12/1/11…an airline and a government…what do they have in common?

 Bloomberg Top Stories:

*France-Spain Bond Sales Win Investor Backing After Central Bank Palliative – is that because Goldman can sell more credit default swaps? Ahem…why is gold rising again???

*Bonds Jump in France, Spain After Auctions; Stocks Futures Pare Declines  

*Bank Stress Rewinds to October After Policy Makers’ Move – That’s all? But stocks rallied?

*King Urges Banks to Bolster Defenses as Euro-Area ‘Systemic Crisis’ Looms – huh?

*SocGen Said to Cut at Least 200 U.S. Jobs With Loan Chief Haffar Dismissed – fall guy?

*Fed’s Discount Rate Among Tools to Offset European Sovereign-Debt Crisis

*Natural Gas Battered by Mildest U.K. Winter in Four Years – why not convert from oil???

*Bullish Individuals Help Driving Rally in 3-to-10-Year Bonds – or are they just SCARED???

*Swipe Fees Fail to Lower Cost on Small Purchases in U.S.

*Utah Leads U.S. States Vulnerable to European Contraction – Utah???

*Economists in Majority Don’t Let Improving Data Undermine Deflation Gloom

*Greeks Stage a Seventh General Strike as Papademos Readies More Austerity

*Iran Clings to Oil Lifeline as U.S. Pushes for Tighter Financial Sanctions

*Cheapest U.S. Republican Primary in a Decade Defies Spending Predictions – perhaps because big money is waiting to see who gets the nod? Don’t back a dead horse.


Volume soared to 5.76B shares from a near average 3.9B shares as shorts covered and investors believed…hopd? that this is good news…it is a HUGE bandage, but won’t prevent a problem…just help mitigate it. All indices were strong. for once we had a rally based on volume…but was it a wish trade as TB thinks? A Hail Mary??? Meanwhile, NYSE stocks executed on the Big Board was highest since 10/4 and rose to 1.67B shares from a below-average 918M shares from 959M shares, Friday’s 442M was lowest since 12/21/10!!!  12 of the last 14 sessions have been less than 1B! This would be a very good time to set stop losses! Advance/Declines were very positive:+30:1 vs -1.1:1 vs +5:1 vs -1.2:1 vs -7.1:1 vs -1.6:1 vs -5.6:1 on NYSE and +4.5:1 vs -1.5:1 vs +4.8:1 vs -2.5:1 vs -5.7:1 vs -1.7:1 vs -4.9:1 on Nasdaq. Breadth was even better: +30x vs -1.1x vs +37x! vs -1.2x vs -25x!!! vs -1-3x vs -14.6x on NYSE and +10x vs -1.4x vs +14.4x! vs -2.2x vs -12.4x!!! vs -1.1x vs -3.9x on Nasdaq. New 52 week highs surged to 180 but new lows only declined to 108 – still very high! The ratio turned positive finally. VIX plunged again to lowest level since 10/298 but still VERY elevated, 27.80 -2.84, First time below 30 in the past 15 sessions. Meanwhile the 12 mo. ave. lies at 23.50 – fear prevails!

Here are the results of the past seven sessions: +4.2%!!! vs +0.3% vs +2.6% vs -0.2% vs -2.1% vs -0.5% vs -2:1%; Transports +4.8% vs +0.6% vs +3.5% vs -0.7% vs -2.4% vs -1.1% vs -2.3%; S&P 500 +4.3% vs +0.2% vs +2.9% vs -0.3% vs -2.2% by 35:1! vs -0.4%; Nasdaq Composite +3.8% vs -0.5% vs +3.5% vs -0.8% vs -2.4% vs +0.1% vs -1.9%; Nasdaq 100 +3.8% vs -0.6% vs +3.4% vs -0.7% vs -2.3% vs +0.2% vs -1.9% -5.7:1; Russell 2000 +5.9%!!! vs -0.3% vs +4.8% vs -1.2% vs -3.2% vs -0.7% vs -2.4%; NYSE Financials also +5.9% vs -0.2% vs +3.6% vs +0.3% vs -2.9% vs -0.8% vs -2.4%.  BAC +7.3%!!! vs-3.2% vs +1.6% vs +0.6% vs -4.3% vs -2.6% vs -5%!!! vs -0.3% vs -1.7% vs -3.8%; C +8.9%!!! vs +0.8% vs +0.6% vs +0.5% vs -3.9%.

See this is all about financial stocks…not a good thing…you don’t want to be short here!

