6/16/11…grand ole expiry revisited

Bloomberg Top Stories:

*Ireland Snubs ECB Effort to Avoid Meltdown With Threat to Bank Bondholders

*Stocks Drop, Euro Weakens on Greek Debt Crisis as Swiss Franc Strenghtens

*Greek Two-Year Yield Climbs; Exceeds 40% for First Time

*Europe’s ‘Lehman Moment’ Looms as Greek Debt Unravels Markets

*Goldman Sachs Sees No Panic in Options as VIX Takes Six Weeks to Exceed 20

(Of course they aren’t panicking…they are making money on the trade! TB)

*Wall Street Pushes Back Over Capital as Regulators Weigh Wind-Down Policy

(THE LUNATICS ARE RUNNING THE ASYLUM…with your money! Damn Congress! TB)

*Secretly Financing U.S. Elections Surges With Easy Evasion of IRS Scrutiny

Volume soared to 1.1B shares yesterday while the market tanked and following Tuesday’s 1% Dow…why? First, the selloff was on above average volume vs. rally on below. Second, this week is options expiry and you were whipsawed! Due to the weakness of the past six weeks they pushed the market higher then slammed it. WSJ is now reporting total volume on NYSE listed stocks and yesterday it was 4.2 billion shares! In other words, ¾ of the volume is on electronic trading platforms…mostly flash trades of no value whatsoever! This could be an ugly end to an ugly quarter for equities! Why not? We rallied on increased growth in China – accompanied by increased reserve requirement??? That lasted for just one day! Meanwhile our economy is weakening with David Rosenberg saying there is a 99% chance of slipping back into recession…oh hell, what does he know??? The news on Greece and Ireland is not good!

Yesterday, the Dow fell 1.5%, Transports -1.2%; S&P 500 -1.7%, and all three (both Nasdaq indices and Russell 2000) fell 1.8%!!! Every index was off well more than 1%. Advance/Declines were -5:1! Breadth was -12:1 on the NYSE and -10:1 on Nasdaq…that is about as ugly as it gets!

BofA plunged 2.8% on 212M shares after gapping down on the open and closed at $10.50, barely above the 6/10/11 low and that was lowest close since 5/14/09…beginning of the stock recovery! JPMorgan is at levels of 12/31/10 despite having the greatest banker of all time (sic) running the show. Citi, adjusted for the 1:10 reverse split is at levels of August 2010. Wake up folks!

Even more interesting is the gold miners vs. the ETF. They have delinked as GLD surged on speculative demand (can you call it anything else? The wise play should have been the miners (GDX, GDXJ) which tracked well but with a widening spread until delinking and now the miners are plunging even as Gold trades at $1,530! Explain that – other than excess speculation as we saw in crude and other commodities thanks to Goldamn/Morgan Stanley’s and others commodities index swaps which will trap unwary pension fund investors just as they did in 2008. When will people learn that Goldamn talks out of two sides of its mouth and thus cannot be trusted…except to lie, cheat, and steal? (Lest you think TB was smart to observe the GLD/miners delinking, he just realized the severity of it…never has the spread been so wide…but no one is talking about it…not on CNBC…not on Bloomberg…get real!

Overnight, the Dollar is almost at 76, U.S. Treasuries are rallying sharply with the 10 year now 2.91% +1/2 and the long bonds 4.16% +3/4!!! The aforementioned Gold is $1528.30 +$2.10 while Crude continues to plunge and is now $94.40 -.41…once again the American people have been scammed while the CFTC sits idly by and says nothing wrong here…bullshit!!! Dammit, when will we stand on our hind legs???

…the general rule is if market is down when options expiration week comes there is at least a bounce in the first three days…well that came on Tuesday and then gave it back…in spades on Wednesday in one of the ugliest days you can imagine…everything tanked! There was no safe harbor.

It seems inconceivable with a Congress thinking only of the 2012 presidential election and ideologues of both parties running the show, that we can avoid a double dip. Where are the jobs? Yesterday, J&J announced 1,000 jobs cut and a one time charge. Thanks to our manipulated commodities markets…can their be any other explanation?…the entire world is suffering over bloated gasoline prices…note that crude soared while natural gas – a natural substitute stays at its precious $4 level. So how can we chalk all this up to excess global demand…it isn’t…not even close. In fact, according to Matt Taibbi, it is highly likely that Arab sovereign wealth funds are big players pushing up the price of oil thru commodities index swaps…or at least were…are they exiting now, further driving crude prices while we see only trickle down at the pump? Enjoy your driving summer.

Despite six weeks of weakness in stocks, the VIX, options volatility index on S&P options, traded between 15 and 20 and only yesterday broke out to 21.32…how could we have been so complacent? Goldamn says not a problem…didn’t they say the same of mortgage backed securities and credit default swaps while they played the other side of the trade? VIX above 20 hasn’t been seen since it plunged down on March 23rd so this is not a fluke. This will be an ugly quarter for money managers and their clients.

Yesterday, TB reported that according to Bloomberg the best performing fund is a commodities hedge fund that returned 3.5%…that is 5.5% before deducting their usurious fees. Hedge fund clients are very upset with returns…think that will get better? Also, in discussions with conventional money managers, clients are upset with their fixed income returns…but what can the manager do with such niggardly yields out there? Pray is all TB can think to do.

This is the insidious part of the financial crisis which despite conventional wisdom is very much alive. Those on fixed incomes have a problem…not that those working without raises and in some cases without benefits…think part-timers who want to work full time…are all in the same boat…making due with less…yet the ‘eggspurts’ tell us that edamn will return…how disgusting can they get. Meanwhile, the Koch brothers funded tea party is pushing the GOP to balance the budget and defending the Koch’s and others from paying the taxes that a progressive tax rate demands…those that are told to eat cake are even baking the cake!

Don’t worry, things will get better…they always do..but only when adults start running the Congress AND the presidency. We don’t need any more platitudes or self-serving people on the hill…we need leaders, and they are sadly missing in action. God bless the United States of America!

. . .  – – –  . . .    . . .  – – –  . . .

In case you think TB intoned his anger today, you are correct. Tell him how stocks can have a sustained rally when there is a total lack of transparency in the markets and the SEC sits idly by while travesties occur. How token fines are meted out with penalties of millions on gains of billions? How Jamie Dimon took a $23 million bonus while shareholder value barely improved? How Goldamn paid out huge bonuses with your taxpayer dollars…without which they would have been out of business…and still they control the government and what they don’t the rest of the financial lobby does. How we complain about Medicare costs without doing anything about the costs…health insurance and pharma. How Obama and the Dems sold out to those two groups just so they could say they got a health care bill thru…a bad bill is better than no bill at all.

How is it that Billy Tausig, the GOP senator who crafted the prescription drug act which banned Medicare from buying prescription drugs thus lowering costs, left to head up the pharma lobby and become a wealthy man…wealthier? How he then became a consultant to Obama and visited the White House almost daily helping to draw up the bill. Of course, following the precedent set by Dick Cheney, no notes of these meetings were taken or even that fact that Tausig did this. You wanted change? You got more of the same…but one hell of an orator!

Wake up, it’s later than you think!

TB

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