9/1/11…what would Judge Green say?

Bloomberg Top Stories:


*Jobless Claims in U.S. Decline by 12,000 as Impact of Verizon Strike Wanes

*London Biggest Loser as Banks Look to Book Trades Overseas to Reduce Costs

*Swiss Franc Climbs, Euro Weakens Against Dollar on Economic Growth Concern

*Bonds Beat All Investments ass S&P Downgrade Turns Treasuries Into Favorite

(…but the Bond King said short them…how Gross…but is back long again – caution)

*AT&T’s $12 Million Lobbying Spree Fails to Prevent Rare Antitrust Setback

*T-Mobile Antitrust Challenge Leaves AT&T With Little Recourse on Takeover

*No GM Buybacks or Dividends in Sigh at Pension Deficits Freeze Cash

*Silver Poised for ‘Golden Cross’ Advance to Record $50 – above 40,50,200 day m/a

*Entrepreneurs Still Hurting as U.S. Expansion Providing Few Opportunities

*Free Libya Awaits Paris Unveiling as new Leaders Push UN to Release Assets

*Obama Resolves Dispute With Boehner by Delaying Jobs Address for One Day

*Competition for Retired Generals to Rise as Vendors Seek Edge Amid Cuts


Volume rose to 4.6 billon shares from 4.0B shares on the NYSE while share

executed on the Big Board rose to 1.27B from 1.0 billion, following Monday’s 912 million share ‘rally day’, lowest since July 26th…that was the day before stocks fell off a cliff. Note also that we had a ‘double top’ in July with the first coming on 7/7 and the second on 7/24, which could prove ominous. We took out the TRIPLE TOP of the bounce from the 8/9 lows which were lowest since 9/17/10 on Tuesday with little follow thru yesterday! %. Advance/Declines were positive again but not impressively: +2:1 vs +1.8x vs +1.5:1 vs +5:1 vs -3.3:1 vs +2.3:1 vs +5.5:1 vs -1.2:1 on NYSE and 1:1 vs +1.1:1 vs +7:1 vs +4:1 vs -4:1 vs +2:1 vs +4.8:1 vs -1.2:1 on Nasdaq. Breadth was similar: +2.5x vs +1.3x vs +31x!!! vs +9.5x vs -3.1x vs +3.4x vs +4.4x vs -1.2x on NYSE and +1.1x vs +1.2x vs +39.5x!!! vs +8x vs -9x vs +2.6x vs +6.2x vs -1.3x on Nasdaq. New 52 week highs were steady and have lost their mojo 71 from 72, while new lows continued to slide to 22 from 33 from 228!!! – the high was 616 last Friday! The ratio has been positive now for three sessions for the first time in weeks, but not by much! The VIX slsid again but remains above 30, to 31.62 -1.27. 48 was the selloff high, not seen since 5/21/10: 48.20!


It was a mixed and unimpressive day: Dow +0.5%; Transports DOWN 0.4%; S&P 500 +0.5%; both Nasdaq indices up just 0.1%; Russell 2000 DOWN 0.2%. Scorecard:


August    QTD       YTD

Dow Industrials  -4.3%     -6.5%      +0.3%

Dow Transports   -9.0%!!! -14.0%!!!   -8.6%

S&P 500          -5.3%     -7.7%      -3.1%

Nasdaq Composite -5.4%     -7.0%      -2.8%

Nasdaq 100       -4.8%     -3.6%      +1.1%

Russell 2000     -8.3%    -12.2%!!!   -7.3%

NYSE Financials  -9.1%!!! -13.0%!!!  -13.4%!!!


Note that only two indices are up for the year and by 1% or less! This is pathetic in a ‘recovery.’ Worse, look at the financial sector which everyone says is a screaming buy. Don’t bet on it and certainly don’t look for any significant dividend increases. We have been duped…again!


Overnight European equities are weak, Asia little changed except Japan: FTSE -0.1% vs +1.02% vs +1.8% vs closed vs -1.1% vs -0.4% vs +0.8% vs +0.5% vs +2.3% vs -1.5% vs -2.7%; CAC 40 -0.7% vs +2.2% vs -0.3% vs +1.6% vs -1.7% vs +0.3% vs +1.3% vs +1% vs +2.3% vs -1.6% vs -3%; DAX -1.6% vs +1.9% vs -1% vs +1.2% vs -2.2% vs -0.1% vs +2.4% vs +07% vs +1.3% vs -2.7% vs -3.8%!!!; Nikkei +1.2% vs flat vs +1.2% vs +0.6% vs +0.3% vs +1.5% vs -1.1% vs +1.2% vs -1% vs -2.5% vs -1.3%; Hang Seng +0.3% vs +1.6% vs +1.7% vs +1.4% vs -0.9% vs +1.5% vs -2.1% vs +2% vs +0.5% vs -3.1% vs -1.3%; Korean KOSPI flat vs +2% vs +0.8% vs +2.8%!!! vs +0.8% vs +0.6% vs -1.2% vs +3.9% vs -2% vs -6.2%!!! vs -1.7%; Indian Sensex closed vs +1.6% vs +1.6% vs +3.6%!!! vs -1.8% vs -0.9% vs -1.3% vs +1% vs +1.2% vs -2% vs -2.2%. U.S. futures were weak but came back to little changed following jobless claims: DOW +4; SPX -0.50; NDQ +3.50. Gold pretty much unchanged for the past two sessions after plunging Friday. Gold has nearly offset the huge four day decline from the big record high of $1917.90 set last Monday and is now $1,830.00 -$1.70. As for Crude, it too is stagnant, but remains weak: $88.59 -.22. First resistance is at $90, then $92-95. Meanwhile, bonds were trashed again yesterday and are only slightly higher overnight: 30 yr 3.55% +3/8; 10 yr 2.21% +1/8.


