10/6/11…forgettable Friday

TB’s Poem of the Day:

Things fall apart; the centre cannot hold
Mere anarchy is loosed upon the world
…The best lack all conviction, while the worst
Are full of passionate intensity

– from The Second Coming, by William Butler Yeats

Bloomberg Top Stories:

*Trichet Says ECB to Offer Longer Loans, Will Resume Covered-Bond Purchases

*U.S. Consumer Confidence Declines, Capping Worst Quarter since Recession

*EU Urges Coordinated Bank Aid as Merkel Says Help should Be a Last Resort

*Stock in U.S., Oil, Euro Fall as Europe Equities Trim Advance on Outlook

*Apple Counts on Overseas Sales to Stay on Top Without Visionary Jobs

*Gross Trails Vanguard Index Fund a Top Bond Managers Blindsided by Rally

*U.S. Apartment Vacancies Drop to FIve-yhear Low as Demand Begins to Slow

*Steve Job’s Death Struck Like John Lennon, JFK Getting Shot, Wozniak Says

Volume declined but to a well above average 5.13B shares from 6.9B shares strong session for the second straight up day…but what does it mean? If it was short-covering inspired today could be the deathknell of it, if not a possible continuation but bear in mind that a week from today come payrolls and they won’t be pretty…perhaps 75,000 new jobs! NYSE stocks executed on the Big Board however plunged from 1.66B shares (originally reported as 1.19B on Bloomberg – TB checked too soon after the close) It crossed 1B just four minutes before the close, contrast to Tuesday when that occurred an hour before! Advance/Declines were positive…still: +2.7:1 vs +1.5:1 va -10:1 vs -3.9:1 on NYSE and +2.2:1 va +2.7:1 vs -10:1 vs -3.4:1 on Nasdaq. Breadth was much better, but again, compare: +5.9x vs +5.7x vs -30x vs -16x on NYSE and +7.6x vs +8.7x vs -10x vs -9.2x on Nasdaq! New 52 week highs rose just 2k to 19, while new lows hit plummeted from that amazing new high of 2102 to a still high and negative, 154. The ratio is -7.5:1. The VIX meanwhile fell back to levels before the recent volatility closing at 37.81 -3 points, making support now the 40 day m/a at 36.96, then 50 at 35.38.

Here are the results: Dow +1.2% vs +1.4% vs -2.4% vs -2.2%; Transports +2.7% vs +4.4%! vs -3.6% vs -3.5%; S&P 500 +1.8% vs +2.3% vs -2.9% vs -2.5%; Nasdaq Composite +2.3% vs +3.0% vs -2.9% vs -2.6%; 100 +2.5% vs +2.1% vs -2.5% vs -2.7%; Russell 2000 +1.5% vs +6.5%!!! vs -5.4%!!! vs -2.8%%; NYSE Financials +1.4% vs +3.1% vs -4.4%! vs -3.6%. Note the volatile Russell 2000 was up but the worst performer along with financials. All indices remain net negative for the four sessions. Overnight markets are strong both in Europe and Asia, but subject to major hiccups on any adverse news event.

Stocks are up globally after that mixed session yesterday, for Asia this is the first up day in seven sessions: FTSE +2% vs +1.9% vs -3.4%! vs -1.7% vs -1.3% vs -0.7% vs -0.2%; CAC 40 +2.3% vs +2.9% vs -3.2% vs -2.3% vs -1.8% vs -0.1% vs +0.1%; DAX +1.5% vs +3.5% vs -4.1%! vs -2.8% vs -2.5% vs -0.4% vs +0.1%; Nikkei +1.7% vs -0.9% vs -1.1% vs -1.8% vs flat vs +1% vs +0.1%; Hang Seng +5.7%!!! vs closed -3.4%! vs -4.4%!!! vs -2.3% vs closed vs -0.7%; Korean KOSPI +2.6% vs -2.3% vs -3.6% vs closed vs flat vs +2.7%!!! vs -0.7%; Indian Sensex closed vs -0.5% vs -1.8% vs -1.8% vs -1.5% vs +1.5% vs -0.5%. US futures modestly higher as they were yesterday prior to the open: DOW +57; SPX +5; NDQ +11 – almost identical. Oops, Trichet just said economy is facing intensified downside risks! Hmmm. Bonds plummeting following the last two days decline. Currently 10 yr is 1.9% -5/8, after a RECORD low 9/23 of 1.6855%; 30 yr 2.92% -1-1/2. Long TIP 0.90% -1-3/16/

Gold continues to hold above $1600, now for a fifth day after closing $1641.60 +$25.60), and is up slightly overnight, following 9/23’s low of $1534, lowest since 7/6!), $1642.80 +$1.20. Last Monday’s low was nearly to the 200 day, now $1536.60, now critical support. We negated the spike to $1923.70, a buying climax on 9/6, but could make another run for the roses. Crude rallied modestly and had a high of $79.91 before settling at $79.68 +$4.01. Tuesday’s close was lowest since 9/23/10 as was low of $74.95!. Overnight, we are up slightly above resistance at $80, $80.43 +$.25.

…today is the first day of the rest of your life…but will it end the two day rally from the depths? Keep two things in mind: next Friday is payrolls with an estimate of just 75,000 net new jobs…hey, at least it’s a positive! Second, Jean Claude Trichet just said that the global economy faces ‘intensified downside risk.” What does that frog know, right? After all, the geniuses on CNBC are bullish…of course, when have you heard them bearish? The closest they come is calling a selloff a terrific buying opportunity…one that might get even better unfortunately! No jobs is not an answer! Second, will the GOP stop saying that it is the private sector that creates new jobs…or even small business…it is NEW businesses, large or small and that requires a new technology…hey we have already used up semiconductors, dotcoms, and are finally resorting to social networking! How many facebooks, linkedins, etc. do we need? Well the other geniuses, the private equity guys, who are having trouble getting investors are all focused on just that. Pity. Is that the best that the best and brightest (sic) can offer?

