10/28/11…a nation that has lost its soul? 53% may have!


(picture of India lit up at night…wouldn’t copy here)


What is this a picture of? (answer in commentary)


TB’s Word of the Day: Liquidity – when you look at your 401(k) and wet your pants.- submitted by a friend. Or is that your 2019k), not after yesterday’s rally…but tomorrow’s?


Bloomberg Top Stories:

*MF Global Said to Draw Down Credit Lines as Moody’s Cuts Ratings to JUNK – kowabunga!

*Consumer Spending in U.S. Increased 0.6% in September But Incomes Rose Just 0.1%

*Focus Swings to Italian Debt as Greece Wins Reprieve From EU – then Spain, then Ireland, then

*Whirlpool to Eliminate 5,000 Job, Lowers Forecast as Charge Is Increased

*Euro Rescue Fund Not ‘Ultimately Sustainable,’ Nobel Laureate Krugman Says

*Ford, General Motors Credit Ratings Raised to Highest Junk rating by Moody’s
Volume was a big 6.63B shares vs an above average 4.79B shares on a day when some thought it would burn itself out…instead it peaked blasting through the 200 day moving average on the Dow and while strong closed 76 points off the high, the drop coming in the final ½ hour. While all indices were up it was led by NYSE Financials and the Russell 2000 with the two Nasdaq indices once again being the laggards. NYSE stocks executed on the Big Board rose to 1.43B shares from 1.1B, (highest since 10/4). We have now had three straight 1B+ share days, not seen since 10/7 when there were 13 straight 1B+ share days, all but one above 1.1B. Advance/Declines were very strong: +6.9:1 vs +4.1:1 vs -5:1 vs +5:1 vs +6.5:1 vs +2:1 vs -2.6:1 vs +5:1 vs -4.5:1 vs +5:1 on NYSE and +5.1:1 vs +2.7:1 vs -4:1 vs +5:1 vs +3.5:1 vs -1.1:1 vs -3.2:1 vs +2.3:1 vs -4.5:1 vs +3:1 on Nasdaq. Breadth was even better which may be suspect: +17.2x!!! vs +3.7x vs -9x!!! vs +6.5x vs .+5x vs +2x vs -5x vs +13.5x!!! vs -7x vs +6x on NYSE and +6.8x! vs +1.5x vs -5x vs +1.5x vs +4x vs -1.1x vs -3.5x vs +5.3x vs -5.3x vs +3.2x on Nasdaq! New 52 week highs exploded to 293 from 90, while new lows slumped to 34 from 54. The ratio is the fifth straight positive and a big +9x, only the eighth positive ratio in months, all in the last eleven trading days. VIX imploded to 25.46 -4.40 – the second lowest close since 8/3’s 23.74 when we were in full rally mode.

Here are the results for the past five days. Dow  +2.9% vs +1.4% vs -1.7% vs +0.9% vs +2.3% +1.5%; Transports +4.5% +0.3% vs -2.2% vs +1.8% vs +2.2% vs +1.6%; S&P 500 +3.4% vs +1.1% vs -2% vs +1.3% vs +1.9% vs +0.5%; Nasdaq Composite +3.3% vs +0.5% vs -2.3% vs +2.4% vs +1.5% vs +-0.2%; Nasdaq 100 +2.8% vs -0.1% vs -2% vs +2.1% vs +1.3% vs -0.5%; Russell 2000 +5.3%!!! vs +1.9% vs -2.8% vs +3.3%!!! vs +2.3% vs +0.3%; NYSE Financials +6.6%!!! vs +1.6% vs -2.7%!!! vs +2.1% vs +2.3% vs +0.9%. Note the two Nasdaq indices continue to LAG…what’s that all about? Could it be earnings disappointments? Hmmm. Lots of misses and matches, few positive surprises. Look at the Financials? BAC +9.6%; Citi 9.7%; JPM +8.3%; WFC +5.1%…a couple of days ago they were betting on BofA going bust…like much of the rally today, call it short-covering.


