11/7/11…TB hates Occupy Wall Street

This week’s economic calendar is very light with no major, market-moving indicators. We will get September Consumer Credit (Monday), September Wholesale Trade (Wednesday), September International Trade, October Import Prices, and the October Treasury Budget (Thursday), and the preliminary November Consumer Sentiment (Friday). Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA

Bloomberg Top Stories:

 

*World Economy Dodging Slump With China-U.S. Buoy as Europe Crisis Smolders (if you were drowning and grabbed on the U.S. to keep you afloat you would have made a bad choice.TB)

*Stocks Drop, Euro Weakens on Italian Vote Concern; Gold at Six-Week High – another vote!

*Europe’s Bailout Fund Said to Revive 3 Billion-Euro Sale of 10-Year Bonds

*Italy’s Surging Bond Yields Ste Berlusconi on Path to Bailout – why isn’t HE out???

*MF-Global Creditors to Form Committee in Endeavor to Recover Amid Probes

*Jeffries Bears in Retreat After Firm Boosts European Disclosure

*S&P 500 Showing Record Rise in Sales Collides With Slowing Revenue Growth

*Citigroup Puts $800 Million Into Buyout, Hedge Funds Even as Volcker Looms – at it again!

*Local-Government Bonds Damping Volatility Surpass Companies – what say you, Whitney?

*Groupon Reignites Chicago Dream of Harvesting Cash from a Silicon Prairie – see comments

*China Credit Squeeze Prompting Suicides Along With Offer to Sever a Finger (incredible, can’t get credit go underground where those who can borrow from govt. lend at usurious rates!)

*Papandreous Confers on Formation of Greek Unity Government as Talks Drag on – bad news!

*Berlusconi Struggles to Hold on to Power Before Key Italian Budget Votes – dump him!
Volume slumped to a below average 3.78B shares from 4.26B shares as investors weighed implications of Greek vote, Papandreous narrowly survived but then stepped down in what must have been a planned retirement, The Dow, on an inside day poked its head back above the 200 day m/a, then closed down.  NYSE stocks executed on the Big Board were a feeble 861M shares, lowest since 7/25 vs 1.0B, the third sub-1B day in the last ten, in the second straight down since peaking on 10/17. Advance/Declines were slightly negative: -1.1:1 vs  +3.5:1 vs +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 -1.8:1 vs +2.9:1 vs +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. (TB is leaving in those long strings to show why individuals should be avoiding this market like the plague! Breadth was also negative: -1.8x va +5.5x vs +8.5x vs -13.8x!!! vs -15x!!! on NYSE and -1.2x vs +3.6x vs +2.5x vs -11.1x!!! vs -7.5x! on Nasdaq. New 52 week highs were halved to 79 from 159, while new lows were more so to 61 from 147 So the ratio is again barely positive.  VIX dropped slightly to 30.28 -.22, which is unusual on a down day. Major support at 30…follow closely!

Here are the results for the past five days. Dow +0.5% vs +1.8% vs +1.5% vs  -2.5% vs -2.3%; Transports -0.4% vs +2.1% vs +1.3% vs -2.6% vs -2.4%; S&P 500 -0.6% vs +1.9% vs +1.6% vs -2.8% vs -2.5%; Nasdaq Composite -0.4% vs +2.2% vs +1.3% vs -2.9% vs -2.5%; Nasdaq 100 -0.5% vs +2.1% vs +0.9% vs -2.6% vs -1.9%; Russell 2000 -0.7% vs +2.5% vs +2.7% vs -3.7%!!! vs -2.1%; NYSE Financials -1.4% vs +1.8% vs +2.2% vs -4.5%!!! vs -4.9%! All are net negative for the week! BAC -6.2% vs +2.8% vs +5% vs -6.3%; Alcatel/Lucent plunged 17.2% on weak earnings report AND negative cashflow!

