11/2/10…erection day!

Bloomberg Quote of the Day: “No man goes before his time – unless his boss leaves first.” – Groucho Marx

…that is election day…except in Japan…sorry about that, Ka-boom! Don’t you feel all warm and fuzzy? …especially if you are a Republican knowing that your destiny is in the hands of the teabaggers who have replaced the Christian Right as the drivers of party policy…and if they don’t…they lose in two years. Sarah Palin said the freshmen should not mingle with their seniors…don’t give one iota on their agenda…so what if gridlock then takes us down deeper…we have to learn. Well if you believe that, TB won’t be of much interest or help to you…we are mired in a financial crisis and one has to be totally blind to reality to not see it. Why are our banks putting excess reserves in t-bills to Libor at less than 1% (until you get to the 3 year treasury where you will earn all of 1.16%!)???

The dollar is weak…bouncing off the lows of mid-January and poised to take out the Nov/Dec 2009 lows depending on what Bernanke & Co. decide today and tomorrow. Ah but this is good for corporate profits…a weak dollar increases exports (if we made anything here and if there was solid demand in Europe), so that must be good for stocks, no? No…because even multi-national companies will only be earning on the currency translation (not the conversion as they don’t want to repatriate and pay taxes on it), NOT on top line REVENUES. Oh, and Jim Cramer seemed bewildered yesterday over what this means…a first…but he stuck to his guns and said buy the most aggressive growth stocks…sorry Jimbo but TB is sticking to his dividend payers! Remember strong corporate earnings based on cost-cutting do not create jobs…at least not in the U.S. of A. That revenue from abroad does count for earnings and is positive for multi-nationals in the short run…but it is not sustainable…no country is an island and if our demand remains weak their exports will slow…don’t they have to? Seems logical! Some say China is the biggest bubble yet…by the way, isn’t Hong Kong and island?

Not only is the dollar weak but where is the ‘springboard’ effect in gold? Crude? Other commodities which were mixed yesterday! Dunno…but Jimbo said to buy gold…meaning the ETF which is already loaded with speculators and that spells trouble with a capital ‘T.’ The other play of course is the miners (mining stocks), and the best way to do this is to diversify through the miners…yet yesterday GDX, the ETF, closed off slightly, while GDXJ, the junior miners was up? Gold meanwhile attempted to rally, then sputtered yesterday and is only up by about half yesterday’s loss today.

As for crude, why isn’t it up significantly? Dunno, but a Bloomie story yesterday said the producers are using satellites to monitor the movements of the tankers so they know what is available and can reduce shipping costs…so much for using those to thwart the Somali pirates…the real pirates are in Houston…where they always have been!

Ah but some commodities are up…yep those we eat or require for clothing…Cotton and grains were the leaders yesterday and overnight…followed by metals…in other words: input goods. That is your inflation…but like in 2007 when index funds were driving commodities prices…especially oil higher, which in turn caused double digit inflation in raw materials and intermediate goods…and fear…it could not be passed on (except in gasoline prices), so inflation at the retail level remained tame…this caused TIPs to post a negative return over the end of the year by the way as the fears waned….will it happen again? Could be and if you invest in TIPs you better understand the math or you will get burned on the inflation accrual (for four months the TIP ETF (TIP), which is not just the long TIP but all outstanding TIPS paid NO dividend...this could happen again!)

So couldn’t the agricultural stocks which are our primary exporters end up losing money – relatively? Beware of overripe expectations.

Turning to yesterday’s stock market…in the first 45 minutes the Dow rallied 126 points then faded into the afternoon where it was down 46, then came back to close up just SIX points on the session! This on volume of 958 million shares, the ninth straight below average (1.2 billion) share day!...and this is on the first session following the release of the Barron’s roundtable which was unanimously bullish…so doesn’t it stand to reason that THAT was the cause of there rally out of the chute, not fundamentals? You don’t honestly believe it was those monthly economic releases that incited a rally of that magnitude on the open, do you? Not on such skimpy early morning volume...most likely squeezing the shorts. But during that abbreviated rally we had 378 new 52 week highs and only 61 new 52 week lows were recorded all day. As always, take Groucho’s sage advice: why join a club that would have you as a member…there already enough out there…and by the way he said that about country clubs and if you look at their statements you can find a second reason not to join!

