6/11/13…absolute power corrupts…

From the Friar’s Club Encyclopedia of Jokes: “Beverly Hills is so exclusive – it’s the only town in America where Taco Bell has an unlisted number. And so rich – it’s the only place I’ve seen a  Salvation Army Band with a string section.” – anonymous

 “People who say money can’t buy happiness just don’t know where to shop.” – Tom Shivers 

Bloomberg Quote of the Day: “I learned the value of hard work by working hard.” – Margaret Mead

Bloomberg Top Stories:

*Stocks Drop With Bonds, Commodities After BOJ Policy Unchanged; Yen Rises – sick!

*Kuroda Stares Down Bond Volatility With Bank of Japan Stimulus Unchanged

*Treasuries Fall on Speculation Mortgage-Backed Hedge Sales Will Increase – or not!

*Citigroup Faces Up to $7 Billion Currency Loss on Dollar, Peabody Predicts – !!!

*JPMorganChase Credit-Rating Outlook is Cut to Negative From Stable by S&P

*ECB Bond-Buying Case Pits Market Stability Against Democracy, Lawyer Says – yes!!!

*Corinthian Colleges Falls After SEC Begins an Inquiry of the For-Profit Chain – Good!  

*U.S. Surveillance Leak Spawns Criminal Probe With Congressional Questions

*Booz Allen Contracts Seen at Risk With Employee-Leaked Government Secrets

*House Republicans Seek Faster Pace on Immigration as Senate Moves Forward – oh?  

Talk about a lack of momentum, five indices (Dow, S&P 500, both Nasdaq Indices and NYSE Financials were between +.01% and -.01% – three of them flat! Despite that bonds traded weaker and have broken down yet again! Best performer was the Russell 2000 small cap, +0.5%, worst was Dow Utilities, -0.3% – yawn! The NYSE Volume spoke…well…volumes at just 2.95B shares while shares traded on the floor plunged to 595M shares, lowest since 5/24! Advance/Declines and Breadth were little changed and mixed: NYSE negative, Nasdaq, slight positives. New 53 week highs continued to rise – not difficult near the index record highs but new lows nearly tripled!   Volatility (S&P VIX) rose modestly and remains elevated above at 15.45 with an extremely narrow range of 15.20-15.60 intraday.

The Nasdaq 100 was FLAT but 41 were up and 58 down! 5 stocks led by GOOG +2.5 and EBAY +2 rose by more than 1 index point, while losers were led by AAPL -2.5 and MSFT -1.4. 1.2%. As noted yesterday, the leadership changes on a daily basis making this a tough year for tech and very volatile.

So let’s see what else happened:

* Dow 30 -0.1% vs +1.4%! vs +0.5% vs -1.4%! vs -0.5% vs +0.9% vs -1.4%!!!; Dow Transports -0.3% vs +2.4%!!! vs +1% vs -1.9%! vs -0.5% vs flat vs -0.8% vs +0.2% vs -1.1%; Russell 2000 +0.5% vs +0.8% vs +1.2% vs -1.4%! vs -0.8% vs +0.7% vs -1% vs +0.6% vs -1%; Dow Utilities -0.3% vs +0.8% vs +1.3% vs -0.9% vs -0.3% vs +0.1% vs -0.6% vs flat vs -1.5%!!! vs -1.4%!!! – now down 6.1% over the past 12 sessions, and since posting a near record high on 4/30, have plunged 11%!!!; S&P 500 FLAT vs +1.3%! vs +0.9% vs -1.4%! vs -0.6% vs +0.6% vs -1.4%!; Nasdaq Composite +0.1% vs +1.3% vs +0.7% vs -1.3%! vs -0.6% vs +0.3% vs -1%; NDQ 100 FLAT vs +1.4% vs +0.5% vs -1.2%! vs -0.6% vs +0.3% vs -1%!

*NYSE Volume plunged to 2.95B, the lowest level in 10 sessions vs 3.37B vs 3.48B vs 3.62B vs 3.6B vs 3.94B vs 3.91B vs 3.47B vs 3.56B vs 3.43B vs 2.75B (2013 low).  REAL NYSE Volume also plunged to 595M shares, lowest since 5/24 vs 729M vs 800M vs 740M vs 787M vs 880M vs 1.35B (highest since 3/15 and 2nd highest of the year!) vs 711 shares vs 722M vs 734M vs 587M. The 12-month average is just 720M shares. The range since 2/11 is 558M to 1.825B on 3/15’s options expiry and a near 12 month high, second only to 12/21’s 1.88B shares. May 31st was only the fourth day this year to register over 1B shares! There have now been just 20 800M+ shares in 2013 – 7 up, 13 down, but on trades of less than that 79 have been up and 27 down…there have been 22 mixed sessions.

