11/28/11…more on ‘failed auctions’ and other failures

Debacle: A sudden, and ignominious failure, a fiasco. Bruins fans can identify with the 50-0 loss to USC Saturday night. Even their new uniforms looked like surrender flags…all white! Helmets too! Fire the coach, replace the team. In other words, the opposite of what the government did to Wall Street in the biggest debacle in global history! Hang your heads in shame, Americans!

TB repeats: “Suppose they held a treasury auction and nobody came?” We are already short one primary government securities dealer (MF Global), who it turns out was making money then old-fashioned way…using their clients funds without compensating them!

This week’s economic calendar is quite full and quite full of important indicators. The highlight of the week will be November Employment Situation (Friday). We will also get October New Home Sales (Monday), the September Case-Shiller Home Price Index and November Consumer Confidence (Tuesday), November ADP National Employment, revised Q3 Productivity & Costs, the Chicago Purchasing Managers Index, and October Pending Home Sales (Wednesday), October Construction Spending, the November ISM Manufacturing Survey, and November Motor Vehicle Sales (Thursday). In addition, the Federal Reserve will release its Beige Book in preparation for the December 13th FOMC meeting (Wednesday). Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA.

Bloomberg Top Stories:

*Stocks Rebound With U.S. Futures on Thanksgiving Sales; Commodities Jump – fools! It’s not the revenue…it’s the bottom line! How much did they make after discounts, overtime, etc.???

*Banks Step Up Warnings on Euro Breakup as Moody’s Sees Ratings Threatened

*Merkel Spurns Debt ‘Bazooka’ in Favor of Fast-Track Changes to EU Treaty – see Hank???

*Intervention No Barrier as Euro Loses to Surplus Currencies Most Since ‘03

 *Price Swings Accelerate as Appetite for Bond Trading Dwindles – failed Spanish auction!

*U.S. New Home Sales Probably Little Changed Indicate Worst Year on Record!!!

*SEC Said to Investigate Investment Firm Run by 49ers Legend, Lott, Barton

*Thanksgiving Sales Set Record as Shoppers With Jobs Chase Bargain – again, earnings!!!

*Bank Debt in Europe Lures Funds With 26% Chance of Default – such a deal!

*Longest Junk-Bond Drought in 2 Years Sends

*Junk Beating Stocks by 53% After Market Peak Shows Recession Worries Fade – corp. cash!!!

*Secret Fed Loans Undisclosed to Congress Gave Banks $13 Billion in Income – see below!

*MetLife Removed From Citigroup’s Top Picks as CEO Kandarian Reshapes Firm

*Schwartzman Backs Mitt Romney as Wall Street Support Turns Away From Obama – quid pro quo? Look what Goldman extracted from Obama…and how it ended up! (GS at 32 month low!)

Volume plunged in a shortened session as traders (Ex-high frequency, or were their computers merely on autopilot?) must have gone shopping on Black Friday…that was the only thing that was in the black though…a sea of red!, and STILL it was a DOWN day…again! Volume was 1.57B vs  3.8B shares due to the early close. NYSE stocks executed on the Big Board slumped to 442M shares, lowest since 12/21/10!!! So all that move MUST be attributed to flash trading! Wednesday’s volume was a below average 876M shares making ten of the last 11 sessions less than 1B! Despite the lack of volume volatility rose by more than 1%!?!  Advance/Declines were negative again: -1.2:1 vs -7.1:1 vs -1.6:1 vs -5.6:1 vs +1.4:1 vs -4.3:1 vs -3.3:1 vs +1.8;1 vs  -3:1 vs +6:1 vs +2.3:1 vs -9:1!!! vs on NYSE and -2.5:1 vs -5.7:1 vs -1.7:1 vs -4.9:1 vs -1.1:1 vs -2.5:1 vs -1.3:1 vs +2.1:1 vs -3:1 v +3.6:1 vs +1.7:1 vs -6.9:1! on Nasdaq. Breadth was similar: -1.2x vs -25x!!! vs -1-3x vs -14.6x vs -1.1x vs -13.6x!!! vs -5.4x vs +1.8x vs -5.5x vs +12.8x! vs +2x vs -60x!!! on NYSE and -2.2x vs -12.4x!!! vs -1.1x vs -3.9x vs -1.9x vs -4.3x! vs -2.7x vs +2.5x vs -3.6x vs +6x vs +1.6x vs -18x!!!! on Nasdaq. New 52 week highs rose slightly to 52 vs 44, while new lows fell by 25% but to a high 303 from 398. The ratio is remains negative by 6:1.  VIX rose to 34.47 +.49, above the 40/50 day m/a’s for a second session!!!

