10/3/11…a new beginning

This week’s economic calendar has several very important indicators. The highlights of the week will be the September ISM Manufacturing Survey (Monday), the September ISM Non-Manufacturing Survey (Wednesday), and especially the September Employment Situation report (Friday). We will also get August Construction Spending and September Motor Vehicle Sales (Monday), August Factory Orders (Tuesday), the ADP National Employment Survey (Wednesday), and August Wholesale Trade and August Consumer Credit (Friday). Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA.

 

Bloomberg Top Stories:

 

*U.S. Stock Futures Decline as Europe Weighs Risks of Greek Default on Debt

*Chrysler September U.S. Vehicle Sales Rise 27% in Best Results Since 2007

*Greece Approves $8.8 Billion in Spending Cuts Before Scrutiny by EU, IMF

*UBS Sat It Borrows at Lower Rate Than Credit Suisse After Trading Losses

*New York Fed May Demand Europe’s Bank Produce More Details on Liquidity

*Manufacturing From U.K. to China Expands as Global Economy Weathers Crisis???

*Apple’s IPhone Loses Surging India Smartphone Market to Blackberry

*World’s Third-Worst Bonds Show Collateral Damage Spreading – that’s Poland

*Dollar Beating All Assets in September Undermines S&P U.S. Downgrade

*Bond Bears Piling into Treasuries as Yield Forecasts Cut by Most Since ‘09

*Raw Material Wagers Slashed by 26% in Biggest Rout Since 2008

*Copper Plunge Signals Aussie ‘Downside’ Risk Back to Year Low

*Koch Brothers Flout Law Getting Richer With Secret Sales to Terrorist Iran

(Tea Party members…these are the men funding your organization! Think about it!)

*Anti-Wall Street Protesters Reach ‘Prime Time’ With Mass Arrests  

 

Volume rose to 4.77B shares from 4.56B shares on a deadly last day of the quarter. For NYSE stocks while trades executed on the Big Board rose to 1.32B from 1.2B shares – highest of the week. Advance/Declines were ugly: -3.9:1 vs +2.5:1 vs -5:1 vs +4.4:1 vs +2.7:1 on NYSE and -3.4:1 va +1.6:1 vs -5.2:1 vs +3:1 vs +1.9:1 on Nasdaq. Breadth was dismal: -16x vs +2.8x vs -28x!!! vs +3.1x vs +8x vs +2x vs -22x!!! vs -19x!!! on NYSE and -9.2x vs -1.6x vs -13.4x!!! vs +3.8x vs +2.2x vs +5x vs -12x!!! vs -4x on Nasdaq! New 52 week highs about doubled but to a weak 34 vs 17, while new lows surged yet again to 572 vs 419 The high a week ago Thursday was 1499!!! This level has only been seen a few times…think 1987 and 2008 – the ratio is now -15:1. The VIX surged to 42.96 +4.12, just off the session high and is the third highest since the selloff began. 48 was the selloff high, not seen since 5/21/10: 48.20!

 

Here are the FINAL returns for the day/month/quarter/ytd AND 12 months: Dow -2.2%/-6.0%/-12.1%/-5.7%/+1.2%; Transports -3.5%/-10.2%/-22.7%/-18%/-7.4%; S&P 500 -2.5%/-7.2%/-14.3%/-10.0%/-0.9%; Nasdaq Composite -2.6%/-6.4%/-12.9%/-9.0%/+2.0%; 100 -2.7%/-4.5%/-8.0%/-3.6%/+7.1%; Russell 2000 -2.8%%/-11.4%/-22.2%/-17.8%/-4.7%; NYSE Financials -3.6%/-11.4%/-22.9%/-23.3%/-18.6% – No index was up for the quarter or year to date and only the two Nasdaq indices are up significantly for the past twelve months, with the Dow and S&P only slightly positive..

 

Global stocks are in a funk like the end of the quarter on the same old crap about Greece: FTSE -1.7% vs -1.3% vs -0.7% vs -0.2% vs +3.1%!!!; CAC 40 -2.3% vs -1.8% vs -0.1% vs +0.1% vs +4.2%!!!; DAX -2.8% vs -2.5%!!! vs -0.4% vs +0.1% vs +4.1%!!!; Nikkei -1.8% vs flat vs +1% vs +0.1% vs +2.9%; Hang Seng -4.4%!!! vs -2.3% vs closed vs -0.7% vs +4.2%!!!; Korean KOSPI closed vs flat vs +2.7%!!! vs -0.7% vs +5%!!! vs -2.6% vs -5.7%!!! vs -2.9%; Indian Sensex -1.8% vs -1.5% vs +1.5% vs -0.5% vs +3% What a way to start the final quarter when we are in the hole for the past nine months! U.S. futures also weak: DOW -57; SPX -6; NDQ -16. Currently 10 yr is 1.87% +3/8 after a RECORD low 9/23 of 1.6855%; 30 yr rom a low of 2.748%, 2.84% +1-5/8!!! After a low of 2.748% on 9/23. Long TIP 0.94% +2 pts!