*New 52 week highs have ranged from 74-864. They rose to 278 vs 227 vs 103 vs 74!!! vs 235 vs 234 vs 221 vs 300 vs 175 vs 517 vs 138!!! vs 811. New lows nearly tripled to 143 vs 50 vs 95 vs 125 vs 182 vs 325 vs 290 vs 108 vs 191 vs 79 vs 49 (recent range 29-290).

  1. Advance/Declines were little changed and mixed: -1.2x vs +2.2x vs -3.6x vs  -4.3x!!! vs -1.7x vs -1.2x vs -5.5x! vs +1.3x vs -3.8x!!! (recent range -7.1x to +4.4x) on NYSE and +1.8x vs +1.9x vs +2.4x vs -3.4x! vs -2.1x vs +1.4x vs -2.6x vs +2x vs -2.3x vs +2.4x vs +1.1% vs +1.1x vs -2.9x! vs +1.2x vs -3.3x! (recent -3.5x to +3x). Breadth was similar: -1.1x vs +2.7x vs +5.3x! vs -4.3x!!! vs -2.2x vs +1.3x vs -6.8x!!! vs +2x vs -1.7x vs +1.8x vs -1.5x (recent -10.5x to +6.4x!!!) on NYSE and +1.3x vs +2.6x vs +2.6x vs -4.9x!!! vs -2x vs +1.2x vs -3.8x!!! vs -+3.5x vs -1.6x vs +2.5x (recent -12.8x to +6.2x)  
  2. NYSE Financials were FLAT vs +1.3% vs +1.1% vs 1.8%!!! vs -0.4% vs +0.3% vs -1.7%!!! BofA declined by 0.6% vs +1.4% vs +0.8% vs -2%!!! vs -0.7% vs -0.8% vs -1.1%! vs +3.3%??? vs +1.5%??? to $13.30 -.08…21st day above $13 since 4/11/11. Brokers +0.2% vs +3.3%!!! vs +2.1% vs -2.3%! vs flat vs -0.9% vs -1.4%; KBW Banks +0.6% vs +1.6% vs +1.2% vs -1.4%! vs -1% vs flat vs -1.7%; Nasdaq Banks +0.7% vs +0.9% vs -1.2%! vs -0.7% vs +0.6% vs -1.2%. GE -0.3% vs+2.1%…only other financial mover.
  3. Volatility (S&P VIX) rose slightly two days after another recent high of 18.51 intraday, not seen since 2/25…but traded in a very narrow range of 15.10-15.60 before closing at 15.45 +.31 –  (15th day above 13 since May 2). The range since 4/12 is 11.99 (multi year low) to 18.51, and it remains  above the 40/50 day (13.88/13.78) and the 200 day (14.91)…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.10!

Global equities are being slammed overnight; UK -1.7%! vs +0.5% vs +0.2% vs -1.4%!; France -2%!!! vs +0.5% vs +0.5% vs -1.2%!; Germany -1.7% vs +1.2% vs +0.7% vs +0.4% vs -1.1%!; Japan -1.5% vs +4.9% vs -0.2% vs -0.9% vs -3.8%!!! vs +2.1% vs -3.7%!!! vs +1.4% vs -5.2%!!!; Hang Seng -1.2%! vs +0.2% vs -1.1%! vs -1% vs -0.5% vs -0.4% vs -0.3% vs -1.6%!!!; Korea -0.6% vs +0.5% -1.8%!!! vs -1.5%!!! vs -1.3%; India -1.5%! vs +0.1% vs -0.5% vs -0.3% vs +0.1% vs -0.3% vs -0.8% vs -2.3%!!! U.S. stock futures are being hit also and near low end of range: DOW -108; SPX -14.10; NDQ -26.50!!!