…is TB the only one who remembers Judge Green? Well…for those of you who don’t, he is the judge that had the guts to break up AT&T amid cries of how it would ruin a great phone system in this country. Instead it was a great boon to consumers by breaking up the last monopoly in the U.S. Out of it came the many regional Bells and increased competition which meant lower rates. Imagine what your phone bills would look like today if this not happened? Flat rate fees? You have to be kidding! But like the Hydra of Greek mythology it morphed itself gradually until it was big again but competition still caused rates to fall. Then along came cell phones and despite the big boost of having an exclusive on the iPhone for more than a year, Verizon and others held well.


So what did Ma Bell do? Try to buy up the competition. T-Mobile would have been a huge victory. But in a rare revival of regulation…something the SEC, FDA, and other agencies should have done long ago, they fought for the consumer! Competition is good. So much for the myth of ‘free market capitalism.’ It ain’t free when a company spends $12 million lobbying for their cause. It is bribery. Why isn’t this illegal? Because the slanted Supreme Court in a 5:4 decision says a corporation has first amendment rights to spend as much as it pleases to influence elections and legislation. This is also why the financial sector is in total control of regulation and why we, the people are held to blame.


Can you imagine the arrogance of AT&T to think there was no possible challenge by Justice? They thought the game was rigged in their failure and it will cost them dearly as now they have to pay a break-up fee to T-Mobile. Imagine all those highly paid lawyers and accountants with egg all over their Cheshire cat grinning faces. Power to the consumer!


This reminds TB of the farmer who saw a friends new outhouse and had one designed to ‘up’ it. He had a beautiful brick one built by a renowned architect. People came from all over to see it. But after a month or so it began to stink. No matter what he did it wouldn’t go away. So he called the architect who came over and examined it thoroughly. Shaking his head he said, “I don’t get it…this has never happened before…someone crapped in here.” Form over function! …and yes, @%&# happens!


The smart money is on the sidelines despite the one week drop in initial jobless claims to 409k due to waning on the Verizon strike. Box score: 400+ = 4 wks; >400k ONE week! TB’s bet is payrolls are very weak tomorrow and hurricane will also make next months numbers weak. As for jobless claims however they may fall for one week due to filing problems…don’t be misled, economy is weak! You saw plunge in Investor Confidence in Germany and here it fell to below the neutral 50 – 44!


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

Who is the President of the United States? Obama? Boehner thinks it is himself! No, the President is a symbol…one to be respected. It doesn’t matter if you loathe the man it is the position you are demeaning when you ‘diss’ him as the rappers say.


Yet that is what John Boehner did once again…and Obama, taking the high road caved. He had asked through his Chief of Staff, John Daley, to address a joint session on Wednesday to lay out his jobs plan. Initially, the Speaker said ‘OK’ but then said no because they had a House vote at 6:30pm that night. Now remember Congress is still in recess…and as one pundit said…Obama should have said “can’t you have them go to work a little earlier?” This is insolence and disrespect of the worst sort. Of course, Obama could have overruled but that would have been even more devisive. So why the one day delay and what is the big deal? Because that makes in on Thursday – the first night of the NFL season and the Super Bowl champion Green Bay Packers are playing. They are hoping for fewer viewers…this on an incredibly important topic. Also, they keep saying he never proposes anything but when he tries this is what he gets: disrespect…not for Obama…for the office! Of course, this might just backfire on them…perhaps more viewers? They should delay the game!


If you want this kind of government just keep letting this vile nonsense continue. Cheer for your party and laugh at the results. It is a sad time for America and one our founding fathers would be totally disgusted about. Time to do something, ya think? Or do you want Wall Street and AT&T to continue to run the country? Free market capitalism is based on a myth that a corporation would never do anything against its long term best interests…the myth is they always tried to cheat, and now with the emphasis on the short-run (read CEO tenure), who gives a damn about the long-run? Only those who were taught to buy and hold and are left holding the bag.


Look at market correlation. There is no diversification…none…you can’t diversify when the market is rigged by derivatives and flash trading. The only way is to trade and hope you are right. But the success of trading has serious limits.


One last thing: Cheney’s autobiography is out and now he is blaming Condolezza Rice for misinforming Dubya on North Korea’s nuclear capabilities. This from a man who faked an injury so he would not have to stand at Obama’s swearing in. As for Rice, there is no one in the GOP who has been more loyal to her boss…sadly. But then Cheney obviously believed HE was her boss.


Have a good day in trying times!




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