Monday followed Friday’s ‘nothing’ a day….isn’t this (countertrend?) rally about as tired as it can get without falling down? Have we forgotten the pre-election rally of two years ago which peaked right after the inauguration? Up or down minimally intraday then ended nearly flat. Volume was 1.04B shares yet there were 182 new 52 week highs however and 49 new lows…still can’t figure out how that is happening. On Wednesday, despite the market being down all day we managed 176 new 52 week highs! The same situation occurred a week ago Friday! How can you get that many new highs on a day that is down from the open thru the session??? Thursday we were up for only the first hour or so yet we had 278 new highs…149 of them on the NYSE! Now let’s compare advance/declines and breadth

11/1 10/29       10/28       10/27


NYSE              +1.1:1           +1.7:1            +1.1:1            -1.9:1

Nasdaq                  -1.5:1!!!  +1.3:1            -1.4:1            -1.6:1

AMEX              -1.1:1           +1.5:1                1:1           -1.7:1


NYSE              -1.1x            +1.2x       -1.1x            +1.1x

Nasdaq                  -1.1x            +1.2x       +1.1x       +2.0x

AMEX                -1.1x           +2.1x       -1.8x              -2.5x

. . . - - - . . . . . . - - - . . . (S.O.S.)

We live in an age of incivility…especially by politicians and wannabe’s who rather than tell you what they are going to do (other than reform government), put their money in negative campaign ads against their opponents who in turn fight back.

Think of how much ego is involved to be Meg Whitman and spend $140 million of your hard-earned…oops, other people’s…money to get elected…even for the great state of California…and you don’t offer any specifics of how you are going to do but instead make up lies or exaggerate the flaws of one Jerry Brown who as an experienced campaign fighter did the rope-a-dope routine then came back in the final rounds slugging.

…or Carly Fiorina, who by throwing dollars, defeated the one person (fiscal conservative Tom Campbell) who could have defeated Barbara Boxer (not linked to the analogy above), and forgot that Silicone Valley doesn’t much like her, especially her former colleagues at HP. Don’t know how much she spent but glad she is losing it.

Then there is Delaware’s Christine O’Donnell who alienated not only sensible people but the GOP…her party…and who Sarah Palin endorsed but now says she didn’t know what she was about except change “you just throw things against the wall and see what sticks”), while TB’s new state of Minnesota has  Michelle Bachman who is off the wall.

(This has to sound sexist but TB likes responsible women Diane Feinstein…and while not a fan of Hillary respects the job she has done…no, TB believes it is because they are women that they gained the support of other women who are disgusted with how the men have performed…as is TB…but incompetent replacements are not the answer).

Equal time: Minnesota has two men running for Governor, Mark Dayton, Democrat, who was the only Senator to run from D.C. following 9/11 shutting his office and sending his staff home, and Tom Emmer, GOP, who is a recovering alcoholic and has at least two DUI’s to his name. What has this country become? Perhaps this is the future: people whose reputations are already tarnished…whose families have already endured shame. Anyone else, beware as they will destroy you and your family…welcome to the new order! …this is America? TB thinks not!

Don’t forget to vote…your vote counts…right? Isn’t that what we are told? You betcha!


Trader Bill thinks it is clear to anyone reading these missives that they are merely commentaries...as he sees it...and do not necessarily reflect the views of anyone other than his own. Information is gathered from sources he has found reliable, but no guarantees of accuracy are implied. These are merely observations of events in the marketplace offering in an attempt to offer a non-mainstream viewpoint. Copyright TBD Capital LLC, November 2, 2010.






  1. JW said

    Industrial output by country 2009 UN

    USA 1,831
    Germany 767

    While I enjoy your writing, I wish you wouldn’t subscribe to the meme that says the USA doesn’t make anything anymore. Please research your “Facts” before publishing as there are people who will believe your spin and/or agenda. The above list is the 2009 UN data of largest manufacturers in the world. We still manufacture more than anybody else.

    • traderbill said

      …how much of that OUTPUT came from foreign inputs? I do not have a spin or agenda…but it is absurd to believe that a country that is outsourcing its production is generating that much real output. Consider multinationals. Not trying to be hostile but numbers do lie …sometimes. TB

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