Posts Tagged Jamie Dimon

1/10/13…more crosscurrents

January 10, 2013 at 9:27 am · Filed under banking, economy, financial, markets, politics ·Tagged , , , ,

From The Friars Club Encyclopedia of Jokes: “What’s the difference between an optimist and a pessimist? An optimist created the airplane; a pessimist created the seat belt.” And…

“Things are bad. I saw two fellows downtown carrying those signs reading ‘The End Is Near’ – and they were synchronizing their watches.

Bloomberg Quote of the Day: “A day without sunshine is like, you know, night.”

 – Steve Martin

Bloomberg Top Stories:

*First-Time Jobless Claims in U.S. Unexpectedly Rose Last Week to 371,000

*Commodities Rise on China Exports as Spanish Bonds Gain After Debt Auction

*Nokia Says Profit at Mobile-Phone Business Beat Its Estimates; Shares Jump

*Cantor Expansion sputters as 41% of Lutnick’s Touted Hires Exit the Firm – ouch!

*Draghi Keeps Rates Unchanged as Improving Confidence Silences Calls for Out

*Bats Says System Errors May Have Caused Mispricing of Thousands of Trades

*Liquidity Splits Corporate Bond Market Most Since Crisis – liquid bonds firm!

*Lew-for-Geithner Switch Closes Curtain on Era of Tight Fed-Treasury Ties

*BOE Refrains From Adding Stimulus as Credit Program Shows Initial Success

*Molycorp Cuts Sales Forecast After Missing Rare-Earth Target; Shares Drop

*States Helping Companies Pay U.S. Workers to Trim Unemployment Costs

*IBM Is Granted the Most U.S. Patents for the 20th Year With Record 6,478!

*UBS Retreat Plotted at 437-Year-Old Castle as Credit Suisse Attacks Costs

*Obama Choosing Lew for treasury Adds Fuel to Fight Over Budget Priorities

*Kurdish Women Activists Are Assassinated in Paris as Turkey Talks With PKK

*Obama’s 81% New York City Backing Surpasses All Records From 1898

*Cameron Lawmakers React With Fury to U.S. Advice on U.K.’s EU Membership – !!!  


An up session that more or less negated Tuesdays loss, the second straight down session following Friday’s mixed session – earnings the culprit in both days??? Hello…does any of this make sense to you, investor? All indices were up except Dow Utilities which posted a 0.3% loss. Nothing to see here. Total NYSE volume rose slightly to 3.63B shares vs 3.56B vs 3.29B vs 3.42B vs 3.82B vs 4.2B. Trades executed on the floor of the NYSE dipped slightly to a still weak 672M shares vs 692M vs 626M vs 651M vs 707M vs 859M shares. Advance/declines and Breadth were modestly positive at about +2x. New 52 week highs hit 713 a week ago today and rose yesterday to 440 vs 314 vs 316 vs 428 vs 437 while new lows dipped again to a weak 12 from 16. After closing at 22.70 on 12/28, the S&P VIX volatility measurement was little changed at a near 12-month low (13.32 on 8/17) rising to 13.81 +.19.

Global stocks higher for a second day, except France -0.2% and India, flat. U.S. stock futures rising and near session highs: DOW +37; SPX +6.10; ND! +16.

The bond market closed slightly weaker yesterday and is off again overnight. The 10 yr note is 1.90% vs 1.87%, and the 30 yr 3.10% vs 3.07% – well above the old 3% high set on 12/18! TIPS also slightly weaker at 0.45% vs 0.44% – but back from the 0.22% record low set on 12/6! Reverse Repo rate fell to 0.17%! Libor is starting to slip at 0.30%, 3 months, and 0.498% six months. Foreign bond rates are mixed again with Germany, U.K., and France slightly higher while submerging markets FELL: Italy 4.16% -10; Spain 4.915 -20!; Portugal 6.23% -10; except Greece 11.52% +17!

Gold closed slightly lower at $1655.50 – $5.50, still below the 200 day m’a with huge resistance at $1700! The $1636 low on 12/21 – lowest since 8/21 is now key support. It is still weak at $1660.30 +$4.80. Crude was little changed for a fifth day after breaking above $92 on 1/2, closing at $93.10 -.05 – still well above the 40/50 day, and the 200 day: $91.71! Overnight however it is soaring at $94.05 +.95 – highest since 9/19!

…since many of you see TB as an Obama apologist (only in the sense that everytime he asks for something someone in Congress rips him to shreds), but the appointment of Jack Lew, his chief of staff, treasury secretary is an in-your-face move. The press sees it as a shift from crisis mode to rebuilding the economy while the right sees it as less focus on budget cuts. While something has to be done however, an austerity budget at this point in the economy would be a ‘fatal error.’ What needs to be done is setting a framework to be implemented as the economy improves, something the GOP extremists will balk at.

The nomination of Sen. Hagel as defense secretary is interesting as he is a former GOP senator. Right out of the chute Sen. Graham opposed the choice as he has everything else since he started the ‘get Rice’ campaign with Sen. McCain. Interestingly, some in the GOP are out to get Graham for not being conservative enough? What do they want, a fascist? TB concurs with the sentiment that even the revered Ronald Reagan couldn’t get the nod today…far too liberal! It seems that moderate is now about where Goldwater stood three decades ago.

Meanwhile the story yesterday that GE is joining Boeing in making donations to congressmen they opposed but who beat their opponent is a new wrinkle on an old game. Smart on their part, you neutralize the opposition while they are dialing for dollars (something they all hate to do…wouldn’t you if you did it for thirty hours a week?). No surprise that both of these behemoths derive substantial revenues from the military and therein lies the rub.

Other than entitlements the largest budget item is defense and to the GOP it is sacrosanct. Any fool could cut billions from the budget but not the GOP, no sir…let’s not place the entire burden on the working class who despite the propaganda have paid into both Social Security and Medicare – albeit if they live long enough they will get back far more than they paid in – but then is it their fault that Congress not only required SS trust funds be invested in treasury bill equivalents but spent it on their own pet projects leaving a trail of dubious valued IOU’s.

Buy bank stocks! The more they lose in settlements the more they rise…to a point. Analysts are all over CNBC touting them for their value and opportunity despite the settlements and the unknown power of newly elected Sen. Elizabeth Warren who will serve on the banking committee. Don’t forget how the affable Jamie Dimon of JPMorganChase derailed her for the consumer protection agency she designed even though she met with him to try to smooth their differences. Old JP would be so proud of Jamie…other than him costing the bank $5 billion by pushing London to take more risk (wasn’t that what Rubin told Citi – Dimon’s old firm where he was mentored by Sandy Weill – and the results were similar). There is a total disconnect between bank earnings, compensation of senior management and their total lack of accountability, and the dividends shareholders receive. This for a sector that nearly destroyed not only the U.S. but the entire world’s financial markets. Now that folks is POWER!!!

So while you are writing out your checks to the IRS consider how the very people who screwed us are benefitting and continue to do so with the full blessing and admiration of the GOP – and not just the extremists in the party. Someone has to care for Americans. Wayne LaPierre and Grover Norquist most certainly don’t!

Have a great day!

TB

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

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12/7/12…just another payrolls Friday

December 7, 2012 at 9:38 am · Filed under banking, economy, financial, markets, politics ·Tagged , , , , , ,

December 7, 1941…a day of infamy, Pearl Harbor Day…which caused this song:

Remember Pearl Harbor, as we march against the foe…the end of U.S. pacifism.

December 7. 1994…we learn that Orange County, CA filed for bankruptcy at 5pm the previous day  in the biggest bankruptcy by a municipality of all time…and caused merely by portfolio speculation, not economic events in a battle egos between two treasurers, the other L.A. County…whose treasurer went on to San Bernardino County, and was later convicted of receiving bribes in the form of travel ‘perks’ by the brokers it did business with…nice, huh? Orange Country forever changed TB as he testified twice before federal grand juries as a victim (his clients), former ML employee, and expert witness. In the second he was the only money manager willing to testify…the others all backed away fearing reprisals from Merrill…they wouldn’t even testify under subpoena as TB did. His satisfaction came when Merrill blinked and settled the case right before the deadline. It’s good to do the right thing…even if it turned his hair white!  

Bloomberg Quotes of the Day:

“Greatest Fools are oft most satisfied.”  –Nicolas Boileau

…certainly seems applicable these days…don’t ya think? TB

“The reward of a thing well done is to have done it.” – Ralph Waldo Emerson

…of course the money certainly helps! YN

 

U.S. Non-Farm Payrolls rose by 146k in November vs 85k median forecast! Revisions however cut Sept/Oct by 49,000…so about in line…no conspiracy theories please!!!

But Factory jobs fell by 7k while Construction fell by 20k…meanwhile Services rose by 169k where they have exceeded the total private jobs changes for two of the last three months and barely missed in October (171k vs 189k)! That is the bad news as these are mostly lowpaying jobs. To wit: Financial Activities rose by just 1k, Professional Business Services buy 43k …the remaining 125k were Temp workers, Health and Education and Leisure and Hospitality…capische?

Meanwhile the Unemployment Rate, as reported in the Household Survey dropped 0.2% to 7.7% but eliminating rounding about a 0.1% decline. It was more than due to a modest decline in the labor force of about 350k, while those not in the labor force fell by 550k. The Augmented Unemployment Rate fell by just 0.1% to 9.2% and the U6, which includes Part-Time for Economic Reasons also fell 0.2% to a still very high 14.4%.

Average Weekly Hours worked are stagnant at 34.4 and Average Hourly Earnings rose by just 0.2% – same as Average Weekly Hours – niggardly gains when we need BIG! They are up just 1.7% the last 12 months for both categories!  Manufacturing hours rose by just 0.1% to 33.7% – where they have been for a year! Manufacturing Hourly and Weekly wages were also up just 0.2%  They are up just 1.3% the last 12 months for both categories! 

Market Reaction (9:15 EST): Bonds reversed and plunged with the 10 year yield rising from 1.57% to 1.62% or -3/8, and the 30 year to 2.81% vs 2.78% -13/16…the crazy long TIP however just moved back to 0.23% from 0.22% – avoid!

U.S. Stock Futures also reversed with DOW +53 but surged to +78; SPX +4.66 and at session high; NDQ +18.41 – session high was +23. Could be an interesting day! The Dollar Index was little changed before the number but is now up to the highest level since 11/23. Gold is now off $4 to 1698.10 while Crude is now up just 15 cents…little effect there! Happy Trading!

Bloomberg Top Stories:

*Payrolls in U.S. Rose 146.000 in November as Jobless Rate Declined to 7.7% – hey, conspiracy theorists: still think Obama is cooking the books? To what purpose?

*U.S. Stock-Index Futures Gain After Job Growth Tops Economist’s Foreasts – recovery from Superstorm Sandy? Could be part of it…what does business know now it didn’t?

*ECB Governing Council Said to Have Majority Supporting Interest-Rate Cut – to what?

*Bundesbank Lowers 20163 German Growth Forecast to 0.4% on EU Crisis – hello!!!

*London Fund Managers Become More Confident on U.K. Economy – gimme a break!

*London Whale’s Unprofitable Trade Back in Favor as Junk bond Allure Fades – just goes to show you that Mr. Dimon and Co’s management was pure speculaton!

*Netflix CEO Hastings Faces SEC Threat as Facebook Posting Drives Stock up – he posted that Netflix view ‘exceeded 1B hours’ of videos in June…stock rose 6.2% on that!

*Chinese-Group Said to Be in Talks to Acquire AIG’s Aircraft-Leasing Unit – TB may not have been off the mark when he speculated China Mobile may want to buy Nokia!

*JPMorganChase Investment Pool Is Said to Decline as Much as 2% – Two percent???

Is that a typo? What sacrifices that team is making…but will it go to Jamie instead?

*BlackBerry Still Loved in Asia Where RIMM Can’t Afford to Lose – can u spell loser?

*New Jersey Seen Most Vulnerable to Widening of Minimum Tax – Christy? Hello?

*Lone German Keynesian Bofinger Says Redemption Lies in Pooling Euro Debt – that’s Bo-fan-jay to you…Keynes is dead but rolling over in his grave…slowly, very slowly!

*Democrats Hint at Entiltement Cuts Signalling Shift in U.S. Budget Talks – Go for it!

*Bernanke’s Fiscal Cliff Analogy Overstates Immediate Harm to U.S. Economy – !!!

*You Know Students Are Out of Control When Harvard Pushes New Regulations – !!!

*Goldman CEO Blankfein Said to Buy Hampton’s House Listed for $32.5 Million – still doing ‘god’s work’…see, GOP’er’s THAT is the one of the people you are sacrificing to protect. Think about it! 

In addition to Wednesday’s Deutsche Bank hidng $12 billion in losses, yesterday Reuters  announced that HSBC may have to pay a $1.8B fine by Christmas for money laundering Iranian funds…the Mafia would drool for the opportunities provided and taken by the big banks…so why do we keep protecting them? Ask your elected officials…they know damned well why!

Apple update: after falling to $518.63 yesterday, lowest since ll/16s’s $505.75 intraday low, it rebounded in what can at best be termed a ’dead cat bounce’ of about 50% of the loss from Wednesday (+1.6% vs -6.5%!). It was the third straight lower high and lower low. Over the past three sessions volume has totaled 97M shares, high 40M yesterday vs an average of 21.7M this year. Since the last bout of big volume in the first quarter, there have been just 3 days where volume has been close to 40M, all in November (normal volume is 20M shares)…is the pain over? Ask the hedge funds who have huge positions and whose yearend cutoff is 12/26 (coincidentally TB’s birthday in case you were thinking of a present). Stay tuned!

Yesterday’s NYSE volume fell back from 4.14B shares to another puny 3.17B shares. REAL trades on the floor also declined to 616M shares from the ‘surge’ to 759M. There simply is no retail…can you blame them? Advance/declines and breadth were barely positive again. Nasdaq breadth of +2.3x was due to the Apple ‘rally’ while A/D’s were 1:1. It also comprised 7 of the 18 points gained on the Nasdaq 100

Bond market closed little changed and is up slightly overnight: 10 yr note 1.57%, 30 yr 2.76%. The big story remains TIPS…with no sign of inflation in sight but risk of fiscal cliff reduced which caused the stock rally yesterday, the 30 yr TIP yields just 22bp’s over the inflation rate – another record low. The long TIP yields MINUS 254bp’s to the long bond and -202 to the 10 yr! Looks like a setup for yearend…buyers caution!

Gold was up $8 closing at $1701.80, back above $1700…barely above $1700 on an unconvincing ‘inside’ session and remains well below the 40/50 day moving averages,while Crude lost $1.62 closing at $86.26, lowest since 11/15, and is well below both the 40/50 day m/a’s. Overnight Gold is $1696.20 -$5.60. Crude is off 44 cents and weak.