Here are the results for the past twelve sessions with every major index being down for the 2nd straight quarter (NYSE Financials were up slightly)…the NDQ 100 is the best of the lot a just -3%, followed closely by the S&P, -3.1%: Dow -0.2% vs -2.1%, all 30 down, vs -0.5% by 3:1 vs -2.1% by 30:0 vs +0.2% vs -1.1% by 14:1 vs -1.6% vs +0.1% vs -0.6% vs +2.2% vs by 9:1 vs -3.2% by 30:0; Transports -0.7% vs -2.4%, all 20 down, vs -1.1% by 5:1 vs -2.3% by 19:1 vs +0.6% vs -1.5% by 9:1 vs  -2% vs +0.8% vs -0.7% vs +2.8% vs +1.3% vs -3.8% by 19:1; S&P 500 -0.3% vs -2.2% by 35:1! vs -0.4% by 24:1!!! vs -1.9% by 15:1 vs flat vs -1.7% by 19:1 vs vs -1.6% vs +0.5% vs -1%! vs +2% vs +0.9% vs -3.7% by 499:1!!!; Nasdaq Composite -0.8% vs -2.4% by 6:1 vs +0.1% but 2:1 down vs -1.9% by 5:1 vs -0.6%! vs -2%! by 3:1 vs -1.7% vs +1.1% vs -0.8% vs +2% vs +0.1% vs -3.9% by 7:3; Nasdaq 100 -0.7% vs -2.3% by 16:1 vs +0.2% but 11:9 declining vs -1.9% by -5.7:1 vs -0.8%!! vs -2.3%! by 19:1! vs -1.7% vs +1.1% vs -0.6% vs +1.9% vs -0.1%vs -3.6% by 99:1; Russell 2000 -1.2% vs -3.2% by 23:1 vs -0.7% by 2.8:1 vs -2.4% by 11:1!!! vs +0.1% vs -1.5% by 3.3:1 vs -1.8% vs +1.4% vs -1.6%! vs +2.6% vs +0.9%+3.9:1 vs -4.8% by 4.7:1; NYSE Financials +0.3% vs -2.9% by 36:1! vs -0.8% by 3:1 vs -2.4% by 14:1 vs +0.5% vs -2% by 7:1 vs -1.8% vs +0.1% vs -1.8% vs +2% vs +0.4% 2.3:1 vs -5.6% by 63.5:1!!! BAC +0.6% vs -4.3% vs -2.6% vs -5%!!! vs -0.3% vs -1.7% vs -3.8% vs +1.3% vs -2.6% vs +3% vs -2.1%; C +0.5% vs -3.9%; JPM +0.4% vs -3.5%.


Finally a rally…but for the wrong reasons??? At least Europe is now positive for the last five days! Asia off more than 1% still: FTSE +2.3% vs -0.03% vs -0.4% vs flat vs -2.2%! -0.5% vs -2%!!! vs -0.8% vs -1% vs -0.6%; CAC 40 +4.2%!!! vs -0.4% vs +0.1% vs -0.2% vs -2.8% vs +0.1% vs -1.5% vs flat vs -2% vs -1.3%; DAX +3.7%!!! vs -0.3% vs +0.7% vs -0.6% vs -2.9% vs +0.2% vs -1.4% vs -1.1% vs -1.9% vs -1.1%%; Nikkei +1.6% vs -0.1% vs closed vs -0.4% vs -0.3% vs -1.2% vs +0.2% vs -0.9% vs -0.7% vs +1.1%; Hang Seng +2% vs -1.4% vs -2.1%!!! vs +0.1% vs -1.4% vs -1.7% vs -0.8% vs -2%! vs -0.8% vs +1.9%; Korean KOSPI +2.2% vs -1% vs -2.4%!!! vs +0.3% vs -1% vs -2% vs +1.1%! vs -1.6% vs -0.9% vs +2.1%; Indian Sensex +3%, only the second time in the last 12 sessions due to huge withdrawals from India funds: -1% vs -2.3% vs +0.8% vs -2.6% vs -0.6% vs -1.9%!!! vs -0.6% vs -1.4% vs  -0.4% vs 1% vs closed vs -1.2%. U.S. stock futures ROARING!!! DOW +260; SPX +33; NDQ +54! Bonds weaker again and 10’s and 30’s are back ABOVE 2% and 3% respectively: 10 yr 2.07% -15/16. RECORD low 9/23 of 1.6855%; 30 yr 3.03% -2-5/16!!!; Long TIP 0.82% -1-5/8 vs .57% at high two week ago Tuesday. The 5 yr TIP yields MINUS 0.82%! 10 yr +.03% vs -.02%. Libor  0.52% 3 mo., and 0.74% 6 mo., a very steady upward climb – 3 mo. above 0.5% and six month approaching 0.75%…bears watching! Bills 0.02% from one month out to six months 0.07%! Bills are rising too…very slowly.

