11/3/11…Groupon this!

Bloomberg Top Stories:

*Greece’s Euro Membership to be Put to Vote as Merkel, Sarkozy cut off Aid – a big OH! OH!

*Stocks Climb in Prospect of Greek Exit with Merkel Cornering Papandreou

*Stocks Climb in Europe, U.S. Futures Rebound; Greek Note Yield Tops 100%!!!

*China non-Manufacturing Industries Expand at Slower Pace as Property Cools

*G-20 Debates Whether to Press China for Greater Yuan Strength at Summit

*Bernanke Gives Push to Further Stimulus as Officials Lower Growth Outlook

*BNP Paribas Third-Quarter Profit Declines 72% on Writedown of Greek Debt – more to come!

*Vultures Circle MF Global Debt as Prices, Trading Gyrate

*MF Global’s Demise May Show U.S. Willingness to Let Larger Firms Collapse

*Corzine Lived Up to Risk-Taking Reputation at MF Global Before Bankruptcy

*MF Global Customer Shortfall of $633 Million May Be Recouped Through Court

*Dividend Swaps Signal No Recession For U.S. as European Debt Crisis Roils

*RBA Warning Ratified in Biggest Australian Bond Rally Since 2008 – they have problems too!

*EU Leaders Deal Fails to Ease Bank Funding Market Tensions

*U.S. Becoming Saudi Arabia of Gas as Shale Ignites Industrial Renaissance

(Why hasn’t Obama seized this for infrastructure bets by shifting cars to nat. gas??? TB)

*ANZ Bank’s Second-Half Profit Misses Estimates as Trading Income Declines

*China Plans ‘Orderly’ Delivery of New Ships at Glut Hits Rates, Earnings

*Draghi May Resist Calls to Step Up ECB Stimulus at First Meeting in Charge

*Kellogg Drops After Earnings Miss

*China Solar Boom Edges Technology Backed by $5.5 Billion U.S. Guarantees

*Syria Said to Accept Arab Call to Stop Protester Attacks, Free Prisoners

*More Than 1 Million Remain Without Power in U.S. Northeast After Snowstomr 
Volume dropped to 4.05B shares from 5.65B shares on the faux rally (aka ‘dead cat bounce’). How can any rational person see the changing headlines and believe this is good for stocks? Huh, Abbey? so this is the biggest day since that whopping 6.63B shares in Thursday’s mega-rally. All indices are now below their 200 day m/a’s except the NDQ 100 which bounced off it for a second day after a HUGE gap down on Tuesday, closing at 2318 vs the 200 day, now major support (2296). Game, set, match!  – confirmed! NYSE stocks executed on the Big Board slumped to 957M from 1.33B shares, lowest since 10/24. Remember TB’s mantra: almost every rally has been on low volume while the declines are on BIG volume…Monday’s rally was the exception. This breaks the string of six 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 solid but…: +5:1 vs -5.9:1 vs -4.5:1 vs +1.1:1 vs +6.9:1 vs +4.1:1 vs -5:1 vs +5:1 vs +6.5:1 on NYSE and +3.5:1 vs -5.3:1 vs -3.6:1 vs -1.3:1 vs +5.1:1 vs +2.7:1 vs -4:1 vs +5:1 vs +3.5:1 on Nasdaq. Breadth was positive but NASDAQ lagging: +8.5x vs -13.8x!!! vs -15x!!! on NYSE and +2.5x vs -11.1x!!! vs -7.5x! on Nasdaq! New 52 week highs doubled to 50 from 27, while new lows were halved to 47 from 93. Call the ratio even but remember that after a rally of the magnitude we had it is hard to have many stocks still trading near their 52 week lows.  VIX also had a dead cat bounce to 32.74 -2.03, about 40% of Tuesday’s rise and the close was just below the 40/50 day convergence (34.71).

