7/27/11…doomed to failure

Bloomberg Top Stories:

 

*U.S. June Durable Orders Fall 2.1%; Ex-Transportation +0.1%

*Stocks Drop, Euro Weakens as Spanish, Italian Bonds Fall on Debt Concern!!!

*U.S. May Lose AAA Rating Even With a Debt Deal, BlackRock, Templeton Say

*Debt-Ceiling Deadline Drives Buyers to Wal-Mart, EDF Bonds

*Bernanke May Need to Stay ‘Above Politics’ in Standoff Over Debt Ceiling

*Boeing Raises Full-Year Forecast After Second-Quarter Profit Tops Estimate

*Default of $4.2 Billion CDO Pits Bundesbank Against Lehman in London Court

*Delta Air Lines Profit Trails Analysts’ Estimates on Increasing Fuel Costs

*Private Equity Lobbyists Claiming No systemic Risk Aim to Avoid SEC Review  

(Isn’t that what lobbyists do? Deny, deny, deny and what does it get us? TB)

*Cargill Defines Food Chain While Excoriating government Hoarding Policies

*Boehner Fights Strife Within Republican Party on Veto-Threatened Debt Plan

 

Volume was higher at 3.8B shares while Big Board volume rose to 837 million, still low but highest in a week. Meanwhile the VIX surged to close at 20.23 from 19.37 now well above the 40, 50, and 200 day moving averages all clustered at 18.36-18.74 major support.

 

All indices were down for a second day except the Nasdaq 100 which rose 0.2% vs -0.6%. The Dow fell 0.7% for a second sesson, Transports -1.3% were the big loser vs -0.3%, and the S&P 500 fell 0.4% vs -0.6%. The Nasdaq Composite was off just 0.1% vs -0.6% while the Russell 2000 was off 0.8% vs -1.1%. New 52 week highs plunged for a second day to 82 from 106 vs 192 vs 262, while new surged to 102 from 77 from 50. This is only the second time in months that the ratio has been negative! Advance/Declines which were -1.9:1 vs -4:1 on the NYSE and -1.8:1 vs -3.3:1 on Nasdaq while Breadth was -1.4x vs -3.5x on NYSE and -1.1x vs -2.5x on Nasdaq. Bonds ended the session stronger but still hovering around support on an  inside session.

 

Overnight global equities are weaker, except Korea: UK’s FTSE -0.5% vs +0.1%; French CAC 40 -1% vs -0.5%; German DAX -0.6% vs flat for two days; Nikkei -0.5% vs +0.5%%; Hang Seng -0.1% vs +1.3%; Korean Kospi +0.3% vs +0.9%; Indian SENSEX -0.5% vs -1.9%. U.S. Futures are modestly weaker but they were up and we still had a down session yesterday: DOW -22; SPX -6.20; NDQ -12.25. Gold is $1626.70 +$7.40 after hitting another record high of $1629.20 overnight, while Crude is $98.53 -$1.06 U.S. treasuries are weakening again: 10 year 2.97% -3/16 but at least it is below 3% again; 30 year 4.30% -5/16.

 

…Mr. Boehner would have us believe that he not only has a plan to get through both houses but that Obama will sign. He cannot sign it for two reasons: first, it is for just six months and that would allow the GOP and its tea party contingent to hold us hostage again; second, it requires that the budget be balanced each year which is not only stupid but will tie the governments hands in any economic emergency. Even so, the tea party holds the trump card and has a plan of its own. Boehner must know that he is not in control of his own party, if not, TB has already given him too much credit for smarts.

 

Even IF it can pass and IF Obama signs it, the rating agencies will undoubtedly cut the debt rating to AA and the GOP will have this albatross on its back. Already most people blame them for the stalemate and if they succeed it will get very ugly. They have totally glossed over the fact that spending cuts mean lost jobs and use the unlikely assumption that this will spur corporate hiring. They believe this because…??? Oh yes, the uncertainty will be removed.

Consider the implications of a budget that has to be balanced each and every year. What would Japan do right now? What if we had a major catastrophe…or the wars that the last president and his Congress got us into. A friend pointed out that most of the Scandavian countries have balanced budget rules but that they are over four or five year time frames…note that they have AAA ratings and their debt trades richer that U.S. treasuries so they must be doing something right. But the buffoon’s here want to make no allowance for the economic and catastrophic events that have become commonplace.

 

This brings us to another falsehood: small business. The U.S. Chamber of Commerce says they represent this class, others claim to have talked to small businesses but this is not what they are doing…they are talking to THEIR definition of small businesses which are not all that small. Not many businesses which you would define as small have the same goals of worrying about incomes over $250,000 which have reaped rewards for the past ten years losing their tax cuts which were supposed to be temporary and never did add to economic growth as promised by Dubya & Co.

 

OK, those of you who are sick of blaming the GOP take a heads up here for you are about to see equal time. In Calfornia, which has not yet figured out that TB has moved, his former Rep. John Garamendi (D), sent out an infuriating email yesterday. First, Garamendi, a former Insurance Commissioner, and old school pol, barely defeated an unknown Republican for Ellen Tauscher’s seat (she went off to help Obama and hasn’t been heard from since). Here is the lead to the video that Garamendi sent out after being on the Ed Show:

 

Congressman Garamendi Says “No and Hell No” to Social Security, Medicare, and Medicaid Cuts on MSNBC’s Ed Show

 

There should be a special place in hell for elected officials who refuse to believe there is a problem and this shows the same inane stupidity that the other side is using. He thinks it will all go away…it won’t without reform.

 

Since politicians have called Social Security “the electric third rail” they chose to ignore a growing problem. One which Canada solved by reducing benefits and allowing the fund to purchase corporate bonds instead of government securities. To get the most bang for the buck, our government invested the money in treasury bills, now yielding less than 0.1% and which will severely worsen the problem but due to government failure not the program itself. So once again, in order to get re-elected both sides chose to ignore the problem. In fact, we are lucky since other countries have way more younger people supporting seniors programs.

 

We need a serious discussion and plan without the rancor and rhetoric. So there you have it, we are being led by fools…worse, fools with agenda’s and bettering America for its majority is not one of the items on it.

 

Now you see both sides of the picture and how difficult it will be to achieve balance for the common good.

 

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

 

A friend sent this: I was so depressed last night thinking about the economy, wars, jobs, my savings, Social Security, retirement funds, etc., I called the Suicide Hotline. I got a call center in Pakistan , and when I told them I was suicidal, they got all excited, and asked if I could drive a truck.

 

Have a great day…and hope that our ‘leaders’ can come to their senses.

 

TB

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: