TB’s Quote of the Day: “If you can’t take their money, drink their liquor, @#&* their women, and then come in here the next day and vote against them, you don’t belong here.” Jesse Unruh, former Speaker of House and Treasurer of the Great State of California…and he lived his life to this homily (sic). Today, it is the same, the lobbyists, despite multiple attempts at reform have bought and paid for our elected representatives, but these guys don’t know how to resist giving them everything they want!
Bloomberg Quote of the Day: “Feel the fear and do it anyway” – Susan Jeffers
Bloomberg Top Stories:
*U.S. Profit on AIG Climbs to $22.7 Billion on Treasury’s Final Sale – that’s PROFIT!
*German Investor Confidence Jumps More Than Estimated on Outlook for Growth – ???
*European Stocks Rise for Seventh Day on German Confidence as Franc Weakens–Italy?
*HSBC Agrees to Pay $1.92 Billion to Settle Money Laundering Probe in U.S. – sick!
*UBS to Charge Bank Clients for Deposits in Swiss Francs Starting Next Week – not only do they lose money for them, they are going to charge them for the privilege!
*Bond Hoarders Squelch Trading in Year of Record Offerings – can’t replace yields!
*FedEx Systematically Overcharged Customers for Years, Internal E-Mail Says – idiots!
*U.S. Energy ETF Pouts Drop to 18-Month Low as Economy Strengthens – Hello???
*Wharton Women Earn 86 Cents on Male Graduate Dollar ass MBA Pay Gap Widens – !
*An $822,000 State Worker Shows How California Is Leading U.S. Pay Giveaway
*U.S. Fiscal Dispute Shows Signs of Thaw Before Year-End Deadline for Deal
*Britain Makes First Arrests in Libor Investigation as Three U.K. Men Held – finally!
*Asian Children Again Top Academic Testing as U.S. Struggles to Narrow Gap – wait, are we on to something here…perhaps it isn’t demographics but discipline!
Monday’s NYSE volume continued to slip to 3.0B shares vs 3.11B and a far cry from last Wednesday’s 4.14B shares. REAL trades on the floor also declined to 593M shares, lowest since 11/23’s low for the year of 329M shares, from 600M following the ‘surge’ to 759M. Advance/declines and breadth were only slightly positive so even the high freaks can’t do much. The S&P 500 and Dow Utilities were flat as a board, the Dow was up just 0.1%, both Nasdaq indices rose just 0.3%, and Transports took honors, +1.1% (wonder what will happen today with the new FedEx scandal?
Bond market closed little changed and is weaker overnight: 10 yr note 1.64%, 30 yr 2.82%. The big story remains TIPS…the 30 yr TIP yields od 0.23% just 1bp’s off the record low.
Gold was up $8.90 closingat $1714.40, still above $1700 but with a lower high and lower low. It remains well below the 40/50 day moving averages,while Crude lost .37 cents closing at $85.56, once again the lowest close since 11/15, and also remains well below both the 40/50 day m/a’s. Overnight Gold is up 50 cents and Crude is up 53 cents.
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…one of the now foreseen consequences of the cuts/limits on deductions is charitable giving. To recap, Mitt Romney did nothing illegal to cut his tax rate to 14% – instead he was a good citizen donating to his church and other worthy causes…millions of dollars! While it may not have been illegal however he invested his 401(k) in investments you would not be able to…through a gimmick of course when Bain Capital borrowed money – in addition to their clients funds – to do some of those LBO’s…that was their ‘skin in the game.’ Then through a conduit the loan was part of a shell company that was legal for 401(k)’s – this is not a criticism of Romney just the inequality in the Tax Code. Hence the value of his 401(k) which is at least $100 million and perhaps multiple more!
So removed is Romney from reality that he still believes ‘faith-based’ charities and local government can do a better job in a catastrophe…the first too small and disorganized…even the Red Cross and Salvation Army were overwhelmed by both Katrina and Sandy…the second at the ‘eye’ of the storm and having far too many problems to be able to work effectively. Sandy put the final nail in Romney’s coffin (even as he and the rest of the GOP foresaw total victory.
