8/10/11…just like a rubber ball

Bloomberg Top Stories:


*U.S. Stock Futures Retreat After Rally in Benchmark S&P 500, Dow Averages

*U.S. Stocks Fall Amid Concern Europe’s Sovereign-Debt Crisis Will Worsen

*SNB Steps Up to Weaken Franc Surge by Boosting Liquidity to Banks

*France in Crosshairs as Germany Enjoys Sole Safe-Haven Status

*Downgrade Doesn’t matter as Bond Investors Show Faith in Fed After S&P Cut

*Bernanke Record-Low Rates Pledge Blunted by Europe Turmoil

*White House Seeks Ideas on How to Convert Foreclosures Into Rental Homes

*Cameron Prepared to Use Water Cannons on Rioters as Calm Returns to London


Here are last three days NYSE volumes: 8.9B shares, 9.7B shares 8.6B shares, highest in 30 months. Big Board volume has been 2.4B shares, 2.54B shares, 2.25 billion, all three highest since June 2010! The S&P VIX which came back in to 35.06 from 48, the highest since May 2010’s 48.20. For anything higher you have to go back to March 5, 2009 just about when the stock market finally bottomed. But this does not feel like a bottom. Yesterday, merely was a dead cat bounce.


We have had two up days in 13 sessions, with Monday being a devasting rout that was about 2/3 of Monday’s decline. Dow +4% vs -5.6%, Transports +4.5% vs -7.0%; S&P 500 +4.5% vs -6.7%; Nasdaq Comp +5.3% vs -6.9%; 100 +4.9% vs -6.1%; Russell 2000 +6.9% vs -9.9%. New 52 week highs rose slightly to 23 from 10 – they had been running in the hundreds, while new lows nearly dipped to a still-high 1363 from 2133. That puts the ratio at -57:1, back from an incredible -213:1 from -93:1 both of which are unbelievable,and it has now been NEGATIVE for TEN straight sessions! Advance/Declines were positive but compare: NYSE: +13:1 vs -252:1 and +5:1 vs -22:1 on Nasdaq, while Breadth was +29x vs -81x! on NYSE and +19x vs -139x! on Nasdaq.


Overnight European equities are weak while Asia is rallying, reversing yesterday: UK’s FTSE -1.2% vs +0.1% vs -2.2% vs -1.9%; French CAC 40 -2.3% vs +0.4% vs -2.5% vs +0.4%; German DAX -1.5% vs -1.7% vs -3% vs -1.5%; Nikkei +1.1% vs -1.7% vs -2.2% vs -3.7%!!!; Hang Seng +2.3% vs -5.7% vs -2.2% vs -4.3%!!!; Korean Kospi +0.3% vs -3.6% vs -3.8% vs -3.7%!!!; Indian SENSEX +1.6% vs -0.8% vs -1.8% vs -2.2%. U.S. Futures are getting slammed again indicating yesterday’s move was not Fed related but shortcovering: DOW -254; SPX -27.80; NDQ -49. Gold is $1768.10 +$25.10 on an inside session after a new record high of $1782.50 yesterday, while Crude is up but weak, $80.80 +1.60. U.S. treasuries are strong again: 30 year 3.54% +1-9/32; the 10 year 2.15% +7/8. Strong 3 yr note auction yesterday, 10 year today.


…just as the selloff Monday and 2/3 retracement indicated the selling was heavily index-based in a take no prisoners trade. Yesterday, despite the hope of more Fed easing, the market fell back after rallying early then rallied strong into the close on the Fed announcement of no tightening until mid-2013…but with three dissenting votes and no further stimulus provided. That created a massive shortcovering rally…what other reason was there to rally.


TB will be off line until Wednesday due to family matters. Nothing serious, just won’t have time to write. Perhaps things will have settled out by then…or not.


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


As if it wasn’t bad enough that the Obama administration issued that damning statement on S&P’s downgrade, rather then cite their flaws, and heed the warning on a lack of government accountability. This is a tragic failure to lead. Worse, Treasury Secretary Geithner, who has decided the country needs his presence in these trying times, echoed the same thoughts…he, who is charged with protecting the stability of the dollar.


As for the $2 trillion accounting error by S&P…it may well have been but the government numbers are based on false assumptions and so TB believes in the end they might be right and the government, as usual, horribly wrong.


No one came out in defense of S&P, and Boehner blamed Obama as did John McCain. This is Washington politics at its worst…or is it merely on its way to the worst.


TB hates recall elections…witness California’s of Gray Davis for problems caused by Enron. Schwarzenegger replaced him and borrowed his way out of it resulting in fiscal problems for California.


Yesterday, Wisconsin held six recall elections of Republicans. All but one easily beating the Dem opponent and that one is too close to call. GOP will see this as a mandate, while TB sees it as the Dems offering no solution but more of the same. Why change horses in mid-stream if your options are not good? The recall was a very bad idea.


One last thing: Gov. Rick Perry of Texas is being praised after his prayer rally for knowing how to grow the economy. Ahem…for three decades, after the collapse of oil prices that took down Penn Square and Continental Illinois? Texas is about oil (it is also, along with the rest of the southern Midwest in the worst drought since at least the Dust Bowl days). Texas did not share in the housing boom…why? Because oil wasn’t part of it until 2008 when speculation drove the price up. But the question is: with oil back to $80 a barrel will the boom continue? Perry, like Clinton is a very lucky man.


Until next Wednesday, all the best,




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