Traderbill's Financial Markets Weblog

Quotes of the Day:

 

“Salus Populi Suprema Lex Esto ultimate …Suum cuique.”  Let the ultimate welfare of the people be to each his own –Cicero 55B.C. – you think we were the first to have budget problems? But he did NOT say: the budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance. This has been making the rounds three years…does TB need to say what group propagated it?

 

Bloomberg Top Stories:

*Orders For Durable Goods in U.S. Climb 2.2% on Demand for Cars, Computers

*Stocks Fall in Europe as U.S. Futures Lose Gains on Durable Goods Report – twice in a row

*Greek Election Gridlock risks Derailing Terms of Bailout Plan – ye gads…again???

*Disposable Incomes in U.K. Plunge Most since 1977 on ENERGY Costs! – growth? Inflation?

*Subprime Bulls Trim Bets as Rally Raises Specter of 2011 Redux – go fish!

*Gross Will Change Ticker Symbol on Month-old Pimco ETF to ‘BOND’ – James Bond?

*China Overtaking U.S. With Power from Coal that Recaptures Carbon – we need to THINK!

*JetBlue Pilot in Onboard Rant Is Called a ‘Consummate Professional’ by CEO – like Bales?

 

Volume was steady at a weak 3.5B vs 3.52M shares on NYSE listed stocks. Also, NYSE stocks executed on the Big Board fell slightly to 730M shares vs 755M, still about 250M below the 12 month average. Since 2/29 there has only been one 1B+ share day, 3/16’s high for 2012 and the average has been just 817M shares, 200M below average! Since 11/1 there have been just eight 1B share days…only three in 2012! Since 2/6 there have been FIVE sessions less than 700M shares. 91 of the last 99 sessions have now been less than 1B! Advance/Declines were negative: -1.4x vs +3x vs +2.4x vs -2.8x! vs -1.1x on NYSE and -1.6x vs +3.2x vs +2.3x vs -2.2x vs +1.1x on Nasdaq. Breadth was similar: -2.2x vs +5.6x! +3x vs -7x!!! vs -1.1x vs on NYSE and -1.1x vs +4.2x! vs +2x vs -2.2x vs +1.1x on Nasdaq. New 52 week highs dipped to 366 vs 420, while new lows were steady at 28 vs 29. The ratio is now +12x vs +15x. The S&P VIX ROSE to 15.54 +1.97. Friday 3/16’s intraday low of 13.66 was lowest since 6/20/07’s 12.75.

 

Caution: the quarter has ended for hedge funds due to T+3 settlement, the rest of us have to wait till Friday. Note that yesterday, they did little having made their buys on Monday…good luck! They can do whatever they please for the rest of the week!

 

Here are the results of the last five sessions: Dow -0.3% vs +1.2% vs +0.3% vs -0.6% vs -0.4%; Transports -0.2% vs +1.4% vs -0.1% vs -2.1%!!! vs +0.8%; Dow Utilities +0.5% vs +0.7% vs flat vs flat vs -0.2%; S&P 500 +0.5% vs +1.4% vs +0.3% vs -0.7% vs -0.2%; Nasdaq Composite -0.1% vs +1.8% vs +0.2% vs -0.4% vs flat; Nasdaq 100 UP 0.2% vs +1.8% vs -0.1% vs -0.2% vs flat; Russell 2000 -0.7% vs +1.9% vs +1.1% vs -1% vs +0.1%; NYSE Financials -0.8% vs +1.4% vs +0.8% vs -1.2%! vs -0.6%. NYSE Financial Leaders: BAC -3.3%! vs +0.8% vs +2.5%! vs -2.2%! vs +0.1% vs +2.9%; GE -0.1% vs +1.4% vs -0.4%.

 

Global equity markets weaker. India now down 2.1% in 8 sessions: FTSE -0.3% vs -0.1% vs +0.5% vs -0.4% vs -0.8%; CAC40 -0.3% vs -0.3% vs +0.1% vs -0.7% vs -1.5%; DAX -0.5% vs +0.5% vs +0.6% vs -0.6% vs -1.3%; Nikkei -0.7% vs +2.4%!!! vs +0.1% vs -1.1%! vs +0.4%; Hang Seng -0.8% vs +1.8%! vs flat vs -1.1%! vs +0.2% vs -0.2%; Korean KOSPI -0.4% vs +1% vs -0.4%! vs FLAT 2 days; Indian Sensex -0.8% vs +1.2% vs -1.8%!!! vs +1% vs -2.3%! U.S. stock futures little changed : DOW +3; SPX -0.70; NDQ +1.75. Bonds weaker yet again! 10’s and 30‘s still well above 2% and 3% respectively: 10 yr 2.20% -5/32. RECORD low 9/23 of 1.6855%; 30 yr 3.32% -7/16; Long TIP 0.89% -11/16, it was 0.57% at high. The 5 yr TIP yields MINUS 1.26%; 10 yr -.15%. Bills 0.06% 1 month; 0.08% 3 months, 6 months 0.14%. Reverse Repo 0.21%. 3 mo. Libor 0.47%, and 0.74%, stable.