Global stock markets modestly weaker: FTSE -0.6% vs +0.7% vs +06% vs +0.2% vs -3%!!! ; CAC 40 -0.3% vs FLAT vs +2.2% vs +1.1% vs -4.4%!!!; DAX -0.1% vs -0.3% vs +2.2% vs +1.2% vs -5.3%!!!; Nikkei -0.4% vs +1.9% but vs closed vs -2.2%!!! vs-1.7%; Hang Seng -0.8% vs +3.1%! vs -2.5% vs +2% vs -2.5% vs -1.8% all still net down!; Korean KOSPI -0.5% vs +3.3%!!! vs -1.5% vs -0.6% vs flat; Indian Sensex closed vs +0.5% vs +0.1% vs -0.1% vs -1.3%. U.S. stock futures also weaker: DOW -37; SPX -5.50; NDQ -6.50. Bonds FLAT following Friday’s minor rally: 10 yr 2.03% unched. RECORD low 9/23 of 1.6855%; 30 yr 3.09% +1/32; Long TIP 0.71% +7/16. The 5 yr TIP yields MINUS 1.12%!, 10 yr -0.1%. Libor  0.44% 3mo, and 0.64%, creeping up. Bills still yield zero percent out to six months where it is 0.04%. 

Gold rallying overnight after Friday’s slight loss. It is up $20.10 overnight to $1776.10. 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), then the 40 day ($1699), while 200 day ($1570) continues to rise. Major support $1600! Crude up slightly overnight but is up against a wall at the 200 day (94.88) which has been resistance for the past two weeks, and is now $94.65 +.39. Support is the convergence of the 40 and 50 day m/a’s at $86.63-91, still rising.

…the name that is, not the underlying concept and gripes. It needs a better and more accurate name that suggests change not revolution, and TB disagrees with Occupy Congress as they are the pawns doing the bidding of the Wall Street boys. TB says boys because he doubts there are any women in the power group. How about Reclaim Corporate America or RCA…nice acronym, like SNAFU or FUBAR, right? Congress is owned by Wall Street and the other big lobbying groups, and if you doubt this you need to watch the interview of Jack Abramoff by Lesley Stahl on 60 Minutes last night. This is a must-see! Here is the link: Abramoff interview

Abramoff, a convicted felon and self-avowed lobbyist for GOP causes, candidly discussed how at the time he saw nothing wrong with his lobbying efforts which earned him $20 million a year. To those of you who have scoffed at TB’s “the best government money can buy,” this is food for thought. You decide. The point is, he gave peanuts to the Congressmen but lavished gifts and entertainment on them. His big play was to offer the senior staffers a chance at a job working for him and bestow favors on them. It is the senior staffers who write the bills, and as convicted Rep. Robert Ney (R-Ohio) testified, he as committee chairman was unaware of clauses inserted in the bills! He was convicted on corruption charges. Starting to believe TB now?

This is a perfect seque into what TB wanted to write Friday but was preempted by the discussion on IPO’s. AdivsorOne magazine wrote an article on the eight most overpaid CEO’s in America. TB has added two to the list, both of which should arguably be above their top one. Here is the list, how much the stock is off in the last fiscal year and their compensation:

8. Kevin Sharer, Amgen  -3%, $21M

7. William Weldon, Johnson & Johnson, -4%, $28M

6. Robert Stevens, Lockheed Martin, -7.2%, $12M

5. William Swanson, Raytheon, -10.1%, $18M

4. Miles White, Abbott Labs, -11.3%, $25M

3. Laurence Fink, BlackRock, -17.9%, $23M

2. Tom Ward, SandRidge Energy, -22.4%, $21M

1. John Chambers, Cisco, -31.4%, $18M

TB would add to the list:

**John Corzine, MF Global, -12.5% (now $94.6%), Mr. Corzine’s compensation was just $1.5M (when hired they also gave him a $1.5M signing bonus, given $11M in restricted stock options (that vested at $12.1M if the company was sold for any reason…no wonder he withheld the condition from the traders and worked so feverishly to sell it the weekend before the debacle became public), and paid $400k to his attorneys for drawing up his contract which is unheard of…this on a man who co-chaired Goldman Sachs, was the proponent of it going public in 1994, took it through too huge bets, one that year that they nearly lost $20 million, then in 1998 encouraged traders to go long the bets of LTCM AND buy the ruble as it tanked. When they finally went public, he was ousted and walked away with $305M. Next he becomes a senator from N.J., then governor. In 1998, he was hired by MF Global, who didn’t do their due diligence, obviously. He took the firms leverage to 40:1…how did that happen as that was exactly where JPMorgan and the other big banks were when the crisis hit???