 

Asian markets rallying sharply, Europe mixed??? FTSE +0.5% vs +2.9%; CAC 40 FLAT vs +3.5%;  DAX DOWN 0.5% vs +4.2%!; Nikkei +1.9% vs -0.5% vs +2.3% vs +1.6%; Hang Seng +5.6%!!! vs -1.5% vs +1.2% vs +2% vs -1.4% vs -2.1%!!!; Korean KOSPI +3.7% vs -0.5% vs +2.3% vs +2.2% vs -1% vs -2.4%!!!; Indian Sensex +2.2% vs +0.7% vs -1% vs +3%, up only five times in the last 16 sessions due to huge withdrawals from India funds: U.S. stock futures slightly weaker after being up early in session: DOW -21; SPX -3; NDQ -1. Bonds weaker yet aqain with 10’s and 30’s still above 2% and 3% respectively. 10 yr 2.11% -3/8. RECORD low 9/23 of 1.6855%; 30 yr 3.13% -1-3/8!!!; Long TIP 0.83% -1-1/8. .57% at high three weeks ago. The 5 yr TIP yields MINUS 0.94%! 10 yr 0.00% vs -.04%. Libor  0.53% 3 mo., and 0.75% 6 mo. – 3 mo. above 0.50% and six month now AT 0.75%…only the intervention stopped the climb – for now but yearend approaches! Bills 0.01% from one month out to six months 0.05%!  

Gold rallied again Wednesday and is still above $1700. It closed at $1750.30 +$31.20 is now $1751.20 +.90. Question: if things are so rosy, why is gold rallying? Hmmm. The record high is $1923.70, a buying climax on 9/6. RES is again $1706, the 40/50 day convergence. Crude rose again closing $100.36 +.57, but is little changed overnight at $100.32 -.04. Will $100 be the line in the sand? Support at the 200 day (95.51), still rising. Major support is the 40/50 day m/a at $91.38-89.63, also still moving up.

 

…before we start on today’s topic, think what the concerted intervention meant. First, it was not an intervention, it was a vote of support and at a time when there were few options left The Fed could lower the discount rate but to what avail??? …and it is way to close to ZERO. It is now 0.75% and they may cut it to 0.5% but Fed Funds are trading at 0.10% or less! So we had a meaningful rally…on big volume…yes we did…but there were a lot of shorts out there. One problem that few are considering: by reliquifying the banks there is the risk that speculators could mount attacks on currencies or short sovereign credits…remember Soros???

 

Now let’s talk about AMR. TB believes they did stave off bankruptcy for as long as possible and that was not their desire, but who are the winners and losers? The winners? MANAGEMENT! …and of course those who shorted the stock. The losers? Shareholders but more importantly the employees. Management has been arguing that pay is too high for existing employees and that is probably true, but the entire industry has been bragging that they are doing well…how? Just like all other businesses these days…with fewer employees and flights (inventory). Thus it is hard to negotiate under those circumstances.

 

Which brings TB to the real losers and he has this straight from a friend, a former UAL employee that had retired prior to the bankruptcy. The pension was turned over to the government and hacked to pieces, dollars but also a loss of benefits. But then what happened? Management reorganized and brought out the new, improved UAL and enriched themselves…just like in all things these days…the people the GOP is trying to protect. Just another addendum to the wealth gap, that the right says does not exist. See below for the other part of the story.

 

We are living in troubling times…hatred and angst flow everywhere. Our elected officials have lost the ability to compromise, replacing it with distortions of fact and name calling. Pity. Pity us!

 

. . .   – – –  . . .

Now what about extending the payroll tax cut? First, it isn’t a tax…it is withholding and ultimately becomes a tax. In other words replacing a ‘savings’ account with an IOU. The effect of this is to put more money into people’s pockets…at least temporarily in hopes that the economy will be better later and thus help the recovery.

 

The GOP is correct that the benefits are small, but with 160 million workers at $1,000 each that is a lot of money. They say they would favor it if there is no cost such as financing it with bonds, or higher tax rates for the wealthy.

 

But while they are correct, the voted to enact the cuts and now don’t wish to extend them so that even if there is just a marginal positive impact, taking it away will hurt the economy…pretty simple math here. Now, just as with the debt ceiling they don’t want to extend it.

 

There is a clear message from a party that won’t even remove stupid subsidies or require hedge fund operators to pay their full tax rate: only capital gains matter…earned income doesn’t count! So we continue to make the workers pay while those with passive income reap the benefits. Damn! TB is sounding like a damned socialist…and he doesn’t want to! REFORM CORPORATE AMERICA…RCA. Get rid of the Occupy Wall Street name that implies anti-capitalism with one that restores American style capitalism…but we are out of time, and lack leaders…true leaders!

 

Have a great day!

 

TB

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