 

Gold held above $1600 Friday ($1622.30 +$5) and is roaring again overnight, following last Monday’s low of $1534, lowest since 7/6!), $1658.60 +36.30. Didn’t think it was over for the yellow metal. Last Monday’s low was nearly to the 200 day, $1527.20, now critical support. We negated the spike to $1923.70, a buying climax on 9/6, but will we go there again? Crude had three days of lower highs and lower lows and closed $79.20 -2.94, lowest level since 9/29/10 although it did not take out the 8/9/11 low of 75.71. It is now $77.41 -$1.79.

…or not! A miserable quarter, nine months and 12 months, and this one is starting out in the hole based on the futures. The usual suspects: Greece, the EU, and European banks…but let’s take a look at our own dysfunctional government. By the way, S&P affirmed the U.K.’s rating at AAA, which goes to show they have confidence in the ability of Parliament to function like a government…which was precisely the reason we lost our AAA rating and we deserved to lose it, even though we are much better off than the U.K.

Some of you are upset that TB dislikes the Tea Party…they don’t know what they are doing but it makes good sound bites…Sarah Palin now says just being President may hamper her efforts…after all she is a maverick…yep, just the trait you want in a President. She also knows she won’t make it…but she is still making money shrieking, er, speaking. Today, an investigator found that the Koch brothers, who TB loathes, have been secretly selling goods to terrorist Iran. How many times do these scumbags have to hit you over the head before you see them for what they are, teabaggers? They are making fools of you as you fight their causes.

Warren Buffett modified his stance on taxing the wealthiest, after Obama ran with it and distorted it beyond belief. He wanted to extend it to about 450,000 while Buffett says that it is more like 45,000 who have been using the carried interest loophole and others to lower their effective rate to about 20%. See, this is what happens when politicians get an idea, they take it to extremes. By the way, this is exactly what TB said he wanted, not a higher marginal tax rate, just get rid of the loopholes and subsidies. But that requires the GOP to give and they will not while piling the pain on the backs of the working class.

More and more though you are hearing people disgusted with the GOP’s stalling efforts (George Will excepted who has moved so far to the right he may just walk off the table). All for the same reasons…sound economic reasons that you cannot and should not try to balance the budget in a weak economy. The problem was brought on by the GOP leadership who kept on spending despite the housing boom turning it into a bubble that we now must deal with.

No matter who TB hears however the solutions all lack one element: balance! It is as if they don’t follow the line to the end and see that pushing down here drives it up somewhere else like a cruel game of Whackamole! That is why the idea of raising taxes on the wealthiest, as opposed to the hedge fund operators and others who are not creating anything should pay like everyone else. But they have also bought their respectability in the form of campaign contributions…frequently to both sides to be for sure, for sure.

TB does not claim to have all the others but it is clear that the plan the GOP has is a recipe for disaster. Also, when revenues plunge, isn’t it only natural that the deficit rises? Particularly after their own spending spree, two rounds of temporary tax cuts they have made permanent (if and when the economy rebounds they should be taken off), and two expensive wars.

Even on the war…if we get out of Afghanistan (and Korea!), as TB recommends, the troops come home and we will have too many troops on the payroll. Furlough them and you have more unemployment…a vicious cycle.

So TB leaves it to men…and women…better than he to come up with a solution but he hasn’t seen one viable plan yet. Especially not Cain’s 9-9-9 plan. Had to laugh when asked about it and that experts had studied it and found it even more regressive. His reply: “they havent’ done the numbers…I have done the numbers.” Then he proceeded to use as an example the average $50,000 income –which by the way is the mean NOT the median, which is what blows his entire argument off the planet!

Someone will come up with a solution that works…they have to or the supremecy of the United States will evaporate like that of the United Kingdom…therefore it can’t!

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

The Minnesota Vikings upstaged themselves Sunday. After losing three straight when they led at the half, this time they tried something different…they were behind at the half and it still didn’t help. Worse, the lost to the other team with a 0-3 record…talk about insult to injury. It also seemed the U of M Golden Gophers were emulating them getting pulverized by Michigan…other than that it was a great weekend.

 

Hope this is a good week for you!

 

TB

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