Meanwhile these upstanding CEO’s who earn 400 or more times their average employee (contrast to pre-Reaganomics days when it was just TEN times…and frankly you got better performance from these self-serving clowns than today.
But the hypocrisy continues as they lobby for budget cuts with no increase in marginal rates and continue to spread the myth that all income of those earning more than $250k will be taxed along with the millionaires. For all our grousing about the Tax Code how can so few understand it’s basic elements: tax rates, marginal tax rate and effective tax rate…even though you see it every time you file your tax return. In fact, that $250k is after deductions and exemptions…then you look at the tax tables…so to be impacted you would have to be making well over $300k due to the average family having over $40k in deductions and to be the same as the Bush era tax cuts you would have to be earning much more than that. Of course, there are also the tax increases that kick in next year but those are across the board and are regressive as a higher percentage of income will be paid by lower income individuals and families.
James Kwak of The Baseline Scenario, who TB has mentioned several times along with his colleague former IMF Chief Economist Simon Johnson, has, along with Paul Krugman and others, has been outspoken about the CEO’s and the ‘Fix the Debt’ group led by Pete Petersen and others (remember Petersen was CEO of Lehman Brothers just before its decline that took years to resurrect itself only to suffer total ignomy under Dick Fuld. This is the complete text of Kwak’s missive today:
“Several weeks ago, I wrote a column criticizing the “Fix the Debt” CEOs for saying that we should raise taxes while not mentioning the one tax break that means the most to them as individuals—the preferential rate for capital gains—and, in many cases, giving money to the presidential candidate who promised to protect that tax break for them.
A friend pointed out another glaring example of these CEOs’ hypocrisy. Of the CEOs in Fix the Debt, 71 lead public companies; of those, 41 have employee pension funds. Of those, only two pensions are fully funded; the other pensions are underfunded by an average of $2.5 billion, according to the Institute for Policy Studies.
More generally, according to the same source (see full report), S&P 500 companies’ pensions are only 72 percent funded. Social Security, by contrast, will pay full benefits for the next twenty-some years, and will pay about 75 percent of scheduled benefits thereafter even if nothing is changed. And those company pension funds benefit from the lax standards of private pension accounting, which allow them to assume optimistic rates of return. Social Security’s funding estimates have much less risk because it is paid for by interest on Treasury bonds and by payroll taxes, which are much less volatile than the stock market.*
So when anyone tells you that we should listen to so-and-so because of his success in the business world, run far, far away. Luckily we learned that lesson in time for November 6.
*Someone is sure to point out that company pensions are underfunded relative to being pre-funded, while Social Security is a pay-as-you-go system. But that’s beside the point. The federal government has the power to collect payroll taxes, which is why we can count on future program revenues. Corporations do not have the power to unilaterally raise prices on their customers (without losing sales), so they can’t reliably increase revenues in the future; that’s why they are supposed to be setting aside money today.”
That is what we are facing folks…nothing more for TB to comment on today.
Have a reflective day!
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Volume fell again to 3.0B shares from a weak 3.17B shares. NYSE shares executed without the aid of the ETN market also dipped to 593M shares vs 600M vs 616M vs 759M vs 674M. 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!!! 128 of the last 172 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 78 sessions less than 700M shares. 244 of the last 267 sessions have been less than the 12 mo ave (91%)! Don’t play here…yearend is coming!
