10/20/11…what gives?

TB’s poem of the day:

Deal not with me God as I have dealt with man


In the prosperity which thou hast given me


Helpless in his need a careless course I ran


And now oh Lord that thou hast driven me


To my last gasps I pray for all I am not worth


Deal not with me as I have dealt on earth


Stevie Smith, 20th-century English poetess


Perhaps Lloyd Blankfein would like this as his epitaph? Oops, forgot, he is merely doing God’s work…along with Schwartzman of Blackstone. He is the defender of the 15% tax on carried interest for hedge funds. TB

Bloomberg Top Stories:


*U.S. Jobless Claims Decreased 6,000 Last Week to 403k – still over 400k, big  whoop-de-do

*Stocks Drop, Metals Decline on Europe Divisions; U.S. Futures, Oil Climb???

*Rescue Fund Overhaul May Enable Europe to Lend 10% of a Country’s Economy

*Citibank Case Shows SEC Struggling to Punish Top Bank Officers for Crisis – disgusting!!! TB

*McGraw-Hill Third-Quarter Profit Falls as Standard & Poor’s Revenue Drops

*Wells Fargo Sees ‘Huge Opportunity’ as BofA Retreats From Mortgage Lending – not buying it!

*Qaddafi Reported Died After Capture as Libyan Fighters Hoist Flags Over Center of Sirte

*Papandreou Faces Final Greek Austerity Vote as Athens Prepares for Clashes
Volume dropped to an average 4.4B shares from 5.03B shares on a bizarre day that had the Dow up slightly most of the session while ALL other indices were DOWN? This following a huge rally and near ‘key reversals’ which would have been a big positive Tuesday. But the point is that you can ignore this due to options expiry on Friday!  NYSE stocks executed on the Big Board slumped again to 964B shares from 1.09B shares, so there have been just two 1B plus share days in the last eight! Advance/Declines were negative: -2.6:1 vs +5:1 vs -4.5:1 vs +5:1 on NYSE and -3.2:1 vs +2.3:1 vs -4.5:1 vs +3:1 on Nasdaq. Breadth was even more negative: -5x vs +13.5x!!! vs -7x vs +6x on NYSE and -3.5x vs +5.3x vs -5.3x vs +3.2x on Nasdaq! Surprisingly new 52 week highs rose to 84 from 54…how is that possible?…while new lows dipped to 58 from 74. Thus the ratio turned positive again…on a down day???, only the third positive ratio in months, all in the last six trading days Don’t expect it to hold! VIX climbed again to 34.44 +2.88 surpassing Monday’s ballistic move to 33.39…caution.  The 40 day (36.24) and 50 day (36.44) remain res. 30 is again support followed by the 200 day, 22.92.

Here are the results for the past eight days. FRIDAY is OPTIONS EXPIRY: Dow  -0.6% (despite spending most of the day in the green) vs +1.6% vs -2.1% vs +1.5% vs -0.4% vs +0.9% vs. -0.2% vs +3.0%; Transports -1.3% vs +3.1% vs -2.8% vs +2.2% vs -0.6% vs +1.3% vs. +0.2% vs +3.9%; S&P 500 -1.3% vs +2% vs -1.9% vs +1.7% vs -0.3% vs +1.0% vs. +0.1% vs +3.4%; Nasdaq Composite -2%! vs +1.6% vs -2% vs +1.8% vs +0.6% vs  +0.8% vs +0.7% vs +3.5%; Nasdaq 100 -2%! vs +1.3% vs -1.6% vs +1.9% vs +0.9% vs +0.8% vs +0.7% vs +3.5%; Russell 2000 -2.1%! vs +3.0% vs -3.4%!!! vs +2% vs -0.2% vs +1.7% vs +0.6% vs +4.4%; NYSE Financials +-1.7% vs 3.6% vs -2.9% vs +1.2% vs -1.7% vs +2.5% vs -0.3% vs +4.7%. Look at the leaders: BAC -3.6% vs +10.1% vs -2.6%; Citi -1.6% vs +7% vs -1.7% .6%; WFC -2.6% vs +5.9% vs -4.2% – not a leader but JPM fell 2%.

Why was the Dow positive most of the session when decliners beat advancers by 26 to 4? Look: JNJ -13.5 index points; IBM -11.4; DD and CAT -9. The ONLY major winner was Travelers TRV, which soared – catch this – because they increased their subprime mortgage bet by the most since 2007 in Q3??? Do you agree? TB doesn’t! Also, they are increasing their rates…hmmm. As for the others, all big negatives: Transports 20 to 0!!! S&P 5:1; Nasdaq 100 5:1 Composite 3.5:1; Russell 2000 8.5:1!!! THINK…that is what we are supposed to do, not just react!

