7/11/13…”I am not a crook”

From The Friars Club Encyclopedia of Jokes: “Marriage means commitment. Of course, so does insanity” – unattributed, and…

“Marriage is bliss. Ignorance is bliss. Ergo…” – unattributed…to protect the author!

Bloomberg Quotes of the Day: “Humility is attentive patience.” – Simone Weil – is that Sanford’s wife? If so she has the patience of a saint while he has no humility.

Bloomberg Top Stories:

*Bernanke Supports Pressing On With Stimulus Amid Debate Over Tapering QE

*Stocks Advance With Metals, Bonds as Dollar Weakens on Bernanke Comments

*First-Time Jobless Claims in U.S. Unexpectedly Climb to a Two-Month High

*Deutsche Bank Opaque Loans From Brazil to Italy Obscure Risk for Investors – !!!

*Cross-Border Swaps Agreement to End U.S.-European Union Regulation Overlap

*U.S. Consumer Confidence at Highest Level in Five Years in Bloomberg Index

*Commodity Traders Face New Squeeze as Storage Congestion Spreads to Cocoa

*Property Returns Crush Hedge Funds as Investors Seek Alternatives – that is called chasing performance and ultimately ends in a trail of tears!

*Egypt Interim Leader Assembles Cabinet Shunned by Brotherhood Amid Arrests

*Germans Hail Snowden as U.S. Spying Evokes Stasi Seizing Lives of Others – !!!

You can’t tell the players without a scorecard. Yesterday was a mixed day…by every definition. The lagging Nasdaq indices turned in the best performance at +0.5%/0.6% respectively followed closely by Dow Utilities +0.4% vs -0.6% Tuesday’s high flier Dow Transports was the biggest loser a day following that big 2.3% – 142 point gain! Movers led by ALK +5.8 vs +21.7!!!; UPS +2.8; JBH 1.1 while the losers were KSU -11.9 vs +13.3; UNP -9.7 vs +17.2; GMT -7.3; UAL -6.8; NSC -5.3 – six others lost more than one index point! What a difference a day makes! Our continued coverage of the chppy NDQ 100 provides these movers: MSFT +2.5; AMGN +2.4; QCOM +1.6; GILD +1.3 vs +1.4; CSCO +1.2 vs +1.4, these six totalled 9 points of the total 16 point gain where winners outpaced losers by 2.7:1…the losers? ORCL/AAPL both -1.1…AAPL gained 5.7 Tuesday to lead!

Advance/Declines and Breadth were solid on NYSE Stocks, Nasdaq not so much. New 520 week highs slipped to a still strong 606 from 669. while new lows were more than halved to 70 from 180. The VIX declined again to 14.35 -.43…a little stronger. Gold rallied, Crude spiked then closed just slightly higher and bonds held Monday’s gains…can’t ask for much more than that these days.

Here you go:

* Dow 30 -0.1% vs +0.5% vs +0.6% vs +1.3% vs +0.4%; Dow Transports -0.7% vs +2.3%!!! vs +0.1% vs +1.5%! vs -0.3%; Russell 2000 +0.2% vs +0.9% vs 0.4% vs +1.4%! vs +0.2%; Dow Utilities +0.4% vs +0.6% vs +1.3% vs -0.5% vs -0.2%; S&P 500 flat vs +0.7% vs +0.5% vs +1% vs +0.1%; Nasdaq Composite +0.5% vs +0.6% vs +0.2% vs +1% vs +0.3%; NDQ 100 +0.6% vs +0.6% vs +0.1% vs +0.7% vs +0.2%.

*NYSE Volume declined to a below average 2.99B shares vs 3.14B vs 3.3B vs 2.63B vs 2.63B (1.96B is the lowest of 2013). REAL NYSE Volume also declined to a below average 671M shares vs 692M from a strong 905M shares vs 625M vs 482M – a new 2013 low. The 12-month average is 723M shares! The range for 2013 is 482M to 2.01B. There have been just SEVEN 1B+ share sessions! There have been 26 800M+ shares in 2013 – 9 up, 17 down, but on trades of less than that 87 have been up and 31 down…there have been 25 mixed sessions.

*New 52 week highs have ranged from 33-864. They slipped again to 451 vs 606 vs 669 vs 531 vs 165. New lows declined to 60 vs 70 vs 180 vs 64 vs 61 vs 33 (a new recent low!).

