12/24/12…wise King Solomon and the Grinches

Bloomberg Quote of the Day: “Pleasure in the job puts perfection in the work.” – Aristotle…it’s hard to do with $100k in student loans and a part-time, no-benefits job!

From The Friars Club Encyclopedia of Jokes: “Well, we can’t stand around here doing nothing, people will think we are workmen.” and…

“According to the latest statistics, there are 13 million Americans who aren’t working. Ant there are plenty more of you count the ones with jobs.”  

This week’s holiday-shortened economic calendar is quite light. The highlight of the week will be December Consumer Confidence (Thursday). We will also get the October Case-Shiller Home Price Index (Wednesday), November New Home Sales (Thursday), and the December ISM Chicago Survey (Friday). There are no data releases scheduled for Monday and Tuesday is a market holiday for Christmas.

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

Bloomberg Top Stories:

*Americans Miss Almost $200 Billion by Abandoning Stocks During Bull Market – did it occur that they might not have the stomach for it? S&P since 12/31/99 = -1.3%…+0.53% annualized w/dividends reinvested! Perhaps that is why!!!

*U.S. Index Futures Drop as Gold Advances Amid Budget Deadlock; Yen Weakens

*Draghi’s Cheap ECB Cash Triggers Record Drop in Interbank Lending Rates – fixed?

*Economy Weighs on U.S. Shoppers in Final Holiday Weekend Gift Dash to Mall

*Federal Reserve is Flummoxed by Mortgage Yield Gap That Refuses to Shrink

*Leveraged Loan Sales in U.S. Climb to Highest Since 2007

*Credit Rallies as European Debt Risk Falls for the First Time Since 2009

*Bullish Commodities Wagers Retreat to Six-Month Low as U.S. Talks Stall

*Trump’s Toronto Tower Woes Signal Top of City’s Condo Market  – but not Trump’s!

*Dealers Tighten Grip on Treasuries as Fed Expands QE3 Suppressing Yields

*Lawmakers in U.S. Say Time Is Short to Avert Consequence of Budget Impasse

*Opponents to New Islamist-Backed Constitution in Egypt Vow to Overturn it

 

Friday was the last options expiry of 2012  and it was as TB predicted… unpredictable!

It was made more so by the D.C. Grinches who would rather play a dangerous game of ‘fiscal bluff’ than fix a fixable problem before it becomes well…unfixable!

It began with a bang and just kept banging…like heads together which if WE, the people, had any brains is exactly what we would have done to those pompous men and a few women we sent to our Capitol to do the best they could for us…but that at odds with what was best for them: raise money for their re-election! Meanwhile, the S&P Volatility Index (VIX) ’rallied’ – the only thing other than U.S. treasuries to do so – unusual on expiration day, closing at 17.84 +.19 VIX but only after opening at 19.85 quickly moving up to 19.93 (highest since July 24th!) as the breakdown in budget talks became even more apparent…happy holidays, America! But wait…there’s more as the TV hawkers say: Wednesday is last day for (T+3) settlement in 2012…which means hedge funds will have total control for the remainder of the year since due to their leverage they have to close year on completed trades, not actual trades to avoid distorting balance sheets. One reason? Rebalancing of index funds on last trading day of the year…hedgies will make them pay to do so! January is now up (or down) for grabs!

The expiration of the quadruple witching brought NYSE volume up to 4.74B shares from 3.66B shares in a session that is best described as ‘down and downer!’ Meanwhile trades on the floor of the NYSE (or should we now say ICE?) also rose to 1.08B shares, highest since 11/2 nearly double Thursday’s 683M shares…never underestimate the value of options…especially a quadruple witching! Advance/declines and breadth were both negative. All indices were down led by The two Nasdaq indices, and the Dow, S&P 500 – all off 0.9-1.0%! The grinches have truly stolen Christmas…and a happy new year!

