3/8/13…the sins of the bankers

From the Friars Club Encyclopedia of Jokes: “An alcoholic is someone you don’t like, who drinks as much as you do.” – Dylan Thomas

Bloomberg Quote of the Day: “Even if you fall on your face, you’re still moving forward.” – Victor Kiam

U.S. Payrolls rose by 236,000, exceeding the median estimate of 165,000. Private Payrolls rose by 246,000, while Government declined by the usual 10,000. January was revised down by 38k while Dec. was increased by 23k for a net reduction of 15k. Where were the jobs? Construction rose by 48k, Goods Producing +67k, Manufacturing still tepid at +14k – services increased by 179k (Transportation +30k, Retail +24k, Information +20k, Business Services +73k, but the high paying Financial by just 7k! Temporary Workers +16k, Education +24k, Leisure +24k. Average Hourly Earnings rose by 02% (just 2.1% y-o-y) while Weekly Earnings rose by 0.5% or +1.8% y-o-y). Manufacturing Hours Worked rose by just 0.2% to 40.9 while Overtime rose by 0.1% to 3.4 hours – neither category has shown much change for months!     

The Unemployment Rate FELL to 7.7% -0.2%, lowest since December 2008 (remember when  the effects of the financial crisis kicked in obliterating Team Obama’s forecast of getting it back to 6%, for which HE was held accountable). This was exaggerated by the increase of 296k not in the labor force (drop outs). The Labor Pool declined by 110M!  It sits at a 30 year low!!! Adding marginally attached workers and part time for economic reasons the jobless rate declined by 0.1% on both, 9.2% and 14.3% respectively…attesting to the poor quality of jobs and pay offered.  

Market Reaction: bonds tanked, stock futures increased their overnight gains. Post the open stocks have given back most of their gains and Nasdaq is now negative. Headlines took it up…facts bringing it back down to earth.  Bonds however, remain very weak!

Bloomberg Top Stories:

*Payrolls in U.S. Rise More Than Forecast as Jobless Rate Decclines to 7.7% – watch out for the headlines (see above), as it is positive but very misleading!

*U.S. Stock Futures Gain as Job Growth Exceeds Economists Estimates

*Fed See, Goldman, JPMorgan Overvaluing Capital Strength in Economic Crisis

*Ten Year Treasury Hits 11-Month High as Jobs Signal Stronger Recovery – yes but…

*Barclays CEO Jenkins Paid 63% Less Than Diamond as Bank Seeks to Cut Costs

*Women Raped in Egypt Wish Death Over Life as Authorities Ignore Male Crime

*Storm Spreads Snow From New York to Boston as Waves Threaten Coastal Areas

*North Korea Scraps Armistice After UN Vote on Sanctions, Cancels Hotline – sick!

*House Budget Success Is Really a Case of More Congressional Failure

OK, OK, the market rallied again…well sort of but the gains were modest as the Dow  eked out yet another new record high and high close…but  by just 35 points vs 38 vs 88 and 42 vs 56 points. Meanwhile volume has been little changed for the last five sessions while REAL trades on the NYSE barely passing 700M for the first time in four sessions? Expect a continuation today however on the employment situation.

The biggest gainers was the Russell 2000 +0.5% while the Dow and S&P had to settle for 0.2% gains, The two Nasdaq indices (plus NYSE Financials) were all +0.3% while the stellar Dow Transports fell for a second day -0.5% vs -0.4% after being the big winner at +1.5% vs +1%. Dow Utilities declined by 0.3% vs flat vs +0.5% vs +0.9%!

The high on the Dow was a new record 14354 with a new high close of 14329.  This is looking more like yet another year of ‘sell in May and go away’ – IF we make it that far…and if the extremists in the GOP have their way it will be even earlier!

Total NYSE total volume fell slightly to 3.62B shares vs 3.67B vs 3.57B vs 3.38B vs 3.76B vs 3.53B vs 3.92B vs 3.81B vs vs 3.41B vs 4.26B and 4.2B (highest of 2013 by about 400M shares). Real NYSE volume rose slightly to a still weak 708M shares vs 684M vs 683M vs 693M vs 743M vs 2/28’s (monthend) 1.01B shares!!!(second only to 1/18’s 1.07B and third best to 12/21’s 12 mo. high of 1.88B shares). Note this is the first time this week it has been above 700M shares while the average volume since 2/15 is a weak 781M shares!!! Ave vol. 12 mos. 745M, ytd 714M. There have been just eight 800+M shares in 2013. This is a very thin-based rally that is producing record highs on the Dow???