Global stock markets are mixed…Europe down, Asia up. The relief rally turned into a strong won yesterday: FTSE -0.3% vs +2.5% vs +0.2% vs -0.2% vs +0.3% vs +1.1%; CAC 40 -0.4% vs +4.8% vs +0.5% vs -0.7% vs -0.2% vs +1.5%; DAX flat vs +4.3% vs +0.4% vs +0.9% vs -0.1% vs +2.1%; Nikkei +1.4% vs +2% vs -0.2% vs +1.9% vs flat vs -1% vs -1.6% vs +1.5% vs -0.9% vs +1%; Hang Seng +1.7% vs +3.3% vs +0.5% vs +4.1%!!! vs +0.2% vs -1.8% vs -4.2% vs +2% vs -1.4% vs +2.3% vs +1.0% vs +2.4%; Korean KOSPI +0.4% vs +1.5% vs +0.3% vs -0.5% vs +3.3%!!! vs +1.8% vs -2.7%!!!; Indian Sensex +0.1% vs closed vs +0.4% vs +1.9%!!! vs +0.9% vs +0.9% vs -0.9% vs -1.6%; US futures weaker: DOW -60 vs +212!!!; SPX -8.20 vs +26; NDQ -13 vs +48. ! Bonds attempting to rally after yesterday’s debacle which took them to yields not seen since 9/2!: 10 yr now 2.36% +1/8, off a RECORD low 9/23 of 1.6855%; 30 yr 3.45% +1/8; Highest yields since 9/1 on long bond…8/8 on 10 yr! Long TIP broke through 1% after trading to 0.90% two days ago!, 1.05% +3/16. Libor steady at 0.43% 3mo, and 0.62% 6 mo.   

Gold amazingly continued to rally yesterday for a seventh straight session, closing at $1747.70 +$24.20!!!, following 9/26’s low of $1534, lowest since 7/6!), first time above $1700 since 9/23, nearly eradicating the entire decline but is now $1738.80 -$8.95 overnight! Gold rallying along with stocks??? Hmm.  9/23’s low was nearly to the 200 day, $1556 (currently), now critical support. The record high is $1923.70, a buying climax on 9/6. Support is $1716, the 40 day: res is $1737, the 50 day….converging while 200 day continues to rise. Major support $1600! Crude attempted a rally yesterday closing at $93.96 +$3.76, but is off overnight to $92.24 -$1.72. Was Tuesday a peak? MAJOR resistance is $94.75, the 200 day…missed on Tuesday’s rally by 10 cents. Support is the convergence of the 40 and 50 day m/a’s at $85.62.

“China’s official Xinhua news agency said the outcome of the EU summit was “positive but filled with difficulties;” however, “it shows the systemic and structural problems the EU has,” and this is not good for investors.” –Asian News


Before we start the commentary but directly tied to the above quote, look what has changed since last quarterend. Nice rally…but is it sustainable given the problems in government, slipping corporate earnings (remember the ‘p’ and the ‘e’?), uncertainties over the Greek bailout.

9/30/11                             10/27/11

YTD/12 mos                        YTD/12 mos

Dow 30                     -5.7%/+1.2%                     +5.5%/+9.1%

Dow Trans                -18.0%/-7.4%                     -1.6%/+6.1%

S&P 500                  -10.0%/-0.9%                     +2.1%/+8.6%

NDQ Comp                -9.0%/+2.0%                     +3.2%/+9.4%

NDQ 100                   -3.6%/+7.1%                     +8.2%/+12.9%

Russell 2000            -17.8%/-4.7%                     -2.3%/+8.7%

NYSE Fins.              -23.3%/-18.6%                    -9.9%/-5.9%


Study these numbers well…then ask yourself if you can handle that kind of volatility.


A fellow blogger and friend had an explanation for the rally thanks to a friend. Note that it was the financial stocks that led the way…specifically the BIG banks…big as in ‘too big to fail.’



…the picture above is of India during the Festival of Light or Diwali. Amazing no?…kind of like George H.W Bush’s ‘thousand points of light’ only brighter! But what it partially explains is the runup in gold that indeed on the record high of $1923.70 – September 6th, which was also a key reversal (higher high, lower low, and close BELOW the prior day’s low) AND a buying climax! A very strong technical warning! OK, that explains what happened THEN, what it does NOT do is explain why gold rallied along with stocks yesterday. Bloomberg asked a question of viewers: what commodity is consumed the most on a yearly basis (gold, silver or copper)?  The answer of course is copper 5.5 million tons, followed by silver at 1.3 million tons and gold at 129 tons. Diwali is the biggest buying period for gold as the Indians give it lavishly as gifts…so knowing this isn’t it logical that speculators would run it up in anticipation, but when it went that high they sold it. Big time. But ‘splain this to me…why did gold continue to rally strongly yesterday when stocks were going like a house-a-fire? Dunno, but it should raise some questions since they were selling bonds like there will be no tomorrow…perhaps there won’t be.


No go to the definition of liquidity above and ask yourself if you are going to rush in tomorrow and buy this rally? Not a trick question but to help you decide, look at the table below from less than a month ago! Can you stand that kind of volatility? Who was buying? Again, dunno, but there was huge volume for the first time in months. Are you going to buy tomorrow…well are you? Do you feel lucky? Do you? Why add to your pain…if China isn’t happy with the deal it isn’t a deal!


