +1.1x vs +2.5x vs +3.3x vs -1.1x on Nasdaq. New 52 week highs climbed again (?) to 226 vs 206 vs 154 vs 143 vs 170 (768 is cycle high, 28 low), while new lows rose slightly to 51 vs 43 vs 38 vs 62 vs 48. The ratio remains positive: +4.5x vs +5x vs +4x vs +2.3x vs +3.5x vs +2.9x. Recent high was +7x! The S&P VIX rose to 16.64 vs 15.87! The 12-month low was 13.32 on 8/17 while the 1012 high is 27.73 on June 4.

Here are the results of last 5 sessions: Dow -0.5% vs flat vs +0.3% vs +0.8% vs -0.7%;  Dow Transports -1.1% vs -0.5% vs +0.6% vs +0.7% vs -0.2%;Dow Utilities -0.7% vs +0.9%! vs +0.5% vs +0.3% vs +0.1%; S&P 500 -0.5% vs flat vs +0.4% vs +0.8% vs -0.5%; Nasdaq Composite -0.3% vs -0.1% vs +0.7% vs +0.8% vs -0.3%; Nasdaq 100 -0.2% vs -0.1% vs +0.6% vs +0.9% vs -0.4%; Russell 2000 -0.1% vs -0.2% vs +1.2% vs +0.5% vs -0.2%; NYSE Financials -0.3% vs +0.1% vs +0.8% vs +0.5% vs -0.7% (KBW Banks -0.8%! vs -0.2% vs +0.3% vs +0.3% vs -1.3%!; Nasdaq Banks flat for a second session vs +0.7% vs +0.1% vs -0.8%; NYSE Brokers -0.5% vs +0.3% vs +0.4% vs +2% vs +0.1%.NYSE Financial Leaders: BAC -0.6% vs +0.3% vs +0.7% vs +0.3% vs -1.8%; C -1%! vs-1.8%!! vs +0.6% vs -0.1%; GE -1.5%! No other leaders.

European equities mixed, Asia weaker except India: FTSE -0.1% vs +0.2% vs +0.3% vs +0.9% vs -0.3%; CAC 40 +0.5% vs +0.8% vs +0.3% vs +1% vs -0.3%; DAX flat vs +1% vs +0.4% vs +0.7% vs -0.2%;Nikkei -0.3% vs +0.1% vs +0.5% vs +1% vs -1.2%; Hang Seng +0.2% vs -1.2% vs +0.5% vs +1% vs -0.6%; Korean KOSPI -0.3% vs +0.4% vs -0.1% vs +1.2%! vs -0.8%;Indian Sensex +0.2% vs -0.1% vs +0.9% vs +1.8%! vs closed vs +1.7% vs +0.2% vs -0.1%. U.S. stock futures a tad weaker after oscillating o/n: DOW flat – 55 point range;  SPX -0.30 – 7 point range; NDQ -1.25 – 12 point range. Caution!

U.S. treasury bonds rose modestly Monday and up slightly overnight: 10 yr 1.61% -1/16 – record low of 1.40%; 30 yr 2.79% +3/32. Long TIP 0.27% vs 33% +5/16 – 0.25% is the record low!The 5 yr TIP yields –1.52%; 10 yr -.88%.T-Bills: 0.12% 1 month; 0.09% 3 months; 0.14% 6 months. Reverse Repo 0.31%. 3 mo. Libor 0.31%; 6 mo. 0.525%. European problem sovereign 10 years, Germany-bench: 1.40% -1; Japan 0.69% -1; Italy 4.40% -3; Spain 5.21% -1; Greece 14.76% +20…on 9/20: 19.75%; Portugal 7.38% +11; Ireland 4.31% +4.

Gold closed up $10.40 on an inside day following a NEGATIVE key reversal (higher high, lower low, close below prior day’s low!) and remains below both the 40 and 50 day m/a’s. It closed at $1721.10 +$10.40. On 10/4 it closed at $1796 highest since 2/29 and it has lost $63 since. 7/12’s intraday low of $1547.60 was lowest since June 1. The record high is $1923.70, a buying climax on 9/6/11. MAJOR RES at $1728, the 40 day, and $1738, the 50 day.Support at $1671, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! It is now $1701.40 -$19.70!!! The session low is $1698.50, lowest since 11/6!!! Crude rose slightly closing at $89.09 +.18 with an intra-day high of $90.33, highest since 10/22!!! SUP at the 50 day (88.48), then the 50 day (87.88), and RES at $90 and the 200 day (93.62), falling again! It is currently $88.70 -.89. Both failed!!!

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