1/10/11…brave new week (adding mea culpa’s)

…following the sick shooting in Tucson and huge borrowing plans by European governments stocks are reacting poorly…as if the miserable payrolls report Friday wasn’t reason enough. Weak? You mean you focused on the straw man unemployment rate falling to 9.4%, a decline of more than 0.3% to comments everywhere on how things are improving! Nevermind that the decline was caused by a decline in the labor pool due to discouraged workers dropping out, or to the 0.3% increase 16.6% when you add in discouraged and those wanting full-time jobs but having to settle for part-time! How about the loss of another 10k government jobs which will continue (not that it is a bad thing per se, but is this the time? In all of 2010 there were just 1.1 million new jobs…that is less than the number that enters the workforce every year! If the GOP follows through on its promises (unlike their broken ones on not using earmarks), this will only get worse. So who will buy products?

To those of you afraid of QE2 causing inflation, consider Bernanke’s comments that unemployment will not improve appreciably for another five years…TB agrees and that should be a shot across the bow for stocks. At least consider it.

99 is the magic number…that is the number of weeks of total unemployment compensation you can collect…thanks to the lame-duck compromise that the GOP said they wouldn’t do…are they trying to be the good guys now? Consider what holiday sales might have been if they had been allowed to expire? Was that the reason for the late surge in sales? The average length of unemployment is 34.2 weeks (up 0.3), and the median 22.4 (up 0.7), which illustrates how many are closing in on that 99 week number. So will…can consumption continue to grow without more jobs…a lot more jobs…or significant wage increases?

Ah, you say, but what about car sales which are flying? If you watch the ads you know why…leasing is big: 0% interest, 0 down, 0 due at closing…so if you can qualify with a high enough credit score, what is not to like? Well, you better look at the residual which determines the capitalization rate and you might be concerned. Isn’t this reminiscent of when Detroit dumped all those SUV’s off on us at similar terms…and don’t forget the zero percent down loans that meant when you finally got that monster paid off it was worthless…or at least worth less and that stopped the sales of new models as you couldn’t unload them and still have enough for the down on a new model. Déjà vu all over again.

Friday’s volume was 1.09B shares in a week where the lowest day was 1.04B shares. To find a similar week you have to go way back the July 26-30! There have been no weeks since where all five days have been 1B or more shares. Despite the Dow being down all day, there were another 300 new 52 week highs and just 24 new lows…also the pattern of the week. Three up days for the Dow, climaxed by Wednesday’s ‘rally’ high close of 11722 and then two straight down days that still made for an ‘up’ week. Even so advance/declines and breadth were mixed on the three exchanges all week with a bias toward negative.

The other indices were mixed as exemplified by the Russell 2000 small cap which has been more or less flat for four weeks, and hit a high last Monday of 798, a pretty pathetic gain over that period and then slowly slid back to the norm. Is there any conviction in this market or just puffery? Still we have had a great run since August but is it tiring? Beware the ides of January.

Caution is advised.

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

As TB predicted the year…in fact the next two years won’t be boring. The sad shooting and killing of innocent people in Tucson is proof that our government is out of control. We have members of Congress – fringe that is telling people that it is OK to take the law into your own hands if government doesn’t do the right thing…as they see it. Michele Bachman from Minnesota comes to mind along with others…and she is considering making a run for the presidency! Her other female contender Sarah Palin is not unafraid to use terms and rhetoric that might incite people to take the law into their own hands either. Then there are all those others who use flammable rhetoric on the floor of Congress and in speeches to get their point across. This in a country with a lot of unstable people…now, as during the Great Depression, and who have even more access to firearms…with much more lethal firepower.

Someone on a talk show yesterday commented on people in the gallery of the House who shout out insults to those on the floor. How did we get to this point? Is it empowerment by the internet that says, as Tom Friedman once wrote, I can say what I want and you can’t stop me.

TB receives an incredible number of email forwards that when he checks them on www.snopes.com, are either retreads or outright lies made to convince you. Some of these come from blogs and extremist magazines and newspapers as ‘commentary’ which those forwarding take to be fact!

One came last week stating that Obama was going to honor Jane Fonda as one of the top 100 women of the past 100 years. It included passionate pleas from veteran’s to stop him from doing this. Yes, she was named that…in 1999 and like Time’s person of the year didn’t imply that she did great things, but was one of the top 100 newsworthy women. But the thing is: Obama had nothing to do with this…he was not involved.

Hopefully the shooting of the Arizona congresswoman and all those bystanders will make us think before we blame people for things they did not do, and remember in the U.S. we honor the office, not the person. This is digusting. Do you want to be responsible for causing another assassination attempt…like with JFK, Ford, and Reagan? Please think and act responsibly…we are destroying all civility in this great country…be an example to our overly ‘compensated’ representatives in D.C.

A Brit friend sent an article where a MP was sentenced to prison…and not a Club Fed type on either, for inflating expense accounts to Parliament. 18 months of hard time…and more are to follow.

Now contrast that to Rep. Charlie Rangel's ‘censure’ for what you or I would have gone to jail for…ask Martha Stewart how tough they can be on lying to federal officers. Coming up is Maxine Waters who pushed to have her husband’s S&L included in a meeting with Fed officials during the crisis without disclosing who he was…also his was the only S&L: represented. What are we going to do about that especially since they received federal funds?

True, these are both Democrats…but there are many charges awaiting GOP members…and don’t forget Tom DeLay and other GOP’ers who violated their fiduciary responsibilities. Congress needs a house cleaning.

To Boehner and Reid who talk about cutting the deficit, are you willing to recommend that Congress pay for their health insurance? Take a cut in your pay? No way.

Lastly, on Meet the Press, David Gregory dug at Reid for having urged the Senate not to pass the debt ceiling increase…in 2006. Reid did not comment that the economy was strong then but instead should have agreed to pay for what they already encumbered us with and then cut the budget. The debt ceiling is merely symbolic but it affects not only U.S. citizens but our ability to sell bonds. Boehner and Reid should both grow up and act responsibly. Reid’s response sounded like Nixon’s Checkers speech.

Another Mea culpa: yesterday TB referred to Barney Frank receiving a 'censure' when he mean Charles Rangel (some time ago Frank received a reprimand. Also, TB referred to 'Reagan's Checker's speech and had meant to write 'Nixon's.' TB appreciates those of you who wrote to tell him of his stupid error! That is what happens when you hurry.

Also, TB did not mean to imply that the shooting in Arizona was caused by any one person. This man was severely deranged. But he did mean to point out that when our leaders resort to making inflammatory statements there are those who will act on them and we suffer for their indiscretions. Very sad.


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 10, 2011.



  1. Yarnman said

    At the end of your piece today you refer to Barney Frank’s “censure.” Methinks you may have confused him with Rep. Charlie Rangel. Some time ago the House Ethics Committee investigated Frank for running a male escort service out of his Washington apartment, where he housed a gay friend named Gobie. The Committee found no evidence that Frank had known of or been involved in the alleged illegal activity and dismissed all of Gobie’s more scandalous claims; they recommended a reprimand for Frank using his congressional office to fix 33 of Gobie’s parking tickets and for misstatements of fact in a memorandum relating to Gobie’s criminal probation record. The House voted 408–18 to reprimand Frank. (See Wikipedia for this info under “barney frank”.)( A reprimand is less worse than a censure.)

    Also, Nixon delivered the “Checkers” speech, not Reagan. (You knew that!)


    • traderbill said

      I meant Nixon…will correct thanks. Also thanks for pointing out my error on Rangel…editing now.

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