12/6/13…never give a banker an even break, right Mr. Fields?

TB’s Parable of the Day: An Indian walks into a cafe with a shotgun in one hand and pulling a male buffalo with the other. He says to the waiter: “Want coffee.” 
The waiter says, “Sure, Chief. Coming right up.”
 

He gets the Indian a tall mug of coffee….. 
The Indian drinks the coffee down in one gulp, turns and blasts the buffalo with the shotgun, causing parts of the animal to splatter everywhere and then just walks out.
 
The next morning the Indian returns. He has his shotgun in one hand, pulling another male buffalo with the other.
 

He walks up to the counter and says to the waiter: “Want coffee.” 

The waiter says, “Whoa, Tonto! We’re still cleaning up your mess from yesterday. 
What was all that about, anyway?”
 

The Indian smiles and proudly says, “Training for a position in United States Congress. Come in, drink coffee, shoot the bull, leave mess for others to clean up, disappear for rest of day.”  …it happened that way…moving west!

Today’s Joke of the Day from the Friar’s Club Encyclopedia of Jokes: “Political speeches are like a steer: A point here, a point there, and a lot of bull in between.” – unattributed 

Bloomberg Quote of the Day: “In a real dark night of the soul it is always three o’clock in the morning.” – F. Scott Fitzgerald…and Scott new dark!

U.S. November Payrolls Rose 203k vs forecast 185k. Also, revisions added a net 8k jobs to Sept/Oct Factory Jobs rose by 27k, largest since March 2012, while Construction added 17k…a fluke?

Meanwhile the Unemployment Rate fell to 7.023% from 7.28%…how 818,000 ‘new’ household jobs were created…pullease, gain merely reversed October loss!!! This pushed the ‘underemployment rate’ to 13.2% vs 13.8%. But what about the Participation Rate??? It rose to 63% vs 62.8% weakest in decades! Ah, but Average Hourly Earnings are up just 2% from a year ago and while consumer spending rose 0.2% in September, personal income FELL 0.1% vs estimated +0.3%. The savings rate slipped to a still high 4.8% vs 5.2%.   

Market Reaction: Dow futures had a 100 point range rising from the lows on the data and market is opening +130, but still shy of 16k – watch! Data was good for everything as Bonds rallied following Thursday’s weak session: 10 yr +1/16; 30yr +1/4; Long TIP +5/16…off highest but we’ll take it. Gold up $10 and Crude slightly higher, modest gains I dollar. Ah, a week until Friday the 13th!

Bloomberg Top Stories:

*Payrolls in U.S. Rpse 203,000 in November as Jobless Rate Declined to 7% – DETAILS!

*S&P 500 Index Futures Advance With Commodities After U.S. Employment Data

*Consumer Spending in U.S. Climbed More in October Than Economists Forecast–Sales

*Canada’s Jobless Rate Stays At Lowest Level Since 2008 on Part-Time Work

*World’s Biggest Pension fund Urged to Start Cutting Japan Bond Holdings – Arigato!

*John Thomas CEO Belesis Agrees to Wall Street Ban in Settlement With SEC – Penny stock broker steered trades to his firm from mutual fund…SEC getting backbone?

*Bitcoin Skepticism by Bankers From China to U.S. Becoming Growth Obstacle – Duh!

*Gold Bearish Outlook Longest Since 2010 as Price Nears $1200 – a bottom? Hmmm

*South Africa Falls Short of Mandela’s Vision 19 Years After Apartheid End – like MLK!

*Japan’s Embrace of Nuclear Power Restored in Post-Fukushima Policy Shift – meanwhile we are still wringing our hands over Three Mile Island – Fools that we are!

*Hagel Pledges Stronger U.S. Ties With Persian Gulf Nations Wary of Iran

 

Thursday’s Market Summary:

Once is an aberration, twice a coincidence, three times a warning, four new trend? Today is number five…do you really think it will be a good one? Consider the conflicting data but today is payrolls Friday, so read and heed.

The best performer yesterday was a weak gain of 0.1% for the Russell 2000 small cap, followed by flat for the Dow. The rest declined by from 0.1% on the Nasdaq Composite to 0.9% on the Dow Transports…with NYSE Financials losing 0.9% – mainly KBW Banks down 1%! TB is confident we will not see another 16k print on the Dow this year. This is the only the second  time since 11/15 that the Dow has not touched 16k! Also the number of up days since 11/15 stopped at 10 with now SEVEN losing sessions, 11/19-20-29, and 12/2-3-4-5!

Can’t wait for Friday the 13th – can you? Hey, this is no time to be superstitious, right? Then the following Friday is options expiry…again…final for the year…things that go bump in the night?