  1. Advance/Declines were barely positive: 1.1x vs +2.8x vs +1.4x vs +1.3X vs -1.5% (recent range -17.5x to +4.4x) on NYSE and +1.4x vs +1.6x vs +1.3x vs +2.8x vs -1.1x vs +2.4x vs +1.1x vs +3.5x! (recent -3.5x to +3x). Breadth was also minor and mixed: -1.2x vs +3.4x! vs +1.7x vs +1.8x vs -1.6x (recent -18.6x!!! to +6.4x!!!) on NYSE and +1.3x vs +1.2x vs +2.4x vs +1.4x vs -1.2x (recent -12.8x to +6.2x)  
  2. NYSE Financials declined by 0.4% vs +0.6% vs +1.3%! vs -0.3% vs -0.2%; Brokers -0.5% vs +1.3% vs +0.3% vs +2.4%! vs +0.2%; KBW Banks -1%! vs +0.4% vs +0.6% vs +2.6% vs flat; Nasdaq Banks -0.6% vs +0.4% vs +0.1% vs +2.4% vs +0.3%. BofA was most active: -1.2% vs +1.9% vs +1.7% vs +1.8% vs -0.5%…$13.37 -.16.
  3. Volatility (S&P VIX) declined for a fourth straight day below 15 and the close of 14.21 -.14 is the lowest since May 24! 6/25’s session high of 21.91 was highest since 12/31/12!!! The range since 4/12 is 11.99 (multi year low) to 21.92, It is well below the 40/50 day (15.72/15.24) and the 200 day (15.06)!!!…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

European equities moderately better; Asia STRONG: UK +0.6% vs -0.6% vs +0.8% vs +0.8% vs +0.3%; France +0.9% vs -0.7% vs +0.6% vs +1.7%! vs +0.1%; Germany +1.1%! vs -0.5% vs +0.9% vs +2.3%!!! vs +0.1%; Japan +0.4% vs -0.4% vs +2.6%!!! vs -1.4%! vs +2.1%!; Hang Seng  +2.6%!!! vs +1.1%! vs +0.5% vs -1.3%! vs +1.9%; Korea +2.9%!!! vs -0.3% vs +0.7% vs -0.9% vs -0.3%; India +2% vs -0.8% vs +0.6% vs +0.4% vs +1.2%. U.S. equity futures strong: DOW +128; SPX +16.20; NDQ +27.25! Stocks are opening strong with Dow up 146!

Bonds closed higher yesterday but still near levels not seen since August 2011! Overnight they are stronger. The 30 yr TIP closed little changed at 1.38% -.01. Currently: 10 yr Treasury 2.59% (recent range 2.74% to 1.63%!!!), and the 30 yr range of 2.82% to 3.71%, currently 3.64% +3/16. The long TIP is now 1.36% +9/16 – and remains the weakest link since the (record?) low of 0.36% on 4/5. Recent high 1.53%! Libor update: 0.268% 3 mos, 0.404% 6 mos, still slipping and remains close to the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields mixed: Germany 1.63% -3; UK 2.37% -4; France 2.24% -1, Italy 4.52% +8!; Spain 4.85% +6!; Portugal 6.69% +12!; Greece 10.69% +9 vs 10.85% +28!!! vs 10.52% vs 10.54% +40!!! vs 10.85% -37!!! vs 11.22%. Recent range: 8.04% to 12.57%.  Japan 0.82% -3. Currencies remain a ‘crapshoot’.

Gold closed slightly higher yesterday but was up all session closing at $1247.40 +$1.50. Repeating: the combined bullion in the gold ETF’s was 2450 or so metric tons…it is now 1800 tons– a 25% decline…and when the ETF’s are being sold the metal has to be sold creating a maelstrom. It is nearing last Thursday’s levels again from Friday’s loss of $39 which pushed it down almost to breaking $1200. The high took out minor resistance at last weeks highs at $1257-1259 with a high of $1265– contrast to 6/27’s intraday low of $1179.40 – lowest since at least 2011 and now critical support. Major res is the 40 day/50 day: $1340/1364 – both declining, and way higher, the 200 day – $1585!!!  Overnight it is $1283.50 +$36.10 – with o/n high $1297.20! Crude closed strong at $106.19 +$2.66 with a new rally high of $106.66 – highest since 5/3/12. It remains well above the 40/50 day m/a’s (96.50/96.20), while the 200 day ($92.54), is distant support. First support is $102.19 – a double top from last week!  4/18’s low of $85.61 was lowest since 12/11! It is off slightly overnight at $105.68 -.84, but not before putting in a new rally high of $107.45!! – highest since 3/1/12!The range is NOW $85.61-$107.45 since June 29, 2012..

Some random thoughts:

…today’s slug is the famous quip of Richard Milhous Nixon…which of course he was!

BoA is the barometer since is the only consistently most active of the financials. BAC closed $13.37 -.16 but that is 1.2% following a string of gains. Trading below $13 again would be a key…40 day is $13.19, 50 day $13.09!!! Then $12.73, the July 3 low. Citi follows BoA so no need to watch it.

Wells Fargo WFC is important as it is the cleanest of the big banks. It closed a gap from its run to a 52 week high ($43.08) at $42.07-42.29 closing yesterday at $42.07 but with a $42.29 low. You can also follow the KBW Bank Index which declined by 1% yesterday.The point is they have all moved in tandom!

