9/8/11…we need help!

TB’s Quote of the Day: “Never give a sucker an even break.” – W.C. Fields, and wholeheartedly adopted by Wall Street with the full blessing of the GOP.


Bloomberg Top Stories:


*Trichet Says Risks to European Economic Outlook Have Moved to the Downside

*Euro, Stocks, U.S. Futures Drop as Trichet Sees Threat to Region’s Economy

*U.S. Trade Gap Shrank More Than Forecast to Three-Month Low $44.8 Billion

*U.S. Stock Futures Extend Loss on European Outlook, Weaker U.S. Jobs Data

*Asian Central Banks Hold Interest Rates Amid Threat of Slowdown in Exports

*Bartz Loses More Than Email When Yahoo Quarterly Revenue Disappoints

*Toyota Boosts Japan Ship Lines as Dry-Bulk Rates Tumble – strong economy???

*Corn Crop Shrinking as Hottest Summer Since ’55 Spurs Record Harvest Crop

*Moynihan Tries to Keep Bank of America Intact as Mortgage Loans Fall Apart

*Dalio Returns 35% on Diversified Bets as Markets Convulse; - Bridgewater wins!

*Obama Will Challenge Republicans to Act or Share Blame in Address Tonight

*House Democrats Bank on Buyerss Remorse in Steep Climb to Retake Chamber


Today the bad news first to be fair and balanced…Volume DECLINED to 3.9B shares from 4.48B shares almost as low as Friday’s 3.8B for NYSE stocks while trades executed on the Big Board declined to 954M shares, lowest in six sessons from 1.12B shares vs Friday’s 975 million. Why is that bad news? BECAUSE THE MARKET STAGED A MAJOR RALLY, that’s why! Note that last Monday’s rally on 912M shares was lowest since July 26th, while Tuesday’s massive early morning selloff to catch up with Europe’s Monday rout, was on higher volume…this has been the case since the market peaked in 2009. We also had a ‘double top’ in July with the first coming on 7/7 and the second on 7/24, which was never broached and negates the recent rally. In just three sessions we nearly obliterated the entire rally. Advance/Declines were very positive but suspect: +9:1 vs -2.6:1 vs -5.6:1 on NYSE and +5.5:1 vs -2:1 vs -4.6:1 on Nasdaq. Breadth was hugely positive but look at the past: +18x vs -3.8x vs -19x -7x on NYSE and +26x vs -1.9x vs -14x vs -4.7x on Nasdaq. New 52 week highs were up slightly to 38 vs 36 while new lows, which exploded to 467 Tuesday, dropped to 55…but the important thing here is the ratio is STILL negative! The VIX dropped sharply and closed at 33.38 vs 37 but that is just back to Friday’s level! 48 was the selloff high, not seen since 5/21/10: 48.20!

Stocks rallied on better European news…to hell with the U.S. economy…which is where it is headed, U.S. stocks rallied…albeit on low volume indicating an absence of sellers before the GOP debate and Obama tonight. Look at the last four sessions…all appear to be net negative to TB! Dow +2.5% vs –0.9% vs -2.2% vs -1.0%; Transports +3.4% vs -0.9% vs -3.4% vs -1.4%; S&P 500 +2.9% vs -0.7% vs -2.5% vs -1.2%; Nasdaq Composite +3.0% vs -0.3% vs -2.6% vs -1.3%; 100 +2.6% vs flat vs -2.3% vs -1.0%; Russell 2000 +4.2% vs -0.4% vs -3.4% vs -2.5%. At least they trimmed the losses!

European stocks slightly lower, Asia a tad better but still slightly negative:  FTSE -0.6% vs +2.1% vs -3.6% vs -1.5%; CAC 40 -0.3% vs +2.9% vs -4.7% vs -2.3%; DAX -1.1%!!! vs +3.8% vs -5.3% vs -2.4% vs -1.6%; Nikkei +0.3% vs +2.0% vs -1.9% vs -1.2%; Hang Seng -0.7% vs +1.7% vs -3.0% vs -1.8%; Korean KOSPI +0.3% vs +3.8% vs -4.4% vs -0.7%; Indian Sensex +0.9% vs +1.2% vs -0.6% vs +0.9%, only net gainer. U.S. futures weak again: DOW -95; SPX -11.80; NDQ -15.

Gold is following its usual pattern: after hitting a record high of $1923.50 on Tuesday it plunged below $1900 and closed $1873.30. Overnight it is $1815 -$58 – the rally isn’t over though…not yet! Crude meanwhile continued its plunge closing at $86.02 and is now $87.72 +$1.70 with major resistance at $90!

…what a sorry lot last night. TB thought Romney won while Huntsman told a good story but Perry showed no understanding of economics or politics by attacking social security…perhaps someone should tell him that seniors are the backbone of the party and calling it a ‘ponzi scheme’ is suicide…more on that point later. Romney, although appearing the most presidential, still appears smug to TB.