- – -  . . .  – - -

(Correction: a blog reader informed TB that the ice chunk that fell off in Greenland was NOT bigger than the U.S. but bigger than Manhattan…TB must have heard it from a broadcaster in the Big Apple. Mea Culpa!)

…why would any rational person trade this market? OK, jockeying for tax purposes, but no other sane reason. Meanwhile the GOP continues to disintegrate by the hour.

Sen. Jim DeMint (or as Herb Caen would have said it, DeMint Jim), announced he is leaving the Senate to head the conservative and about to become ‘uberly’ so, Heritage Foundation which makes the Hoover Institute look like a bunch of cock-eyed optimists! Hope we find out what his salary is going to be…bet is significantly more than his Senate salary…and he can still be addressed as Senator…not much meaning there though as former Dem Senator/NJ Governor Jon Corzine disgraced himself by not only bringing down MF Global but by trying to negotiate a sale when he knew it was going there – to get his own $40 million bonus…no wonder Goldman voted him out as Co-Chairman. So much for “if you can do it there you can do it anywhere…”

It is a sad state of affairs when one party created a fiscal cliff – an imaginary one which could have been solved at least a year ago but what would have been the political advantage in that…especially when there stated goal was to make Obama a one-term president (still think there were racial overtones or undertones there), and implied goal

was to have him leave office in disgrace. So much for the best-laid plans of…mice and men? Bring on the women…they most certainly couldn’t do worse and likely better!

Meanwhile the global banking system…of which the GOP has done its utmost to protect the biggest U.S. ones…including the faux banks of Goldman Sachs and Morgan Stanley…is embarrassing itself by the day…with lawsuits and fines continuing to pile up, and of course the bill is not footed by the perps but by you the shareholders? Ain’t that a ‘beatch?’ Heck, if they collect a few more there will be no fiscal cliff, imaginary or otherwise and at least a big chunk of that will be paid by the wealthiest in terms of shareholder value…they have so many ways to get you…

Well, TB has spoken far too long this week, with not one column falling below the 2100 words (total column including stats), so he will take a breather and let the payrolls summary fill up the rest.

Have a great weekend!

TB

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Volume plunged back from Wednesday’s solid 4.14B shares to a weak 3.17B shares. NYSE shares executed without the aid of the ETN market also plunged to 616M shares vs 759M vs 674M vs 658M vs 1.18B. There have been just 21 700M+ days since 8/3. The high ytd was 9/21’s 1.8B shares. Since 6/29 just 18 sessions have surpassed 800M shares, mostly down days. The average since 8/1’s 1.03B is just 675M. The average for 2012 is just 764M shares and since 6/29 just 696M shares– WEAK!!! 126 of the last 170 sessions have been less than 800M shares (74%!). Since 2/29 there have been just 27 ‘average’ days (mostly down!), and just 22 have been above 900M – 768M is the 12 month ave. and falling! Since 11/1/11 there have been just 18, 1B share days…14 in 2012! Since 2/6 there have been 76 sessions less than 700M shares. 242 of the last 265 sessions have been less than the 12 mo ave (91%)! Don’t go hear…yearend is coming!

Advance/Declines were about neutral: +1.1x vs +1.1x vs -1.1x vs -1.5x vs +1.2x on NYSE and 1:1 vs -1.3x vs -1.1x vs -1.2x vs 1:1 on Nasdaq. Breadth slightly positive: NYSE: +1.2x vs +2.3x vs -1.1x vs -2x vs +1.3x on NYSE and +2.3x vs +1.1x vs -1.1x vs -1.9x vs +1.1x on Nasdaq. New 52 week highs dipped to a weak 116 vs 130 vs 105 vs 226 vs 206 (768 is cycle high, 28 low), while new lows were 71 vs 78 vs 71 vs 51 vs 43. The ratio is barely positive: +1.6x vs +1.9x vs +1.5x vs +4.5x vs +5x. Recent high was +7x! The S&P VIX rose slighlty to 16.58 vs 16.46 vs 17.12 vs 16.64 vs 15.87! Tuesday was first time above 17 since 11/15. 17.54 is the 200 day m/a! The 12-month low was 13.32 on 8/17 while the 2012 high is 27.73 on June 4.

Here are the results of last 5 sessions: Dow +0.3% vs +0.6% vs -0.1% vs -0.5% vs flat;  Dow Transports -0.1% vs +0.9% vs +0.3% vs -1.1% vs -0.5%;Dow Utilities -0.3% vs +1.4%! vs -0.6% vs -0.7% vs +0.9%; S&P 500 +0.3% vs +0.2% vs -0.2% vs -0.5% vs flat; Nasdaq Composite +0.5% vs -0.8%! vs -0.2% vs -0.3% vs -0.1%; Nasdaq 100 +0.7% vs -1.1% vs -0.2% vs -0.2% vs -0.1%; Russell 2000 +0.2% vs -0.2% vs +0.2% vs -0.1% vs -0.2%; NYSE Financials +0.2% vs +0.9% vs flat vs -0.3% vs +0.1% (KBW Banks +0.3% vs +1.7% vs -0.7% vs -0.8% vs -0.2%; Nasdaq Banks flat vs +0.3% vs -0.5% vs flat for 2 days; NYSE Brokers -0.2% vs +0.9% vs -0.3% vs -0.5% vs +0.3%.NYSE Financial Leaders: BAC -0.1% vs +5.7% vs +1.1% vs -0.6% vs +0.3%. C +1.5% vs+6.3%!!! – remember those changes are only pennies on price. BAC holding above $10, closed $10.48. Second close above $10 since 7/11/11!!! No other leaders.

Global equities weaker ahead of U.S. payrolls, except Korea: FTSE -0.2% vs +0.3% vs +0.3% vs -0.1% vs +0.2%; CAC 40 -0.3% vs +0.2% vs +0.3% vs +0.5% vs +0.8%; DAX -0.3% vs +1% vs +0.3% vs flat vs +1%;Nikkei -0.2% vs +0.8% vs +0.4% vs -0.3% vs +0.1%; Hang Seng -0.3% vs -0.1% vs +2.2% vs +0.2% vs -1.2%; Korean KOSPI UP 0.4% vs +0.1% vs +0.6% vs -0.3% vs +0.4%;Indian Sensex -0.3% vs +0.5% vs +0.2% vs +0.2% vs -0.1%. U.S. stock weaker ahead of payrolls and at session lows: DOW -25; SPX -4.10; NDQ -4.75.

U.S. treasury bonds closed little changed yesterday and are up overnight…this has been the pattern this week: 10 yr 1.57% +1/8 – record low of 1.40%; 30 yr 2.76% +1/4. Long TIP 0.22% +5/16 – and another new record low!The 5 yr TIP yields –1.56% vs -1.54%; 10 yr -.94% vs -.92%.T-Bills: 0.05% 1 month; 0.08% 3 months; 0.13% 6 months. Reverse Repo 0.31%. 3 mo. Libor 0.31%; 6 mo. 0.52%.  European problem sovereign 10 years, Germany-bench: 1.29% vs 1.34%; Japan 0.70% +1; Italy 4.57% +1; Spain 5.48% +5; Greece 13.92%!!! vs 14.72% -45!!!…on 9/20: 19.75%; Portugal 7.38% +3; Ireland 4.45% +5. BIG DROP in GREECE AGAIN…and bunds!!!

Gold closed up $8 at $1701.80, after two straight closes below $1700 and worst since 11/5! It had an inside session following two lower highs and lower lows of $1686 not seen since 11/16 and remains well below the 40/50 day moving averages,while Crude lost $1.62 cents closing at $86.26, lowest since 11/15 and well below the 40/50 day m/a’s. Overnight Gold is $1696.20 -$5.60 ahead of payrolls. Crude is off 44 cents and remains below the 40/50 day m/a’s

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8/22/12…what kind of fools are we?

August 22, 2012 at 8:38 am · Filed under banking, economy, financial, markets ·Tagged , , ,

Bloomberg Quote of the Day: “We can have facts without thinking but we cannot have thinking without facts.” – John Dewey…ah but they don’t WANT us to think, John! TB

Bloomberg Top Stories:

*Game of Last Man Standing Means That European Investment Banks Resist Shrinking

*Stocks Drop as Treasuries Gain on Japan Trade, Greek Appeal; Gold Advances –oops!

*RBS Said to Be Probed by U.S. Regulators on Possible Iran Sanctions Breach – banks!

*Confidence Returning Globally as Revealed in Country Risk – as stocks end rally?

*Citigroup to Expand European Credit Trading Team by 5% as Rivals Cut Back

*Dell Falls After Cutting Profit Forecast as Personal Computer Sales Drop

*Apple-Samsung Jurors Have 600 Questions to Answer Before Reaching Verdict – gads!

*Upscale Chicago Retailer Mark Shale Files Chapter 22 for Sale- as in: bankruptcy!

Top Chinese Bankers’ Reward for Record Profits Is Fraction of Dmon’s Pay – is this a great country or what…stupid communists…what do they know? Eh, Jamie? Not much!

*Obama Leads Romney by 4 Points in Poll Showing Voter Disdain for Congress

*Russia Becomes 156th Member of World Trade Organization as Commerce Eases – that’s sending them a message on their human rights, isn’t it folks!

*Ryan’s Opposition to Abortion Consistent With Akin Votes for No Exceptions – sick!

*China Tightens Rules for Visas in Move That Could Slow Growth of Tourism – ???

…after damning our Congress and the parties for more than a year, TB has found redemption. First the book by Lawrence Lessig (moderate and former Reagan Republican), then one by Robert Reich (liberal and Dem), and last night on PBS another one by Mickey Edwards, a former GOP congressman from Oklahoma (conservative but not reactionary). All three books and TB is sure there are now even more, have similar titles and themes: our political system is out of control. It is not what the founding fathers envisioned, it is not a free market, it is not a democracy. If anything, it has become an oligarchy. If that is what you want, then preserve the status quo.

Lessing blames it not on corrupt elected officials, but enticements. Certainly there are a few but for the most part they came there to do something (TB would argue however that the concept of a retirement for them helped destroy that argument). That purpose has been neutered. He also says that the rise in campaign contributions since Lyndon Johnson championed civil rights. That caused the Blue Dog Democrats to break from the party and for the first time since FDR give the GOP a chance to control both houses of Congress which they did for the majority of time since then.

But to raise money the 80% or so committed to the two parties are not relevant. Rather, they have been forced to appeal to the fringe…wealthy individuals of both parties who have their own agenda which may or may not be in conflict with the party’s goals.

Thus our elections are being decided by 4% of the electorate, and on distorted facts, half-truths and lies. This is what America has become. You think your vote counts? Think again.

Edwards tells of being elected by farmers yet not having a full understanding of their needs. He arrived in D.C. and was told by party leaders to tow the line if he wanted to be on any committees. In other words, don’t make waves and never…never…agree with the other party.

TB once heard that from the day he takes office a congressman has to raise $5,000 a day to support his campaign for re-election. That figure must be considerably higher now.

A congressional candidate from Minnesota says that he wants to get Congress to meet Monday thru Friday…now they introduce bills on Tuesday and vote on Wednesday evening…they never get to know the members of the other party and thus there is no compromise.

If you are happy with this and think electing Romney or Obama will change it think again. But in four years there might be another white knight to save us…like we thought Obama might be. Is it too late? TB thought Obama was the last chance. Could be that assessment was correct. Pity us, pity America.

Have a terrific day!

TB

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

 After tottering after a short-lived rally, stocks were down and volume increased although remaining weak at 3.25B shares. Remember it is bad to see weaknerss on higher volume. Compare to 2.76B vs  2.91B vs  3.1B vs 2.6B vs 2.9B vs 2.48B vs 2.78B vs 3.07B vs 3.21B vs 3.64B. The range since 7/29’s QE surge of 4.56B (above average) remains 2.06B-4.28B shares with just 2 days above 4B! NYSE stocks executed without the aid of the ETN market also rose to 641M vs 551M vs 564M vs 596M vs 498M vs 567M vs 484M vs 566M vs 576M vs 637M vs 728M vs 647M vs 754M vs 826M vs 1.03B! Since 6/29 just 7 sessions have surpassed 800M shares. Look at this: average since 8/1’s 1.03B is just $597M, and the highest since 7/29 was 728M shares. There is STILL NO retail! The average for 2012 is just 796M shares and since 6/29 just 703M shares, levels not seen since week ended 12/30/11! 63 of the last 97 sessions have been less than 800M shares (65%!). Since 2/29 there have been just 19 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B (4.85B including ETNs) and just 17 have been above 900M – 874M is the 12 month average and dropping! Since 11/1 there have been just 16, 1B share days…12 in 2012! Since 2/6 there have now been 27 sessions less than 700M shares. 178 of the last 189 sessions have been less than the 12 mo ave (94%)!

Advance/Declines were slightly negative again at -1.3x vs -1.3x vs +1.6x vs +2.6x vs +1.7x on NYSE and -1.3x vs -1.4x vs +1.9x vs +2.3x vs +2.3x on Nasdaq. Breadth was similar: -1.1x vs -1.1x vs +1.6x vs +3.2x vs +1.7x on NYSE and -1.2x vs -1.6x vs +1.1x vs +2.2x vs +1.8x on Nasdaq. New 52 week highs rose (?) to 284 vs 237 (7/3’s 504 is the high), while new lows declined to 32 vs 43. The ratio jumped to 8.9x? vs 5.5x – on a down day? The S&P VIX rose again to 15.02 +1.00 two days after posting a 13.45, the low for 2012. Caution advised!

Here are the results of last 5 sessions: Dow -0.5% vs flat vs +0.2% vs +0.7% vs -0.1%; Transports +0.1% vs -0.1% vs +0.5% vs +0.5% vs +1.2%;Dow Utilities -0.6% vs flat vs -0.2% vs -0.3% vs -0.5%; S&P 500 -0.4% vs flat vs +0.2% vs +0.7% vs +0.1%; Nasdaq Composite -0.3% vs flat vs +0.5% vs +1% vs +0.1%; Nasdaq 100 -0.4% vs +0.1% vs +0.4% vs +1.2% vs +0.5%; Russell 2000 -0.1% vs +0.4% vs +0.8% vs +1.1% vs +0.3%; NYSE Financials UP 0.3%? vs flat vs +0.5% vs +0.9% vs +0.2% (KBW Banks +0.2% vs +0.3% vs +0.6% vs +0.5% vs +0.4%; Nasdaq Banks -0.1% vs +0.1% vs +0.7% vs +0.5% vs +0.8%). NYSE Financial Leaders: BAC +2.3%??? vs +1.9% vs +0.9% vs +0.8% vs +0.9%; C +3.2%??? vs +3.3%? vs +0.7% vs +0.3% vs -0.1%; JPM +2.7%??? vs +0.4% vs -0.3% vs +0.1% vs -0.1% Not leaders, but…WFC +0.9% vs +0.1% vs -0.3% vs +0.5% vs flat; USB DOWN 0.6% vs +0.4% vs -0.3% vs +0.1% vs +0.5%; GS flat vs +2% vs +0.1% vs +0.3% vs -0.1%; MS +0.4% vs +1.6% vs flat for two days vs +1.3%; UBS UP 2.7%??? vs DOWN 1.4% vs +1.5% vs +1.6% vs -0.3%. Banks again in control??? UBS?

