11/15/10….a cruel reality?

Note to readers: Commentary and summaries available on the blog:

www.traderbill.com 50,400 hits since 11/9/07. TB


Bloomberg Top Stories:


*Stocks, U.S. Futures Rise on Retail Data; Dollar, Irish Bonds Climb

*Ireland May Use EU Bailout fund to Rescue Banking System, Constancio Says

*Companies Safer Than Sovereigns as Crisis Cracks ‘Old Order’

*Caterpillar to Buy Bucyrus for $7.6 Billion, Will Sell Shares to Fund Deal

*HeartWare, Medtronic Heart-Failure Devices May Help Stem Seniors’ Epidemic

*Auto Rebound Seen in Bonds as Sales Soar, GM Prepares IPO

*UBS Recovery Fizzles as Gruebel Sees Diminished Profit After Lowering Risk (!!!)

*Berlusconi Ministers Resign in bid to Force Collapse of Italian Government

(French Prime Minister resigned yesterday)


 Overnight Global Markets (8:30am EDT):


Dollar Index 78.51 +.42 – 10/15’s 76.14 low not seen since Dec 24, 2009…and created a positive key reversal that FAILED! We are now at the 50 day (78.62) which should ber res with sup at the 40 day (77.80). Not good for gold  bugs! Yen 82.99 weaker by .09; Euro $1.3648 +.0033; Sterling $1.6091 +.0018. DEC Gold $1361.70 -$3.80…follow the bouncing dollar! 11/9 was record high on dollar weakness, $1424.30! SUP at the 40/50 day m/a ($1345/1328). DEC Crude $85.46 +.59. The 11/11 high of $88.63 was highest since 10/8/08!!! when oil prices were plunging from the 7/11/08 speculation-induce $147.27 record, and is res. The 40/200/50 day are sup ($81.91-78.54). US bond market weak, especially the belly. The 5 yr TIP is now yielding -0.26% back from -0.49% to the basis…5 yr Note (1.47%)!!! Europe weaker -5/16. 1 mo. 0.10% (1 mo. Libor 0.253%); 3mo 0.12% (3 mo. Libor 0.284% - sliding!); 6 mo. 0.16% (6 mo. Libor 0.442% - so much for QE2!) 2 yr 0.54% -1/16; 3yr 0.81% -7/32; 5 yr 1.47% -1/2; 7 yr 2.09!!!% -5/8; 10 yr 2.86% -5/8; 30 yr 4.31% -13/32; 30 yr TIP 1.70%!!! -1 pt! European bourses rallying, Hang Seng weak: UK’s FTSE +0.5%; France's CAC 40 +0.8%; German DAX +0.8%; Nikkei +1.1% vs -1.4%; Hang Seng -0.8% vs -1.9% (Shanghai +1% vs -5.2%!!!, Shenzhen +2.4% vs -6.2%!!!); Korean KOSPI flat; Indian SENSEX +0.8%. Globex up a little; DOW +33; SPX +5.90; NDQ +14.25!!!


 …are we waking up to the reality that QE2 is merely a last-ditch effort to rally stocks to get consumers back? Thanks to a friend/reader TB watched a clip of Jeremy Grantham (GMO Partners) being Interviewed by CNBC’s Maria Bartaromo. For a half hour he pointed out to the Fed’s losing sight of inflation and controlling money supply growth under Sir Alan of Greenspan and now under Helicopter Ben. He was not as negative as you might think but pointed out that his company as value investors see little if any value in the U.S. stock market, BUT that stocks could continue to rally perhaps for another two years…but with frequent corrections as is the case when faith is based on myth.


As for GMO however, they already have boosted cash…those who are aware of Grantham know that he took his clients to cash in August of 1999 while stocks continued to rise. He lost 25% of his assets under management, but that began to come back after the market collapse of 2000. It was the consultants who steered the accounts away from as the looked for stocks to continue to rise as far as the eye could see…the only other person TB knows who was not only this prescient but put his money where his mouth was would be John Ralfe of Boots PLC who liquidated the entire stock portfolio and went to bonds in early 2000…government bonds as well as corporates yielding north of 8%! Subsequently both have been redeemed but why instead weren’t the rest of the managers instead chastised? But the most significant comment was this: if you don’t build cash on the way up you cannot benefit after stocks plummet…well said, Jeremy! (will try to provide the link upon request…if it is still up).


In 2002, TB asked a panel of consultants (actuaries in the UK) why they didn’t at least rebalance to 60% equities…they hemmed and hawed until one said there weren’t enough bonds to do that…horse manure! They were fools…well paid ones at that!


Now looking at Friday’s market the NYSE had 5:1 declining, 4:1 on the Nasdaq on another sub-average 1.01B share day while advance declines were horrible at -9:1 on the NYSE, -4:1 on Nasdaq and -3:1 on AMEX! Still the managed to get a combined 111 new 52 week highs while new lows climbed to 76. The Dow has now erased all gains from the November 2 ‘one-day breakout event.’ The other indices did it much earlier! Only 4 Dow stocks were up led by Disney with 14, then came Intel at +2. Meanwhile Boeing (787 problems), IBM (buying back huge amounts of it’s own stocks, and CAT (today announcing an all-stock buy of Bucyrus Erie) all lost more than 10 points. Is this a market you want to play in?


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


Why even bother to listen to the liars, thieves, and nit-wits on the Sunday talk shows? Not one has given a clear statement on budget cuts and the GOP won’t even discuss raising taxes on the wealthiest class….that is what happens when you win by default and have the teabaggers breathing down your throat. Where are the real leaders? Not that bunch of overpaid leeches that is up on the hill…answering only to the lobbyists and their big contributors like Goldman and Citi!


The words weren’t even fully out by the committee to balance the budget or at least rein in the deficit before the loonies were saying don’t cut my programs…led by AARP who talks as if raising the retirement age to 69 will start tomorrow for everyone. This is what happens when people have been deceived by their government to believe they are doing well and that with the able help of the banking and credit card industry…until they stopped!


Vikram Pandit, CEO of Citi is spreading …uh….manure…that banks are being asked to have too much capital and that will hurt the American consumer…please Vikram you know that is a bald-faced lie…you don’t want to lend it in the first place you want to use it to leverage your investment banking operations…precisely what got us into this mess.


TB has had enough for one day….signing off!




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 15, 2010.



  1. Yarnman said


    Bonddad’s blog for Tuesday, November 16th, has an informative essay about QEII. He excoriates the political class in DC nearly as well as you do! Bottom line: there is no threat of inflation from QEII as long as the money supply measure MZM is close to its 40-year low growth rate.

    The DC dummies are gridlocked so, in my opinion, they have no status in complaining that the Fed is the “default” player in trying to generate job growth.

    Glad you’re back home safely in snowy MN!


    • traderbill said

      Thanks…DEFLATION is, and will be the problem…so long as we aren’t getting the ‘multiplier effect’ from banks producing loans…IF that were to happen and it won’t as they are more intent on funding their investment operations…while parking excess reserves at Libor!…it cannot become a problem. We are in Keynes’ liquidity trap…why lend at low rates when the risk is higher?
      Actually not home…here on west coast till Dec. 15th!

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