Here are the results for the past three days. Dow +1.5% vs  -2.5% vs -2.3%; Transports +1.3% vs -2.6% vs -2.4%; S&P 500 +1.6% vs -2.8% vs -2.5%; Nasdaq Composite +1.3% vs -2.9% vs -2.5%; Nasdaq 100 +0.9% vs -2.6% vs -1.9%; Russell 2000 +2.7% vs -3.7%!!! vs -2.1%; NYSE Financials +2.2% vs -4.5%!!! Note the Nasdaq 100’s puny performance, worst of the lot! The highlighted indices tell the story. Look at the banks BAC +5% vs -6.3%; C +2.3% vs -7.7%. Ford +0.6% vs -5.1% and still off 11.6% since 10/24!

European stock markets stronger but still haven’t recovered from Monday, Asia weak, Japan closed: FTSE +06% vs +0.2% vs -3%!!! ; CAC 40 +2.2% vs +1.1% vs -4.4%!!!; DAX +2.2% vs +1.2% vs -5.3%!!!; Nikkei closed vs -2.2%!!! vs-1.7%; Hang Seng -2.5% vs +2% vs -2.5% vs -1.8% going nowhere!; Korean KOSPI-1.5% vs -0.6% vs flat; Indian Sensex +0.1% vs -0.1% vs -1.3%. U.S. stock futures strong but will it hold?: DOW +133 vs +70 vs -194; SPX +15 vs +9 vs -29; NDQ +15 vs +15 vs -46!!! (changes are from same time each morning, not closes!) Bonds weaker for a second straight sessions following two up days – Monday’s rally was HUGE, wiping out Thursday’s big declinet: 10 yr 2.06% -5/8. RECORD low 9/23 of 1.6855%; 30 yr 3.10% -1-13/16; Long TIP 0.75% +1-9/16. The 5 yr TIP yields MINUS 1.06%!, 10 yr -0.1%. Libor  0.44% 3mo, and 0.63%, creeping up. Bills still yield zero percent out to six months where it is 0.04%. 

Gold climbing overnight adding to yesterday’s gains. It rose $17.80 yesterday to $1729.60 and is up $27 overnight to $1756.70!  9/26’s low was $1534, lowest since 7/6, now critical support). The record high is $1923.70, a buying climax on 9/6. SUP is again the 50 day ($1727.38), then the 40 day ($1702.52), while 200 day ($1566) continues to rise. Major support $1600! Crude up overnight following yesterday’s modest gain t $92.51 +.32, and is now $93.61 +$1. Tuesday 10/18 WAS a peak! MAJOR resistance is $94.81, the 200 day…missed on the rally by 10 cents. Support is the convergence of the 40 and 50 day m/a’s at $86.28-53, and rising.

…want a crapshoot? Here it is and despite the negatives (misreporting of margins, hyping, and a plethora of other B.S.) it is oversubscribed THREE times even as the price drops. It is being compared to Amazon which is an incredible stretch. Buy it and you will regret it…unless of course you are one of the chosen few who ‘might’ be able to flip it on the open…otherwise TB sees it going the way of other over-hyped IPO’s. Remember this company is operating in the red and hemorrhaging cash they are doing the IPO now at a fraction of where it would have come at because they have no choice! Don’t you long for the days when no one would underwrite an IPO unless it had been in business for at least five years WITH three straight winning years? Goldman and the others ended that with the dotcom boom. What a disaster that was and now it is happening again…when will we ever learn…hey, the banks have to make up for those earnings losses somehow and you are the mark!

Still think OWS is bunk? Crybabies? Read this from thebaselinescenario.com:

Here’s what their Simon Johnson said about GS on PBS (now TB understands that some of you don’t believe anything said on PBS or NPR and prefer FOX NEWS for accurate reporting):

“Goldman Sachs and Morgan Stanley had a problem, which is, they were about to fail, and that everyone felt that this was coming, and they couldn’t borrow easily from the Fed, because they weren’t banks.”


That shining new building, directly across from “FREEDOM TOWER”, (standing above a former car-park, the scene of automobiles spontaneously combusting and engine blocks disappearing on a sunny day), wasn’t cheap either = $ 2 billion bucks.