Global stocks WEAK: FTSE -1.2% vs +0.3% vs -0.4% vs +0.1% vs -0.2%; CAC 40 -1% vs +0.5% vs -0.3% vs flat vs -0.2%; DAX -1% vs +0.4% vs flat vs +0.3% vs flat;Nikkei -0.3% vs -0.2% vs +0.1% vs +0.8% vs +1.8%; Hang Seng -1.1%! vs flat vs -0.1% vs +0.8% vs -0.5%; Korean KOSPI -0.4% vs -0.2% vs flat vs -0.6% vs +0.1%;Indian Sensex -0.2% vs +1.1% vs +0.2% vs +0.2% vs -0.4%. U.S. stock futures also weaker but off lows: DOW -30; SPX -4.20; NDQ -7.75.

Bonds were little changed again but are rallying overnight: 10 yr 1.77% vs 1.84% – record low of 1.40%; 30 yr 2.86% vs 2.95%. Long TIP 0.56% vs 0.63%. 0.28% is record low!The 5 yr TIP yields -1.14% first gain over basis in days! 10 yr -0.50 vs -0.43%Bills 0.10% 1 month; 0.10% 3 months; 0.14% 6 months. Reverse Repo 0.20%! 3 mo. Libor 0.43%, and 6 mo. 0.72% – both trading below 0.45% and 0.73%. European problem sovereign 10 years, Germany-benchmark 1.49% -6; Italy 5.62% -2; Spain 6.16% +1; Greece 23.29% +2; Portugal 8.75% -14???; Ireland 5.80% flat.

Gold still holding above $1600, and surged on equity weakeness? It closed at 1642.90 +$19.90! 7/12’s intraday low of $1547.60 was lowest since June 1. The hit is $130 since 2/28! 2/28’s $1792.70 intraday high not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. SUP at $1604, the 50 day AND $1604, the 40 day. RES at $1659, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1640.30 $2.60. Crude closed at $96.84 +.58, with an intraday high of $97.25! SUP at the 40 day (89.60), and the 50 day (88.00) – both rising fast so could get very interesting quickly! RES/SUP at the 200 day (96.74). Currently $96.73 -.11.

Volume stunk again but did rise which is not what one wants on a down day. All indices were down and by close amounts indicative of high freak trading. Only Transports +0.1% and NYSE Financials +0.3% didn’t succumb. BofA led financials and closed at $8.34 +.19 as banks took over the lead from the faux banks again. UBS however was up 2.7%. Remember though these changes are pennies. AAPL was 7.34 of the 12 point loss on the NDQ 100. What Apple giveth, Apple taketh away…in spades!

While the VIX which hit a low for 2012 on Monday (meaning call buying vs puts and probably due to Friday’s options expiry), is back up to 15.02. One puzzlement: if all indices were down, how come the number of new 52 week highs rose to 284 from 237? That was due to the early morning rally as Apple surged to yet another record high. The Dow was up 127 points a little over one hour after the open. It then plunged 144 points before closing off 68 points. Meanwhile Apple hit its record high of $674.88 less than 15 minutes after the open when it ‘gapped up’ $5 but soon reversed, closing the gap and falling by nearly $25 before settling off $9 at $656. That is not what you want to see!

Are bonds beginning to make a rebound? Could be…the world is an unhappy place, right? You bet it is and yet we keep clinging to every morsel of good news, only to have it pulled back like Lucy does with Charlie Brown’s football…again? …again?

Could be a very bad day for stocks!

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8/6/12..cucharachas!

August 6, 2012 at 8:23 am · Filed under banking, economy, financial, markets ·Tagged , , ,

From Keep Calm and Carry On: “The safe way to double your money it to fold it over once and put it in your pocket.” – Frank Hubbard

TB’s Quote of the Day: ”It does no good to kill just one cockroach…you have to kill them all.” – Charles Bronson – Death Wish III 

This week’s economic calendar is fairly light and with an absence of any major market moving indicators. We will get June Consumer Credit (Tuesday), preliminary Q2 Productivity & Costs (Wednesday), June International Trade and June Wholesale Inventories (Thursday), and July Import & Export Prices and the July Treasury Budget (Friday). There are no data releases scheduled for Monday. Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA.

Bloomberg Top Stories:

*Knight Capital Ducks Insolvency as Investors Provide $300 Million in Cash

*Monti Warns of Euro Breakup as Disagreements Harden Over ECB Aid for Spain

*Bund Yields Drop as Euro Weakens; Stocks Advance With U.S. Index Futures ???

*Greece Agrees on Need to Boost Policy Efforts to Receive Aid, Troika Says

*Knight Investors Eye Prize in Market Making Business Aimed at Individuals

*Berkshire Cash Hoard Swells to $41 Billion as Buffett Cuts Consumer Stocks – a bear?

*Treasury Bears Submit to Bernanke as Bond Optimism Rise to Highest of ’12 – bullish?

*T. Rowe Price Sees Investor Food Fight as Newest Junk Bonds Soar

*Rogoff Sees World Wishing It Was America Year After S&P Downgrade of Debt –hello?

Finally a rally following four straight ‘down’ day following two straight ‘up’ days and everyone is ga-ga!! This will not stand to quote George H.W. Bush. Volume DROPPED to 3.75B vs  4.12B shares vs 4.34B! The range since 7/29’s QE surge of 4.56B (above average) remains 2.06B-4.28B shares. As always: note that the big days come when there is a reversal due to news but on a weak but better than expected payrolls number??? NYSE stocks executed without the aid of the ETN market were even worse falling back to 754M vs 826B vs 1.03M – if you can’t read short-covering there is no help for you as a trader! Just 7 of the last 24 sessions have surpassed 800M shares. The average for 2012 is just 812M shares and since 6/29 just 754M shares, levels not seen since week ended 12/30/11! 51 of the last 85 sessions have been less than 800M shares. Since 2/29 there have been just 19 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B (4.85B including ETNs) and just 17 have been above 900M – 925M is the 12 month average. Since 11/1 there have been just 16, 1B share days…12 in 2012! Since 2/6 there have been 16 sessions less than 700M shares. 166 of the last 188 sessions have been less than the 12 mo ave (88%)!

Advance/Declines were positive following four straight negatives. Here are last six: +4.7x! vs -1.7x vs -1.7x vs -.4x vs -1.1x vs +5x! on NYSE and +3.4x! vs -1.4x vs -2.9x vs -1.4x vs -1.8x vs +3.3x on Nasdaq. Breadth was even stronger: +7.1x!!! vs -4x!! vs -2x vs -1.8x vs +1.1x vs +9x!!! on NYSE and +4.7x! vs -2x vs -2x vs -1.6x vs -2x vs +1.8x on Nasdaq. New 52 week highs more than doubled to 301 vs 141 (7/3’s 504 is the high), while new lows were more than halved to 77 vs 167 from a recent high of 229! The ratio turned positive again at +3.9x vs -1.2x! vs +2.1x vs +3x vs +3.7x +4x. This from the early rally highs of +14x and +20x. The S&P VIX plunged 11% to 15.64 -1.73 vs 17.57 7/15’s 20.47 was highest since June 15th. A week earlier it closed at 15.45, lowest since 3/26 – the low for this year!  Now IF as the drop Thursday suggests, a huge number of calls were bought, more would be bought and the shorts would be forced to cover making the rally look stronger…kind of explains such a big move on such low volume, no?

Here are the results of last 6 sessions: Dow +1.7% vs -0.7% vs -0.3% vs -0.5% vs flat vs +1.5%; Transports +2.1% vs -0.1% vs -2%!!! vs -0.5% vs -0.3% vs +2.4%;Dow Utilities +1.1%??? vs -0.7%? vs -0.7%? vs -0.8% vs +0.4% vs +1%; S&P 500 +1.9% vs -0.7% vs -0.3% vs -0.4% vs -0.1% vs +1.9%; Nasdaq Composite +2% vs -0.4% vs -0.7% vs -0.2% vs -0.4% vs +2.2%!; Nasdaq 100 +1.9% vs -0.4% vs +0.3% vs flat vs -0.2% vs +2.4%!; Russell 2000 +2.6% vs -0.3%? vs -2%!!! vs -0.6% vs -0.6% vs +2.4%!; NYSE Financials +2.7%!!! vs -1.1%!!! vs -0.4% vs -0.6% vs -0.1% vs +2.4%! (KBW Banks +3.1%!!! vs -1.3%!!! vs -0.5% vs -0.4% vs -0.8%! vs +1.5%; Nasdaq Banks +2.8%!!! vs -0.5% vs -1.3%!!! vs -0.3% vs -0.7% vs +1.5%). NYSE Financial Leaders: BAC +3.5%!!! vs –0.6% vs -1.6% vs +0.8% vs -0.4% vs +2%!; C -2.2% vs -1.3% vs flat vs -0.6% vs +3.9%! Not leaders, but…JPM +2.6% vs -2.3% vs flat vs -0.4% vs -2%! vs +3%!!!; WFC +3%! ss -1.7% vs +0.2% vs -0.5% vs -0.5% vs +1.1%; USB +1.8% vs -1.3% vs -0.5% vs -0.7% vs -0.5% vs +1%; GS +3.2% vs -2.3% vs -0.8% vs flat vs -0.7% vs +3.7%!!!; MS +5.8%!!! vs -3.6%! vs -1.1% vs +1.1%! vs flat vs +3.8%; UBS +5%!! vs -2.2% vs -1% vs -4.2%! Meanwhile MGIC (MTG) which fell -64% Thursday after missing on earnings and breaching capital requirements, fell another 4.5% to $0.84 – this for a financial company? Hello, they are TOAST!!! As for Knight (KCG)  which fell -62.8% following a 32.8% decline on Wednesday rallied on a temporary infusion (?) 1.6% to a ‘lofty’ $4.05…get real and tell them goodbye! Buyers will emerge for their ‘aps’ but…

Global stocks up despite warnings of EU problems, but for the present all is well – huh? FTSE +0.3% vs +1.5% vs +1.1% vs -0.3% vs +0.6%; CAC 40 +0.75 vs +2.7% vs +0.9% vs flat vs +0.6%; DAX +0.7% vs +2.3% vs -0.1% vs +0.3% vs +0.9%;Nikkei +2% vs -1.1% vs +1.3%!!! vs -0.6% vs +0.7%; Hang Seng +1.7% vs -0.1% vs -0.7% vs +0.1% vs +1.1% vs +1.6%; Korean KOSPI +2% vs -1.1% vs -0.6% vs -0.1% vs +2.1%!!! vs +0.8%;Indian Sensex +1.3% vs -0.2% vs -0.2% vs +0.1% vs +0.5% vs +1.8%! U.S. stock futures up modestly and at session highs…do you trust this? DOW +20; SPX +3.50; NDQ +13.

Bonds were slammed on the faux stock rally but will rise again as bullish sentiment indicates, but are little changed o/n: 10 yr 1.56% +1/32 – record low of 1.40%; 30 yr 2.65% -1/16. Long TIP 0.34% -1/32. 0.28% is record low!The 5 yr TIP yields -1.25%!!!; 10 yr -0.68%!!!Bills 0.02% 1 month; 0.08% 3 months; 0.13% 6 months. Reverse Repo 0.31% vs 0.28%! 3 mo. Libor 0.44%!!!, and 6 mo. 0.72% – both have now broken below 0.45% and 0.73% where they have been embedded! European problem sovereign 10 years, Germany-benchmark 1.34% +5 bp’s; Italy 5.95% -6; Spain 6.68%! -9; Greece 24.41% -12!; Portugal 10.06% -51???; Ireland 5.85% +1. This is crazy!

Gold continues to pivot on $1600 closing above again at 1609.30 +$8.60 – an exact reversal of Thuursday That was the first time it has closed below $1600 since 7/25! 7/12’s intraday low of $1547.60 was lowest since June 1. The hit is $161 since 2/28! 2/28’s $1792.70 intraday high not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. RES/SUP at $1600, the 40 day and $1598, crossed and stable, then $1665, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1612.00 +$2.70. Crude had a HUGE rally +4.9%! closing at $91.40 +$4.27 – doubling the down move on Thursday? SUP at the 40 day (85.58), and the 50 day (85.82), both rising! RES at the 200 day (96.54). First SUP is again $89.17, the 11/1/11 low, RES $92.52-54, the lows of 12/16-12/17, a prior double bottom. It is now $91.08 -.32…can’t explain this thru fundamentals…no sir!

Breadth and Advance/Declines were very STRONG after FOUR straight weak sessions! This is only the second day of advances in six sessions…the last a faux rally from a week ago Friday…that was quickly overwhelmed. Lots of talk about nearing the 2008 highs for the S&P…but it isn’t even the same S&P which changes as stocks get in trouble or go out of favor. So who cares and is it something to be proud of when an index gets back to where it was four years ago? About as useful as the fourth quarter of last year was following a disastrous third quarter…or the second quarter of this year! Thankfully, investors only listen to CNBC and haven’t a clue about history! Egads!

Note that volume, both gross and especially executed on the NYSE plunged – not a sign of a rally – more a sign of SHORT COVERING. This is somewhat confirmed by the decline in the S&P VIX on THURSDAY – buying of call options to hedge shorts? Also, note that as in previous short-lived rallies all indices moved similarly which TB ascribes to high frequency trading not individual stock buyers…real ones!

Oh, and Knight (KCG) rallied on a one day infusion…call it what it was: short covering after the stock was off more than 90% the prior two sessions, capiche? Meanwhile, MGIC Mortgage (MGIC) continued to fall – it either has to find an angel or it is out of business. Think about that! Two financials within two days of one another? Boy isn’t technology great! Let’s turn everything over to the programmers and see what happens!

How many of you had even heard of MF-Global, Knight Capital, Bernie Madoff, Allen Standford and others before they blew up? Not many TB would suggest! Not many!

 

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

…there’s never just one cockroach…never! Sadly, our financial system, once the best in the world is now a disgrace…on all but those of us who have to invest in it (speculate is the more apt term. What is the problem here…more accurately ‘problems’.

What does it take to wake us up to the fact that our financial system has become a joke? A bad one…a ponzi scheme that the taxpayers keep afloat. When was the last time you heard a complaint about FNMA/FHLMC from a member of Congress – even from the GOP who loathed them but continued to take their money and tacitly back them!

