9/6/11…on the one hand…

This week’s holiday-shortened economic calendar is fairly light in both importance and the number of indicators. The highlight of the week will be the August ISM Non-Manufacturing Survey (Tuesday). We will also get July International Trade and July Consumer Credit (Thursday), and July Wholesale Trade (Friday). In addition, the Federal Reserve will release the Beige Book in preparation for the September 20th – 21st FOMC meeting (Wednesday).


TB made up this word in honor of the Oxford Dictionary of the English Language adding 400 words this year…still to be determined.

Policonomics (Pol-e-conomics) N. The substitution of political ideology for accepted economic theory.


It is an ugly word that best describes the lunatics in government today, the ones we elected!


Bloomberg Top Stories:


*SNB Pledges Upper limit on Franc Value With Unlimited Currency Purchases

*Franc Slides as Swiss National Bank Sets Limit; U.S. Futures Pare Declines

*Yield Spreads Diverging From Ratings by Most in 20 Years – who needs ‘em?

*Hedge Funds JAT, Bridgewater, Brevan Howard Buck Worst Rout in Three Years

*German Factory Orders Fell More Than Estimated in July as Exports Cooled

*GE Beating S&P Through 2013 Sets Profit Goal as Immelt Decade Skirts Abyss

*Global Fund Managers Bullish on Stocks in Third Quarter, HSBC Survey Says

(once again the fools see stocks as attractive, guess the don’t look at returns!)

*Default Swaps on Treasuries Drop to Record Low Against Bunds in S&P Denial

*Israel Loss of Trade With Turkey May Be Costly to Exporters, Fischer Says

*Economies in Peril Proving Voters Aren’t Careful About What Is Wished For

*Tax Cuts Exceeding Republican Plans Seen Included in Obama’s Jobs Proposal

*Obama Approval Rating Drops to Record Low on Economy, Washington Post Says

(Read those last three headlines…you are getting what you wished for from idiots! Obama’s approval; 43%, GOP approval of how they are handling things 28%! Think!)  


Volume plummeted to 3.8B in pre-holiday trading from 4.6 billon shares on the NYSE while trades executed on the Big Board slumped to 756 million from from 1.0B, lowest since July 22. This did not prevent a total rout however which carried over to the foreign markets on Monday (see overnight summary). For the week it averaged just 990 million with the highest being less than 1.3B shares. Compare to the week of 8/8-8/12 when the market tanked and bottomed. The volume on the selloff day was a huge 2.54B, highest of the year and the average for the week was 2.05B. This is pathetic when you factor in the moves and volatility! We 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 then plunged back through it, a bad thing! Advance/Declines were very negative: -2.7:1 vs +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 -4:1!!! vs 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 even worse: -7x! vs +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 -4.7x! vs +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 shrunk to 57 from 71, while new lows nearly doubled to 41 from 22. The ratio has been positive now for four sessions for the first time in weeks, but not by much! The VIX surged on the selloff to 33.92 from 31.82, gapping up on the open and closing a gap created during the rally – negating it! 48 was the selloff high, not seen since 5/21/10: 48.20!


It was incredibly ugly and like the jobs report contained no bright spots: Dow –2.2% vs -1.0% vs +0.5%; Transports -3.4% vs -1.4% vs -0.4%; S&P 500 -2.5% vs -1.2% vs +0.5%; Nasdaq Composite -2.6% vs -1/3% vs +0.1%; 100 -2.3% vs -1/0% vs +0.1; Russell 2000 -3.4% vs -2.5%!!! vs -0.2%. A horrible quarter and getting worse.


A mixed bag following two days of dark red ink, caused by increased recession fears for the U.S., India in the best shape: FTSE +1% BUT vs -3.6%!!! vs -1.5% vs -0.1% CAC 40 +0.2% vs -4.7%!!! vs -2.3% vs +1.3%; DAX +0.5% vs -5.3%!!! vs -2.4% vs -1.6%; Nikkei -2.2% vs -1.9% vs -1.2% vs +1.2%; Hang Seng +0.5% vs -3% vs -1.8% vs +0.3%; Korean KOSPI -1.1% vs -4%!!! vs -0.7% vs flat; Indian Sensex +0.9% vs -0.6% vs +0.9% vs closed. U.S. futures slammed yet still well off their lows: DOW -221 back from -290!!!; SPX -26.40; NDQ -38.25, was off 51!!!


Gold surged to a record high yesterday of $1923.70 before dropping back as it always does on record days lately. Friday it hit $1898.60 before closing at $1874.50 +$22.40! Overnight it is $1898.90 +$22. Crude on the other hand is in a very bad funk. It tried to reach $90 resistance and failed with the high at $88.99, 90 cents below Thursday’s high, and closed at $86.45 – $2. 48. Yesterday in European trading it closed at $83.74 -$2.71 near the session low of $83.64! It is now $84.16 -$2.29 from Friday’s U.S. close…can you spell recession? All of this of course spelled good news for bonds but talk of an ‘operation twist’ has the market strong again…who knows what the Fed will do…or what it CAN do? It is all in Obama’s and Congresses weak hands. 10 yr 1.95% +5/16; 30 yr 3.23% +1-5/16!!!


…you have the GOP led by the Tea Party…if you think Boehner is in charge, think again, and even if he was, he and his cohorts, some of the biggest spenders of all time are still trying to portray themselves as the good guys. The last white hat TB saw in Washington was Reagan’s more than two decades ago.