Bonds are weak yet again…doesn’t matter whether stocks are up or down bonds just trade lower…especially TIPS!!! 10 yr Treasury 2.24% -9/32 (recent range now 2.24% to 1.63%!!!), and the 30 yr’s 3.33% to 2.82%!!!, now 3.38% -5/32. The long TIP has broken down yet again setting another new high of 1.20% vs 1%, set just a week ago Monday!!! Currently 1.21% -1-1/8 – off 5-1/2 since 6/6 and TWENTY points since May 2nd! –  still the weakest link since a new (record?) low of 0.36% on 4/5. Since the Bernanke announcement on the 7th the high yield has gone from 0.82% set on 5/22 to 1.21%! Libor update: 0.272!!!% 3 mos., 0.411% 6 mos. Foreign bond yields rose even further yesterday afternoon and are still higher overnight led by GREECE!!!: Germany 1.62% +2; UK 2.18% +4; France 2.23% +5, Italy 4.43% +14; Spain 4.71% +13; Portugal 6.54% +42!!!; Greece 10.27%!!! +92!!! vs 9.28% vs 9.00% vs 9.05% vs 8.83% vs 9.11% vs 9.20%!!! vs 8.80% vs 8.54% vs 8.39% vs 8.63% vs 8.54% vs 7.98% vs 7.97% vs 7.94% vs 7.96% vs 8.47% – it has broken down from the rally! Recent range 7.94% to 12.57%. Japan 0.88% +5.  

Gold closed slightly higher at $1386.00 +$3??? after trading in a very narrow 13 point range?. Last week ended with a rare string of three straight ‘inside; days! It has closed above $1400 just one of the past FOUR sessions! 5/30’s intraday high was $1417.70, highest since 5/15.  It has been down 13 of the last 21 sessions following 5/20’s intraday low of $1338, lowest since 4/18. 5/10’s high of $1487.20 was highest since 4/12. 4/16’s intraday low of $1321.50 – was lowest since Sept. ’10. Resistance remains at the 40 day/50 day: $1416-1446 – still declining! Overnight it is weaker at $1374.60 -$11.40 – session low $1365.80, lowest since 5/23! Crude closed slightly lower at $95.77 -.26 – a day after the highest close since 5/20 ($96.03), but remains well above the 40/50 day …five days after putting in an intraday low of $91.26 – lowest since 5/2! It remains above the 200 day ($92.27) with just one day below since 5/1, making it major support at $92.28. Support at the 40/50 day (93.41-93.56).  The rally high is $97.11 set 5/20, nearing a 12 month high! Overnight $94.56 -$1.21 – gambling anyone? 4/18’s low of $85.61 was lowest since 12/11! The range is $85.61-$97.80 since June 29, 2012!!!!

Some random thoughts:

“Absolute power corrupts – absolutely.”  Here is a quote and expressed as politicians would not like you to think of it: “Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.” -Johne Dalberg (1834-1902).  Earlier, William Pitt, the Elder in a 1770 speech to the House of Lords: “Unlimited power is apt to corrupt the minds of those who possess it”

Here is the likely quote by Lamartine in an essay in 1848: “It is not only the slave or serf who is ameliorated in becoming free… the master himself did not gain less in every point of view,… for absolute power corrupts the best natures.”

No matter who said it originally, it is the truth. It is good to have a great orator for a president but they must follow throu with their actions, not just rely on their words and Obama has so often done…still it is better than George W. Bush, recall his ‘mission accomplished’ speech…it was just the beginning and look where the Iraqi people are for it…in a power struggle between the Sunni’s and Shiites…because we didn’t know the difference…but hey, we preserved the Oil Ministry with all those valuable contracts…but who is benefiting from them? China! Mission accomplished, my foot!

Obama wake up…your legacy is going to be one of a failure to keep your campaign promises if you aren’t careful. You said you would protect us from government snooping, nugatory…you said you would shut down Gitmo…ditto. You came through on your healthcare promise – partial credit as you sold out to pharma to get it through…think how much could have been saved by Medicare buying prescription drugs…ah, the spirit (sic) of the GOP is alive and well and the clock is ticking.

When are we going to wake up to Jamie Dimon being the most overhyped CEO – oops, Chairman/CEO – since First Pennsylvania run by the first wunderkind, John Bunting, who the analysts all believed would show those stuffed-shirt bankers how to run a bank. For a while he succeeded taking it to the 19th largest bank holding company before overextending in…drum roll please…financial services. Hey, was he Dimon’s mentor? The worst thing one can do is believe the hype put out about them by Wall Street. What’s next, Time’s Man of the Year???…sorry ‘Person’

The revelations of the wrongdoing in the London Whale as reported on Bloomberg raise questions on who is in charge: Congress or Mr. Dimon? Where is the SEC? Where are the shareholder lawsuits? This was outright fraud. J.P. would have been proud of this opportunist – until now!

Have a terrific day!…you too, Jamie…no hard feelings!

TB

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