We had Glass-Steagall which served us well for more than 70 years then thanks to the finagling by one Sanford Weill, who enriched himself while Chairman of Citigroup (don’t take TB’s word for it, take Graef Crystal, a former compensation analyst who billed him as the most overpaid CEO in America…and there is a lot of tough competition for that title!).

Then, thanks to direct phone calls to President Clinton, Treasury Secretary Rubin and Fed Chairman Greenspan, it was done…with the help of Sen. Phil Gramm who was rewarded by being made Chairman of UBS Americas…sweet!

But Sandy couldn’t even wait for the bill to be drafted…no sir, he began his stock swap for Transamerica even before it had become law…after all that was all he cared about: enriching himself, like Countrywide’s Angelo Mozillo…at least he got a hand slap!

TB believes that JPMorganChase is the most corrupt financial institution in the country. Yet its beloved Jamie Dimon continues to press for less regulation even in the wake of a $6 billion plus ‘gambling’ loss, and also to promote those who commit sins. This time however it was too big so CIO Ina Drew had to go…er…retire with $22 billion in compensation. She, however had the decency to return her last two years of compensation…something her irresponsible boss has refused to do, instead leaving it up to the Board, of which he is the only banker and Chairman. Board says do nothing! Dimon brought in a new risk officer…who lost his last job for allowing too much risk!

Every time we turn around our once-trusted banks continue to rip us off. Either thru illegal foreclosures, excessive fees, or now lending at the taxpayers expense. Just how many of those sub 4% mortgages do you think are going on the banks books? All of them…for 60 days – long enough to dump them on FNMA/FHLMC and still get paid ½% to service them. You do the math…they can make as much or more money from the same amount of capital with NO credit exposure…nope, that goes to you the taxpayer!

How about the Fed? Bernanke once thanked Milton Friedman and said they learned from their mistakes thanks to him…then they did the same thing all over again. The N.Y. Fed has become a joke, first with former Chairman Stephen Friedman who bought Goldman Sachs stock while still a director of G.S. Unlike Martha Stewart he didn’t go to jail or even get prosecuted, instead he had to give up the profits and resign! That’s it! Jamie Dimon sat on and still sits on the board of the NY Fed, even though his bank is being investigated. The new chairman of the NY Fed is an academic with no expertise in banking despite the by-laws calling for him to be.

Former Goldman co-chairman, Senator, and Governor Jon Corzine who decided to try his hand once again at investing…and as usual was a gun-slinger. TB didn’t even know that MF-Global was a primary dealer and when the went bust found out that the Fed no longer reviews the financials of primary dealers…the ones it entrusts with OUR money!

Then of course, Bernie Madoff, who escaped scrutiny for decades because he was a former president of NASD, and now we have ‘sir’ Allen Stanfrord, the Mormon Madoff, Peregrine and a dozen others not worthy of mention.

But it is also corporate America. Insurance companies…almost exclusively for profit that are fraudulently charging fees…when does it end…and where?

No, the world abounds with them and far too many in our own beloved U.S. of A. TB could write volumes about how the NRA has exceeded the wishes of its members, AARP enriched itself from its members – at the expense of our heirs, and Congress is rife with conflicts of interest that don’t even get attention (remember when Rep. Charles Rangel was censured by the House for things we would have been tried for tax evasion…then went on to be re-elected by an even bigger majority? At the time, Speaker Pelosi said that other cases were pending…like Rep. Maxine Waters (D) Los Angeles, who got her hubbie’s  S&L included in a Fed panel on bailouts without disclosing this and his was the only S&L to get bailout money…nothing since! This is two years after the investigation into Rangel began! Update: on June 12, it was announced that the investigation would resume…and four days ago that it would continue…conveniently nothing done until AFTER the election!

As for our presidential contenders, the word for them both is ‘gaffers’. This is the way they evade responsibility for their inaccurate statements and the media is only too willing to oblige by watching even closer and labeling everything a gaffe. This is sick! There is no way in this advanced information age for voters to make an objective decision – none!

Both take a shred of fact and then promulgate lies about it to confuse the voters. While Obama was crowing about the creation of 163,000 jobs, following just 67,000 in June when we need at least 250,000 a month to handle new entrants to the labor force, Romney was blasting him…because the unemployment rate rose to 8.3% from 8.25 and said his plan would create millions of jobs…despite evidence to the contrary by the Brookings Institute which he condemned but had lauded when they were critical of Obama’s! As for that 8.3% rate it was simply rounding: 8.225% vs 8.222% – talk about within the margin for error! They want you to trust them…not your lying ears and eyes!

TB is sick…sick of an ailing nation who continues to enrich the wealthiest…no not the 2% but the 0.01%! Like the Koch brothers who would destroy our entire infrastructure for their personal gain. How much is enough? Apparently not the $42 trillion that resides in offshore accounts! Honk if you think we are in trouble: HONK! HONK! HONK!

Hope you have a great week but do something…make your vote count, not as a republican or a democrat but as an American who loves her country. If only we paid enough attention to finding a solution as we have to the Olympics, we could do it!

TB

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7/5/12…bank on it!

July 5, 2012 at 7:52 am · Filed under economy, financial, markets ·Tagged , , , , ,

From Keep Calm and Carry On: “Wise men don’t need advice. Fools Won’t take it.” – Benjamin Franklin    

TB’s Quote of the Day: “It is not our job to protect the people from the consequences of their political choices.” – Chief Justice John Roberts – that’s BOTH sides of the aisle

Bloomberg Quote of the Day: “A hotel isn’t like a home, but it’s better than being a houseguest.” – William Feather

Bloomberg Top Stories:

*ECB Reduces Rate to Record Low 0.75% as Draghi Detects Threat to Economy (yet market rallies as if this will solve the problem??? Hello!!!)

*China Lowers Interest Rates for Second Time in a Month to Bolster Growth (yet we are in denial that their economy is slowing~!)

*Fewer Americans Than Forecast Filed Jobless Claims in Week, Easing Concern (do you think the record hot weather could have been why? Besides Friday’s #’s trump!)

*U.S. Employers Added More-Than-Forecast 176,000 Workers in June, ADP says (has little correlation value to the official data to be released tomorrow.)

*Philly Fed Employment Gauges Signals Soft Payrolls – you pick ‘em, TB says SOFT!

*Wall Street Bank Investors Are Kept in the Dark on Libor Probes Liability (see below)

* Iran Oil Tankers Signal Bound for China in Sign Storage Plan May Be Ending (loaded ships have been sitting idle off Iran for months and more…helped create shortage)

*Congress Grabs $45 Million of Free Postage While Pushing Post Office Cuts – yawn!

Volume plummeted to or very close to a 12 month low on a short session: 2.06M vs 3.25B shares but that didn’t stop the high freaks from their high jinks! NYSE stocks executed without the aid of the ETN market also plunged to 466M shares vs 736M shares…160M of those came in the final half hour (one-third!). It was the lowest since 11/25/11 – day after Thanksgiving (442M shares). 36 of the last 63 sessions have been less than 800M shares (Corrected!) Since 2/29 there have been just 15 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B (4.85B including ETNs) and just 14 have been above 900M – 942M is 12 month average. Since 11/1 there have been just 14, 1B share days…ten in 2012! Since 2/6 there have now been NINE sessions less than 700M shares. 148 of the last 167 sessions have been less than the 12 month average!

Advance/Declines were positive: +3.9x vs +2.4x vs +6.6x vs +1.3x vs +3.6x on NYSE and +2.7x vs +1.8x vs +5.8x vs -1.6x vs +2.3x on Nasdaq. Breadth was similar: +3.4x vs +1.7x vs +6.2x vs +1.1x vs +4.3x on NYSE and +3.4x vs +2x vs +5.9x vs -2.8x vs +3.2x on Nasdaq.. New 52 week highs rose yet again to 504 vs 463 (another new high), while new lows dipped even further to 24 vs 37. The ratio is now about +20x vs +12.5x vs +10x vs +1.2x vs 2x. The S&P VIX declined slightly to 16.65 -.15…the low for 2012 is 13.66 on 3/16!

Here are the results of last 5 sessions: Dow +0.6% vs -0.1% vs +2.2% vs -0.2% vs +0.7%; Transports +0.6% vs -0.1% vs +2.8% vs +0.8% vs +0.5%; Dow Utilities -0.3% vs +0.7% vs +0.7% vs +0.1%; S&P 500 +0.6% vs +0.3% vs +2.5% vs -0.2% vs +0.9%; Nasdaq Composite +0.8% vs +0.6% vs +3%! vs -0.9% vs +0.7%; Nasdaq 100 +0.8% vs +0.4% vs +3.1%! vs -1.1%! vs +0.8%; Russell 2000 +1.3%!!! vs +1.2%!!! vs +2.9%! vs -0.1% vs +1.5%; NYSE Financials +0.7% vs +0.8% vs +2.8%! vs -0.4% vs +1.2% (KBW Banks +0.4% vs +0.6% vs +2.7% vs -0.4% vs +1.4%; Nasdaq Banks +0.7% vs +0.8% vs +1.9% vs flat vs +1.5%). NYSE Financial Leaders: BAC +0.1% vs -1.6% vs +5.7%! vs -0.4% vs +2%; F +2.2%! vs -2.1%! vs -5%!!!; JPM -0.3% vs +1.5% vs -0.4% vs -2.5% vs +3%; GE -0.3% vs -1.7% vs +3.2% vs +0.4% vs +1.7%. Not leaders, but… C +0.7% vs flat vs +3.9% vs -2.6% vs +1.3%; WFC -0.2% vs flat vs -0.1% vs -0.8% vs +1.3%; USB +0.4% vs +0.9% vs +2.3% vs flat vs +0.3% vs +0.5%. NOTE:  USB has had new 12 month highs the last two sessions!

Global stocks higher, except Japan: FTSE +0.6% vs +0.4% vs +0.5% vs +1.4% vs -0.6%; CAC 40 +0.2% vs +0.4% vs +1.2% vs +2.6%; DAX +0.8% vs +0.7% vs +1% vs +2.5% vs -0.9%; Nikkei -0.3% vs +0.7% vs flat vs +1.5% vs +1.7%; Hang Seng +0.5% vs +1.5% vs +2.2% vs +2.2% vs -0.8%; Korean KOSPI +0.1% vs +0.9% vs -0.1% vs +1.9% vs +0.1%; Indian Sensex +0.4% vs +0.2% vs -0.2% vs +2.6% vs +0.1%. U.S. stock futures higher but giving up about half from highs: DOW +27; SPX +3.30; NDQ +4.

Bonds rallying after Tuesday’s do nothing session: 10 yr 1.60% +1/4 – record low 6/1 of 1.442%!; 30 yr 2.72% +3/8; Long TIP 0.50% +1/4. Record low yield of 0.347% on 6/1. The 5 yr TIP yields -1.12% – strong!; 10 yr -0.54%. Bills 0.07% 1 month; 0.08% 3 months; 0.14% 6 months. Reverse Repo 0.32% vs 0.38%. 3 mo. Libor 0.46%, and 0.73% – steady. European problem sovereign 10 years, Germany-benchmark: 1.47% +2 bp’s; Italy 5.80% +6; Spain 6.55% +21; Greece 24.77% -23; Portugal 9.73% +5; Ireland 6.00% +2!

Gold took advantage of the light volume and closed above $1600…but still lacks traction, closing at $1621.80 +$24.10 with an intraday high of $1625.70. 6/22’s intraday low of $1555.60 was lowest since June 8th! The hit is $153 since 2/28! 2/28’s $1792.70 intraday high was not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. Res/sup is $1590, the 40 day and $1603, the 50 day, then $1670, the 200 day. It is now $1622.30 +.50. 5/2’s o/n low of $1526.70 was lowest since 12/29! Crude had a huge rally closing at $87.66 +$3.91 with a session high of $88.04, highest since 6/20. The intraday low on 6/28 of $77.28 was lowest since 10/5/11. This is the first close above $85 since June 1!  RES/sup at the 40 day (86.87), the 50 day (90.15), then the 200 day (95.96), – caution as the averages have been plunging thus creating an artificially low 40 day which was easy to breach. First REAL res $89.17, the 11/1/11 low, then $92.52-54, the lows of 12/16-12/17, a prior double bottom, MAJOR sup remains at $74.95, the 10/4/11 low!!! It is higher overnight at $88.73 +$1.06!

Being  a short session, there is nothing meaningful to report for Tuesday. Note that as in prior ‘faux’ rallies all of the indices were up about the same amount: 0.6%-0.8% which is always suspect. The lone exception is the laggard Russell 2000 small cap which was up 1.3% and up 1.2% on Monday. Is it over-reaching?

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

…who caused the financial crisis? BANKERS! (with the benign/able assistance of Alan Greenspan and other regulators). Who has seen their personal earnings soar while their shareholders remain under water? BANKERS! Who has thwarted all efforts at serious financial reform? BANKERS! Who leads this motley crew? Jamie Dimon!

But that is on THIS side of the pond. It seems to be even worse on the other side of it. The Barclays LIBOR (London Interbank Borrowing Rate) fixing scandal is spreading like wildfire and will lead to the other British Bankers Association (BBA) members being pulled in. To understand the significance of this you have to understand just what the BBA does.

It determines the Libor rate which is the benchmark for all banks. In days of old, when TB was cutting his teeth it was the Fed Funds rate and the T-Bill rate that was the basis for short term lending. With the advent of truly global markets there had to be a common index and LIBOR was adopted.

Not only does LIBOR now set the rate on short loans it also determines floating rate mortgage rates (except long term mortgages which remain tied to the 10 year treasury). You still don’t care?

The ten banks who set the rate meet daily in London and held meetings within earshot of trading desks – guess they believed in transparency…to their own traders! Long before the financial crisis some bankers and investors questioned the validity of the rate. After the crisis, the strongest (perceived) banks were actually borrowing at that rate while weaker banks were borrowing at significantly higher rates. This slowly began to raise flags. But for most, it didn’t matter. Apparently it mattered little to the Bank of England and the FSA because nothing was done about it. But now we have the Barclay’s scandal.

If you believe Barclay’s they were told (with a wink?…implied?) to shave the rate. So what? Well…they ‘honestly believed’ they were only carrying out the regulators wishes. Really? Who benefitted the most from this? Barclays and other big banks. Who was (is) impacted? Holders of Libor-based paper…no small change as there are $350 TRILLION of LIBOR-based securities/loans out there! But wait, isn’t this good for borrowers? Maybe but not if the ‘spread’ is raised. So if a trader knows that the rate is artificially low he raises his required spread to buy more and the cost is passed on to sellers. Bid/offer spreads will therefore widen at the expense of potential ‘retail’ buyers.

