12/10/12…the ‘fiasco cliff’

Bloomberg Quote of the Day: “Unrest of spirit is a mark of life.” – Karl Menninger…and a sign of a political party that is out of touch…Gingrich said yesterday on MTP: If Hillary Clinton runs we have no one to put up against her.

This week’s economic calendar is just as jam-packed with important indicators as this week’s was. The highlight of the week will be November Retail Sales (Thursday) although the November PPI (also on Thursday) and the November CPI (Friday) will also garner much attention. In addition, we will also get October International Trade and October Wholesale Trade (Tuesday), November Import & Export Prices (Wednesday), October Business Inventories (Thursday), and November Industrial Production (Friday). Also, the FOMC will hold a two-day meeting (Tuesday and Wednesday) with a policy statement due on Wednesday afternoon.

Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA

Bloomberg Top Stories:

*Monti Exit Pushes Up Italian Yields in Test for Europe’s Nobel Laureates – talk about a dysfunctional country: Berlusconi, a tax cheat and child molester is still holds the power!

*Greece Extends the Deadline for Buyback of Sovereign Debt After Nearing Target

*Stocks in Europe Decline on Monti Resignation Plan as Commodities Advance

*Banks With $39 Billion of Assets Face Direct Oversight by ECB, Draft Shows

*Chavez Cancer Recurrence Singles Region-Best Rally Not Over – another demagogue!

*Chavez Names Loyalist Heir as Venezuelans Brace for Battle Over Succession

*Honeywell 2013 EPS Outlook Misses Estimates; Company Plans to Buy Intermac

*Homebuilder Profits Show U.S. Boom as Loans Mask Uneven Rebound

*Speculators Cut Bullish Best as Lawmakers Debate Fiscal Cliff – Fiasco Cliff??? TB

*Lawmakers Leave Room for Split-the-Difference Deal to Avert Fiscal Cliff – “ “

*Syrian Rebels Clash With Assad’s Forces Within Mile of Presidential Office

*You-May-Be-Fired Warnings Surge in Virginia as Defense Spending Cuts Loom  

Friday’s NYSE volume was slightly weaker at 3.11B shares vs 3.17B and a far cry from Wednesday’s 4.14B shares. REAL trades on the floor also declined to 600M shares from 616M shares following the ‘surge’ to 759M. There simply is no retail…can you blame them? Advance/declines and breadth were mixed with the NYSE slightly positive on both and the Nasdaq negative on both. Once again, APPL was 12 of the 15.76 points lost on the NDQ 100…expect more volatility from Big Red!

Bond market closed weaker but is up slightly overnight: 10 yr note 1.60%, 30 yr 2.79%. The big story remains TIPS…the 30 yr TIP yields remains at just 22bp’s over the inflation rate – a record low. The long TIP yields MINUS 257bp’s to the long bond! If you don’t understand TIP accounting and don’t put it in an IRA – Avoid like the plague!

Gold was up $3.70 closingat $1705.50, still barely above $1700 on an outside session that barely made a ‘key reversal’ but should be ignored pending more information. It remains well below the 40/50 day moving averages,while Crude lost .33 cents closing at $85.93, once again the lowest close since 11/15, and also remains well below both the 40/50 day m/a’s. Overnight Gold is $1717.50 +$12. Crude is up 71 cents – still weak!

- – -  . . .  – - -

…TB empathizes with the Republicans out there…where are your party’s leaders? When Newt Gingrich says that if Hillary Clinton runs in 2016 the GOP hasn’t a chance, it is time to fear. This is not gloating on TB’s part because he is neither fish nor fowl…a man without a party and merely wants two legitimate choices to vote for – no more ideologues please…there are far too many Jim  DeMint’s in the GOP…who will earn much more and possibly do more damage (to either his party or possibly to the Dems) as head of the Heritage Foundation.