Here are TB’s observations:

Perry: kept avoiding questions such as 50 of 50 in education and jobs pay. Romney said the jobs he created were BELOW AVERAGE PAYING; he said they were above minimum wage – ha (which he wants to eliminate)! He also dodged that they were worst in uninsured people. Now get this…he doesn’t believe in evolution, nor in global warming but he signed an executive order mandating young girls to get shots for HPV (allowing parents to opt out), avoiding the legislature. He gave the reason for this as he believes in science…’nuf said! Throw the bum out!

Romney: still waffling on heath care – wants to take credit for Mass. But avoiding it if he can

Cain: eliminate the tax code…this is a non-starter! Also, his ‘9-9-9’ plan is the most regressive you could have and HURTS the people he says he is trying to protect while giving yet another gift to the wealthiest. CEO of a pizza company? You have to be kidding!

Santorum: cut corporate tax rates to zero as he did in his state. Wants to do the same if elected President PLUS not tax on dividends and no capital gains for anyone making less than $200k.

Ron Paul: regulation is the problem…drug companies would be better then having FDA regulations…that along with opposition to financial reform has to make you wonder where he has been for the past four years??? Another believer in Ayn Rand laissez-faire capitalism. He should have stayed a doctor where he could do some good!

Huntsman: Cut defense spending by bringing troops home…atta boy! We cannot be the policeman to the world.

Bachmann: We need to be the global policeman… how does this mesh with budget cuts? It is scary that she is on the House Intelligence Committee. Let our people suffer budget cuts while we protect Afghans and Koreans! She was the big loser! O-U-T spells out. Her ex-campaign manager turned senior advisor Ed Rolins shows why people like Carville or Axelrod are not to be listened to as they are mouthpieces. Rollins had the nerve to say she held her ground well.

One down and two more gawdawful debates remain. Here they were at the sancrosanct (to the GOP) Reagan library, yet they made the Gipper look like a liberal. He was to the left of everyone there! Not only that they forgot that he raised taxes 11 times (income tax plus other things GOP labels tax increases). Furthermore, he knew how to drive a hard bargain then build consensus through compromise. None of these people is a Reagan! Least of all Perry who was a democrat, never held a private sector job and supported both Gore, and Hillarycare! Oh well, if Rush can do it so can he…but would you want Limbaugh or O’Reilly for president?

To sum it up, to TB the only intelligent statement in this campaign came from Palin: get rid of Obama but who will we replace him with??? Damn, we need a third party and need it desperately! But can it be done? The best chance ever was Pete Peterson and Paul Tsongas’ Concord Coalition which TB supported…it failed miserably! But the point is they put America first shunning the Dems and the GOP.

God Bless the United States of America…please!

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

A thoughtful friend and reader wrote this after he read yesterday’s column. To those of you who think government is the problem and the private sector through free market capitalism can save us…or is willing to even try…fuggeddabout!

Here is the crux of the problem which this political group will flog until they drop without resolution: There are no more low-skill, high paying jobs as there have been in the past. They have all gone to (pick one or two or more) Mexico, China, Vietnam, India, or somewhere else. Our consumer-based (i.e., Wal-Mart-based) economy will simply not stand for (or understand) the imposition of higher prices caused by bringing those jobs back to the US. Nor will declining credit card balances support it. Nor will declined home equity piggy banks from which to tap for more money. Therein you have it.

The country became consumer-based after WWII…why? Because it served the politicians interest. Perhaps it started with the television, that led to credit cards (gas credit cards and Sears were the pioneers), then the full court press for expanding credit, which was encouraged by the high inflation of the 1980’s. When inflation waned TB thought credit would contract but the credit card companies primarily now the money center banks pushed hard…including deluging us with unsolicited credit cards and lowered credit standards. The ‘limit’ became a joke as after you surpassed it, they merely increased it (until they didn’t when times turned bad). The Supreme Court played a role by ruling usury laws unconstitutional…one of the worst decisions ever…and akin to Greenspan making all Nasdaq listed stocks, even new ones, marginable, which further inflated the stock market. Don’t forget the role of corporations either, who broke the contract with labor by substituting 401(k)’s for defined benefit pension plans (and converting those to defined contribution for the most part. When the credit card boom died out along came home equity loans and finally Alt-A and sub-prime mortgages. This brings us to where we stand today.

The only way to increase revenues now is to grow the economy, and that means increased consumption…but how can that happen with reduced credit availability (despite the big banks being up to their eyeballs in deposits and some like Mellon now charging large depositors to take their money). Add to this the aging of America, the reduced value of retirement accounts…no positive returns since 2000 in their retirement money, plunging home values – what equity they had has largely been spent already. So the answer according to the tea party is to slash the budget and thus corporations will begin to hire. They have record profits for the most part, record cash levels, but hire? You have to be kidding? After all this is all about taking care of management. To hell with the economy…until it impacts them negatively…then they will lay off…as banks are already doing…are these signs of a strong economy? You decide.

Hopefully awaiting Obama…but not with baited breath,



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