1/4/11…rally round the flag

…because you can’t be buying the fairness or transparency in the U.S. stock market…it is a rigged game.

Yesterday’s volume was 1.06B shares…a far cry from that 632 million share average (range 468M, 2nd lowest of 2010, to 829M shares), since  since December 17.’s 2.02B shares on a triple witching. Even then the volume was still below the 1.15B share average for all of 2010. Still for an opening day of the year at least it brought some encouragement, especially with that 93 point gain (0.8%) on the Dow, although well below the session high, and the 1.1% gain on the S&P 500 and 1.5% on the Nasdaq. But coming from such lofty levels just how much is left in this rally? Dunno, but the fixers will let us know when it is over, right?

Retail sales, according to Goldman and the International Association of Shopping Centers, rose 0.4% but that is 3.6% above the same week last year…if you are focusing on revenues that is all well and good but when the game is 50% or more discounts one has to ask just how much they are making! Also, TB believes he heard that internet sales surpassed store buying in December for the first time…think about that.

IF people are buying on line that is less traffic in the stores who have to inventory, pay rent, pay employees, etc…and pay more sales taxes. So what does this mean for jobs? Not much…any more than the manufacturing activity is resulting in jobs in emerging markets NOT in the U.S. even with government subsidies. Oh, and the much-discussed small businesses (an oxymoron), are hiring again – part-timers!

So the question is: just how sustainable is the growth? Has it peaked and will be steady…or will we slip – or even double dip? IF we do the latter and the GOP succeeds in ‘repatriating’ the unused subsides while cutting the budget back to 2008 levels we will be in a heap of trouble. Especially the later into the year we go as thoughts turn to the NEXT election and the teabaggers scrutinize every vote. If you aren’t thinking about this you may be in for a shock because the GOP has already shot itself in the foot by denouncing earmarks then breaking their own pledges before the soundbites even stopped airing.

Will Obama be a one term president? TB asked for any suggestions from friends and readers to replace him…none! Well, except Sam Nunn, from one reader a good choice but well off the radar screen. So IF Obama can overcome the internet slams put out by the GOP and move to the center he might just pull it off. Not saying this is a good thing but for someone who was a zombie just two months ago, pretty amazing. Which also begs the question of whether the GOP can control the House again after the next election. That could be a stretch.

So against this backdrop, soaring state and local governments, a housing market that is off the bottom…but in yet another redistribution of wealth as the wealthiest form syndicates to buy foreclosed property, and the majority cannot even get a loan for one place…how much can home prices appreciate…especially when that same group won’t pay them more and is fighting any form of health care plan, which has reached confiscatory proportions for most of America. Is THAT a strong economy?

…you decide, dear readers…you decide.

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

A friend and former senior executive of a bank wrote yesterday:

I am intrigued by the issue involving public company employees serving as consultants, on the side, to the expert-network firms. I would think that outside employment for pay would be against most company’s policies. If the company would allow it, I would think that it would at least require the employee to get permission first. I would think that the company would screen this outside employment very carefully and make certain there was no potential conflict of interest. Finally, I would think that the company would immediately fire the employee upon learning of this outside employment if it had not been approved. 

What is it that I am missing here? I can not ever image engaging in this type of behavior during my years at (the bank). I am surprised at how seemingly easy it was for these expert-network firms to hire so many people.

Against this background of corruption, it is amazing that people want to dramatically reduce regulatory oversight of the markets.

Why can key employees discuss things to small groups – for a fee – that a CEO cannot do except in broad announcements to all investors? Have we forgotten already the mess we were just in? How come those involved have not been fired, even if not prosecuted by the regulators?

TB doesn’t understand where your lack of ire is while your investments are tossed around like garbage for the benefit of a few privileged investors. THAT is why TB is so cynical on Wall Street and its links to the government and if we don’t take back our government soon, instead of focusing on every proposal Obama makes, then we deserve what we get.

Have a terrific day!

TB

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, January 4, 2011.

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