House Speaker Boehner continues to bash Obama and claim it is he who is crying my way or the highway, but his rhetoric and especially that of his extreme right colleagues (wouldn’t you think by now he would have given them a swift kick in the derriere? Or can he, as their majority evaporates without the Tea Party support…imagine being held hostage by Michele Bachmann??? If he is a true leader he will oust her from the House Permanent Intelligence Committee…and from the Rice accusations neither that or the Senate equivalent have any idea what ‘intelligence’ means – in either form).

Think for a minute: if you were Obama, had just been elected for a second term, and been insulted by the extremists in the GOP plus their leaders in the House and Senate, just how willing would you be to sit down and try to strike a deal? Not very. But in the end you know the end it has to be resolved because otherwise the ‘fiasco cliff’ will damage both parties with their big donors…after all, isn’t that what this is all about? Why else would the GOP be willing to forsake all but the top 1-2% of Americans…just to protect those who have benefitted the most and created the biggest wealth gap thanks to the Bush tax cuts than any other group since the Robber Baron’s of the 19th century?

Worse…he could get them together, pass the legislation, only to be held hostage once again with the Debt Ceiling which the Tea Party and their bosom buddy Grover Norquist are certain to attempt.  That story remains in the wings but it is of far greater consequence than the fiasco cliff – that the Tea Party created and used to blackmail Obama.

Now, just as during the election, both sides are misrepresenting the facts…to their advantage, but just as in the election, the GOP argument is built on lies which have been used to try to scare voters and instead cost them the election…one that even on the eve of the election they felt certain they would win!

Sorry but the would-be emperor’s clothes are fading from view and what is underneath is not a pleasant sight.

Don’t take TB’s word for it…here is a link to a Huffington Post on how the media aided the GOP in their fall from grace: GOP lies

TB waited but was angered at the GOP defeat of bill to vote for the UN equivalent of the Americans with Disabilities Act…once again on ideological grounds…they hate the UN with all their backbone. They voted against it on …well, lied again…this despite calls from vets Dole, McCain, and several disabled vets who travelled to the Capitol to urge its passage. The lie was that we would be aiding terrorist nations…get real people! It provides the same things for Americans abroad that the Act does here. That is how much contempt they have for the UN…just as they showed with the nonsensical attack on Susan Rice. But what is important is do they believe it or does it serve (or at least to them), their political agenda.

The GOP is dead…long live the GOP – may it resurrect itself as a respectable party.

Have a great week!

TB

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

Volume fell again to 3.11B shares after plunging Thursday from Wednesday’s solid 4.14B shares to a weak 3.17B shares. NYSE shares executed without the aid of the ETN market also dipped to 600M shares vs 616M vs 759M vs 674M vs 658M vs 1.18B. There have been just 21 700M+ days since 8/3. The high ytd was 9/21’s 1.8B shares. Since 6/29 just 18 sessions have surpassed 800M shares, mostly down days. The average since 8/1’s 1.03B is just 680M. The average for 2012 is just 763M shares and since 6/29 just 696M shares– WEAK!!! 127 of the last 171 sessions have been less than 800M shares (71%!). Since 2/29 there have been just 27 ‘average’ days (mostly down!), and just 22 have been above 900M – 767M is the 12 month ave. and falling! Since 11/1/11 there have been just 18, 1B share days…14 in 2012! Since 2/6 there have been 77 sessions less than 700M shares. 243 of the last 266 sessions have been less than the 12 mo ave (91%)! Don’t go hear…yearend is coming!

Advance/Declines were minor and mixed: +1.2x vs +1.1x vs +1.1x vs -1.1x vs -1.5x on NYSE and -1.1x vs 1:1 vs -1.3x vs -1.1x vs -1.2x on Nasdaq. Breadth was similar: NYSE: +2.6x vs +1.2x vs +2.3x vs -1.1x vs -2x on NYSE and -1.3x vs +2.3x vs +1.1x vs -1.1x vs -1.9x on Nasdaq. New 52 week highs rose slightly to a still weak 128 vs 116 vs 130 vs 105 vs 226 (768 is cycle high, 28 low), while new lows dropped to 60 vs 71 vs 78 vs 71 vs 51. The ratio is positive: +2.1x vs +1.6x vs +1.9x vs +1.5x vs +4.5x. Recent high was +7x! The S&P VIX fell to 15.90, and is now below the 10/50 day, vs 16.58 vs 16.46 vs 17.12 vs 16.64 vs 15.87! .