NYSE Volume slipped to a slightly below average 3.32B shares vs 3.6B vs 3.44B vs 3.08B and the 12-month low of 1.59B shares last Friday! Meanwhile, Real NYSE Volume, also coming off a 12-month low of just 474M shares Friday slipped to a slightly below average 700M shares vs 756M shares vs 770M vs 657M from Friday’s 12-month low of just 474 million shares last Friday.

Advance/Declines and Breadth were both negative. New 52 week highs slipped to 145 vs 153 vs 151 vs 331 vs 560, while new lows surged to 190! vs 126 vs 132 vs 108 vs 35 vs 64 vs 111. VIX closed higher for a fourth day closing at an unhealthy 15.08, highest since 10/15 two days after closing a gap down from 10/16-17. Remember TB’s warning about ‘13’! now 15…er 16!!!

Bonds continue to decline and are even closer to the highs of August and November: 3.92-3.93%! Gold gave back all of Wednesday’s $26.40 gain on an inside session??? Note that at the close it was $1224.60 -$22.90 but somehow they settled it $7 above that at $1231.90 -$15.30! Huh??? Remember Wedndesday was a positive key reversal after printing $1210.80, lowest since $1187.90 on 6/28, the lowest since July 2010! Crude closed slightly higher after gaining $5 in just three days and following a new low of $91.77 – lowest since June 3rd! The session high was $97.99, highest since 10/30! The record high of $114.83, courtesy of JPM/MS/GS’s manipulation (not necessarily in that order was on 5/2/11), while the low since on 10/4/11 was $74.95: $93.60 is the midpoint!!!

The Nasdaq 100 lost another 5 points vs -3.7 vs -2 vs -7 (would have been -16 if APPL hadn’t saved the day) vs +17 vs +25 (both led by Apple) by -1.5:1 vs -1.5:1 vs -2:1 vs -2:1 vs 1:1 vs +7:3. Just four members gained more than a point, while two lost more than a point:  MSFT -7 bd +4.7 vs +2.4 vs +3.9 vs -2.2; CSCO -1.60; APPL +2.4 vs -1.1 vs +12.3!?! vs -3.9 vs +8.2!!! vs +9.9!!! vs +7.8!!! vs +3.2; INTC +2.3l CELG +1.6; GILD +1.

Dow 30 -0.4% vs -0.2% vs -0.6% vs -0.5% vs -0.1%; Dow Transports flat vs -0.4% vs -1% vs +0.3% vs -0.3% vs +0.6%; Russell 2000 +0.1% vs -0.2% vs -0.5% vs -1.2%!!! vs +0.1% vs +0.6%; Dow Utilities -0.9% vs +0.2% vs +0.6% vs -0.4% vs flat vs -0.4% vs -0.9%; S&P 500 -0.4% vs -0.1% vs -0.3% vs -0.3% vs 0.1% vs +0.3%; Nasdaq Composite -0.1% vs flat vs -0.2% vs -0.4% vs +0.4% vs +0.7%; NDQ 100 -0.2% vs +0.1% vs –0.1% vs -0.2% vs +0.5% vs +0.7%.

*NYSE Volume dipped to a slightly below average on a fourth straight losing session to 3.32B shares vs 3.6B vs 3.44B vs 3.08B vs 1.59B (12-month low) vs 2.6B vs 3.27B vs 2.98B. Note the higher volume on down days continues vs low volume on the three prior ‘winners’. The record high (?) is 4.82B shares on Q3 end of quarter while 11/29’s 1.59B is weakest of 2013, replacing 1.96B as the low). REAL NYSE Volume slipped to a slightly below average 700M shares vs 756M vs 770M vs 667M vs 474M (new 12-month low) vs 482M (lowest since 7/3, a half day!), vs 828M vs 626M vs 607M (2.06B shares on the Sept. expiry was 3rd highest ever: 6/30/06 3.38B; 7/12/02 2.29B while last Friday’s 474M is the new 12-month low). Since 11/11 the high has been 828M shares on 11/26 followed by 796M shares on 11/15, and now five days with a ‘7’ or higher handle! The 12-month average is 721M shares. The average since 6/28’s 1.75B share day is just 695M shares, ranging from 482M to 2.025B shares on 9/20. This year there have been just NINE 1B+ share sessions! There have been 38 800M+ shares in 2013: 16 up, 19 down, three mixed.

*New 52 week highs have ranged from 33-864. They slipped to 145 vs 153 vs 151 vs 332 vs 560 vs 602. Recent high is a super-strong 890!!! New lows surged to 190 vs 126 vs 132 vs 108 vs 35 vs 64 vs 111 vs 111 vs 88.