The bond market was the winner…U.S. treasuries at least as Muni’s, on fears of limiting the exclusion of municipal bond income, took their biggest hit since Meredith Whitney proclaimed total disaster for the sector. The 10 yr note gained 5/16 to close at 1.76%, while the 30 yr closed at 2.93% +15/16 and back from 3% just three days earlier. TIPS gained over a point to 0.33% but still a far cry from the 0.22% record low on 12/6! The big story remains the problem countries led by Greece where the yield has fallen to 11.39% from 11.52% – high on 5/31 was 29.88%, 18.13% on 11/1!!! No worries!

Gold was up, regaining $14 of the $47 lost in just three sessions, closingat $1660.10 +$14.20 following the lowest close since 8/22! It remains way below the 40/50 day moving averages and now the 200 day – $1668! – Overnight is is up $2.70 to $1662.80. Crude was trashed losing $1.47 and closing at $88.66 but still above the recently attained 40/50 day, overnight it is $88.45 -.21.

- – -  . . .  – - -

…according to Wikipedia:

The story (of Solomon’s wisdom) is recounted in 1Kings 3:16-28. Two young women who lived in the same house and who both had an infant son came to Solomon for a judgment. One of the women claimed that the other, after accidentally smothering her own son while sleeping, had exchanged the two children to make it appear that the living child was hers. The other woman denied this and so both women claimed to be the mother of the living son and said that the dead boy belonged to the other.

After some deliberation, King Solomon called for a sword to be brought before him. He declared that there was only one fair solution: the live son must be split in two, each woman receiving half of the child. The liar, in her bitter jealousy, exclaimed, “It shall be neither mine nor yours—divide it!” However, upon hearing this terrible verdict, the boy’s true mother cried out, “Oh Lord, give the baby to her, just don’t kill him!” The king gave the baby to the real mother. King Solomon’s judgment heard throughout all of Israel and thought to be wise.

There is also a slightly different Jewish version:

According to the Midrash, the two women were sisters-in-law, both of whom had borne sons, and whose husbands had died. The baby was actually the lying woman’s nephew. Therefore, when Solomon suggested that the infant be split in half, the lying woman, jealous of her nephew and sister-in-law, agreed. Thus was Solomon able to know who the real mother was.

Alas, fellow Americans we don’t have a Solomon…in fact the gospel according to the three tenors of the NRA (Wayne LaPierre, Grover Norquist, and president David Keene) in what had to be the most scripted – not to mention stupid – remarks off all time, switched from ‘guns don’t kill people’ to a bleating: ‘let’s try something that works (or might work).’ How disgusting and an insult to the families at Shady Hook! They simply don’t give a damn so long as they get the support of the gun manufacturers. That is why there has been an outflow of members under LaPierre who have continued to stress gun safety and hunting regulation. Not so for these three unwise men, the most disgusting of whom is Norquist who continues to hold this country hostage to his damnable pledge!

Considering that all three of these individuals are staunch Republicans, isn’t it interesting that LaPierre had the audacity to say the federal and state governments should be able to fund policemen in every school? The chief of police in Fremont, California said that to do so would require HALF of his police force! God, you men are brilliant! Get real!

Too bad there isn’t someone in the GOP willing to take a similar stand. It certainly isn’t the ‘weak-kneed’ John Boehner, who may not remain House Speaker for long…but who would replace him? Michele Bachmann? She wants the job…do you want her to have it?

     The failure cast doubt on Boehner’s ability to navigate the competing political and legislative forces bearing down on him. To get a tax-and-spending deal, Boehner must gain enough support from Republicans to keep control of his party while relying on
Democrats for the votes needed to send any measure to President Barack Obama.
     “It weakens the entire Republican party, the Republican majority,” said Representative Steven LaTourette, a nine-term Ohio Republican who is retiring after this session. “If you’re not a governing majority, you’re not going to be a majority very
long.”
     That view was underscored by the results of an ABC/Washington Post poll released this morning, in which 53 percent of Americans said the Republican Party needs less
conservative policies that are more focused on middle-income and lower-income Americans, while 38 percent said the party needs better leaders to sell its policies. The telephone poll of 1,002 adults, conducted Dec. 13-16, has a margin of error of plus or
minus 3.5 percentage points.