Barclays has agreed to pay a $450 million fine to settle but as more is learned they got off easily (consider that Glaxo was just fined a record $3 billion – which ‘crime’ was more significant?)…although it cost them their chairman (Marcus Agius) and CEO (Robert Diamond, an American, not to be confused with Jamie Dimon), and now Agius is heading a committee to find a new CEO. Sources tell TB that when Diamond appeared before a Brit committee yesterday the grilling was medium rare at best.

So much for the LIBOR scandal…will it be swept under the carpet rather than ruin some government officials? Consider the way our Congress has gone out of its way to placate Dimon and the rest of the banking committee…don’t upset your backers!

It is incredible how the right is claiming that Chief Justice Roberts vote must have been due to threats – some claim on his life!…yet no one has challenged the Citizens United decision, which was just upheld in another case where a state (Montana?) challenged the right of Superpacs to interfere in state elections. What reasonable person believes a corporation is a person and furthermore should have no limits on its spending (or who is deciding how that money is to be spent), or even have to disclose their contributions which are in unlimited amounts? Wall Street is a huge contributor to these ‘slush funds.’)

IF we are to increase the accountability of elected officials we have to reverse what we are seeing done with the blessing of a partisan court. But if you are happy with it, good luck to all of us.

For it was the banks…and what used to be shadow banks (Goldman, Morgan Stanley) that created the demand for mortgage pools consisting of subprime loans and then packaged them into pools which they claimed diversified them and protected investors from losses…with the assistance of Moody’s and S&P. Wells Fargo proudly says it didn’t own any subprime mortgages, yet the mortgage sub was the biggest sub-prime lender. Wells however was happy to take the home equity portion (if the underlying mortgage is bad why would you take a subordinate position?), and the unsecured portion for a total of 105% of the purchase price! Their reasoning was simple: the loans would be refinanced at the first reset date and in the meantime they could ‘cherry-pick’ them for the highest yield portions…of course when the music stopped, they too had big losses.

Then when it came time to foreclose the banks resorted to paper mills that generated often bogus documents…often to cover up for the Wall Street created MERS (Mortgage Electronic Recording System), which resulted in millions of mortgages being in a nominee name making it difficult if not impossible to track down the true lien holder. The banks were fined for this and the system remains chaotic.

Then there is the account processing scandal in which (memos from Wells first emerged showing this was done), transactions were delayed then recorded late in the evening and ‘reordered’ so that the largest debits came first thus producing several overdraft charges rather than one or two. An internal memo noted that after the crisis the fees had declined sharply (most likely due to banks tightening restrictions on account holders) and they needed to offset this loss of income. The big banks were fined hefty sums. The latest was U.S. Bancorp which TB has felt was the best bank in the U.S. and still does but is appalled that they too participated in this. This begs the question: is it possible that independently all these banks developed the same strategy to fleece clients? You decide.

Once again: so what you say? Consider this…what is an economy without a sound, transparent financial system? If you can’t trust the banks who can you trust? Politicians? Trading partners? Are we to return to a barter society or attempt to pay for things in gold? At $1600 an ounce it is very difficult to make change…unless it is with paper dollars!

If you aren’t troubled by these events you live in a very rose-colored world…don’t leave it or you be sadly disappointed. TB was proud to be a banker…proud to work for a Wall Street firm…but is now sad for the people who work in either of these industries. When TB comments against them, it is his friends who work in the industry (his friends are honest and not part of the 10% or so who created the crisis), who rush to the defense and see no need for Wall Street reform…pity.

Have a great day!

TB

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7/3/2012…hot Fourth…cold market

July 3, 2012 at 7:15 am · Filed under economy, financial, markets ·Tagged , ,

From Keep Calm and Carry On: “It is unfortunate we can’t buy many business executives for what they are worth and sell them for what they think they are worth.” – Malcolm Forbes…what they’re worth? We can’t even get rid of them cheaply!    

Bloomberg Top Stories:

*Stocks Rise as Commodities Advance no Stimulus Speculation; Corn, Oil Gain isn’t it nice that they explain these things to us…operative word here is ‘speculation’! TB

*Diamond Quits as Political Pressure Mounts Following Barclays Libor Fine

*Osborne Hails Diamond Departure With Pledge to Fix Banks Amid Libor Probe

*Federal Reserve Weighs Weaning Banks Off Mony Funds as SSEC Rules Languish

*Stocks Pessimism Posts Longest Streak in U.S. Survey Since October Bottom!

*Spain’s Waning Social Security Fund Risks Undermining Bonds!

*Blackstone Makes Foray Into Foreclosed Homes for Rentals – honk if you’re happy

*Wall Street Supporters in Congress Are Unmoved by Probes, Trading Debacles – that tells volumes and why Dimon won’t get even his hand slapped…and keep his bonus!

Volume plummeted again as we are in full summer doldrums now: 3.25M vs 4.56B shares on a very mixed day with no real winners except the Russell 2000 and Dow Utiltites. Rightfully, after opening up, the Dow plunged on the release of the ISM Manufacturing Survey which suffered its first decline in nearly three years! But then spent the rest of the session recovering from the lows and closing off just 8 points. Is this rational? Not to TB’s way of thinking, but then, what does he know? NYSE stocks executed without the aid of the ETN market also plunged from their 1.09B share day on Friday to a weak 736M shares…a half hour before the close it crossed 500M shares! 35 of the last 62 sessions have been less than 800M shares (Corrected!) Since 2/29 there have been just 15 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B (4.85B including ETNs)and just 14 have been above 900M – 945M is 12 month average. Since 11/1 there have been just 14, 1B share days…ten in 2012! Since 2/6 there have now been EIGHT sessions less than 700M shares. 147 of the last 166 sessions have been less than the 12 month average!

Advance/Declines were modestly positive: +2.4x vs +6.6x vs +1.3x vs +3.6x vs +1.8x on NYSE and +1.8x vs +5.8x vs -1.6x vs +2.3x vs +1.2x on Nasdaq. Breadth was similar: +1.7x vs +6.2x vs +1.1x vs +4.3x vs +1.9x on NYSE and +2x vs +5.9x vs -2.8x vs +3.2x vs +1.4x on Nasdaq.. New 52 week highs rose again to 463 vs 405 (a new high), while new lows dipped further to 37 vs 41. The ratio is now about +12.5x vs +10x vs +1.2x vs 2x vs 1:1x. The S&P VIX continued to fall to 16.80 -.28…the low for 2012 is 13.66 on 3/16!

Here are the results of last 5 sessions: Dow -0.1% vs +2.2% vs -0.2% vs +0.7% vs +0.3%; Transports -0.1% vs +2.8% vs +0.8% vs +0.5% vs +0.4%; Dow Utilities UP 0.7% vs +0.7% vs +0.1% vs +1.2%; S&P 500 +0.3% vs +2.5% vs -0.2% vs +0.9% vs +0.5%; Nasdaq Composite +0.6% vs +3%! vs -0.9% vs +0.7% vs +0.6%; Nasdaq 100 +0.4% vs +3.1%! vs -1.1%! vs +0.8% vs +0.6%; Russell 2000 +1.2%!!! vs +2.9%! vs -0.1% vs +1.5% vs +0.4%; NYSE Financials +0.8% vs +2.8%! vs -0.4% vs +1.2% vs +0.6% (KBW Banks +0.6% vs +2.7% vs -0.4% vs +1.4% vs +0.6%; Nasdaq Banks +0.8% vs +1.9% vs flat vs +1.5% vs +0.7%). NYSE Financial Leaders: BAC -1.6% vs +5.7%! vs -0.4% vs +2% vs +0.2%; F -2.1%! vs -5%!!!; GE -1.7% vs +3.2% vs +0.4% vs +1.7% vs +1.4%. Not leaders, but… JPM +1.5% vs -0.4% vs -2.5% vs +3% vs +1.2%; C flat vs +3.9% vs -2.6% vs +1.3% vs –0.1%; WFC flat vs -0.1% vs -0.8% vs +1.3% vs +3.4%; USB +0.9% vs +2.3% vs flat vs +0.3% vs +0.5%. NOTE:  while the banks look like they are doing well, the sixth day was dropped which was very weak!

Global stocks higher, especially Asia: FTSE +0.4% vs +0.5% vs +1.4% vs -0.6% vs +0.6%; CAC 40 +0.4% vs +1.2% vs +2.6% vs -0.3%; DAX +0.7% vs +1% vs +2.5% vs -0.9% vs +0.3%; Nikkei +0.7% vs flat vs +1.5% vs +1.7% vs +0.8%; Hang Seng +1.5% vs +2.2% vs +2.2% vs -0.8% vs +1%; Korean KOSPI +0.9% vs -0.1% vs +1.9% vs +0.1% vs flat; Indian Sensex +0.2% vs -0.2% vs +2.6% vs +0.1% vs +0.4%. U.S. stock futures trading in a very narrow range: DOW -2; SPX +0.50; NDQ +3.75.

Bonds weaker but only after a strong rally that took the 10 yr yield down to 1.55% intraday: 10 yr 1.59% -1/16 – record low 6/1 of 1.442%!; 30 yr 2.71% -1/4; Long TIP 0.50% -1/4. Record low yield of 0.347% on 6/1. The 5 yr TIP yields -1.07%; 10 yr -0.54%. Bills 0.04% 1 month; 0.09% 3 months; 0.14% 6 months. Reverse Repo 0.38% rising! 3 mo. Libor 0.46%, and 0.73% – steady. European problem sovereign 10 years, Germany-benchmark: 1.54% +2 bp’s; Italy 5.66% -5; Spain 6.25% -5; Greece 25.09% +28; Portugal 9.70% – flat; Ireland 6.00% -7!

Gold briefly traded above $1600 then closed below again…it lacks traction, closing at $1597.70 -$6.50. A week ago Friday’s intraday low of $1555.60 was lowest since June 8th! The hit is $187 since 2/28! 2/28’s $1792.70 intraday high was not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. Res/sup is $1591, the 40 day and $1603, the 50 day, then $1671, the 200 day. Up again now  at $1611.80.20 +14.10! 5/2’s o/n low of $1526.70 was lowest since 12/29! Crude was weak again closing at $83.75 -$1.21. The intraday low on 6/28 of $77.28 was lowest since 10/5/11. It has closed below $85 since June 1!  RES at the 40 day (87.14), and the 50 day (90.46), then the 200 day (95.96), – 40/50 still plunging. First res $89.17, the 11/1/11 low, then $92.52-54, the lows of 12/16-12/17, a prior double bottom, MAJOR sup remains at $74.95, the 10/4/11 low!!! It is higher overnight to $85.83 +$2.08 – meaningless…it has so far to go!

It is pointless to comment on yesterday’s market except to say that when one has a rally of the magnitude we had on the last day of a quarter (suspect), yet no follow thru the next session that the going will continue to be rough. It will be a long, hot summer and once the campaign rhetoric begins in full force it will only get worse.

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

…it is hot enough to fry an egg on the sidewalk but the market lacks clear direction. The last five days look pretty good but that is only because the sixth dropped off. Today’s quote is particularly relevant as a bunch of boys parading as CEO’s think they are so good their companies couldn’t operate without them, when in truth for most the cost of getting rid of them is too high. Yet we, the shareholders, have to continue to pacify them.

Look at these headlines:

Glaxo Smith Kline fined $3 BILLION – a record! – for various offenses on Paxil and other drugs including recommending them for treatments not approved (weight loss for teens which ended in some suicides), paying for doctors to attend events, etc. This is the same company that had to settle a whistleblower suit over unsafe production…including non-sterile water…and mixing up drugs with others. Some governance!

Microsoft writing down $7.3 billion after company they bought (AQuantive) did not deliver…not implying bad management just a huge writedown.

Barclay’s chairman and the CEO have now stepped down over rigging of Libor rates to improve their profits and hide perceptions of the banks well-being.

A total lack of responsibility or contrition at JPMorgan by Jamie Dimon who sees no need to give back any of his bonus. Also, as yesterday’s story indicated, he remains on the board of the New York Fed. Resign? Hell no! Also in the link provided yesterday, the chairman of the NY Fed is Lee C. Bollinger, president of Columbia University, and while an intelligent man has NO banking experience…has never even conducted a study on banking…yet the Federal Reserve Act states that the chairman “shall be a person of tested banking experience.” When is the Fed going to start playing by the rules the rest of us have to pay…this for the most powerful institution in this country, indeed the world?

An ex-JPMorgan trader, Andrew Feldstein, bet against the bank with his hedge fund and helped the bank unwind the losing trades. He helped them create the credit derivatives market!

Ah but wait for those quarterly earnings to be announced in three weeks…they will prove that things are still rosy for corporations…right? Won’t they? Things are fine, right?

Have a wonderful day…and Fourth!

TB

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7/2/12…figures lie…

July 2, 2012 at 8:51 am · Filed under economy, financial, markets ·Tagged , , ,

From Keep Calm and Carry On: “If you can spend a perfectly useless afternoon in a perfectly useless manner, you have learned how to live.” – Lin Utang…but to survive?    

This week’s holiday-interrupted economic calendar contains several very important indicators. The highlight of the week will be the June Employment Situation Report (Friday). However, we will also get the June ISM Manufacturing Survey and May Construction Spending (Monday), May Factory Orders and June Motor Vehicle Sales (Tuesday), the ADP National Employment Report and the June ISM Non-Manufacturing Survey (Thursday). Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA

Bloomberg Top Stories:

*Barclays Chairman Agius Resigns Without Successor After Record Libor Fine – $455M

*Stocks Rise as Manufacturing Gauges Beat Forecasts; Italian Bonds Advance

*Spain Overestimating Bank Profit Risk Seeking Too Little Relief From EU – DUH!!!

*BNP Paribas Said to Consider Plan for $50 Billion Spain-Italy Funding Gap – are they talking about finance or the World Cup??? …by the way, where was Germany! HAH!

*Hollande Needs $54 Billion to Fix France’s Accounts, Audtor Says – what he know?

*Iran Oil Bank May Become OPEC’s Biggest Supply Loss Since Libyan Rebellion!!!

*Pena Nieto Claims Victory in Mexico President Vote as PRI Returns to Power – actor!

*Clinton Says Escalating Sanctions Pushing Iran Toward Nuclear Negotiations

*Stockton Bankruptcy Plan Turns on Being First to Cause Bondholder Pain – finally!

Volume surged to 4.56B shares vs 3.81B shares on a day where anything went – up! Well, almost…but who cares, right? Question: who SELLS stocks on the last day of a quarter? Huh? Who buys…that’s easy: index funds who have to rebalance! Who drives the trading? High frequency traders …and some hedge funds trying to squeeze the indexers. Stocks and indices ‘gapped up’ on the open (which should be suspect and then either went sideways or fell to session lows for the rest of the day – until the final half hour and mostly the final FIFTEEN MINUTES and on the close! Hello??? This is serious information! The Dow had a range of 278 points closed at the session high!. NYSE stocks executed without the aid of the ETN market also rose to a solid but less impressive 1.09B vs 907M (one day following the lowest volume since May 25th), and again the pattern was the same – 480 million shares in the final 15 minutes…320M at the close. Be giddy if you like but do so at your own risk…unless you believe the EU bailout is a winner…feel lucky this time? 4 of the last 61 sessions have been less than 800M shares!!! Since 2/29 there have been just 15 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B (4.85B including ETNs)and just 14 have been above 900M – 945M is 12 month average. Since 11/1 there have been just 14, 1B share days…ten in 2012! Since 2/6 there have now been EIGHT sessions less than 700M shares. 146 of the last 165 sessions have been less than the 12 month average!