Oh, almost forget….let’s get some HELP, again, from the PUBLIC SECTOR:

“$2-plus billion construction bill, Goldman got New York City and State to bless a $1.65 billion tax-free so-called liberty bond issue, plus another $66 million in job grants, tax exemptions, and energy discounts.”

Life is good.

Paul Solman, PBS….oh, finally, a real reporter doing his job somewhere:

PAUL SOLMAN: So, you mean Goldman Sachs borrows money from the Federal Reserve at a tenth-of-a-percent, a quarter-of-a-percent, takes that money, invests in U.S. Treasury securities at 3.5 percent, 4 percent…

DAVID STOCKMAN: Three-and-a-half percent, exactly.

PAUL SOLMAN: … and they make the money just…

DAVID STOCKMAN: On the spread.

PAUL SOLMAN: And the money is simply being recirculated from the Fed back to the Treasury?

DAVID STOCKMAN: That’s exactly right.

PAUL SOLMAN: But, mainly, Goldman raises money privately, through the markets. And because the Fed is keeping interest rates so low, that private money is also very cheap, as long as the markets think the government will never let Goldman fail.

Doing God’s Work, alright, with other peoples’ money.

Lots of stories about who is backing OWS…TB is investigating and has enquired of both factcheck.org and snopes.com – neither who unbelievably have NOTHING on OWS. Don’t spread rumors until you know the facts…Wall Street has incredible PR folks along with lobbyists and Congress in their hip pocket just in case. Besides Corzine is one of them –both a Senator AND a governor…poor New Jersey first they had Whitman who created a fiscal crisis and then Corzine. Wait…aren’t they both wealthy?

. . .   – – –  . . .

Did you know there is  a Minnesota connection to the Greek crisis? Yep, George Papandreou’s father Andreas was an academic and lived in Minnesota, married here and George was born here. THEN 38 years and three sons later, Andreas met an airline stwardness half his age (this is a good plot for Pan Am), and while still married to George’s mother, paraded her as the first lady of Greece (in the U.K. that would be first consort). Then was divorced from George’s mother…wonder why? In 1967 there was a military coup and the family headed to Sweden (hence George’s fluency in Swedish), later they moved to Quebec.  See George learned early about military coups (some say thaat one was backed by the CIA), which brings us up to day. On Tuesday, the at an extraordinary meeting of the Government Council of Foreign Affairs and Defence (KYSEA), the Defense Minister proposed that the four top military leaders be REPLACED. It was done taking the military by surprise and rendering them ‘coupless.’ (joke).

From the very beginning TB wondered if any of the brilliant people who have been pontificating on the Greek crisis read Michael Lewis’ piece in Vanity Fair on Greece? Apparently not and it is now in his new book (along with a chapter on the demise of California as a precursor to other states fiscal problems). Did we seriously believe that a drastic austerity budget could be imposed without bringing down the government…in a coup or otherwise? Apparently didn’t even dawn on the ECB. Remember that this is a country whose citizens hate paying taxes as much as the Russians, so they don’t! What a wonderful, wacky world. “It’s a great life if you don’t weaken,” as TB’s former boss and mentor used to say!  (thanks to fellow blogger and friend Joan McCullough for this story.)

TB had an interesting meeting with Sen. Al Franken’s aide on elder abuse by using the U.S. mails to fraudulently get them to purchase things they don’t want or need…you know those “you have won $3 million you just have to send in you name to win.” TB’s take is the postal service, so deep in the red has its inspectors turning their back on MAIL FRAUD if its first class…and it all is! The aide was shocked when TB produced a huge shopping bag of mail that his relative had received in less than two weeks. TB got lucky in choosing Franken because he is on all the subcommittees on seniors, ageing, etc. Will keep you posted on how it progresses. Right before contacting Franken, TB called AARP who said someone would contact him within 72 hours…still haven’t heard back. Going to contact them again today…THEY of all concerns ought to do something!

Have a great day. Enjoy the dead cat bounce while you can…payrolls tomorrow!



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