2/22/11…what the???

(late morning comment…or afternoon on the east coast)

Friday’s ‘up’ day on 1.16B shares, the first average (barely) volume of the month, will not stand. With our markets closed, stock markets are being pummeled, and Dow futures are off 77 points, SPX -12.50 and NDQ -27.50. Furthermore, Gold has surged above $1400, and Crude is up $3.50 at $90! Note that this is West Texas Intermediate which at a record $16 below North Sea Brent , which hit a two year high overnight (they should be within a couple of bucks but haven’t for months due to cheap Canadian oil now being pumped down to Texas). The refiners are capitalizing on this at buying the Canadian oil for a buck or more below WTI prices.

The above comment was from Monday’s column. Today, stocks are being hammered for a second day in Europe and the U.S. is trying to play catch up. The big commodities especially grains are DOWN LIMIT!!! TB has repeatedly said that the surge in commodities prices…especially wheat, corn, and cotton, which surged to record prices were not supply and demand but speculation primarily in the U.S. The driver this time…as it was in 2008 is pension funds whose lame consultants told them to buy commodities…ignoring the size of the funds and the size of the market (readers may recall TB asking in 2001 why these same geniuses failed to rebalance stock positions from 80% to 60% which would have mitigated the losses in the 2000 double dip…and was told there weren’t enough bonds…but commodities????…a friend and former commodities trader told TB that open interest in commodities is up 38% over the past few years…that is huge! Do you really believe the S&P 500 at 16x earnings represents value? Not if you believe history…or that trees don’t grow to the sky…

So anyone concerned about the prospects of inflation is missing the point! That is not to be confused with rising bond yields in a sick economy that is further hindering the home market recovery…the latest Case Shiller was not pretty except in a few isolated areas…not California, Arizona, Nevada or Florida!

Lastly, TB was surprised by Friday’s 1.16B share day on a session preceding a three day weekend…analysis however shows all the volume came in during the final half hour. Today, however is a different story with over 760 million shares trading already – 200 million more than what we have seen lately. Once again a big down day brings in the volume…that is what TB means by the significance of low volume rallies (insignificance?), and how fast the corrections come…at this point all Dow stocks are down as are the nascent Transports…

…thanks to those of you who wrote – all complimentary – on TB’s analysis lately…what is more it came from people of both conservative and liberal persuasions. Everything was heartfelt and as a former boss once told TB: you wear your feelings on your sleeve. He thinks that was a compliment. TB makes mistakes for sure, but trust that they are honest ones not trying to convince a reader of his viewpoint. Yesterday, for instance, TB said that Martha Stewart was sentenced to five years…it was five MONTHS as two helpful readers pointed out…a tip of the hat to them! (What’s a hat? Hat trick we know but…)

The best part of the story in Wisconsin is going hardy unnoticed. Like him or hate him, Gov. Scott Walker did exactly what he said he would…he also said there is no person who is more conservative…he is opposed to abortion for any reason…this is precisely what is wrong with America…we have an ill-informed electorate…who lets splinter groups take control and risk destroying the country.

But now the tea baggers who voted for him are upset for attacking what they don’t want cut…welcome to the new America…this is precisely what TB was concerned with…they want change but not if it affects them. In addition, the tea baggers were funded…not founded by the Koch brothers…one of their groups Americans for Prosperity is a non-profit with a $40 million budget in 2010 from $7 million three years ago (see NY Times article today). Their company, Koch Industries, the second largest private company in America (behind Cargill), has a horrible pollution and safety record, choosing to pay big fines than fix the problem (of course now they are fixing the problem to their satisfaction). The point is to be careful who you support and look who is behind the organizations supporting them….or you may have to live with their decisions for four long years. Read the article:

http://www.nytimes.com/2011/02/22/us/22koch.html?pagewanted=print

It is totally irresponsible for the House Speaker to say we are broke…we are not! We do have to do something but part of that involves raising taxes on the wealthiest when we need more educated workers to compete in the global economy…so instead they cut and cut again Pell grants…no mention of the student loans being used to pay outrageous salaries at for-profit colleges.

Let’s stop the funding of NPR…grants to public broadcasting…which provides the only real news…not Sean Hannity throwing a football on FOX.

A sad note on the four people killed by Somali pirates…senseless…when you are being followed by a flotilla of naval ships what is the point in killing your hostages??? These are stupid, starving people.

TB would like to offer a solution (besides people using their heads and not going off in their own to these waters….that was insane):

TB served on a U.S. Navy destroyer in Viet Nam in 1965 (USS Ingersoll DD-652). Our first mission was Operation Market Time. In that mission we stopped boats coming from the north and searched them for contraband (once we even fired a shot across the bow). Then it shifted to Operation Sea Dragon. The difference was that any vessel moving south was considered to be enemy and attacked. It stopped the traffic very quickly.

Now at the risk of being accused of violating a country’s sovereign rights…of course Somalia doesn’t even have a recognized government…we should drop fliers all over the country with this warning: fishereman are advised that if they venture out more than three miles they will be considered hostile…and subject to attack and sinking without warning!

The reason for no warning is they would simply turn back and we need to send a message loud and clear…as we did in Tripoli (ironically now under siege), with the Barbary pirates more than 200 years ago. Do we have the gumption though…that is the question!

The Khaddafi government is all but finished…kaput…pilots, diplomats and entire ships are defecting rather than attack the people. How long can Bahrain, Yemen, and the rest of the Arab world continue as they have. But don’t forget that the catalyst for all this was FOOD…food prices rising and as just stated above…we…the U.S. get the credit for this travesty…because the CBOT failed to take action after the oi price inflation of 2008~!

Ah, free market capitalism in its finest hour…or is it plutocracy…TB thinks the latter.

Well, there are TB’s thoughts…except he wishes to point out another tragic event here in the Bay Area. Three boys…high school seniors…let their spirit of adventure overpower their common sense and decided to go rafting in a rain-swollen storm drain…they took helmets…but no life rafts in a channel with steep concrete sides and two of them drowned. All or at least most males…TB included have done stupid,risky things but were lucky enough to have learned from them…it’s called growing up! A senseless tragedy to two good kids…

Have a wonderful day! Damn, we do live in interesting, but frustrating times!

TB

 

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