  1. new highs which have ranged from 121-680 (2/19), before falling to just 121, slipped again to 447 vs 539 from a very high 709 vs 418 vs 274 vs 326 vs 268 vs 145 vs 273 vs 214. New lows slipped to plunged to 24 vs 64 vs 73 vs 98 vs 93 vs 59 vs 49 vs 74 vs 52. Puts are incredibly cheap if you want safety!
  2. Advance/Declines were positive for the 8th straight sesson at +1.4% vs +1.3x vs +2.8x vs +1.3x vs +1.3x vs +1.1x vs +3.2x vs +2x on NYSE and +1.6x vs +1.2x vs +2.4x vs +1.2x vs +1.3x vs -1.1x vs +2x vs +1.5x vs -4.4x on Nasdaq. Breadth was similar at +1.8x vs +2.2x vs +4.1x vs +1.5x vs +1.2x vs -1.1x vs +6.2x +2.4x vs -9.7x on NYSE and +1.9x vs +1.4x vs +3.4x vs +1.8x vs +1.7x vs -1.1x vs +4.4x vs +1.6x vs -4.5x on Nasdaq.
  3. The Nasdaq 100 rose by 0.3% vs -0.3% or 6.9 points. Apple reversed tack again adding 3.9 points vs -4.5 vs  +9! On Monday it was also the big loser dragging it down by 8.5 points. The Russell 2000 small cap continued its climb with a 0.5% gain vs +0.3% vs +1.2% vs +0.2% – that is up 2.7% in SIX sessions!.
  4. NYSE Financials rose 0.5% vs +0.3% vs +0.9% vs +0.5% vs +0.1% vs -0.2% vs +1.4% vs +0.6% vs -2.5%. (Brokers +0.9%, KBW Banks +1.2%, Nasdaq Banks +0.6%).BofA still most active not only rose 2.9% to $12.26 (first time since 2/19) vs +3.2%! vs +1.2% vs +0.6% vs +0.1% vs +1.7% vs +0.9% vs -1.6%, coming back from $11.11, lowest since 12/17,  and back well above the 40/50 day m/a’s for the lowest close this year – from $12.42 high on 2/13. Note that due to the low price 11 cents is a 1% change!!!  MGIC FELL by 12.3% vs +5.1% following +27.8% and +10.3%, still up 31% in four days!
  5. Lastly volatility (S&P VIX) which had back to back lows going back to 2006 – 12.13 then back to 18.99 (with an intraday high on 2/28 of 19.28, highest since 12/31 – highs on 12/30-31 were 22.72 and 22.19 respectively, highest since 6/15. It closed at 13.06 -.47 or -3.5% and well below the 40 day m/a (13.75). Far too complacent for the reality! Why? Because NEXT Friday is options expiration!

Global equity markets very strong, surging on U.S. jobs report: UK +0.7% vs +0.4% vs +0.4% vs +1.1% vs -0.4% vs -0.7%; France +1.2% vs +0.6% vs +0.3% vs +1.6% vs +0.2% vs -1.5%; Germany +0.8% vs +0.3% vs +1.1% vs +1.9% vs -0.4% vs -1.2%; Japan +2.6%!!! vs +0.3% vs +2.1%!!! vs +0.3% vs +0.4% vs +0.4% vs +2.7%!!! vs -1.3% vs -2.3% vs +2.4%, Hang Seng +1.4%! vs flat vs +1% vs +0.1% vs -1.5% vs -0.6% vs +2%; Kospi +0.1%? vs -0.8%! vs +0.2% vs +0.2% vs -0.7%; India +1.4%! vs +0.8% vs +0.6% vs +1.4% vs -0.2% vs +0.3% vs +1.5%. U.S. stock futures strong ona a big swing following payrolls, near session high: DOW +84; SPX +7.60; NDQ +11.75.