Boehner has dissed the President of the United States…not Obama the man, by refusing to allow him to speak on Wednesday, and Obama, as has been his m.o., failed to stand up to him. Would someone please explain to him what the bully pulpit is?  So he goes up against the NFL on Thursday night and whatever he proposes will be summarily dismissed by the GOP and the gridlock will increase.


This is disgusting. Grown men…and don’t forget the adult women… behaving like children, unashamed of their behavior and unabashed by it. Meanwhile, everyone in America is now aware of the seriousness of the jobs situation thanks to Friday’s payrolls report…everyone except these looney tunes. For God’s sake, take away their damned pensions…who says the country depends on them to run???


TB has been disgusted with the Sunday talk shows, because there has been no dialogue only people screaming out their differing views. But Sunday was different. Not only that the news had stories on the joblessness.


Listening to NPR…another thing the GOP loathes, perhaps because it has dialogue and differing views unlike FOX, TB heard about the Oxford Dictionary story mentioned at the top of the page. So it caused him to create the word ‘policonomics’ which seems appropriate for the current sick environment.


We so need a third party to get us back on track but it seems the will and money are sadly lacking. If not, TB fears the worst will happen. Remember tea bagger advocates he warned you to be careful what you wish for…confirmed in the Bloomberg story shown at the top of the page.


How can you possibly get the economy back on track by cutting expenses? There are things that can be done…taking the limit of social security taxes…correcting the flawed Medicare Part D that Dubya created with the full support of Congress. Investing social security funds in something other than treasuries…miraculously the GOP is back to letting people invest some of the funds…the original Bush plan – what funds? They say it is broke? Instead it is earning zero and allowing the government to spend more…why hasn’t anyone addressed this?


On Friday, TB pointed out that a major flaw in the stimulus was spending money on ‘shovel ready’ projects. These were already budgeted or needed, such as street repair and thus did not create jobs merely stop people from being laid off, which isn’t all bad, but the point is it didn’t help solve the problem. We need major infrastructure repairs and improvements: the power grid…you do remember that?; interstate highways and bridges…the retrofit of the Oakland Bay Bridge has now taken 17 years…and that was an emergency retrofit!


One GOP representative the other day said that FEMA isn’t the answer to disasters, it is the problem. His solution: make disaster relief the responsibility of the states? Doesn’t this fool read the papers? The states who cannot have deficits are broke! Also, disaster relief creates jobs and improves infrastructure…but if this is done the GOP wants it taken out of other programs. You cannot create jobs and balance the budget at the same time…and truthfully they have no intention of doing this. Merely cutting back spending to levels that were exhoribant in the first place and engineered by the GOP under Dubya.


There, got that off the old chest. So what is Obama going to do? Out-tax-cut the GOP, that’s what. Can hardly wait for the results of the Special Committee on the Budget. Every economist has said we have to find new ways to stimulate the economy yet in their desire to oust Obama…and “replace him with what” as Sarah Palin says. But the Tea Party and emotion…is in total control and doesn’t care. Obama can propose all he wants but don’t count on it. Why hasn’t the GOP gone after for-profit colleges that subsist off taxpayer money in form of student loans? Take the subsidies from the oil companies and enact a serious energy program…substituting natural gas which is plentiful would lower energy costs and keep money at home.


While this section is supposed to be on markets, tell me this isn’t what is affecting markets? Also, tell me how GOP members can follow the flawed Ayn Rand advice that government regulation is the problem. Easy, by lumping financial market regulation which is sorely lacking, with obtuse regulations that have no income producing or public safety value. What could be more compelling than that?


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


If you heard Michele Bachmann on Face the Nation Sunday, you should be wondering how this woman can be running for the presidency. Initially, her comments made sense but Bob Schiefer introduced a clip wherein she said we aren’t listening to God and if an earthquake and hurricane can’t do it what will. He asked her is she believed this? She said it was just a joke…hmmm didn’t the duck’s voice in the AFLAC commercials lose his job for this? He asked twice more if she believed it. She skirted the question both times. If she honestly believes this…and Rick Perry continues to drag the name of God into his campaign…is that the future of the GOP? Let God handle it? It appears to be the case.


TB is going to end on a positive note. Joyce Kearns Goodwin, one of the brightest and most gentile people on the talk circuit was on with her son Joseph, who enlisted in the Army right after 9/11. He had some wonderful observations. A Second Lieutenant with a Harvard degree he posited that if only Dubya had asked people to do something for their country after 9/11 (it worked under Kennedy), instead of telling them to go shopping we might not be where we are today. He pointed to the lack of service or concern of young people for anything but themselves and that they have never worked on a team to accomplish anything. Perhaps this is what is wrong with Congress. TB’s generation must accept responsibility for this as the Viet Nam era ushered in distrust of government and our kids were taught this. No need to pay back…no need to do anything for others. Furthermore, we ignored our parents admonishment to save…instead spending not only our future earnings but their money we inherited…all on material things.


Through people like Joseph Kearns Goodwin however, and Pat Tillman perhaps there is hope for us. It is a stretch but the savings rate is going up…slowly but near 5% from sub-zero. It is the right track but one government does not want us to pursue…after all, like the CEO’s the emphasis is on the short-run…borrow and buy.


We have a chance to make a difference…make America a better place to live when it is already the greatest country on earth in terms of opportunity and personal freedom (even with the loss of some of it since 9/11). How can our elected politicians say they are doing things like holding the debt ceiling hostage possibly say they are doing it for future generations…they are not…we must change that. You can change that by voicing your opinion and VOTING. Voting with your brain not your emotions or looking at just what is best for you right now. Think!


Have a great week…short as it is.




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