11/30/10…the rain in Spain

Bloomberg Quote of the Day: “You can never underestimate the stupidity of the general public.” – Scott Adams…or those that govern them??? TB

…is falling everywhere…snow even in Britain. Yesterday was a freak show for stocks…Dow broke below 40 day, plunged thru the 50 day for a 170 point decline then rallied back to close down just 40 points, but at the session high it was still off 10. NYSE Volume was a weak 924 million but coming off Friday’s 428 point low for the year, and improvement of sorts. Selling volume was big out of the chute…perhaps due to hedge fund redemptions over insider trading?...but recovery was also on decent volume so not much to be learned here. Advance/declines and breadth were somewhat weak but not like we have come to expect on a selloff. New 52 week highs continued to beat new lows by 166/82.

We are being hit on two fronts: Korea and Europe…war and credit, a bad combination, except for the dollar. Commodities are a bit confused with Crude rallying to the highest level since Nov. 12th ($85.90, a two day double top), while dollar strength is keeping Gold from rallying very muchNorth Korea found in the WikiLeaks a memo suggesting China may be willing to support a unified Korea with the South taking control…immediately dispatched an envoy to see if they can ‘say it isn’t so.’

Meanwhile, concerns over Portugal…and Spain are mounting and Banco Santander is taking quite a hit both in Spain and Brazil where they did the biggest IPO outside the U.S. ever, a year ago on 10/6/09 at $13 and has struggled since. It hit a high on 11/4/10 at $15.66 and has since fallen to $13 again…while the parent has followed a similar pattern.

When will we realize that we remain in a global financial crisis of our own making…true, other governments deregulated their banks…Iceland, Ireland, even Spain, but only with the derivatives created here in the good old U.S. of A., which led the way by giving the top five banks autonomy with the repeal of Glass-Steagall in 1999…thank you, Robert Rubin and Sandy Weill! …also to those of you in Congress who were rewarded so much for you efforts, and a special thanks to Chris Cox, who may go down as the worst SEC Chairman of all time.

That the stock market recovered so well yesterday is a testament to our faith that all is behind us…that it couldn’t get back to even is more of a lack of faith that it really is. Meanwhile, U.S. treasuries, battered by the prospects of QE2, are rallying again…long end down 10 basis points in yield…other governments are up too, but emerging markets may continue to be the better bet, offering far better rewards.

This could be an exciting yearend.

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

We are awaiting the outcome of Cyber Monday which for the first time may exceed Black Friday in sales. There are some ramifications to this…loss of state sales tax revenue…possibly fewer jobs and those that remain will be very low paid and most likely part-time. Shop till you drop may have morphed to shop until your CPU fails you!

Have a terrific day…even as we may be entering a new ice age…or not.


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 30, 2010.


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