What a day Friday was…first the GOP said they don’t give a damn what happens, so long as NOBODY gets a tax increase…just cut all the safety net programs. Then along came the IRA who in response to ‘guns in the wrong hands kill people’ proposed this: the problem is there aren’t enough guns…they want them in schools…and with what will we pay these armed guards…or just use teachers, most of whom don’t have the mindset to use a firearm. Both Scotland and the larger Australia passed strong laws immediately after a major mass murder. Neither has had any since…we could do it here. Canada doesn’t have a problem even though it shares our border because of tough gun control laws the require serious background checks, a reason for owning the weapon, and two letters of reference…they too have no problems. So just take the NRA’s word for it…we have for twenty years or more! How about the 4 million members saying they quit?

Now to end on a nice note this Christmas Eve, TB just heard about an organization that is buying up debt from banks of medical bills – that area comprises 62% of all bankruptcies! They then pay off the loans and send a letter to the borrowers (hope Scrooge Uncle Sam doesn’t tax that and they have not obtained a ruling on that…meaning that there now ‘dischargeable’ debt would be converted to non-dischargeable…show some heart IRS!). What does it cost them to buy up this debt? $5,000 for every $100,000 package of loans. This is what we have become…or at least had before this group came along. But imagine if the borrowers had asked if they could pay $5,000 to pay off $100k or even $50k of debt…hear the door slamming? Still think we don’t need universal health insurance? Once again you have been duped by special interests into the impossibility of change. Is this a great country or what? The group is debtstrike.org and is a positive spinoff from Occupy Wall Street. A good idea if the IRS doesn’t put the kibosh on it!

Lastly, TB was in downtown Minneapolis over the weekend and saw several men begging…the most notable a well-dressed black man who said behind our backs “it’s because I am black.” But also, in 9 degree weather, saw men on center dividers with placards saying ‘father of four’ and similar. You don’t do that for the fun of it! Perhaps it has struck them what is about to happen on January 1st if there are no wise men and only grinches…pity.

There you have it…one hell of a mess…where is wise King Solomon when we need him? It had better be soon before the backbone of this great country is severed!

Have a Merry Christmas and let it carry into the new year!

TB

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

Volume rose sharply to 4.74B shares vs 3.66B shares on the final quadruple witching of 2012…and what an expiry it was! NYSE shares executed without the aid of the ETN market also rose to a strong 1.08B shares from a very weak 366M shares. There have been just 25 700M+ days since 8/3. Friday was only the second 800M+ share day in the last 14 sessions! – average 691M shares! The average since 8/1’s 1.03B is just 681M. The average since 9/21 (12 mo high: 1.81B) is just 687M with this only the second 1B share day and just ten sessions above 800M shares! 135 of the last 181 sessions have been less than 800M shares (75%!). Since 2/29 there have been just 29 ‘average’ days (mostly down!), and just 23 have been above 900M – 757M is the 12 month ave and falling! Since 2/6 there have been 83 sessions less than 700M shares. 251 of the last 276 sessions have been less than the 12 mo ave (92%)! We are in for rough sledding!

Advance/Declines were negative: -2x vs +2.5x vs 1:1 vs +2.8x vs +2x on NYSE and -2x vs +1.6x vs 1:1 vs +2.6x vs +2.2x on Nasdaq. Breadth was even worse: -3.9x! vs +3x vs -1.7x vs +6.1x! vs +4.2x on the NYSE and -5x! vs +1.2x vs -1.3x vs +3.3x vs +1.9x on Nasdaq. New 52 week highs fell to 141 vs 259 vs 292 vs 292 vs 151 (768 is cycle high, 28 low), while new lows rose to 66 vs 41 vs 53 vs 55 vs 74. The ratio fell to +2.3x vs +6.3x vs +5.5x vs +5.3x vs +2x. The S&P VIX continued its surge opening at 19.85 quickly moving up to 19.93 (highest since July 24th!) as the breakdown in budget talks became even more apparent before closing at 17.94 +.19. What an expiry!!!