Bonds whacked again yesterday with the 10 yr closing at 2% and off more overnight: 10 yr Treasury range of from 2.06% to 1.85% last 13 sessions, now 2.06% -5/8 and the 30 yr’s 3.23% to 3.05% broken , now 3.26% down 1 point! The long Tip very weak again at 0.65% vs 0.60% – a new high!. Libor update: 0.240% 3 mos., 0.447% 6 mos steady declines!!! Foreign bond yields higher in Germany and U.K. for a second say,  problem countries mixed: Germany 1.53% +4; UK 2.06% +4; Italy 4.54% -4; Spain 4.73% -13!!!; Portugal 5.81% +2; Greece 10.51% -9 – these are unheard of daily changes…consistently!!!

Gold closed nearly flat for a second day still near support with the loss from the 1/17 high of $1699.90 at $117! It closed at $1575.10 +.20, still down -$73 in 9 sessions but still above a week ago Thursday’s low of $1554.30 – not seen since May 2012! Overnight it is $1563.60 -$11.50! The total breakdown through the 40/50/200 day m/a’s, has major resistance $1640-1668, with first resistance at $1600, a double bottom from 8/14-15, also a psychological level. Last time it was below $1500 was Sept. 2011!!! Crude rose slightly yesterday, three days after setting another new low of $89.33, lowest since 12/26, and way below the 40 day ($94.76), AND $94.18, the 50 day. It closed at $91.56 +.15 after trading to 90.22 – below the 200 day (90.35). Overnight it is $91.32 -.24

Some random thoughts:

TB will restrict today to two columns on government spending and banks…you decide.

You have heard a lot about the ‘evil’ debt of the U.S. – mostly by the Tea Party and the GOP representatives and senators, along with their Democratic minorities of the eight Bush years which created the deficit and widened the wealth gap – shamefully! Some ‘thinkers’ however have challenged the assertions of Pete Peterson and the Simpson-Bowles Commission of impending doom. The need is to put in place provisions to be gradually worked in as the economy improves. These, however, require a combination of revenue increases (most likely in the form of reforming the tax code and its myriad deductions), and budget reform. Could you not cut $5 billion or more a year from the military without impairing its capabilities? …or find similar cuts to Social Security (aid to those with dependents who don’t need it!) and Medicare (purchasing prescription drugs), without raising the age limits? Here is an interesting analysis by Dean Baker at www.cepr.net. Link to article:

Dean Baker, spending cuts

Then for those of you who still love and believe in the banks – big banks that are not only too big to fail but too big to ‘try’ there is this from Simon Johnson at The Baseline Scenario: some-of-these-institutions-have-become-too-large

Enjoy your weekend…your Congressman is!

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2 Comments »

  1. Yarnman said

    TB–Tom Edsall points out that you can solve Social Security so-called underfunding just by eliminating the cap for the FICA payroll deduction. “Currently, earned income in excess of $113,700 is entirely exempt from the 6.2 percent payroll tax that funds Social Security benefits (employers pay a matching 6.2 percent). 5.2 percent of working Americans make more than $113,700 a year. Simply by eliminating the payroll tax earnings cap — and thus ending this regressive exemption for the top 5.2 percent of earners — would, according to the Congressional Budget Office, solve the financial crisis facing the Social Security system.”

    The link to his NYT article is:

    http://opinionator.blogs.nytimes.com/2013/03/06/the-war-on-entitlements/

    The Social Security “entitlement” is an easy fix–one doesn’t have to jigger retirement ages, or even means-test retirement payments! I can’t understand why this “fix” is called a “tax increase” by the GOP, when it really is a “shared contribution” (employee and employer) to a retirement plan. Lots of small businessess, supposedly championed by the GOP, don’t have 401(k) plans for their employees, but willingly contribute their employer share every week to the social security program.–Regards, Yarnman

    • traderbill said

      Thanks…as always Yarnman for your insight! Any new tax is a tax increase to Grover Norquist and his hostages as well as the Tea Party. That includes rescinding those two Bush Era ‘temporary’ tax cuts that all along were planned by the GOP to be permanent! Where are the adults? …and I don’t mean Boehner, Cantor or McConnell…they contributed to the mess by approving two unfunded wars and Medicare Part D. They only good thing they did was not act on Bush’s proposal to let individuals invest 25% of their benefits in the stock market – as they saw fit! Had that happened we would have been in a much bigger problem. Wait…how could they when Congress had already misappropriated the trust funds and given the IOU’s that earn the same rate as T-Bills – currently ZERO!

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