Gold closed below $1700 for a 12^th straight session but hardly changed, making the hit just $91 since 2/28, closing $1687.70 -.50. 2/28’s $1792.70 intraday high was not seen since 11/16! It has been above $1600 since Jan. 31, and is now $1675.40 -$12.30! Another run coming? The record high is $1923.70, a buying climax on 9/6. Res is $1689, the 200 day and $1712, the 50 day, then $1716, the 40 day. Major support is again $1652, the 1/25/13 low, now res! Crude also closed barely changed at $107.33 +.30. It is now tanking at $105.55 -$1.78, with support at the 40 day (104.23), the 50 day (103.30), and major support at $95.25, the 200 day…watch closely– though as all are rising! Resistance remains at $110.

 

What a run-up but why? Economic news was good but not showing signs of picking up. So why such a big rally on low volume – again? Because…

 

VERY IMPORTANT: TUESDAY was the  last day for T+3 settlement for quarter end and it appears  hedge funds were big buyers on Monday and did little on their end of quarter. They could now sell if they choose anytime thru Friday, it happened last September!

 

Note that for the first time TB can recall we had an options expiration that was never mentioned during the week preceding it, and there has been no mention of T+3 settlement in the week the quarter ends. This in a market dominated by high frequency trading (which is primarily hedge funds). Meanwhile the SEC has announced it will “look into” high  frequency trading…don’t expect miracles.

 

Yesterday, only ONE industrial index was up: the Nasdaq 100 while the Composite was down 0.1%. If you, don’t know why, you haven’t been paying attention to this column. Apple gained SIX index points yesterday while the index was up FOUR, 2/3 of the stocks were down. Elementary math says that is a 2 point loss or about 0.1%. Utilities were the big gainer, +0.5% but that is a dividend play.

 

Between now and next week, it is possible that the stock market will decline due to hedge fund selling. If this week, to make their performance look better than conventional managers, if next, to catch them flatfooted going in to the new quarter. Not saying it ‘will’ happen but don’t be surprised if it does. Opinion is strongly bifurcated as to the sustainability of this rally…with some well known players being negative, count TB with them (Grantham, Hussman, Rosenburg for starters). Plan accordingly or strategize. Coming awfully close to ‘sell in May and go away’ which was the best advice anyone could have given you last year.

 

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

…ah, yes only it should read ‘the Taussig of the salad (money). Yesterday’s quote by George W. Bush on his plan to protect Medicare led TB to refresh his memory on just what that meant. Bush promoted Medicare Part D and the GOP controlled Congress went along with bipartisan support. While the plans were made the pharmaceutical lobby met with him and expressed their displeasure with Medicare buying prescription drugs. Enter Louisiana’s beloved Billy Taussig a Republican committee chairman who started out as a Blue Dog Democrat. Taussing wrote the bill which included prohibiting Medicare from buying prescription drugs. The reason is obvious. Medicare by not buying on its own pays 30% more than Medicaid…and they couldn’t have that happen. So the largest buyer of prescription drugs had its hands tied. Medicare Part D was passed but funded which gave wonderful ammo to those later trying to blame Obama for the increase in the deficit. See how nice it is to ignore the two biggest tax cuts of our lifetimes and two wars?

 

As for good old boy Billy, he was hired by the Pharma lobby for $6 million a year, along with some of his key staffers…wait, isn’t this a revolving door? Did you hear convicted felon Jack Abramoff tell how easy it is to get a staffer on your side? Merely, indicate an interest in hiring them. That’s the ticket!

 

There are now tens of thousands of lobbyists in D.C. – think what would happen to real estate prices in the area if they were thrown out on their ear…but again, we can’t allow that to happen.

 

Yesterday, a Bloomberg article said the our beloved Billy Tauzin is the highest paid, as well he should be since he went to the White House and ‘negotiated’ with Obama to exclude buying prescription drugs from Obamacare and that along with the health insurance industry made it toothless and not cost effective. Now the Supreme Court and its supreme beings will decide its fate. But if they destroy it we will fall into chaos.