*Jamie Dimon, JPMorganChase,  while the stock rose 1.8% (2.3% in 2010), for the three years since 12/31/07 the return was just 1% annualized for those three years! Worse, from the peak on 5/9/07, it was down 36% in price and the annualized return was -7.6%! In 2011 it is off 18.2% with dividends reinvested, while dividend growth over the last five years is -10.1% annualized (despite increasing it to 25 cents in April from the draconian cut to 5 cents from 38 cents a share in 2008. For this Dimon earned $14 million in cash and stock last year…good job…attaboy! Meanwhile Dimon has been the industry spearhead against any financial reform as well as consumer protection, including his character assassination on Elizabeth Warren (reminiscent of Rubin, Summers, Gramm, and Greenspan on Brooksley Born for advocating regulation of derivatives which would have prevented the entire crisis.

Now what do all these CEO’s have in common…duh! You say. They’re all men! True, but by drilling down a bit TB learned a more interesting trait: all are CHAIRMAN and CEO! Readers know that this is a gripe of TB’s that has usurped any power from the shareholders.

To those of you who aren’t aware, the board of directors is supposed to be the stewards to the shareholders. Thus, being chairman and CEO is a direct conflict of interest as the board is now beholding to him, rather than the shareholders. The CEO then sets the board agenda and determines what actions will be taken – or not…such as advisory votes.

Had brokerages remained partnerships, and had the board reigned in the CEO, and had the CEO reigned in the investment bankers, and had derivatives been traded on exchanges (thus destroying their profitability), and lastly, the regulators done their jobs after the foolish repeal of Glass-Steagall Act of 1933 which had served us well for more than 65 years with Gramm-Leach-Bliley, aka the Financial Modernization Act of 1999, there would have been no crisis.

Bankers began to make mortgage loans in excess of 80% on residential housing (over 100% sometimes by doing seconds and unsecured loans, which was previously prohibited), and Phil Gramm retired to become Chairman of UBS North America…is this a great country or what? Likewise, Robert Rubin, the chief sponsor of Glass-Steagall repeal became vice chairman of Cititgoup…Sandy Weill knows how to thank his friends, and punish them.

So before you chastise OWS, think of it as RCA and see if you then agree with the major complaints. If you don’t, there is little hope for America.

Note that Groupon (GRPN) which was priced at $20, opened at $36, quickly rose to $31.14, then closed at $26.11, just above the session low of $25.90…expect more downside today. Note also that the offering was just five percent of the shares…same tricks they played with the dotcom IPO’s…we never learn…or do we? In the wings is one for Zynga, a virtual game company that allows you to play for free but then ‘sells’ components of the game…virtual ones, virtually. If you are ‘building’ a farm, a virtual tractor will cost you $20! Remember the virtual pets, that if you didn’t feed them, they died? Well, here it is again and the company’s value is estimated at $5 billion to $20 billion…we simply have too much time and money apparently, on our hands!

Tomorrow discussion of Fed Primary Dealers and article by David Kotok. Link Cumberland

. . .   – – –  . . .

What is of less value than having a party strategist or analyst on a talk show? Having the entire panel made up of the above – and all from the same party! That is exactly what Face the Nation did on Sunday with a bevy of them, including the laughable…oops, affable, Liz Cheney, daughter of perhaps the most Machiavellian V.P. of our time. They had so many explanations for Cains sexual harassment accusations. None of them plausible. Ask yourself this: how many people do you know who have had one, let alone two of these charges leveled against them…and of those how many ended up with  a settlement?

Of course, the spin doctors all said that anyone can make these accusations and why do they remain anonymous if they are true? They then went on to compare this to Clarence Thomas. They make their own point since Anita Hill destroyed her reputation and since Thomas was her mentor, it took courage to come forth, yet she was badgered by the committee, even though what she said was embarrassing to her, and too detailed to be made up. Remember she never challenged him before, but felt she had to come forth if he was going to be appointed to the Supreme Court.

Now here is the thing: why is it that those who try to be holier than thou are the most likely offenders? Take Charles Keating who was violently opposed to porn yet it turned out he loved it. Why did conservatives condemn Clinton, yet stand behind Cain? Only 25% of the tea party and 38% of republicans condemned Cain…think about it!

Of course there is abortion, and the proposed law in Alabama is alarming. How can we go this far? Is it better for two people to die rather than have an abortion to save the mother? If a woman must have a child, is it her responsibility of the state for its welfare? Think about it.

Hope you have a great day and week!

TB

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