Here are the results of last 5 sessions: Dow +0.6% vs +0.3% vs +0.6% vs -0.1% vs -0.5%;  Dow Transports +0.2% vs -0.1% vs +0.9% vs +0.3% vs -1.1%;Dow Utilities flat vs -0.3% vs +1.4% vs -0.6% vs -0.7%; S&P 500 +0.3% vs +0.3% vs +0.2% vs -0.2% vs -0.5%; Nasdaq Composite -0.4% vs +0.5% vs -0.8% vs -0.2% vs -0.3%; Nasdaq 100 -0.6% vs +0.7% vs -1.1% vs -0.2% vs -0.2%; Russell 2000 +0.1% vs +0.2% vs -0.2% vs +0.2% vs -0.1%; NYSE Financials +0.5% vs +0.2% vs +0.9% vs flat vs -0.3% (KBW Banks +1.1%? vs +0.3% vs +1.7% vs -0.7% vs -0.8%; Nasdaq Banks flat for a second day vs +0.3% vs -0.5% vs flat; NYSE Brokers +0.5% vs -0.2% vs +0.9% vs -0.3% vs -0.5%.NYSE Financial Leaders: BAC +1.7% vs -0.1% vs +5.7% vs +1.1% vs -0.6%. C +1.7% vs +1.5% vs+6.3%!!! – remember those changes are only pennies on price. BAC holding above $10, closed $10.68. Third close above $10 since 7/11/11!?!

European equities weaker on Monti ousting, Asia better: FTSE -0.1% vs -0.2% vs +0.3% vs +0.3% vs -0.1%; CAC 40 -0.3% vs -0.3% vs +0.2% vs +0.3% vs +0.5%; DAX -0.3% vs -0.3% vs +1% vs +0.3% vs flat;Nikkei +0.1% vs -0.2% vs +0.8% vs +0.4% vs -0.3%; Hang Seng +0.4% vs -0.3% vs -0.1% vs +2.2% vs +0.2%; Korean KOSPI flat vs +0.4% vs +0.1% vs +0.6% vs -0.3%;Indian Sensex -0.1% vs -0.3% vs +0.5% vs +0.2% vs +0.2%. U.S. stock little changed and trading in narrow ranges awaiting more ‘fiasco cliff’ announcements: DOW +1; SPX -0.80; NDQ -4.

U.S. treasury bonds closed weaker Friday, up slightly overnight…same pattern all week: 10 yr 1.61% +1/8 – record low of 1.40%; 30 yr 2.79% +3/8. Long TIP 0.22% +3/8 – at the record low!The 5 yr TIP yields –1.56%; 10 yr -.93%.T-Bills: 0.05% 1 month; 0.08% 3 months; 0.13% 6 months. Reverse Repo 0.31%. 3 mo. Libor 0.31%; 6 mo. 0.518%.  European problem sovereign 10 years, Germany-bench: 1.30% +1; Japan 0.68% -1; Italy 4.80% +28!!!; Spain 5.52% +10; Greece 13.35% vs 13.92% !!! vs 14.72% -50!!!…on 9/20: 19.75%; Portugal 7.39% +5; Ireland 4.48% +1. A 2nd BIG DROP in GREECE AGAIN while Italy rose sharply!!!

 

Gold closed up $3.70 at $1705.50, bouncing off worst close since 11/5! It had an outside session which was a minor key reversal and should thus be ignored. It remains well below the 40/50 day moving averages,while Crude lost 33 cents closing at $85.93, lowest since 11/15 and well below the 40/50 day m/a’s. Overnight Gold is $1717.50 +$12. Crude is up 71 cents but remains below the 40/50 day m/a’s.

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