  1. Advance/Declines were negative for a 4th day and remain very weak: -1.9 vs -1.6x vs -1.6x vs -2.5x vs +1.2x vs +1.7 vs +1.3x (recent range -17.5x to +6x) on NYSE and -1.2x vs -1.4x vs -1.6x vs -2.5x vs +1.6x vs  +2.4x vs +1.8x (recent -4x!!! to +3.8x). Breadth was similar: -2x vs -1.1x vs -2x vs -2x vs +1.1x vs +1.7x vs 1:1 (recent -18.6x!!! to +7.2x!!!) on NYSE and -1.5x vs +1.1x vs -1.6x vs -1.4x vs +1.5x vs +2.6x vs +1.4x (recent -12.8x to +6.5x).  
  2. NYSE Financials were off 0.8% vs -0.1% vs -0.9% vs -0.4% vs -0.1% vs +0.4%. BofA most active but DOWN 1.3% vs +0.6%??? vs -1.2%!!! vs -0.6% vs -0.1% vs -0.3% vs +0.4% vs +1.1%, closing at $15.43 -.20, 11/25’s new 12-month high was $15.98, highest since 6/1/10. Brokers -0.6% vs flat vs -1%! vs -0.1% vs flat vs -0.1%; KBW Banks -1%! vs +0.4%? vs -1.1%! vs -0.2% vs -0.1%; Nasdaq Banks +0.1% vs -0.1% vs -0.9% vs -1.2%!!! vs flat vs +0.7%.
  3. Volatility (S&P VIX) rose for a 5th straight session to 15.08 +.38 for the highest close since 10/15 while the range was inside Wednesdays session high of 15.71!!! – 14.70-15.38, note Wednesday’s low of 14.22!! Two days prior it closed the gap down from 10/16-17!!! It is now well above the 40/50/200 day m/a’s: 13.64/14.35/14.38!!! The recent range is 11.83-21.01!!! Since March 11th the average has been just 14.44…way below the five year average of 23.32~~~ and the It peaked at 22.79 on 12/28/12…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks higher ex-Japan/Korea following U.S. payrolls: UK +0.5% vs +0.1% vs -0.5% vs -0.7% vs +0.3%; France +0.3% vs -0.1% vs -0.9% vs -1.8%!!! vs +0.1%; Germany +0.7% vs +0.1% vs -1% vs -1.3%!!! vs +0.1%; Japan -0.8% vs +1.5%! vs -2.2%! vs +0.6% vs flat; Hang Seng +0.1% vs -0.1% vs -0.8% vs -0.5% vs +0.7%; Korea -0.2% vs -0.1% vs -1.1% vs -1.1% vs -0.7%; India +0.2% vs +1.2%!!! vs -0.7% vs -0.2% vs +0.5% vs +1.4%! U.S. stock futures STRONG in broad range as rally followed payrolls release: DOW +144 (high 15970); SPX +17.50; NDQ +26.

Bonds were weak again after being pounded Wednesday and for the fourth time since last August when the ‘tapering talk’ began are  3.9% on the 30 yr while the 10 yr closed above 2.8% for the first time since hitting 3% on 9/5! The long end is rallying somewhat overnight after dipping before payrolls (30 yr 1-1/2 point range!): 10 yr Treasury 2.85% +3/16 (recent range 1.63% to 2.99%), and the 30 yr 3.8% +9/16 (recent range 2.67% to 3.92%). The long TIP is 1.59% +3/4. The (record?) low of 0.36% was set on 4/5. NOTE recent high yield: 1.63%! Libor update: 0.241% 3 mos, 0.345% 6 mos. (both at or just above their new record lows!). Foreign bond yields mixed: Germany 1.85% -1; UK 2.90% -2; France 2.44% +1; Italy 4.18% -3; Spain 4.17% -6; Portugal 5.95% +4; Greece 8.72% +3. Recently: 7.71% – 12.57%. Japan 0.66% +1…hammered from 0.62% yesterday

Gold had a bizarre session falling $23 on an inside session which nearly obliterated Wednesday’s big gain. Then despite the last trade at $1224.60 -$22.90, the CFTC settled it at $1231.90 -$15.30…this for the second time since the selloff began??? Wednesday’s low was $1210.80, lowest since 6/28, which created a positive key reversal to $1251.50, before closing at $1247.20 +$26.80!!! These have been meaningless of late…strange! Recent high is $1375.40 on 9/19. 6/27’s intraday low was $1179.40 – lowest since at least 2011 and critical support. $1300 remains psychological resistance with major res at the 40 day ($1289!) and the 50 day ($1295!), stabilizing? Major resistance at $1375, the 9/19 high. The 200 day is a $1384. Overnight it is slightly higher at $1238.00 +$6.10, but with a session low of $1210.10, 70 cents below Wednesday’s key reversal, thus negating it???