 

Much was made yesterday of the governments failure to provide a strong case for it. But some non-opinionated sources indicate that the justices were not as dissuaded as it appears. But the real point is that the GOP who never offered any alternative methods of controlling medical costs, which can bankrupt anyone except very wealthy millionaires, to insuring that everyone can get treatment.

 

Without negotiating the purchase of prescriptions, controlling spending on elderly patients, and hospital costs (is it a good or bad thing that there are more MRI machines in Boston than in all of Canada – if you have them you have to use them to pay for them), there is no way to contain a ‘disease’ that is infecting and affecting the lives of all Americans. Note also that no one has told of how much it costs to have uninsured citizens…that is because that is a state and local problem, not a federal one.

 

Saying nationalized health care is unconstitutional is a travesty. They are simply passing the buck back to the states. At the time the Constitution was written the states were almost like individual countries…they even had their own currencies and that only changed after several banking failures. Nobody argues that banking should be controlled by the federal government. Healthcare is similar. We no longer are born, live, and die in the same place. People move from state to state often frequently in their lifetimes yet they are subject to state laws of who can offer insurance opening the door to even more pre-existing condition exclusions. Think about it and you decide.

 

As for Billy, the Bloomberg article stated that he was originally offered $1 million to be the motion picture industry’s lobbyist. He made the right choice in accepting Pharma’s offer as he made $11.6 million last year…a 15% increase over the prior year and making him the highest paid lobbyist. If you take the top 30 lobbyists, their combined pay is $63 million or $2.48M average (of the 30, four are women with an average of just $1.43M). Of course Tauzin’s pay skews the average significantly. The second highest paid, the American Petroleum Institute’s is $6.4M while THIRD is the U.S. Chamber of Commerce at $4.75M. If these figures don’t shock you, nothing will and that is truly sad.

So you see, all you have to do is ‘follow the money’ to see what is wrong with this country. As for Wall Street, their lobbyist was interviewed in Inside Job and you never saw a better ‘gofer.’

 

But the greatest thing is the ability to channel public disdain right where they want it. They don’t offer solutions, merely stop anyone or anything that gets in their path.

 

As for Billy, he joined other political luminaries in the Lousiana Political Hall of Fame (shame?), in 2003. You rock, Billy Tauzin!

 

This leads TB to Hannity last night…stumbled on it by accident. His guest was Joe Kernan and his 12 year-old daughter, Anna. First, let TB say that Anna is incredibly precocious and quick as a whip. It seems she came home from school saying her teachers were critical of capitalism…that is all Joe needed, he being in total denial of capitalists ever doing anything wrong that they wrote a book on what teachers should teach. Now TB doesn’t see why teachers are getting into this at such an early age except that perhaps it is the children, many of whom’s parents lost their jobs …or homes in the crisis Wall Street created. She has since spoken at the Harvard Business School where TB can assure you no one needs to preach the beauty of capitalism.

 

Capitalism is the best system that has been devised, BUT it only works when people and corporations don’t put themselves first, without providing for the future of their company and the country. We do not have capitalism now…it is an abomination of the word.

 

But what shocked TB was this comment Anna made that had to have been drilled into her by good old dad: regulation is destroying capitalism. TB asks: how could someone sit in a news room all day and make a statement like that. It was the lack of regulation that allowed the banks (and faux banks like Goldman) to create these implements of mass destruction! Sure some businesses are over-regulated but thanks to the repeal of Glass-Steagall, banking and finance are not one of them. They could never have gotten to the leverage ratios they did without benign neglect.

 

What is Hollywood thinking? They have already biased a movie on Nancy Reagan by casting Jane Fonda to play her. Nancy is rolling over in her grave now. Like Nancy Reagan or not, this is a slap that will make TB for one avoid the movie, and he didn’t much care for her.

 

On yesterday’s TM column a few readers wrote in. One pointed out that under the Florida law the shooter can’t be held civilly liable…if so that is something that should go to the Supreme Court. Also there was talk about Zimmerman being attacked. The timeline will show that had he left it would never have happened. There is also the account by Trayvon’s friend who told him to run and he said he would just walk fast. IF Zimmerman followed him, perhaps it was HE who felt threatened. The point is, taking the law into one’s own hands is a very bad idea.

 

Hope you take the time to think about these issues and decide for yourself because you aren’t going to get the answers you seek on FOX News or CNBC.

 

Hope your day is a good one!

TB