Here are the results of last 5 sessions: Dow -0.9% vs +0.5% vs +0.9% vs +0.8% vs -0.3%; Dow Transports -0.3% vs +0.7% vs +1.6% vs +0.8% vs +0.1%;Dow Utilities -0.6% vs +0.4% vs +0.9% vs +1.4% vs -0.1%; S&P 500 -0.9% vs +0.6% vs +1.2% vs +1.2% vs -0.4%; Nasdaq Composite -1% vs +0.2% vs +1.5% vs +1.3% vs -0.7%; Nasdaq 100 -1.1% vs +0.2% vs +1.5% vs +1.4% vs -1%; Russell 2000 -0.7% vs +0.5% vs +1.5% vs +1.4% vs -0.1%; NYSE Financials -1% vs +1.2% vs +1.4% vs +1.4% vs -0.1% (KBW Banks -1.2% vs +1.1% vs +1.9% vs +2.8% vs -0.3%; Nasdaq Banks -1.1% vs +0.9% vs +1.4% vs +1.7% vs -0.4%; NYSE Brokers -0.5% vs +1% vs +2.4% vs +2% vs +0.1%.NYSE Financial Leaders: BAC -2% vs +3% vs +3.3% vs +4% vs +0.4% vs -0.7%; GE -1.8% vs +1.1% vs -1.1% vs +1.4%. No other leaders.

Global equities weak and mixed: FTSE +0.2% vs -0.7% vs +0.1% vs +0.5% vs +0.4%; CAC 40 -0.2% vs -0.5% vs +0.2% vs +0.4% vs flat; DAX -0.5% vs -0.7% vs +0.1% vs +0.2% vs +0.4%;Nikkei closed vs -1% vs -1.2% vs +2.4%!!! vs +1% vs +0.9%; Hang Seng +0.2% vs -0.7% vs +0.2% vs +0.6% vs -0.1%; Korean KOSPI +0.1% vs -1% vs +0.3% vs +0.5% vs +0.5%;Indian Sensex +0.1% vs -1.1% vs -0.1% vs +0.6% vs +0.6% vs -0.3%. U.S. stock futures weak again but near session highs: DOW -34; SPX -4.10; NDQ -6. What will happen today?…dunno…

U.S. treasury bonds were up BIG Friday but off slightly overnight: 10 yr 1.77% vs 1.76% – record low of 1.40%; 30 yr 2.94% vs 2.93% and back from 3.00%! Long TIP 0.33% –  but a far cry from its 0.22% record low!The 5 yr TIP yields –1.47%; 10 yr -.77%.T-Bills: 0.02% 1 month;0.05% 3 months; 0.11% 6 months. Reverse Repo 0.28%. 3 mo. Libor 0.31%; 6 mo. 0.51%! European problem sovereign 10 years, Germany-bench: 1.37% -1; Japan 0.76% +1; Italy 4.44% -1; Spain 5.16% -4; Greece 11.40% flat – high on 5/31 was 29.88%, 18.13% on 11/1!!! An incredible move!!! Portugal 6.87% -1; Ireland 4.46% +9???

Gold was up, regaining $14 of the $47 lost in just three sessions, closingat $1660.10 +$14.20 following the lowest close since 8/22! It remains way below the 40/50 day moving averages and now the 200 day – $1668! – Overnight is is up $2.70 to $1662.80. Crude was trashed losing $1.47 and closing at $88.66 but still above the recently attained 40/50 day, overnight it is $88.45 -.21.

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2 Comments »

  1. Yarnman said

    Happy Birthday, TB!

    –Yarnman

    • traderbill said

      Why thank you, Yarnman!
      Hope you have the happiest of holidays!
      TB

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