Which finally brings us to today’s title. Has the ‘me’ generation now convinced itself that people don’t have jobs because they don’t want to work? Do they believe that because they have a job anyone can find one? The anti-OWS group calls itself the ‘53%.’ They believe everyone should have skin in the game. Fine, but would they still be in the 53% if they lost their job? What about if they were retired and watched the nest egg in their home and their retirement funds decimated?


See this group believes only lazy, useless people don’t have jobs…lucky for them they do because if they lose them they are on the bubble of never getting one again. Hmmm, how do they have time to be out protesting if they have jobs?…just asking. It takes a cold-hearted person to be part of the me generation but TB bets they shed tears just like everyone else when things sour.


TB loves the quote that “it isn’t that the baby-boomers and gen x’ers are egocentric, they just believe the world revolves around them.” Wishes he thought of it.


Meanwhile the far right…FOX News, etc. is screaming that they don’t know what they want, ergo they are not a movement like the tea party was. Well for one thing they don’t have the Koch brothers pumping millions into them for their own selfish reasons…there are signs of support for the OWS’ers but not organized like that. No, what TB believes the group has in common is they are ‘mad as hell and not going to take it anymore.’ There may be six, ten, even a dozen different reasons for this group but it boils down to one common theme: our government has served the interests of Wall Street for far too long. The stats from the CBO that TB put in yesterday’s column show just how bad the wealth gap is. TB doesn’t resent anyone with money…just that they pay a tax rate that is proportionate. Yet, the biggest crybabies are people like Lloyd “I’m doing God’s work” Blankfein, and Stephen Schwartzman. They are paying capital gains on EARNED income and there is no justification for it. Not only that but many in this group made millions or more off the crisis that they created with their derivatives when they knew what was going to happen.


Rather than the ranters on FOX, like O’Reilly, Limbaugh and Hannity, TB reads and trusts people like Paul Volcker (why don’t you listen to him…he got us out of the worst inflation of our lifetimes?), Thomas Hoenig, and Simon Johnson, former chief economist of the IMF, who said after the crisis that ‘crony capitalism’ is what causes nations to have financial crises. Instead, do you take as gospel the words of people only interested in their ratings? What is amazing though is how easy we spotted this disease in Asia but can’t see it in our own country. How do people stand up and protect the very financial sector that screwed them and their children. Note TB said ‘sector’ not ‘system.’ The system is flawed but salvageable.


Despite the mocking by the FOX herd and the GOP candidates, while there are numerous forces within OWS, the ‘radical’s they speak of are a small minority, most are just fed up, including Scott Olsen, an Iraq vet, who was hit with a tear gas shell and nearly killed in Oakland, CA. Even the WSJ who conducted a poll of the OWS asking ‘what frustrates you most about the political process in the United States. Just 3% said ‘the democratic/capitalist system.’ Only 4% wanted the ‘dissolution’ of the capitalist system. Hardly a radical group…just angry, fed up, citizens.


Another poll found that 26% of Americans surveyed had sympathy for at least some of the points of OWS, another 32% opposed them, and the rest were undecided…the silent majority? Which way do you think they will go? TB knows which side he is on, because Congress is looking at its wallets not to the people they are sworn to serve.


Look at the pictures of people in soup lines during the Depression…were they looked down on? No…so why now and by people who have never known poverty? Perhaps they are so wrapped up in ‘me’ that it has never crossed their minds that it could just as easily be them out of a job.


One last thing that has gotten virtually no attention. We have a drought in the Midwest…even Perry’s Texas, where apparently he hasn’t noticed his highly-touted growth is slowing. But why isn’t this a big story? Why is irrigable farmland now selling for record prices? Because the cost of borrowing for it is the cheapest it has been since before the war.


. . .   – – –  . . .

On a happy note, while not a great game of baseball (5 errors, 3 by St. Louis), last night was not only the most exciting of the series but possibly the most exciting TB has ever seen!  What about David Freese, who made an error of Bill Buckner proportions, dropping a pop fly he one-handed and setting up Texas runs. But then he came back with a solo home run to win the game! Now THAT is exciting! Game 7 tonight…go Cards and LaRussa!!!


Enjoy your weekend,





  1. Yarnman said

    TB–I finally turned in at close to 1 AM EDT last night after watching my old favorite Tony Larusso finally smile. What I can’t understand is why FOX can’t find any faces of fans in the stands other than the lovelies from St. Louis Country Day! When we lived in Clayton, we saw lots of minorities at the old stadium, especially when Gibson was pitching. I can’t believe that the Cards have an all-white fan base. Hmmmm?–Yarnman

    • traderbill said

      maybe their the only ones who can afford it? Hell, I can’t afford a regular season game let alone a playoff or series. I go way back to Oakland with LaRussa, Duncan and McGuire. Happy days, even the Battle of the Bay…we were supposed to be there the night of the quake but swapped tickets with friends. Go Cards!

RSS feed for comments on this post · TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: