3/25/11…the weekend!

Bloomberg Quote of the Day: “Some people have so much respect for their superiors they have none left for themselves.” – Peter McArthur. TB learned to temper his respect for superiors…and the media…when he served in the U.S. Navy and his executive officer was LCDR Marcus Aurelius Arnheiter, who TB thought was crazy and who, in his first command in USS Vance, became the first Captain in the history of the U.S. Navy to be relieved of command at sea – much as happened in the Joseph Heller novel, The Caine Mutiny. It was a valuable and eyeopening experience…as was returning home from Viet Nam, proud of what we had accomplished and finding out that all was not as we were told. Then came the resignation of Nixon five years later. Factcheck everything…even what you read in this column…especially what you read in this column, or even easier, ask TB. All comments are welcome as long as they are with the intention of improving the column and not mean-spirited. TB

Bloomberg Top Stories:

*U.S. Economy Expands 3.1%, Revised from 2.8%, as Consumer Spending Climbs
*Stocks in U.S. Rise on Oracle, Accenture Outlooks (?); Portuguese Bonds Slide
*Greek Debt-Default Woes Stymie Bank Efforts to Mend or Merge
*Credit-Default Swap Market Said to Face U.K. Insider Trading Investigation – all of this could have been prevented!
*Jeffries is said to Add UBS, Morgan Stanley, Deutsche Bank Debt Traders
*European Car Makers May Be Forced to Idle Plants as Japan Supplies Dry Up – bad news!
*Pork Rally Fails to Spur U.S. Hog-Far, Expansion as Feed Costs Curb Profit – mainly due to speculation!
*Nuclear-Backed Bond Prices Drop Amid Japan’s Reactor Crisis – more trouble for muni’s
*Spanish Banks Most at Risk for Loss From Portugal Contagion
*Reactor Core May Be Breached, Leaking Radiation at Damaged Fukushima Plan – who cares? Not stock markets!
*Obama Under Pressure to Clear ‘Ambiguity’ From Libya, Middle East Strategy – no kidding!
*Qaddafi Unites Arab League in Campaign to Outs Libya’s ‘Mad Dog’ Dictator – now if Wall Street would do the same to big banks!

Yesterday’s 870 million share day replaced Wednesday as the 4th lowest volume of the year. Feb.14’s 817 million was the lowest. This is also the lowest average volume for three straight sessions since during the Christmas/New Years holidays (12/20 to 12/31 ranged from 467 million on 12/27 to 829 million on 12/20 for a nine day  average of just 718 million shares or 400 million a day below average (1.13B)! Interestingly it followed the 2.02B share day on 12/17, fourth highest of the entire year! On that day, the Dow had a range of just 52 points and closed down a mere 8…what were they trading…air? The Dow was up just 0.7%, but that was eclipsed by the Dow Transports which broke their ennui and  closed +1.4%? The two Nasdaq indices were up 1.4% and 1.8% on the 100, while the S&P 500 rose 0.9%, and the Russell 2000 small cap squeaked in a 0.7% gain. But the story of the day was the VIX (S&P 500 options volatility) which plunged to 18, from a high of 31.28 just seven sessions ago taking it back down below the 200 day, 40 day AND 50 day. Likewise the VXN (NDQ 100), peaked at 32.46 and is back to 20.59, 3 points below where it was when it all started, the day of the quake/tsunami! Can someone please explain this kind of complacency with all the problems we are facing globally? TB cannot!  5 points below the 40 day m/a. Either everyone is already positioned for quarterend or biding their time for T +3.

The big bank stocks fared slighty better except BofA and after the Fed rejected their dividend proposal yesterday should fall further as it hugs the 200 day m/a.

Overnight equity markets: Europe mixed around flat;  Nikkei +1.1%; Hang Seng +1.1%; Korean Kospi +0.9%; Indian Sensex +2.9%!!!  U.S. Futures: DOW +18; SPX +2; NDQ +6. U.S. bonds flat to slightly better in the long end, 30 yr 4.47% +1/4. Gold $1433.10 -1.80, after failing in its charge at the 3/7 record high of $1445.70! Crude $105.36 -.25 which also failed to broach  the 3/7 rally high of $106.95. Dollar slightly stronger on Sterling weakness ($1.6076 -$1.18).

…time to end the weak on a soft note after offending some of my friends as they felt lumped among the Goldamn’s of the world, and some among the hedge funds. One long-time friend a hedge fund manager, but not a principal questioned the 15% tax claim, saying he believed that was for private equity. No, it applies to the general partners of either a private equity firm OR a hedge fund as their payment is made to the fund. TB reiterates that as a tax accountant told TB has no justification under the IRS code. Here is the reference on taxation from Wikipedia. But TB’s mission is not to win or lose friends, but to provide the best information possible to readers, unbiased and without regard to personal gain. It is up to the reader to determine what to do with it. Hopefully, it will be used in a manner that improves the world, not enriches anyone. Greed is not good!

In his forty years, nothing has given TB more satisfaction than writing this column – for nothing. But it has enhanced TB’s knowledge of investments and thus made him a better manager of his clients and his investments.

There used to be a saying, coined by the then partnership of Goldman Sachs (note it was not Goldamn then!): think of the client first, the firm second, and yourself last. (Of course he was the managing partner not the lowly salesperson, so it was in his best interest to do so. But it was also good business and had he been greedy he would have transposed the first two goals. To his credit he didn’t…but Goldamn went down that slippery slope following so many others: Merrill Lynch, E.F. Hutton, and another firm TB worked for upon leaving Mother Merrill, L.F. Rothschild.

L.F. Rothschild may have been the best boutique municipal securities firm, but it wanted more capital so it went public in 1986. It then increased its product sectors to first U.S treasuries and agencies (becoming a primary government dealer in 1986…TB asked why they wanted this status and was told “so we can trade with the World Bank and other big clients…TB responded: no dealer has ever made a dime off the World Bank as it is you who has to do the accommodation in competition…e.g. if you win the trade…you lose!), then added mortgages (which when interviewed TB argued against saying that even by going public they would not be able to thrive in this capital intense operation…ultimately it was their undoing, and along with several other firms imploded in the 1987 crash.

What was interesting was in a sales meeting, our new sales manager said: “think of the firm first, the client second, and yourself last.”  To this TB replied, “you have the first two backwards, that is a recipe for going out of business…it fell on deaf ears but proved to be prophetic.

So it is not against all firms or all salespeople, or hedge funds or private equity firms that TB is opposed to, but those people and firms who thrive on their own greed…may they choke on it for the pain they have inflicted on tens of millions of hardworking people and their families. May they find that money cannot buy happiness…and TB believes many have found that as what satisfaction…real satisfaction does one get from seeing something and merely writing a check? A week later he sees the next new thing and wants that…and buys it…casting off the old unless it is high priced and thus starts collecting. But they will never, as many Americans won’t, learn the satisfaction of longing for something, saving for it, and finally buying it…that is priceless.

Yet we live in an era where those who are well off cannot even see the misery that others suffer. Furthermore, they don’t care to know. Instead, the some of the wealthiest

claiming to want to help America by balancing the budget (in a recession??? and yes, we are either still in one, although not statistically, or about to find it again, and who,

like the Koch brothers, fund the teabaggers for their own benefit and must be laughing at the middle-class – if that – fools who do their bidding. Meanwhile the very ‘banks’ that

caused the crisis, have engaged their lobbyists to water down every attempt to prevent another one…which may well be ‘the big one’ and are aided by our, either feeble-minded

or bought and paid for Congress. This is the America we live in…sadly!

Relax and enjoy your weekend!

TB

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