Advance/Declines were strong: +6.6x vs +1.3x vs +3.6x vs +1.8x vs -3.3x on NYSE and +5.8x vs -1.6x vs +2.3x vs +1.2x vs -2.9x on Nasdaq. Breadth was also strong: +6.2x vs +1.1x vs +4.3x vs +1.9x vs -8.6x!!! on NYSE and +5.9x vs -2.8x vs +3.2x vs +1.4x vs -6.5x! on Nasdaq.. New 52 week highs exploded to 405vs 149 (high was 420 on 3/26), while new lows fell by two-thirds to 41 vs 121 – not surprising with an absence sellers and a load of natural buyers! The ratio is now about +10x vs +1.2x vs 2x vs 1:1 vs -1.6x. The S&P VIX gapped down and collapsed by 133% to 17.08 -2.63…the low for 2012 is 13.66 on 3/16!

Here are the results of last 5 sessions: Dow +2.2% vs -0.2% vs +0.7% vs +0.3% vs -1.1%; Transports +2.8% vs +0.8% vs +0.5% vs +0.4% vs -1.9%; Dow Utilities +0.7% vs +0.1% vs +1.2% vs +0.3%; S&P 500 +2.5% vs -0.2% vs +0.9% vs +0.5% vs -1.6%; Nasdaq Composite +3%! vs -0.9% vs +0.7% vs +0.6% vs -2%; Nasdaq 100 +3.1%! vs -1.1%! vs +0.8% vs +0.6% vs -2%; Russell 2000 +2.9%! vs -0.1% vs +1.5% vs +0.4% vs -1.7%; NYSE Financials +2.8%! vs -0.4% vs +1.2% vs +0.6% vs -2.2%! (KBW Banks +2.7% vs -0.4% vs +1.4% vs +0.6% vs -2.7%; Nasdaq Banks +1.9% vs flat vs +1.5% vs +0.7% vs -2%; NYSE Financial Leaders: BAC +5.7%! vs -0.4% vs +2% vs +0.2% vs -4%!; F -5%!!!; GE +3.2% vs +0.4% vs +1.7% vs +1.4% vs -1.5%. Not leaders, but… JPM -0.4% vs -2.5% vs +3% vs +1.2% vs -1.9% vs +0.1%; C +3.9% vs -2.6% vs +1.3% vs –0.1% vs 4.4%!; WFC -0.1% vs -0.8% vs +1.3% vs +3.4% vs -1.8%; USB +2.3% vs flat vs +0.3% vs +0.5% vs -1.8%. NOTE:  On Friday BofA gapped up and traded in a range of $7.95 to $8.20. Citi likewise at $27.01-27.59 AND both had their big gains in the final fifteen minutes…as did everything else. Proceed at your own peril.

European stocks rallying again but this time on the continuation of our rally Friday…but our futures are doing nothing after attempting to rally!: FTSE +0.5% vs +1.4% vs -0.6% vs +0.6% vs +0.2%; CAC 40 +1.2% vs +2.6% vs -0.3% vs +0.5%; DAX +1% vs +2.5% vs -0.9% vs +0.3% vs flat; Nikkei FLAT vs +1.5% vs +1.7% vs +0.8% vs -0.8%; Hang Seng +2.2% vs +2.2% vs -0.8% vs +1% vs +0.5%; Korean KOSPI -0.1% vs +1.9% vs +0.1% vs flat vs -0.4%; Indian Sensex -0.2% vs +2.6% vs +0.1% vs +0.4% vs +0.1%. U.S. stock futures opened up but now stagnant: DOW -12; SPX +0.60; NDQ -0.75.

Bonds little changed after tanking on the global stock rally: 10 yr 1.64% +1/16 – record low 6/1 of 1.442%!; 30 yr 2.74% +1/8; Long TIP 0.53% +1/4. Record low yield of 0.347% on 6/1. The 5 yr TIP yields -1.04%;10 yr -0.50%. Bills 0.05% 1 month; 0.09% 3 months; 0.15% 6 months. Reverse Repo 0.32%. 3 mo. Libor 0.46%, and 0.73% – steady. European problem sovereign 10 years, Germany-benchmark: 1.57% -1 bp’s; Italy 5.68% -11!; Spain 6.20% -5; Greece 24.73% -22; Portugal 9.70% – flat; Ireland 6.10% -10! These declines in yields are in addition to the huge drops on Friday! All is well! Not!

Gold finally closed above $1600 again for the first time in eight sessions…and perhaps the last. It closed at $1604.20 +$53.80!!! A week ago Friday’s intraday low of $1555.60 was lowest since June 8th! The hit is $180 since 2/28! 2/28’s $1792.70 intraday high was not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. Res is $1592, the 40 day and $1604, the 50 day, then $1672, the 200 day. Relax…it is now $1591.20 -13.10! 5/2’s o/n low of $1526.70 was lowest since 12/29! Crude had a huge rally Friday double Thursday’s loss closing at $84.96 +$5.25. The intraday low on 6/28 of $77.28 was lowest since 10/5/11. Intraday high was $85.34 but it has closed below $85 since June 1!  RES at the 40 day (87.51), and the 50 day (90.85), then the 200 DAY (90.85), – 40/50 still plunging. First res $89.17, the 11/1/11 low, then $92.52-54, the lows of 12/16-12/17, a prior double bottom, MAJOR sup remains at $74.95, the 10/4/11 low!!! It is off overnight though to $83.40 -$1.56 – despite the Iran embargo!!!! Treacherous waters!!!

Friday’s rally requires some comment…in addition to being quarterend, the once again good feeling from Europe overrode weakness in OUR economy! Consumer Sentiment and the ISM were weak and tepid respectively…but as the saying goes…never let facts interfere with a  rally…especially on a day that can be manipulated and index funds have to buy on the close! For these two reasons…three actually, it could set us up for more disappointment. Especially if earnings disappoint, right?

Ah! TB is a perma-bear! Well, folks here is your first look at the REAL returns. Real in the sense of looking at them over time an  not just the first half. How conveniently we overlook the weakness of the current quarter and how it reduced the returns of the first quarter…worse…look at the 9 mo. vs 12 mo. returns on key indices! NOTE: Returns assume reinvestment of dividends in the underlying index!

Q2       YTD    9 mos     12 mos

Dow 30                        -1.9%  +6.8%  +20.5%    +6.6%

Dow Transports           -3.1%  +1.4%  +25.9%    -2.3%

Dow Utilities                 +5.6%  +5.5%  +14.1% +15.3%

S&P 500                      -2.8%  +9.5%   +22.4%   +5.4%

Nasdaq Comp              -4.8% +13.3%  +22.6%   +7.3%

Nasdaq 100                 -4.8% +15.4%  +23.3% +13.7%

Russell 2000                 -3.5%   +8.5%  +25.3%   -2.1%

NYSE Financials          -6.3% +11.4% +19.7%   -7.2%

Consider what your returns had been if you had been in cash for the entire third quarter of 2011 and the second quarter of this year! This seesaw effect is unproductive and pulls in laggards only to have their hopes dashed again. These are incredible swings on any historical basis and are more attributable to the good news/bad news in Europe and the lack of action by our dysfunctional Congress than economic fundamentals. Hail Mary’s!

Do you think that Friday’s payrolls reports will be good? Not hardly, as TB sees it, given the layoffs by state and local governments and lack of hiring by the Feds. This puts even more pressure on quarterly earnings reports.

In this week’s Barron’s they discuss the escalating battle in China between the communists and the capitalists and dramatically slower growth. Can the U.S. override this? Also, are we being set up for disappointment again in the EU bailout? TB believes so…too many problems…too few solutions.

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…and liars figure. Nowhere is this more obvious than the rhetoric over the Supreme Court decision. Obama embellishes the numbers (by counting all who will benefit from the 26 and under and pre-existing conditions clauses), while Romney distorts and misrepresents the costs (‘it will cost trillions’ and ‘a $500 million cut to Medicare’ as well as bureaucrats coming between you and your doctor). It would be fruitless for TB to discuss this so he once again defers to factcheck.org. This is not a liberal think tank and was founded by the Annanberg’s, friends of Nixon and Reagan. All they seek is the truth so you owe it to yourself and your country to read it and stop listening instead to people who spread lies and either make threats on Chief Justice Roberts or claim that he had to be threatened in some manner. This is disgusting. Please take the time to check it out yourself. Also, while it is true that consistently 45% of voters approve of the law, majorities approve of the various aspects cited above. Roberts decision was not a win for either side but to have thrown out the law entirely would have created chaos.

FactCheck = Obamacare

It is way past time for our elected officials to behave like adults and sit down and work out something that truly benefits the American people and doesn’t hide the true costs which were signed into law by Reagan requiring hospitals to treat people even if they cannot afford it. THAT was when something should have been done!

The argument that no one should be forced to pay for treatment is insulting. It is like motorcycle helmet laws which are regarded as taking away freedom to choose. Yes, but what happens when those people become quads and we, the people, have to pay to keep them alive? …or young people who still believe they won’t fall ill, and thus carry no health insurance? Pre-existing conditions should be covered…required by our mobile society but that requires that ALL people be covered.

What kind of people have we become? Why do we continue to focus solely on debt reduction without seeing the impact it will have on growth? After all, those funding the movement are doing it for their own greedy reasons…the same people who in 2009 (latest data available) received 93% of the wealth gains in this country? Think about it.

Simon Johnson has written another very informed piece on Jamie Dimon and his continuing to serve on the board of the NY Fed…also on Stephen Friedman, the former chairman who bought Goldman shares while the Fed was deciding to make them a bank. These are very troubling issues…here is the link:

http://baselinescenario.com/2012/06/30/three-more-governance-questions-for-the-new-york-fed/

Hope you have a great week…especially Wednesday’s Fourth of July…then come back ready to work…if you choose!

TB

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6/20/112…public pensions and more

June 20, 2012 at 8:30 am · Filed under economy, financial, markets ·Tagged , ,

From Keep Calm and Carry On: “your company is bankrupt, and our country is in a state of crisis, but you get to keep $480 million. I have a question: is that fair?” –Henry Waxman, questioning Lehman Brothers CEO Richard Fuld….where is our anger at WS?

Bloomberg Quote of the Day: “A tradition without intelligence is not worth having.”

 – T.S. Eliot…sounds like he knew about our primary election system. TB

Bloomberg Top Stories:

*King Overruled in Push for $78 Billion Expansion of Bond-Purchase Program

*Spanish Yields Drop With European Stocks Little Changed; all eyes on the Fed?

*Italy Banks’ Waning Loan Quality Hurts Efforts to Increase Capital Levels

*Fed Seen Expanding Operation Twist Wile Avoiding More Quantative Easing

*Hollande Says Europe Considering Using Rescue Fund to Acquire Italian Debt!

*Banks Face $15 Billion Collateral Need on Spain Downgrade

*JPMorgan Poised to More Than Double Its Return on MF Global’s LME Shares

*Slowest Monetary Velocity in 53 Years Stymies Fed Stimulus – think about that!

*Greek Political Leaders Poised to Agree on Three-Way Governing Coalition

*Americans Say They Are Better Off Since Obama Took Office in Latest Poll – hmmm

TB is not trying to make excuses but the only rational explanation for the rally yesterday is wishing and hoping…for the Fed to embark on a new program: QE3. It failed last time and they have taken a lot of flak for it so given the crisis ‘easing’ in Europe TB thinks there will be disappointment in the outcome of the FOMC meeting. Let the games begin.

A strong rally but volume was weak as it has been in seven of the last eight sessions. NYSE volume was higher at 3.8B vs 3.2B shares but aside from Friday’s 4.31B share day the range has been 3.3B-3.38B shares). Since this was positioning ahead of the FOMC announcement, don’t expect miracles…unless someone is trying to save the quarter, but the where do we go in July? June 1st’s 4.6B was highest since March 16th.  NYSE stocks executed without the aid of the ETN market rose slightly to 772M vs  707M shares vs 1.51B…so it too is 7 for 8 at <800M shares, well below the average since 3/1 of 818M shares. 30 of the last 53 sessions have been less than 800M shares!!! Since 2/29 there have been just 12 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B and just 11 have been above 900M – 950M is 12 month average. Since 11/1 there have been just 12 1B share days…eight in 2012! Since 2/6 there have been SEVEN sessions less than 700M shares. 140 of the last 157 sessions have been less than the 12 month average!

Advance/Declines were positive for a third day – and strong: +5.1x vs +1.4x vs +2.3x on NYSE and +3.2x vs +1.1x vs +2.3x on Nasdaq. Breadth was even better: +5.2x vs -1.1x vs +3.9x on NYSE and +5.7x vs +2x vs +5x on Nasdaq. New 52 week highs rose sharply to 262 vs 185 (high was 420 on 3/26), while new lows imploded to 39 vs 95. The ratio remains positive at +6.7x +2x vs +1.5x vs -1.4x vs -1.7x vs -1.6x! The S&P VIX however, barely budged (?) to 18.38 +0.6 but still below the  40/50 day at 20.75

Here are the results of last 5 sessions,: Dow +0.8% vs -0.2% vs +0.9% vs +1.2% vs -0.6%; Transports +1.1% vs +2%!!! vs +0.7% vs +1% vs -0.6%; Dow Utilities -0.2% vs +0.2% vs +0.5% vs +0.7% vs -0.1%; S&P 500 +1% vs +0.1% vs +1% vs +1.1% vs -0.7%; Nasdaq Composite +1.2% vs +0.8% vs +1.3% vs +0.6% vs -0.9%; Nasdaq 100 +1.1% vs +0.8%! vs +1.2% vs +0.5% vs -0.7%; Russell 2000 +1.8% vs +0.2% vs +1.2% vs +1.3% vs -1.2%; NYSE Financials +1.9% vs -0.6% vs +1.4% vs +1.1% vs -0.5% (KBW Banks +2% vs -0.5% vs +1.5% vs +1.5% vs -0.2%; Nasdaq Banks +1.5% vs -0.5% vs +1.1% vs +1.4% vs -0.7%); NYSE Financial Leaders: BAC +4.5%??? vs -1.8% vs +2.9% vs +2.1% vs +0.1%; GE +1.3% vs +1.4%; C +3.5% vs -2.7% vs +1.4% vs +0.9% vs -0.2%. Not leaders, but… JPM +2.2% vs -1.2% vs +1.1% vs +1% vs +1.6%; WFC +1.5% vs flat vs +1.3% vs +1.4% vs +0.9%; USB +0.8% vs -0.2% vs +1.8% vs +1.5% vs -0.3%. NOTE BofA, finally broke out of the range of $7.92 to $6.72 since 5/21, closing at $8.11…can anyone give a good reason why?