Global stock markets weak, especially Asia: FTSE -0.4% vs -1.1% vs +0.2% vs +1.1% vs -0.9% vs. +0.3% vs -0.7%; CAC 40 -0.7% vs -1.6% vs +0.1% vs +1.2% vs -1% vs. +1.4% vs -0.5%; DAX -0.8% vs -0.2% vs -0.1% vs +1% vs -1% vs.+1.2% vs -0.3%; Nikkei -1% vs -1.6% vs +1.5% vs -0.9% vs +1% vs. -0.4% vs +2%; Hang Seng -1.8% va -4.2% vs +2% vs -1.4% vs +2.3% vs +1.0% vs +2.4%; Korean KOSPI -2.7%!!! vs -1.4% vs +1.6% vs +0.7% vs. +0.8% vs. +0.8% vs +1.6%%; Indian Sensex -0.9% vs -1.6% vs -0.3% vs +1.2% vs. -0.4% vs. +2.6% vs -0.1%. US futures little changed…confused sea?: DOW +2; SPX +1; NDQ -1.50. Bonds surprisingly weaker: 10 yr now 2.17% -1/16, off a RECORD low 9/23 of 1.6855%; 30 yr 3.19% -3/8; Long TIP still above 1%! 1.03% -5/16….everything is correlating again…not a good thing!

Gold was down all day again, closing $1647.00 -$5.80), following 9/26’s low of $1534, lowest since 7/6!), and is now $1619.00 -$19. 9/23’s low was nearly to the 200 day, $1536.60, now critical support. The record high is $1923.70, a buying climax on 9/6. Res is at convergence of 40/50 day: $1750. Crude also weaker, closing at $86.11 -$2.23, and is off again overnight to $85.67 -44. 10/4’s close was lowest since 9/23/10 as was low of $74.95! Major sup/res at $85, convergence of 40 and 50 day m/a’s. Beware of options expiry on Friday!!!

…we now know…the rally was NOT real…it was Memorex! Of course it could be due to options expiration but we have not seen this for awhile…positive correlation which investors and the Fed don’t like: stocks, bonds, commodities all weaker! Sea change coming?

Look at the summaries above and if you can remain a bull you have more guts than TB!

TB apologizes for the long rant yesterday…over 2100 words, including the summaries…but it has to be said. We have already forgotten what the banks did to us. Yet we hold no animosity towards the leaders…the SEC is trying to go after Citi management to little avail.

Today, Bloomberg put out a rare editorial on the banks destruction of Frank-Dodd through millions spent on lobbying. TB read a story the other day that the District of Columbia average income surpasses Silicon Valley. This is a combination of grossly overpaid TOP government workers and lawyers and lobbyists..a true disgrace.

The Bloomberg article (will send to you if you ask), describes how the banks own lobbyists crafted Dodd-Frank and now say it is too cumbersome…Bloomberg compares it to some of the prospectuses on MBS that blew up, and were even longer. How they say it will hurt economic growth (as did Steven Schwartzman about eliminating the carried interest tax loophole), and how they need proprietary trading which creates volatility and even using 10:1 leverage ratios (some actually rose to 40:1 so that even a small loss could impair capital dramatically), that proprietary trading can turn banking profits into losses, and WE the people, are on the hook thanks to too big to fail! We are a country of the bankers, by the bankers and for the bankers and that is what is so disenheartening about the Tea Party which has deflected attention blaming it on government and social programs and of course Obama who has not done the right things but inherited the mess.

It is interesting to hear Jamie Dimon gripe about proprietary trading when arguably the best major bank is Wells Fargo which disbanded its bond department decades ago and carries NO proprietary positions…guess they are just lucky  then, right?

You decide…make up your own mind.

. . .   – – –  . . .

Yesterday TB discussed bank dividends and the lack thereof. That it is only for the dividend that one should buy a bank stock…growth is fleeting and unpredictable. TB knows this from his own experience. There are however some attractive bank preferred out there if you look. Also, a big caveat on preferreds…NEVER put in an order without a LIMIT as they are too thinly traded and you can lose $1 a share or more on a market order…in fact put in limits on anything thanks to the high frequency traders!

All of the GOP candidates are opposed to regulation of the private sector. The banking issues discussed the last two day show the need for MEANINGFUL and steady regulation. A return to Glass-Steagal and its 34 pages would be a step in the right direction. Jamie Dimon says that the Volcker Rule would put U.S. banks at a competitive disadvantage…to what Jamie??? The banks around the world that are failing? Is this your recipe for prosperity…for your own bonus???

But here is an example of BAD regulation. A team of FBI agents in bulletproof vests armed with automatic weapons stormed the Gibson Guitar Company of all places!!! Their crime? They are suspected of using endangered woods brought into this country illegally? This should be investigated just like the federal rates on pot stores in California who are operating under state law although other than a few tree huggers this should not be controversial. What the hell??? Meanwhile, we don’t have the funds to go after the perpetrators of the financial crisis effectively?

Have a wonderful day! Zip up dee doo dah…



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