Gold rallying overnight more than offsetting Friday’s loss and above $1700 again. It closed at $1683.70 -$15.10 bit is now $1723.60 +$35.10! The record high is $1923.70, a buying climax on 9/6. RES is again $1706, the 40/50 day convergence. Crude rose slightly Friday closing $96.77 +.60, and is strong overnight at $99.63 +$2.86!!! Support at the 200 day (95.51), still rising. Major support is the 40/50 day m/a at $91.42-89.66, also still moving up.


Groupon back in the news and now 16.2% below the IPO price of $20 on 11/3, closed $16.75 Friday. When will we learn to not trust Wall Street or a company that misrepresented its profit margins…sheesh! It is what it is…crap!!!


…TB read thru Barron’s and only saw one column commenting on Germany’s failed auction, on Wednesday…unheard of! Then on Friday, Italy held an auction and only succeeded by a near doubling of yields. Overnight Spain had a failed auction despite also a doubling of rates.


Meanwhile, the beneficiary of this grief, U.S.treasuries, are in the tank thanks to record Thanksgiving sales…can you believe this lunacy? Yes!!! The U.S. is going to pull the world out of its mess thanks to holiday sales…incredible given that we don’t even know if they made money (other than marginally). They were robbing sales from other stores…as there is no sign that overall retail sales will be better. Worse, their costs are high. Add to this that according to Barron’s three out of four companies have missed estimates this year. Get it? This is a rally to sell into! It may have some legs however since the magnitude of the selloff was so big…but on Friday we get payrolls again…got it?


Do you want to feel really ill? Remember that $700 billion bailout of Wall Street engineered by Hank ‘Bazooka’ Paulson? Well, no wonder the Fed fought disclosing the REAL numbers because it wasn’t $700 billion…or even $1 trillion…it was $7.7 TRILLION including loan guarantees! But what is worse it that it added too the banks bottom line and allowed them to continue to pay outrageous bonuses to the perps of the biggest financial debacle in history!


Worse, the banks, under the stewardship of the outspoken Jamie Dimon have managed to thwart all attempts at reform…save the lowly Frank-Dodd Act, which is an embarrassment and they continue to pound at that. Just as they denigrated Elizabeth Warren…sorry to those readers who believe otherwise but she is not the villain she was made out to be by the anti-Obama corps! Remember what they did to Brooksley Born, who was proven correct in her concerns!


Meanwhile, you as shareholders, and especially the mutual funds continue to let management get away with it…without a whimper while they continue to pay eight figure salaries for mismanagement! We deserve what we get…they don’t!

Lastly, last week PMI, a huge mortgage insurer was taken over by Arizona authorities. This firm, headquartered in Walnut Creek, CA, and founded by Preston Martin, a former Fed Governor for whom it was named, filed for bankruptcy. Talk about a fall from grace!

. . .   – – –  . . .

TB started reading Mike Mayo’s Book, Inside Wall Street, the story of a true-believer who thought that sound financial analysis would be rewarded…it was, so long as it supported the firm’s investment banking relationships. His story is gripping and he is very candid about all aspects of his life. Welcome to the real world, Mike, where honesty and hard work are not rewarded and clients are pitted against one another (as we saw with Goldman), all in the interest of enriching the senior people. He makes a sound point that once you remove the few at the top, employees of the banks are more Main Street than Wall Street…witness the announced layoffs by the banks which will continue to grow while management continues to reward its own failures lavishly.


Lastly, there is Newt…he has another solution…get rid of janitors in schools…pay the kids a small amount to clean classrooms, grounds, etc. Boy, Newt, you are really on the cutting edge. No matter Fannie and Freddie paid you so much and you became wealthy after leaving the hallowed halls of Congress…and then there is your foundation that for $37 million endorsed universal healthcare…and now you deride it. Mitt? Where do you stand on all this. Today? Yesterday? Tomorrow? Meanwhile Obama just wants to be liked and to speak publicly.


Is this a great world or what? Mostly ‘or what!’





  1. Yarnman said

    TB–You’re holding your own against the buzzards very well–don’t despair! Incidentally, at 3:58pm this afternoon, it looks like another 90/10 day on the upside, even with low volume. I’ve missed your opinion and commentary about 90/10 days recently, either upside or downside, and am interested whether you’re still finding any meaning in that indicator.–Yarnman

    • traderbill said

      I think the significant part is that on the up days all indices move by nearly identical amounts…thus chalk it up to high frequency and index trading…on the downside, we have been seeing the Nasdaq, Russell and financials the worst performers…hang in there!

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