European stocks mixed, Asia stronger: FTSE +0.4% vs +1% vs +0.3% vs  +0.4%; CAC 40 -0.2% vs +0.5% vs -0.1% vs +1.6%; DAX +0.1% vs +0.6% vs +0.6% vs +1.3%; Nikkei +1.1% vs -0.8% vs +1.8% vs flat vs -0.2%; Hang Seng +0.5% vs -0.1% vs +1% vs +2.3%! vs -1.2%; Korean KOSPI +0.7% vs flat vs +1.8% vs -0.7% vs +0.7%; Indian Sensex +0.2% vs +0.9% vs -1.3% vs +1.6% vs -1.2%. U.S. stock futures little changed: DOW +8; SPX +1.20; NDQ +5.75.

Bonds weaker after being hammered yesterday on the stock rally: 10 yr 1.64% -1/8 – record low 6/1 of 1.442%!; 30 yr 2.74% -1/4; Long TIP 0.51% -5/16. Record low yield of 0.347% on 6/1. The 5 yr TIP yields -1.18%; 10 yr -0.55%. Bills 0.05% 1 month; 0.09% 3 months; 0.14%. Reverse Repo 0.21%. 3 mo. Libor 0.47%, and 0.74% – steady. European problem sovereign 10 years, Germany-benchmark: 1.60% +7 bp’s; Italy 5.79% -10; Spain 6.79% -17; Greece 25.44% +23; Portugal 9.93% -5 Ireland 7.01% +3 .  

Gold remains above $1600 remaining above critical support at $1608-17 at $1623.20 -$3.800. Since breaking above on June 1, it HAD traded in a narrow range of $1610-1642 before breaking down again. The hit is $167 since 2/28! 2/28’s $1792.70 intraday high was not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. Res/sup is $1607, the 40 day and $1616, the 50 day, then $1683, the 200 day. It is now $1606.10 -$17.10! 5/2’s o/n low of $1526.70 was lowest since 12/29! Crude rose slightly one day after a NEGATIVE key reversal with a low of $82.04, closing $84.03 +.76. It has been below $85 since June 1! 6/12’s cycle low was $81.07!  RES at the 40 day (92.38), and the 50 day (94.47), then the 200 DAY (96.31), – all slipping. First res $89.17, the 11/1/11 low, then $92.52-54, the lows of 12/16-12/17, a prior double bottom, MAJOR sup at $74.95, the 10/4/11 low!!! It is now $84.04 +.01.

What will happen today if the FOMC does little or nothing as TB expects. The Fed has taken heat for the failure of the first two QE’s to stimulate the economy and will likely remain on hold as the crisis in Europe has been mitigated…for now!

(Correction) Next significant date for markets is Tuesday June 26th – last day for T+3 trading ahead of quarter end.

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…TB has mentioned the former treasurer of Boots LTD, John Ralfe who had the wisdom and guts to sell the stock portfolio from the company’s pension fund in late 1999 and shift to bonds. He was ridiculed for this but in the end switching from an overfunded portfolio of stocks to bonds with yields of around 8% has kept the portfolio sound.

The brilliant actuaries have long assumed an 8% return on stocks as that was an average return…but after the 2000 collapse they never gave it a second thought. Worse, the portfolios became way out of balance yet they never suggested rebalancing thus worsening the pain. That is why Ralfe insists that stocks are an improper way of funding a pension plan. The reason should be obvious: one or more underperforming years quickly moves even an overfunded plan to underfunded…it is all about cash flows whereas stocks are measured on performance which masks the condition.

TB once heard an official of Wisconsin’s pension fund say, “we are underfunded but even if we were fully funded we would still be underfunded.” TB ran into him after he made that comment and asked him about it. He said that the assumption of an 8% return in perpetuity makes it impossible for them to become truly funded.

The state and local governments of this country (and the rest of the world) have enormous unfunded liabilities and are now trying to address them. It is criminal that they refused to recognize the obvious at least after the 2000 crash. Yet for political reasons they ignored it until it hit a crisis stage…wishing and hoping again.

But now it is too late to fund the plans with bonds as yields are so low that they would actually worsen the condition. So they are taking steps to correct by raising retirement ages, employee contributions and payouts. Unfortunately, many of these funds have legal restrictions which don’t allow this so they can only make them apply to new employees which will not help the situation. The only answer for these is to file for bankruptcy (but states cannot do this), and restructure the plan. How well this will work remains to be seen.

What TB hasn’t seen addressed is stopping the wage escalation the system produces, limits on overtime and unused vacation which get paid out at the highest rate when the employee retires. This does not happen in the private sector because they are treated as contingent liabilities and thus limited in carryover.

But even if we were to solve this problem think of the number of retirees with reduced benefits and the impact on the economy. We are playing a huge game of Whack-a-Mole where by addressing the parts separately we are causing more risk in other areas.

Speaking of risk, Jamie Dimon refused to say he would allow his bonus to be clawed back deferring to the board which governs his compensation. This is the ultimate cop-out! Dimon is not only CEO but chairman and has a board that doesn’t have a clue about the operations of a major bank and effectively serves at his will. Wake up people!

Mitt Romney got hit again when the latest poll shows people feel better off now than before Obama took office (despite what Mitt says)…this should have been obvious as we were at the depths of the financial crisis. Many of the steps were taken prior to him taking office which increased the debt dramatically (yet Romney continues to blame him), tax revenues declined sharply as one would expect (yet the answer is seen as cutting spending to match these historically low levels), and the average recovery period following a financial crisis is not four but eight years! With crude prices plunging he can no longer blame Obama for this…but note that pump prices are again rising, despite crude being at $84 and there being a domestic glut. What we want to hear from Romney is exactly what his plan is not fallacies about what this president has done.

As for Obama’s recent decision on illegal immigrants, the most that he has said is he sees it as political. Of course that is true because especially in an election year all things are. But any attempt to change immigration status has been rebuffed by one wing of the GOP and thus nothing can get done. That is a failure of leadership. As for whether the decision was right or wrong, two-thirds agree that is an issue of fairness. This obscures the fact that the U.S. like the rest of the industrialized world has a shortage of workers to support the elders. Are we to deport those we have educated in conditions like this? You decide.

Have a great day!

TB

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6/18/12…the CEO as Captain

June 18, 2012 at 7:39 am · Filed under economy, financial, markets ·Tagged , , ,

From Keep Calm and Carry On: “Success is the ability to go from one failure to another with no loss of enthusiasm.” – Winston Churchill …especially if you are a CEO! TB

“Failures are finger posts on the road to achievement.” – C.S. Lewis – do tell!!! TB

This week’s economic calendar is fairly light with an emphasis on housing data. However, the highlight of the week will be the FOMC Meeting (Tuesday & Wednesday) which will conclude with the release of the member’s central tendency forecasts and Chairman Bernanke’s press conference. We will also get May Housing Starts (Tuesday), May Existing Home Sales, the June Philadelphia Fed Survey, and May Leading Indicators. Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA.

Bloomberg Top Stories:

*Spanish Bond Yields Climb to Euro-Era Record as Stocks Rise, Futures Fall

*Euro Chiefs Signal Willingness to Adjust Greek Terms With New Government

*Yields in Spain at 7% Show Investors Slam Door After Greece – and why not???

*Bond-Swap Divide Widens as Europe Turmoil Fuels Distortion – more to come!

*European Leaders Will Vow to Use All tools to Tackle Crisis, Draft Shows

*Nervous Henrys Dragging Down U.S. Recovery as Wealth Effect Fades

The market goes to great lengths to embarrass TB as it held following Friday’s options expiry.  The Dow closed up 115, just 7 points off the session high and managed to take out the 40 day (12706) and the 50 day (12752) moving averages. But did the rally make sense? Was it because we have just two weeks until quarter end and those caught short got nervous? The increase in volume, even though it was options expiration – and a major one – indicates there was real retail buying…but for how long?

After five straight weak sessions, NYSE stock volume surged to 4.31B shares vs 3.64B shares (range wass 3.3B-3.38B shares). June 1st’s 4.6B was highest since March 16th.  NYSE stocks executed without the aid of the ETN market (where the high freq geeks play) nearly doubled to 1.51B shares vs  779M shares…this after FIVE straight <800M shares well below the average since 3/1 of 818M shares. 28 of the last 51 sessions have been less than 800M shares!!! Since 2/29 there have been just 12 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B and just 11 have been above 900M – 950M is 12 month average. Since 11/1 there have been just 12 1B share days…now eight in 2012! Since 2/6 there have been SEVEN sessions less than 700M shares. 138 of the last 155 sessions have been less than the 12 month average! Advance/Declines were positive for a second day: +2.3x vs +2.4x vs -2.1x vs +3.6x vs -3.9x on NYSE and +2.3x vs +2.3x vs -2.3x vs +2.3x vs -3.4x on Nasdaq. Breadth was similar: +3.9x vs +3.7x vs -2.2x vs +6x v -11.3x!!! on NYSE and +5x! vs +1.8x vs -2.4x vs +3.9x vs -6.5x on Nasdaq. New 52 week highs rose by 50% to 155 vs 107 (high was 420 on 3/26), while new lows dropped to 97 vs 150.. The ratio turned positive which has not been the norm of late to +1.5x vs -1.4x vs -1.7x vs -1.6x! vs +1.5x vs +1.5x vs +2x vs +2.5x vs -2x vs -8.7x!!! The S&P VIX dipped buy by far less than one would expect given the magnitude of the gain to 21.11 -.57 but remains slightly above the 40/50 day at 20.75

Here are the results of last 5 sessions,: Dow +0.9% vs +1.2% vs -0.6% vs +1.3% vs -1.1%; Transports +0.7% vs +1% vs -0.6% vs +0.9% vs -1.4%; Dow Utilities +0.5% vs +0.7% vs -0.1% vs +0.3% vs -0.4%; S&P 500 +1% vs +1.1% vs -0.7% vs +1.2% vs -1.3%; Nasdaq Composite +1.3% vs +0.6% vs -0.9% vs +1.2% vs -1.3%; Nasdaq 100 +1.2% vs +0.5% vs -0.7% vs +1.2% vs -1.7%!!!; Russell 2000 +1.2% vs +1.3% vs -1.2% vs +1.2% vs -2.4%!!!; NYSE Financials +1.4% vs +1.1% vs -0.5% vs +1.6% vs -1.7% (KBW Banks +1.5% vs +1.5% vs -0.2% vs +2% vs -2.3%; Nasdaq Banks +1.1% vs +1.4% vs -0.7% vs +1.6% vs -2.1%); NYSE Financial Leaders: BAC +2.9% vs +2.1% vs +0.1% vs +2.9% vs -3.7%; C +1.4% vs +0.9% vs -0.2% vs +4.3% vs -4.7%. Not leaders, but… JPM +1.1% vs +1% vs +1.6% vs +2.9% vs -2.6%; WFC +1.3% vs +1.4% vs +0.9% vs +1% vs -1.4%; USB +1.8% vs +1.5% vs -0.3% vs +1% vs -0.8%. NOTE BofA, despite the % change has been in a range of $7.92 to $6.72 since 5/21!

European stocks mixed after a knee-jerk rally on Greek elections, Asia strong sans India: FTSE +0.3% vs  +0.4% vs -0.7% vs -0.1% vs +0.3%; CAC 40 -0.1% vs +1.6% vs -0.5% vs -0.2% vs +0.4%; DAX +0.6% vs +1.3% vs -0.7% vs -0.4% vs +0.4%; Nikkei +1.8% vs flat vs -0.2% vs +0.6% vs -1%; Hang Seng +1% vs +2.3%! vs -1.2% vs +0.8% vs -0.5%; Korean KOSPI +1.8% vs -0.7% vs +0.7% vs +0.3% vs -0.7%; Indian Sensex DOWN 1.3% vs +1.6% vs -1.2% vs +0.1% vs +1.2%. U.S. stock futures weak after gapping up on the open and are now at session lows: DOW -50 – range 140 pts!; SPX -4.60; NDQ -2.50.

Bonds modestly rallying: 10 yr 1.56% +1/8 – record low 6/1 of 1.442%!; 30 yr 2.66% +7/8; Long TIP 0.45% +3/4. Record low yield of 0.347% on 6/1. The 5 yr TIP yields -1.22%!!!; 10 yr -0.60%. Bills 0.05%!!! 1 month; 0.09% 3 months; 0.14%. Reverse Repo 0.33%! still rising! 3 mo. Libor 0.47%, and 0.74% – steady. European problem sovereign 10 years, Germany-benchmark: 1.40% -3 bp’s; Italy 6.02% +12; Spain 7.07%!!! +27; Greece 24.97% -67!!!; Portugal 10.02% +1; Ireland 7.10% +1.  

Gold remains above $1600 closing well above critical support at $1608-17 at $1628.10 +$8.50. Since breaking above on June 1, it HAD traded in a narrow range of $1610-1642 before breaking down again. The hit is $163 since 2/28! 2/28’s $1792.70 intraday high was not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. Res/sup is $1608, the 40 day and $1617, the 50 day, then $1685, the 200 day. It is now $1621.40 -$6.70. 5/2’s o/n low of $1526.70 was lowest since 12/29! Crude barely budged on Friday closing $84.03 +.12. 6/12’s cycle low was $81.07! On 4/26 it closed at $104.55…that is a 21% drop! RES at the 40 day (93.35), and the 50 day (95.24), then the 200 DAY (96.36), – all slipping. First res $89.17, the 11/1/11 low, then $92.52-54, the lows of 12/16-12/17, a prior double bottom, MAJOR sup at $74.95, the 10/4/11 low!!! It is now $83.16 -.88 after gapping up on the open but then plunging below Friday’s narrow range setting up a key reversal (higher high, lower low, close below prior low).

The strong rally Friday which held following options expiry still makes no sense given the significance of the Greek elections and weak conditions in Europe. This plus a Congress that has signed off for the session – figuratively – even when significant problems should be addressed does not…at least to this writer…bode for strength in the financial markets. Overnight Futures gapped up and soared on the news, but not European markets are mixed, Asia strong ex-India and U.S. futures which gapped up 140 points are now negative.

Next significant date if Tuesday May 26th – last day for T+3 trading ahead of quarter end.

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…the best job in the U.S. Navy is captain of a ship…it is like being God…it pays relatively well and you are your own boss…until something goes wrong…even if it wasn’t your fault. That is accountability.