Contrast to the regionals of which I like USBank USB the best. It’s high Monday was not seen since 10/3/08 – now that’s strong! It closed at $37.07 yesterday with a low of $36.82, nearly closing a minor gap from 7/5 at $36.78. That should be a key. I like it but not with a 2.48% indicated dividend…23 cents up from 19.5 cents in March, 40 day is $35.55, 50 day 35.06 – both steadily rising!  (JPM is highest at 2.77% up from trailing 2.33% – up 13 cents in two raises since Jan.! BUT new capital rules may preclude more increases), The outlier is BBT which just submitted its new stress test on Friday. It peaked Monday at $35.23 but fell to $34.54, closing at $34.80 – gap below at $34.45-34.32.It’s indicated divvie is $2.64% and was just raised by 2 cents to 25 cents.

Brokers…I refuse to call them banks…while GS is the most visible (it is way off its high from 6/10 of $168.20) closing at $155.83 below both the 40/50 day $158.28/156.08), the key ones are the recovering Morgan Stanley MS which peaked at $27.17 on June 10, bottomed out at $23.83 and ran while the others were sliding, to $$25.52 yesterday barely taking out Tuesday’s $25.49 high so that is resistance with support at 40/50 $25.23/$24.79. the other is the formerly underperforming UBS which has been a dog and closed at $17.25 vs the 40/50 day of $17.64/17.71 – just crossed! For it key support is the also rising 200 day at $16.06 – avoid! Of course the crook, Phil Gramm who was Vice Chairman of UBS Americas from 2003-2012 and resigned amid those big losses…how can TB call him a crook (so is Jon Corzine but you never call a former senator a crook…a governor yes, a representative yes – need I provide examples?…but Corzine was BOTH)?  Because he retired from the Senate to take that position and was the first former Senator EVER to lobby (which is prohibited by Senate rules), on the Senate floor! Will end with this quote: “Joining UBS was one of the best decisions I ever made in my life.” do tell, Senator…do tell! Wait…wasn’t your wife Wendy, former CFTC Chairman, on the audit committee of Enron during the scandal…you bet she was, Phil, you bet she was!

Lastly, how about SAC’s Stephen Cohen? Got off with a big fine for insider trading, but no prosecution…so far that is…just look at the hubris:

When Steve Cohen and his investment company SAC Capital Advisors agreed to 

pay a record $616 million in March to settle insider trading charges by the Securities and

Exchange Commission, the billionaire hedge fund manager may have thought the case

and a pocketful of troubles were over. Within days of the settlement, he celebrated by

plunking down $60 million for a new oceanfront home in East Hampton, Long Island;

that same week news came out that Cohen had paid $150 million last fall to buy Picasso

masterpiece Le Reve from casino magnate Steve Wynn.

But Cohen’s troubles are far from finished. In fact, they may be just beginning. 

The U.S. government is considering whether to pursue criminal charges against 

Cohen under the Racketeer Influenced and Corrupt Organization Act, a federal 

law enacted some 40 years ago to prosecute organized crime. More recently, the 

statute has been used to prosecute criminal wrongdoing on Wall Street — most 

notably, Michael Milken, credited for developing the market for high yield bonds,

 was sent to prison by the government in 1990 on RICO-related charges.

The government has already put away a number of high-profile Cohen associates 

for a string of misdeeds related to insider trading. The SAC founder will be the 

biggest fish of all if government lawyers can land him. Using RICO as its 

prosecutorial bludgeon, the U.S. Department of Justice would buy time — another 

five years or so — to build a case that Cohen headed an empire rife with corruption.

The RICO strategy could be an exercise in “swinging for the fences.” As

Institutional Investor contributor Amy Poster writes in her feature-length story, 

the U.S. Attorney’s Office for the Southern District of New York, which under U.S. 

Attorney Preet Bharara is the arm of the DoJ leading the fight against insider 

trading, has racked up a list of stellar successes, with a culture that encourages its 

people not to fear losing. (Source Institutional Investor, latest issue!)

Note that at least Amy Poster is in charge of RICO prosecutions, not Eric Holder who doesn’t want to try bankers…for fear of hurting ‘innocents’…and the common defense is that they don’t have enough evidence to convict. Aha! Just like local government DA’s – its all about the stats. The defense is that instead they are attacking them civilly and collecting serial record crimes (let’s see if they have the guts to prosecute Cohen). Mr. Holder: just who do you think is paying those record fines? Not the perps…the shareholders –  who are being penalized once again while the ‘bad guys’ continue to run the banks (includes faux banks!). Whatever happened to the way Elliot Spitzer used to handle it? …of course it got him in trouble over his personal matter on prostitution but you can bet who tipped off the Feds, right? The guys he went after you can bet!  Spitzer is alive and well and making a run for N.Y.State Controller…why not? After all, disgraced Representative Anthony Wiener is leading in the race for Mayor of New York City. Is that a great state or what? …or what!

Have another great day! It’s beautiful here in Minneapolis!

TB

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