Advance/Declines were minor but positive: +1.2x vs +1.2x vs +1.1x vs +1.1x vs -1.1x on NYSE and +1.4x vs -1.1x vs 1:1 vs -1.3x vs -1.1x on Nasdaq. Breadth was similar: NYSE: +1.2x vs +2.6x vs +1.2x vs +2.3x vs -1.1x on NYSE and +1.8x vs -1.3x vs +2.3x vs +1.1x vs -1.1x on Nasdaq. New 52 week highs rose slightly to a still weak 144 vs 128 vs 116 vs 130 vs 105 vs 226 (768 is cycle high, 28 low), while new lows rose to 71 vs 60 vs 71 vs 78 vs 71. The ratio remains positive: +2x vs +2.1x vs +1.6x vs +1.9x vs +1.5x. Recent high was +7x! The S&P VIX rose to 16.05 vs 15.90 vs 16.58 vs 16.46 vs 17.12.
Here are the results of last 5 sessions: Dow +0.1% vs +0.6% vs +0.3% vs +0.6% vs -0.1%; Dow Transports +1.1%! vs +0.2% vs -0.1% vs +0.9% vs +0.3%;Dow Utilities flat for a 2nd day vs -0.3% vs +1.4% vs -0.6%; S&P 500 FLAT vs +0.3% vs +0.3% vs +0.2% vs -0.2%; Nasdaq Composite +0.3% vs -0.4% vs +0.5% vs -0.8% vs -0.2%; Nasdaq 100 +0.3% vs -0.6% vs +0.7% vs -1.1% vs -0.2%; Russell 2000 +0.5% vs +0.1% vs +0.2% vs -0.2% vs +0.2%; NYSE Financials -0.2% vs +0.5% vs +0.2% vs +0.9% vs flat (KBW Banks -0.1% vs +1.1% vs +0.3% vs +1.7% vs -0.7%; Nasdaq Banks +0.3% vs flat for 2 days vs +0.3% vs -0.5%; NYSE Brokers -1.1% vs +0.5% vs -0.2% vs +0.9% vs -0.3%.NYSE Financial Leaders: BAC -0.6% vs +1.7% vs -0.1% vs +5.7% vs +1.1%. No other leaders BAC holding above $10, closed $10.57.
European equities better on German Investor Confidence, Asia not so much: FTSE +0.1% vs -0.1% vs -0.2% vs +0.3% vs +0.3%; CAC 40 +0.7% vs -0.3% vs -0.3% vs +0.2% vs +0.3%; DAX +0.6% vs -0.3% vs -0.3% vs +1% vs +0.3%;Nikkei -0.1% vs +0.1% vs -0.2% vs +0.8% vs +0.4%; Hang Seng +0.2% vs +0.4% vs -0.3% vs -0.1% vs +2.2%; Korean KOSPI +0.4% vs flat vs +0.4% vs +0.1% vs +0.6%;Indian Sensex -0.1% vs -0.1% vs -0.3% vs +0.5% vs +0.2% vs +0.2%. U.S. stock futures up and near session highs: DOW +31; SPX +3.30; NDQ +9.50.
U.S. treasury bonds closed weaker and slipping again overnight: 10 yr 1.65% -5/16 – record low of 1.40%; 30 yr 2.83% -13/16. Long TIP 0.24% -13/16 – 0.22% record low!The 5 yr TIP yields –1.54%; 10 yr -.90%.T-Bills: 0.04% 1 month; 0.08% 3 months; 0.13% 6 months. Reverse Repo 0.26%. 3 mo. Libor 0.31%; 6 mo. 0.517%. European problem sovereign 10 years, Germany-bench: 1.32% +2; Japan 0.69% +1; Italy 4.74% -7; Spain 5.45% -7; Greece 12.88% -37!!! vs 13.35% vs 13.92% !!! vs 14.72% …on 9/20: 19.75%; Portugal 7.3-% -7; Ireland 4.57% +7. A 3rd BIG DROP in GREECE!!!
Gold closed up $8.90 at $1714.40 It had a lower high and lower low and remains well below the 40/50 day moving averages,while Crude lost 37 cents closing at $85.56, lowest since 11/15 and well below the 40/50 day m/a’s. Skidding along the bottom! Overnight Gold is $1714.90 +.50. Crude is up 53 cents remaining below the 40/50 day.