7/19/11…as predicted

Bloomberg Top Stories:

 

*Housing Starts in U.S. Jumped 14.6% to 629k, Permits Rose 2.5% - weather!  

*Stocks Rise in Europe on Novartis Profit, Euro Rallies, Commodities Gain

*Nowotny Signals ECB May Compromise on Greece as Leaders Scramble for Deal

*Goldman Sachs Second-Quarter Profit, Revenue Trail Estimates, Shares Drop

*BofA Posts Record Quarterly Loss on Const of Bad Home Loans – surprised?

*Wells Fargo Profit, Revenue Top Estimates as Costs to Cover Bad Loans Drop

*Johnson & Johnson’s Second Quarter Operating EPS, Sales Exceed Estimates

*Top U.S. Economy Forecaster Crandall Sees Stronger Growth in Second Half?

(says only problem is employment…where does he think the jobs will come from?)

*Apple Profit Seen Rising 69% as IPad Buying Makes Up for IPhone Sales Lull

*House Set to Pass Doomed U.S. Spending Cut Bill With No Debt Deal Immenent

 

Volume was slightly lower at 3.7B shares while Big Board volume dropped to 874 million from 1.07 billion, highest and first 1B+ day since June 24th. Meanwhile the VIX traded to 21.93, highest since 6/20 before closing at 20.95 vs 19.53. The 40, 50, and 200 day moving averages are all clustered at 18.10-18.47. Watch!

 

The Dow fell 0.8% vs +0.3% setting the stage for another down week.; Transports +1.1% vs -0.1%, this after plunging 1.2% Thursday; S&P 500 -0.8% vs +0.6% vs -0.7%; Nasdaq Composite +0.9% vs +1.0% vs -1.2%; 100 -0.5% vs +1.4% vs -1.2% Russell 2000 the biggest loser -1.6% vs +0.7% and after plunging 1.6% Thursday. New 52 week highs plunged to 84 from 109 where they have been pretty steady while new lows surge to 171 from 90, turning the ratio negative for the first time in months…not a good sign. Advance/Declines ran -5:1 on the NYSE and -5:1 on Nasdaq, while Breadth was -11x on NYSE and -6x on Nasdaq!!! Watch out below.

 

Overnight European equities are up while Asia is mixed: UK’s FTSE +0.5% vs -1.1%; French CAC 40 +1.3% vs -1.5%; German DAX +1.3% vs -1.2%; Nikkei -0.9% after holiday; Hang Seng +0.5% vs -0.3%; Korean Kospi flat vs -0.7%; Indian SENSEX +0.8% vs -0.3%. U.S. Futures rallying…beats TB: DOW +69; SPX +8; NDQ +16.50. Gold is $1603.90 +$1.50 after hitting another new record high of $1610.70, while Crude is $97.01 +$1.08 very volatile lately, on the 40 day while the 200 day m/a is sup at $94.23. U.S. treasuries mixed: 10 year 2.95% -5/32; 30 year 4.30% +5/32.

 

…when control of the House turns over it is a good idea to not say you have a mandate but determine what that mandate is. The Dems thought it was for change when it was frustration with the GOP on jobs. The GOP thought it was to cut spending with no new taxes of any kind. Both were wrong and both parties warned the other when they took control not to see it as a mandate…both times it fell on deaf, egocentric ears. The GOP, after you take out the hellacious noise of the tea party was elected to do what Obama and company failed to do: create jobs!

As for a balanced budget amendment, it is being sold on the same basis as the debt ceiling: we can’t control ourselves so we have to be forced to do it…unconditionally. How can any intelligent person not have noticed what would have happened had that been in place in 2008? We, and the rest of the world would have continued in a death spiral. One only has to look to our states…see comments on Minnesota below…who are mandated to have balanced budgets…and can’t agree or have to do so with drastic cuts to education (who cares if you are sending YOUR kids to private schools), and other essential services. It lacks the flexibility to react to rapidly changing domestic and international events.  Pass it and see how we do in the next…coming?…financial crisis.

Then there is the issue of the new consumer protection agency. Last night on NBR, there was a debate between an economist and a guy from the U.S. Chamber of Commerce. The claims by the USCC that it will curtail business are absurd except for the types of activities that we have suffered through and if you have tried to read the fine print on a loan or credit card statement you know why we need regulation. Since 2000, and the ante upped in 2008 when Justice decided to outsource regulation of business practices, Main Street has been at the mercy of Wall Street and THAT, was primarily the cause of the housing bust…aided by individuals trying to get in the game. You hear a lot about having ‘skin in the game’ …well now nearly 50% of homeowners have only THEIR skin in the game…while the bankers and brokers have become and continue to get wealthier…and at the expense of their shareholders. The USCC purports to represent the small business man…but that is because of their definition of small…which does not appear to include what WE consider small and who are forced to finance their operations through credit cards. The bankers, led by Jamie Dimon, whose JPMorganChase has amassed numerous civil and criminal investigations of fraud and abuse, led the charge against Elizabeth Warren through innuendo, along with their big lobbying effort, and is now opposed to the new candidate, a former state attorney general who went after the banks on mortgage fraud. 44 GOP senators have signed a pact to oppose ANY candidate…to TB that tells the entire story…and you, dear friends and readers, will pay for it. Very sad.

A poll came out yesterday showing that 44% blame Obama for the debt ceiling stalemate while more than 50% blame the GOP. Wait, it gets worse. 55% of Republicns said that revenue INCREASES should be used with budget cuts to reduce the debt, along with 53% of Dems. The GOP and its fragmented list of 2012 candidates is not in a good position…think how it will look if they don’t raise the debt ceiling.

 

TB has said all along…politicians are not elected to do what their constituents tell them to do but to compromise to get things done…i.e. THINK! LEAD! Our government is sorely lacking in these two abilities. This should be particularly obvious to the GOP who is running scared of the teabaggers as they try to hold their coalition of moderate republicans, fundamentalist Christians, and the tea party together…that is one bad mix. As for the Dems? There is no there, there.

 

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

 

Today is the 19th day that Minnesota’s economy has been held hostage to a lack of a budget. Despite a deal being announced suddenly Friday, neither party’s members are happy and delays are even keeping it from a vote.

 

Another ruling by a judge on a request that liquor licensing divisions be opened to process expiring permits. DENIED! This means that bars, restaurants, and liquor stores will be joining the ranks of Coors in falling victim to this financial blunder…there is also the loss of lottery and fishing license fees which are damaging tourism…all in the name of SAVING us money. Pullease!!!

 

By the way, in California the only time anyone refers to the ‘dew point’ is in conjunction with fog and frost. In Minnesota, where the dew point (where air condenses to moisture) has been running over 80 degrees for days~ Last night, TB went outside after seeing windows fogged over and it was 75 degrees and felt like a steambath…not pleasant.

 

Have a wonderful day!

 

TB

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