Many of you snickered…or even derided TB about his saying that if we aren’t careful we will unify the disenfranchised in this country…two even fired TB from their morning reading…and not in a nice way! That doesn’t hurt TB, what hurts is they refuse to admit he was right. First, he talked about why the furor wasn’t directed at Wall Street, and instead at those who took out mortgages because some slimy mortgage broker told them they could afford it…some could – until the rate resets began.

Then we saw rioting in the U.K. and as a Brit ex-pat pointed out to TB, the rioters were not people who worked, just people trying to strike back and enrich themselves by looting. Now it has spread to this country…remember Michael Moore when he tried to make a citizens arrest on Goldman Sachs senior execs? Well, they are protesting on Wall Street and it has now become national news, and it is spreading to other cities. Remember, “big trees from little acorns grow.”

A case in point: in November 1964, TB was in the U.S. Navy attending school at Mare Island. We had Navy Day off and a friend asked if TB would like to go down to U.C. Berkeley with him to see a friend from his home town.

When we arrived, students were sitting on the lawn eating lunch…as they did every day…believe it or not, many of the girls were wearing skirts, and the guys slacks and sweaters. Walking around we saw a booth and a hippie looking guy shouting about the Viet Nam war…remember this was early in the game as the Turner Joy and Maddox had been attacked just three months earlier (they were not attacked, it was a trumped up story but that is for another time). Students stopped and listened…then went on their way, as we did. That weekend, TB picked up a paper and saw a pic of students on the same lawn, almost as if TB took it himself…with the caption STUDENTS RIOT AT BERKELEY.

TB believes that without the media effort the protests would not have succeeded, but succeed they did and perhaps because the media knew about the lies the government was spinning and wanted it to happen. TB didn’t know much about their arguments until returning from Viet Nam after shelling it to bits, in November 1965, and being subjected to Agent Orange. While TB did not support the draft dodgers he felt duped as Kerry, and so many other vets did. This was the beginning of TB’s transition from conservative to liberal, and utter disgust with the GOP. Oh yeah, there was that Nixon guy too.

So beware of this protest against ‘greed’ and remember that both Wall Street and the Congress asked for it by buying respectability while Main Street suffered and continues to suffer while the Tea Party continues to blame the people and insist on not taxing those who benefitted from the collapse while slashing the budget which can only deepen the recession and slow the recovery. What a sorry state of affairs.

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

TB has seen some wonderful documentaries this week and last night he saw one that really tugged at his heart and would to any parent who watched it. It was on Steve Bartman. Steve who??? If you are a Cubs fan you know all to well who he is.

It goes back to the 2003 NL playoffs with Chicago playing the Florida Marlins. Game Six and a win would send the Cubbies to the World Series. Eighth inning, two outs and a foul ball…way foul…into deep left field was pulled back by the wind, and a hapless devoted Cubs fan, Steve Bartman, deflected the ball, preventing Moises Alou from catching it. Alou shouted at the fan, who sat with a Cubs hat and earphones on, frozen for much of the game. People pointed at him…replays recycled over and over. The crowd began throwing beer at him, pretzels, anything they could get their hands on. The poor kid just sat there. At one point he asked a woman, a lawyer if he did anything wrong. She said no, at least six of us went after that ball. Yet Bartman became the scapegoat, despite the shortstop muffing a play and the Marlins scoring eight unanswered runs to win 8-3. But wait, this was Game Six??? What about Game Seven? Who cares, the curse was back, in the form of Bartman…yep all his fault, and sportscasters blamed him totally for the loss of momentum. Some apologized for their actions in the film. Some of the arrogant wannabe’s did not.

All TB could think about was this kid, 23 years old, who had bought tickets for two friends and come to stay in a hotel to see his beloved Cubs win, would never be the same person. But it couldn’t have happened to a more unlikely person, liked by his neighbors, volunteered by coaching a Little League team, the Renegades (he was wearing a Renegades shirt, which probably didn’t help matters.).

So what happened since? After they escorted him away, he received at least five death threats, while nobody on the team was held accountable for the loss, a fan near him got the ball and sold it for $100,000, while he has had to maintain a very low profile since…what a shame and waste of a life.

Bill Buckner was interviewed…he who was demonized for more than two decades for letting a ball get past him at first base proving the curse of the Boston Red Sox was still alive. Finally after 26 years, and when he saw in a film how he missed it (a loose glove which closed just as the ball hit it), did he feel exonerated…no such luck for this kid. What kind of people are we? We, who hold sports and sports figures in such esteem. We live in an era of soccer bullies, and where a fan can’t even go to a Dodgers game with a Giants hat on and not end up in a coma.

Yesterday, at Rotary, we had a sportscaster and former Twins player Ron Coomer, as a speaker. At the end he talked of a former teammate, Roger Clemens and how he does not deserve what has happened to him. TB concurred…how did that story get so blown out of proportion…meanwhile Mark McGwire, who lied, escaped along with  countless others. The answer is the scapegoat…we all need a scapegoat to run from our own failures.

The documentary dated the term ‘scapegoat’ back to the Bible, Leviticus, when a goat was brought in and all of the sins of the people were placed on it…it was shouted at, ridiculed, then led out of the gates and separated from the others for life…some say it was thrown off a cliff to destroy all those sins. Just as we need a scapegoat, there is also an MVP…but wait, should there really be an MVP in a team sport? Roger Clemens never saw himself as the star…he treated the entire team with respect and for that the played their best for him – Ron Coomer.

Hope you enjoyed this long pontification, have a fun weekend and think of others,

TB

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