1/4/13…seriously folks…

From The Friars Club Encyclopedia of Jokes: “I don’t make jokes; I just watch the government and report the facts.” …and “Everything is funny as long as it is happening to someone else.” – Will Rogers…a wise man!

Bloomberg Quote of the Day: “Without music, life would be a mistake.”

 – Friedrich Nietzsche…uh one, uh two, wunnerful, wunnerful!

Bloomberg Top Stories:

*Payrolls in U.S. Climbed 155,000 in December as Jobless Rate Remained at 7.8%

*U.S. Stock Index futures Advance as Report Shows Employers Adding Workers…some!

*Almost All of Wall Street Got It Wrong in 2012 as Markets Saved the World

*Steve Cohen’s SAC Tops List of Most Profitable Funds Amid Insider Probes…he did it the old fashion way…insider information…it takes a cheat!

*Swiss Envy Permeates G-10 Nations Amid Currency Wars to Rescue Economies

*Geithner Said to Plan Departure From Treasury Before Debt Ceiling Resolved – Good!

*Lilly Forecasts 2013 Profit Higher Than Analsytss Estimates; Shares Climb – duh!

*Airbus Defends Single-Aisle Orders Lead as Boeing Retakes Delivery Title

*Obama Catastrophe Showdown With Congress Looms as Investors Show No Alarm

*Boehner Stops Storm Aid to New Yorkers Feeding Republicans – ?

*New Delhi Rape-Death Case Triggers Supreme Court Hearing on Sex-Crime Laws

*Liberals Nip Obama as He Battles Republicans…and the beat goes on…and on…

U.S Non-Farm Payrolls rose by 155k, IN LINE with median 152,000. Private Jobs rose by 168k while government shed 13k. Factory Jobs rose by 25k while Construction rose by 30k. November revised to 161k from 146k, while October fell by 1k to 137k. U.S. employers added 1.84M jobs in 2012, same as 2011.  Average hourly earnings rose 0.3% and 2.1% year over year.

The Unemployment Rate was steady at 7.8% and averaged 8.1% in 2012, lowest since 2008!

Market Reaction: Stocks had been slightly in the red in the overnight session the reversed to a modest positive: Dow +21; SPX+3.80; NDA +10. Bonds showed little interest fading slightly. Gold fell $14 yesterday and another $29 on the news,, giving back all the gains of the last two weeks! Crude slightly lower. Dollar a wee bit stronger.

A sense of ennui returned to the market after the euphoria of the first trading day of 2013. Total NYSE volume dipped back to 3.82B shares from 4.2B. Trades executed on the floor of the NYSE dropped sharply to a weak 707M shares from 859M shares. All indices except Transports (+0.6%) were weaker – especially Nasdaq which fell by 0.5% with Apple taking the honors on that one. Advance/declines and Breadth were mixed with small differences by +1.3x/+1.2x on NYSE and -1.1x/-1.1x on Nasdaq. Note that new 52 week highs hit 713 on Wednesday and fell to a still strong 437 yesterday while new lows were a weak 22. After closing at 22.70 on 12/28, the S&P VIX volatility measurement had fallen sharply the last three trading days and stands at a moderate 14.56…a lot could happen in the week of options expiration: 1/17!

Global stocks are mixed with Europe up, except for a slight decline in France, Asia mixed…Japan up 2.8% after being closed for three days…all others down.

The bond market was slammed again yesterday and off modestly overnight with yields highest since May Day!!!. The 10 yr note is 1.93% -1/8, and the 30 yr 3.14% -5/16 – well above the old 3% high set on 12/18! TIPS continue to get pummeled and are also weaker at 0.55% -1/8 – back from the 0.22% record low set on 12/6! Libor is steady at 0.305%, 3 months, and 0.501% six months. Foreign bond rates higher except Portugal (6.18%) and Greece (10.92%!!!) with Bunds weaker at 1.52%, UK 2.09%. Worry time?

Gold was in dangerous territory as TB remarked yesterday after rallying from $1636 low on 12/21 – lowest since 8/21, and proved it yesterday falling $14.20 to $1674.60 and another $27.50 after payrolls to $1626 -$48 – ouch!!! It is still weak $1648.80 -$25.80, goldbugs beware!. The 40/50 day moving averages locked at $1705 are now formidable resistance as is the psychological $1700, and now the 200 day – $1668! Crude was little changed yesterday closing at $92.92 -.20 – after the highest close since 9/19 but still well above the 40/50 day, and the 200 day: $91.84! Overnight it is slightly weaker at $92.56 -.36. It’s a jungle out there!

…the fiscal ‘bluff’ may prove to be the biggest smokescreen in history with the added attraction of driving the wedge between moderates of both parties and their extremists in even deeper…if that is possible. Meanwhile, we are totally ignoring the plight of the state and local governments, which is where concerns should be firmly placed.

Ridiculous retirement benefits and declining revenues are forcing these entities to resort to accounting tricks to balance the budget…but you can only postpone pension payments once for a fiscal year…so what will the game plan be on June 30? Beats TB. On top of that the unfunded liabilities of the pension funds are grossly underestimated due to actuarial reinvestment assumptions that are anything but prudent in this volatile economy. How many of you are forecasting a 7% return on your portfolios this year?…and if you own bonds some of that appreciation which added to returns will have to be given back as rates rise…how long and how far is anyone’s guess.

There is just too much happening and too much ‘not happening’ to draw any inferences on what returns will be like for this year…and which quarters will do well and which ones you will wish you had been in cash. Time will tell…it always does.

Stopping now rather than put something foolish in print!

Have a great weekend!

TB

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

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