Crude had a 4th straight positive day five days following a new low of $91.77, lowest since 6/3!!! The record high of $114.83, courtesy of JPM/MS/GS’s manipulation (not necessarily in that order) was on 5/2/11, the low since on 10/4/11 was $74.95: $93.60 is the midpoint!!! It closed at $97.36 +0.16, up $5, in four days, in a narrow session, with a session high of $97.99, highest since 10/29! First time it has shown any strength since 9/18’s surge to $108.49. 9/19’s session high was $108.99! Recent rally high and close are $110.70 and $110.53 respectively. It remains between the 40/50 day m/a’s ($96.36!/97.68!), both major resistance/support! The 200 day ($98.49) is back well  above the 40/50 day!!! Thus very major resistance! 4/18’s low of $85.61 was lowest since 12/11! The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is about even at $97.58 +.21 with a session high of $98.07 – highest since 10/29 and a 1 point range.

 

Some random thoughts:

Think of all we have done for the banks…oops, the BANKERS of the world, in the name of saving our economy. This is differentiated from the shareholders of these behemoths, who have not fared well (except those of the CEO’s of course). In the U.S. it is worse, as at least the EU is punishing both the banks and those who caused the crisis. Not so in the U.S. thanks to a weak Attorney General, Eric Holder, and his prosecutor who never met a white-collar financial CEO he had enough evidence to convict (finally Stephen Cohen was prosecuted and convicted…the first such prosecution since Michael Milken!).

Note that Lanny Breuer, former head of the criminal division at Justice, said on Frontline’s The Untouchables, that there was not enough evidence to convict (not to prosecute!), financial crimes. He said he ‘lies awake at night’ thinking about the pain that would be inflicted on shareholders of companies if a CEO was prosecuted and not convicted. Gee, what a guy! What about all the people who lost their homes, jobs, retirements, thanks to their greed? Didn’t that bother him? Apparently not, as was forced to resign as a result of the broadcast…as well he should! (Note TB has previously associated this with Gary Gensler, head of the CFTC, and as it turns out a former Goldman Sachs partner (aren’t they all?). But he, who has now left, pushed for prosecution and much more regulation of derivatives…talk about strange bedfellows! Of course, the crisis would not have occurred had Brooksley Born not been denigrated by Rubin, Summers, and Greenspan for daring to suggest the same thing.

Ah, but those fines…not paid for by the perps…who probably had much of their legal fees paid for too – by shareholders! Note also that only in the recently settled case of JPMorganChase was there an admission of guilt…a first! Of course, not due to Breuer!

Of course, while JPM was a top recipient of taxpayer largesse, honors go to Goldman Sachs for being ‘named’ a bank during the crisis and still is despite its never taking a single deposit or making a loan. This honor was extended to Morgan Stanley and USB Financial too…while their list of crimes and fines continues to grow…the latest announced Tuesday for manipulating indices of Libor, both U.S. dollar denominated and Yen (not to mention Euro Libor which JPM played a part in).

Our government is broken, and that means our financial system is broken. The SEC, charged with protecting investors has failed miserably, and like Justice has sought civil sanctions over prosecution…they did the settlement with Angelo Mozillo in which he paid a $50 million fine (merely a cost of doing business on the hundreds of millions he made through his insider trading and without admitting guilt!

How did we turn our financial markets, once the envy of the world into such a disgusting mess?

TB has been in the investment business for 42 years, an industry he was once proud to be associated with. Never have I seen volatility – on a daily basis, not talking about crashes like this. This is a casino with rigged games and is not a rational market. No one is protecting the investors…in fact most of the fines collected go to the government, not the victims. What good does that do?

TB has a client with a $3 million account that has income producing securities. The high frequency traders operating through Exchange Trading Networks with anonymity, use their computer-generated algorithms to manipulate prices of stocks…especially large financial ETF’s such as REITS, mortgages, and other lending related holdings. It is not atypical for this account to see a $5-10k loss early in the session, return to even or perhaps a $5k gain, and then repeat this several times during a session. This is not trading on fundamentals…or even fear of ‘Fed tapering’ but pure market manipulation. This while a neutered SEC sits idly by and makes a big deal of going after insider trading, and broker violations. How did a commission established along with Glass-Steagall serve us for more than 50 years and now fail us so miserably? Greed and lack of regulation!!!

Have a terrific weekend…catch the holiday spirit!

TB

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