No captain knows everything that is going on within his ship yet he is responsible regardless. Take the sad case of Captain Lloyd Bucher of USS Pueblo – the spy ship captured by the Koreans who was held accountable even though he followed his orders to the letter, requested help when attacked by Korean gunboats, and had no idea what was contained within the bulk of his ship – the spying gear. He had no idea how long it would take to destroy the equipment and documents. Tough luck, Captain!

Now take a modern CEO of a multi-dimensional financial corporation. When all goes well he takes full credit…reaps huge bonuses, but when things go bad he feigns ignorance. He is defended by those who say it is so complex that no one can have control over so many areas and thus doesn’t know what is going on in all of his departments but relies on those he appoints.

Thus when things go badly, he fires the cause of the problem…often with a nice settlement so that they keep their mouths shut, and still gets his bonus…or retains the ones he received even though they were the result of the underperforming unit.

The situation is worse when he is chairman and CEO as is Mr. Dimon of JPMorganChase. Even though the bulk of profits from the prior year came from a division that was supposed to mitigate risky assets held by the bank, this group (the CIO), made enormous profits…why didn’t Mr. D question how outsized profits can occur from true hedging? Yet, despite prodding from a Senator he didn’t back down from his statement on clawbacks from the perps but not his own ill-gotten gains (i.e. undeserved).

Also, he omitted informing shareholders of the $363 million loss from the fraud perpetrated against American Century while taking another bonus…as well as for the man who orchestrated it J.E. Staley…who also was promoted. This was done by having the records sealed. TB wishes he could have received an $11 million bonus for costing the bank money AND get a promotion!

True, Dimon guided the bank through the crisis…but only because the ‘balanced’ book of credit default swaps stacked one atop another didn’t result in more counterparties unable to pay. Despite this he fights for less regulation, not more, and appears to have beat the Senate at the hearing.

Lastly, no captain is rewarded for failure…either his career is deadended or he is out of the Navy…but for a CEO, failure means a nice fat golden parachute to tide him over until he gets yet another job.

This is not being responsible or accountable…but then, you decide…

Hope you all have a great week!

TB

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6/15/12…what we don’t want

June 15, 2012 at 7:56 am · Filed under economy, financial, markets ·Tagged ,

From Keep Calm and Carry On: “It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.” – Harry S. Truman

“The only function of economic forecasting is to make astrology look respectable.- John Kenneth Galbraith

Bloomberg Quote of the Day: “We never know the worth of water till the well is dry.” – Thomas Fuller…or the value of freedom and democracy…ask the Greeks! TB

Next week’s economic calendar is fairly light with an emphasis on housing data. However, the highlight of the week will be the FOMC Meeting (Tuesday & Wednesday) which will conclude with the release of the member’s central tendency forecasts and Chairman Bernanke’s press conference. We will also get May Housing Starts (Tuesday), May Existing Home Sales, the June Philadelphia Fed Survey, and May Leading Indicators. Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA.

Bloomberg Top Stories:

*Stocks Rise With Commodities on Central Bank Stimulus Bets – operative word: bets

*Central Banks Warn Greek-Led Eu4ro Stress Threatens to Roil World Economy – duh!

*Draghi Fails to Find Clarity Communicating Shared Path Out of Euro Crisis –can you?

*EU Leaders to Press for Growth Measures as Draghin Sees No inflation Risk – none?

U.K. Export Slump Raises Recession Risk Risk as King Steps Up Response – response?

*Ex-Soros Advisor Fujimaki  Says Japan Likely to Default in Debt in Five Years – !!!

 *Irish Tell Spain to Imagine the Worst and Burn Bank Bondholders in Cleanup – irate?

Egypt’s Dissolution of Parliament Sparks Opposition Call for Protest Rally – messy?

*Obama Has Few Options to Contain Europe’s Decline as G-20 Talks Approach

California Budget Heads Toward Vote as Midnight Deadline Looms – dysfunctional!

Ah, it was a rally but given the trifecta of bad economic releases (CPI -0.3% BUT Core +0.2%…drop was oil prices; weekly jobless claims rose; Trade Deficit widened), any thinking person must ask: WHY??? Nokia announced 10k in job cuts…sure they are Finnish but HP is laying off 27k (this morning Moody’s cut them to junk). Meanawhile demonstrations in Greece ahead of the elections  while the Irish tell them to nail the bondholders! Ah, it is options expiry and the volatility has been…well…volatile since May 31st. Yesterday’s 10.7% decline is no exception:

Date Close/Range/ % Chg: 5/31 24.06/ 25.46-22.78/n/a; 6/1 26.66/26.71-24.94/+10.8%; 6/4 26.12/27.73-25.72/-3%; 6/5 24.68/25.90-24.50/-5.5%; 6/6 22.16/23.89-22.06/-10.2%; 6/7 22.48-20.74/-2%; 6/8 21.23/20.29/-2.3%; 6/11 23.56/23.56-19.87/+9.8%; 6/12 22.09/23.90-22.09/-6.2%; 6/13 24.27/24.93-22.66/+9.9%; 6/14 21.68/24.81-21.55/  -10.7% – that is four session with changes of 10% and a range of 39.6%??? Of course, the latter part, including the back-to-back 10% changes is explained by options expiry in a THIN market driven by high frequency trading…only!?! Watch out for today! Only the close matters!

For a FIFTH straight session NYSE stock volume was weak at 3.64B shares (range is 3.3B-3.38B shares). June 1st’s 4.6B was highest since March 16th.  NYSE stocks executed without the aid of the ETN market (where the high freq geeks play) rose to a still weak 779M vs 770M shares, FIVE straight <800M shares and well below the average since 3/1 of 818M shares. 28of the last 50 sessions have been less than 800M shares!!! Since 2/29 there have been just 11 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B and just ten have been above 900M – 950M is 12 month average. Since 11/1 there have been just eleven 1B share days…only seven in 2012! Since 2/6 there have been SEVEN sessions less than 700M shares. 138 of the last 154 sessions have been less than the 12 month average! Advance/Declines reversed yet again – still seesawing: +2.4x vs -2.1x vs +3.6x vs -3.9x vs +2.4x vs -1.2x vs  +7.1x on NYSE and +2.3x vs -2.3x vs +2.3x vs -3.4x vs +2x vs -1.5x vs +4.7x on Nasdaq. Breadth was similar: +3.7x vs -2.2x vs +6x v -11.3x!!! vs +3x vs -1.4x vs +11.8x!!! on NYSE and +1.8x vs -2.4x vs +3.9x vs -6.5x vs +3.9x vs -2.9x vs +12.4x!!! on Nasdaq. New 52 week highs rose but with no significance to 107 vs 78 (high was 420 on 3/26), while new lows rose again to 150 vs 134.. The ratio remains NEGATIVE after just four straight positives at -1.4x vs -1.7x vs -1.6x! vs +1.5x vs +1.5x vs +2x vs +2.5x vs -2x vs -8.7x!!! The S&P VIX once again reversed to 21.68 -2.48 with an intraday high of 24.81 still above the 40/50 day at 20.70

Here are the results of last 5 sessions, not swings, following three straight rally days: Dow +1.2% vs -0.6% vs +1.3% vs -1.1% vs +0.8%; Transports +1% vs -0.6% vs +0.9% vs -1.4% vs +1.1% vs -0.1%; Dow Utilities +0.7% vs -0.1% vs +0.3% vs -0.4% vs +0.4%; S&P 500 +1.1% vs -0.7% vs +1.2% vs -1.3% vs +0.8%; Nasdaq Composite +0.6% vs -0.9% vs +1.2% vs -1.3% vs +1% vs -0.5% vs +2.4%; Nasdaq 100 +0.5% vs -0.7% vs +1.2% vs -1.7%!!! vs +0.9% vs -0.4% vs +2.4%; Russell 2000 +1.3%! vs -1.2%! vs +1.2% vs -2.4%!!! vs +1.2% vs -0.6% vs +2.6%; NYSE Financials +1.1% vs -0.5% vs +1.6% vs -1.7% vs +0.5% (KBW Banks +1.5% vs -0.2% vs +2% vs -2.3% vs +1.7%; Nasdaq Banks +1.4% vs -0.7% vs +1.6% vs -2.1% vs +1.3%); NYSE Financial Leaders: BAC +2.1% vs +0.1% vs +2.9% vs -3.7% vs +1.9% vs -2.9% vs +7.6%; JPM +1% vs +1.6% vs +2.9% vs -2.6% vs +2.7% vs -0.8% vs +3.4% vs +3.2% vs -2.9% vs -3.7%!; C +0.9% vs -0.2% vs +4.3% vs -4.7% vs +3.2% vs -0.9% vs +5.3%! vs +3.7% vs -2.2% vs -4.2%. Not leaders, but…WFC +1.4% vs +0.9% vs +1% vs -1.4% vs +0.8% vs +0.7% vs +1.5% vs +1.5% vs -0.5% vs +1.1% vs -5.9%!!! USB +1.5% vs -0.3% vs +1% vs -0.8% vs +2% vs -0.4% vs +1.6% vs +1.4%. NOTE BofA, despite the % change has been in a range of $7.92 to $6.72 since 5/21! Isn’t that special for a flash trader? You bet it is!

The only markets wackier than ours are the Europeans who act like every day is a crisis or a solution to it:

Global stocks rallying, except Japan and Korea: FTSE +0.4% vs -0.7% vs -0.1% vs +0.3% vs -0.6%; CAC 40 +1.6% vs -0.5% vs -0.2% vs +0.4% vs -0.7%; DAX +1.3% vs -0.7% vs -0.4% vs +0.4% vs -0.5%; Nikkei FLAT vs -0.2% vs +0.6% vs -1% vs +2%; Hang Seng +2.3%! vs -1.2% vs +0.8% vs -0.5% vs +2.4%; Korean KOSPI -0.7% vs +0.7% vs +0.3% vs -0.7% vs +1.7%; Indian Sensex +1.6% vs -1.2% vs +0.1% vs +1.2% vs -0.3%. U.S. stock futures again oscillating in a narrow range…what do you expect on options expiry? DOW +31; SPX +1.60; NDQ +5.75.

Bonds modestly rallying: 10 yr 1.59% +7/16 – record low 6/1 of 1.442%!; 30 yr 2.70% +7/8; Long TIP 0.49% +1-5/16. Record low yield of 0.347% on 6/1. The 5 yr TIP yields -1.14%; 10 yr -0.55%. Bills 0.05%!!! 1 month; 0.10% 3 months; 0.14%. Reverse Repo 0.31%! rising! 3 mo. Libor 0.47%, and 0.74% – steady. European problem sovereign 10 years, Germany-benchmark: 1.46% -3 bp’s; Italy 5.99% -11???; Spain 6.81% -4; Greece 26.03% -137???; Portugal 10.02% -13; Ireland 7.04% -8.  

Gold remais above $1600 and slightly above critical support at $1608-17, closing at $1619.60 +.20??? Since breaking above on June 1, it HAD traded in a narrow range of $1610-1642 before breaking down again. The hit is $174 since 2/28! 2/28’s $1792.70 intraday high was not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. Res/sup is $1608, the 40 day and $1617, the 50 day, then $1686, the 200 day. It is now $1622.70 +$3.10. 5/2’s o/n low of $1526.70 was lowest since 12/29! Crude finally had a gain of more than $1 but still inconsequential. 6/12’s cycle low was $81.07! On 4/26 it closed at $104.55…that is a 21% drop! RES at the 40 day (93.81), and the 50 day (95.59), then the 200 DAY (96.39), – all stable again. First res $89.17, the 11/1/11 low, then $92.52-54, the lows of 12/16-12/17, a prior double bottom, MAJOR sup at $74.95, the 10/4/11 low!!! It is now $84.03 +.12. No QE3, no oil rally!

Watch the markets today but remain sidelined at options expiry – especially given the volatility cited above means nobody knows who is long or short. All that matters is the close…if that as retail volume is barely visable.

We are in the summer doldrums and don’t you wish you had sold in May and gone on vacay? Egads!

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

(TB meant to mention yesterday the quote at the top today on not being special which coupled with the book mentioned and followed by Dimon’s testimony yesterday wherein he assumed no responsibility for the losses which only a fool (or senator) would believe, sparked the column. We do live in interesting times…sadly. TB)

…last Friday’s message was ‘what we want’ – sarcastically. Today’s is what we don’t want and more serious…frighteningly so.

We don’t want another four years of Obama because as Mitt says, ‘he has no plan…Mitt HAS a plan but won’t tell you because if he did you wouldn’t vote for him (his words, not TB’s!).

We don’t want gay marriage as that is a holy union between a man and a woman…never mind that church attendance is down and 50% of hetero marriages end in divorce…many multiple times…like the Donald’s. In Minnesota we have a gay marriage ban on the ballot that has no been opposed by Target and General Mills. Don’t we have enough to worry about…hey, weren’t jobs the number one issue…rather than spend our time on matters that are none of our business?

We don’t want a woman to have the right to choose…even in rape or incest instances. Rush Limbaugh calls a woman a ‘slut’ and ‘whore’ for testifying (she was asked to) before Congress on birth control access. Where was the outrage at this? Especially from those stalwart protectors of our Constitution. After the child is born she AND the child are on their own. In fact, we want to cut back on those food stamps and other safety nets which stopped us from going into a full-blown depression.

We don’t want higher taxes because that would violate a ‘pledge’ to Grover Norquist who answers to no one and is a damned fool…and thanks to that pledge a wealthy one. No sir…not even temporary cuts or loopholes…oh they say they will fix those IF you elect them but you know it will never happen.

We don’t want the financial sector to ever do to us what they just did but under the lead of Jamie Dimon…who has replaced Sandy Weill and who studied at his knee…we let him control the legislation while our Congress mildly chastises him for a loss, and can’t even tell the difference between proprietary trading and a hedge (hint: in a true hedge you cannot have a gain or loss that significantly differs from the basis!). No, we can’t even get him to admit to clawbacks against his bonuses which were directly attributable to the gains on those hedges! Damn, we are one stupid people! Right Jamie? Have a drink!

We want to destroy unions…municipal ones…but will that (while correcting the imbalances) destroy incomes as eliminating private sector labor unions did. Nice trade: your pension for a 401(k). Meanwhile…not coincidentally…CEO compensation soared and continues to feed on itself.

We want our kids and grandkids to live better than we do but we don’t want to see the budget balanced by reducing spending and appropriate tax increases. We can’t see that doing it all on one side…on the backs of those who have suffered most…will only drive us deeper into recession…which statistically speaking we are not in…but…

No what we don’t want is a continuation of the status quo but in so doing we insure that it will happen. We still engage in wars of which we have no reason to be involved in…by volunteer armies who are beginning to lose it. We don’t want to be what we are. So???

…by the day more and more are writing articles similar to TB’s and there is a growing sense of frustration…what say you? Are you in?…or out?

Have a great weekend,

TB

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