12/2/11…what kind of fool’s are we?

TB’s song of the day is dedicated to those stalwart politicians with their huge egos and also to the fools who continue to elect them. We have met the enemy and they are us – Pogo

What kind of fool am I
Who never fell in love
It seems that I’m the only one
that I have been thinking of

What kind of man is this?
An empty shell-
A lonely cell in which
an empty heart must dwell

What kind of lips are these
That lied with every kiss
That whispered empty words of love
that left me alone like this

Why can’t I fall in love
Like any other man
And maybe then I’ll know what kind of fool I am.

What kind of clown am I?
What do I know of life?
Why can’t I cast away the mask of play
and live my life?

Why can’t I fall in love
And maybe then I’ll know what kind of fool
Till I don’t give a damn I am

– Words and music by Leslie Bricusse, and Anthony Newey who also sang it in Stop the World I Want to Get Off…and how appropriate that title is now.


TB’s Quote is an excerpt from Stealer’s Wheel: Clowns to left of me, jokers to the right
Here am I stuck in the middle with you. What? You aren’t in the middle? You have to move! Get us back on track. Or is ‘intelligent design’ what it’s all about, Alfie?


Here is a shocker for you: U.S. Unemployment Rate plunged to 8.6% from 9%, the lowest since March 2009…oh happy day! Note that the labor pool declined by 402k helping make it possible and the adjusted unemployment rate only declined 0.2% to 12.4%! the labor pool has declined by an average 187k for the past three months…lower the denominator and what do you get? Better numbers of course! Also, that doesn’t include expiring benefits and discouraged workers, add in part-timers and the REAL unemployment rate is 15.6% -0.6%…if that could be sustained it would take us 11 months to get to 9% but that is ignoring people entering the work force. Payrolls only climbed by 120k vs consensus 125k and that isn’t going to make a dent in REAL unemployment! Wake up! Figures lie and liars figure! Ahem….but September was revised UP to 210k from 158k and October to 100k from 80k…that’s 72k more jobs. Note also that the average duration of unemployment rose to 40.9 weeks, +1.5 weeks and the highest of the last six months, while the median duration of unemployment ROSE to 21.6 weeks just above the six month average. Ah such good reasons to rally stocks, no? NO!   


But how are the workers faring? Average hourly earnings fell 0.1% following the 0.3% rise in Oct and 0.2% in September while the workweek remained stagnant at 34.3 hours. Where were the jobs: SERVICES +146k vs +121k vs +184k…not the best paying, Manufacturing gained 2k while Construction fell by 12k and goods-producing by 6k. Only service providers have had meaningful three-month growth averaging 150k! Government declined by 20k about in line with the three month average of -16k…flat at the Federal level!


Market Reaction (8:50am EST): Bonds were stunned at first with the 30 year off 11/16 but not moving, then came back and it is now up 1/32. Dollar little changed…not a big factor here. Gold gave up a bit as did stock futures: +129 vs +1165 at o/n high; SPX +12 vs +19; NDQ +23 vs +35.


Bloomberg Top Stories:

*Euro Region’s Central Banks Seen Providing Up to $270 Billion Through IMF

*Stocks Jump as U.S. Futures Climb Before Jobs Report – what? Jobs don’t matter?

*Payroll Increase In November Probably Failed to Reduce U.S. Unemployment – Prolly???

*RIM Q3 Revenue Misses Company Forecast on Slowing Device Demand – poor Cramer

*U.S. Set for Best Year Since ’02 as Debt Tops $15 Trillion – bond returns that is!

*Taxable Yields Lowest Since 1994 Lure Buyers – to Muni’s!

*Oil Profits Plunge as U.S. Ends 62 Years as Fuel Importer – but we’ll be back!

*Iran Faces Oil Curbs as U.S. Targets Central Bank While EU Adds Sanctions

*Syria Risks ‘Full-Fledged Civil War’ Unless Assad Ends Crackdown, UN Says



Volume plunged again to a below average 3.82B shares from 5.76B shares…OK, ‘fess up, who looked down? Look at the number of one-day wonders that then lack follow-thru. Note that initial jobless claims reported yesterday were back above 400k killing that fantasy…will today’s numbers drive a nail through it? Was the rally a Hail Mary??? Meanwhile, NYSE stocks executed on the Big Board were HALVED to 855M, lowest ‘full’ session since 11/15…on the day following a huge rally??? …from 1.67B shares, last Friday’s 442M was lowest since 12/21/10!!!  13 of the last 15 sessions have been less than 1B! This IS a very good time to set stop losses! Advance/Declines were negative:-1.5:1 vs +30:1 on NYSE and -1.6:1 vs +4.5:1 on Nasdaq. Breadth was mixed???: +1.2x vs +30x on NYSE and PLUS 1.3x vs +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 slipped to 156 from 180 while new lows declined to 83 from 108. The ratio is now almost 2x positive. VIX continued its descent closing 27.41 -.39, just above the 26.46-27.01 gap up from 10/27 and 10/31. Second time below 30 in the past 16 sessions. Meanwhile the 12 mo. ave. lies at 23.50 – fear prevails!

Here are the results of the past two sessions: Dow -0.2% vs +4.2%!!!; Transports -0.8% vs +4.8%; S&P 500 -0.2% vs +4.3%; Nasdaq Composite UP 0.2% vs +3.8%; Nasdaq 100 +0.6% vs +3.8%; Russell 2000 UP 0.9% vs +5.9%!!!; NYSE Financials also -0.9% vs +5.9%.  BAC +1.7% vs +7.3%!!!. Note Nasdaq indices only positives, and Russell and Financials were worst.


European markets strong, Asia less so. FTSE +1.5% vs +0.5% vs +2.9%; CAC 40 +1.9% vs flat vs +3.5%;  DAX +1.7% vs -0.5% vs +4.2%!; Nikkei +0.5% vs +1.9% vs -0.5% vs +2.3% vs +1.6%; Hang Seng +0.2% vs +5.6%!!! vs -1.5% vs +1.2% vs +2% vs -1.4% vs -2.1%!!!; Korean KOSPI  FLAT vs +3.7% vs -0.5% vs +2.3% vs +2.2% vs -1% vs -2.4%!!!; Indian Sensex +2.2% for a second session vs +2.2% vs +0.7% vs -1% vs +3%, up only six times in the last 17 sessions due to huge withdrawals from India funds: U.S. stock futures strong…what do initial jobless claims mean anyway… DOW +146; SPX +15; NDQ +28. Bonds weaker for a SIXTH straight session with 10’s and 30’s well above 2% and 3% respectively. 10 yr 2.13% -3/8. RECORD low 9/23 of 1.6855%; 30 yr 3.13% -11/16; Long TIP 0.83% -11/16. .57% at high three weeks ago. The 5 yr TIP yields MINUS 0.92%! 10 yr 0.02% vs -.00%. Libor  0.53% 3 mo., and 0.75% 6 mo. – 3 mo. above 0.50% and six month now AT 0.75%…intervention seems to have done the job – for now, but yearend approaches! Bills 0.01% from one month out to six months 0.05%!  

Gold dipped Thursday but is still above $1700. It closed at $1739.80 -$10.50 is now $1760.80 +$21!!! Have you notice that it is now correlated to stocks? Weird, huh? The record high is $1923.70, a buying climax on 9/6. RES is again $1706, the 40/50 day convergence. Crude dipped slightly closing $100.20 -.16, and is now $101.20 +$1. Will $100 hold? Support at the 200 day (95.87), still rising. Major support is the 40/50 day m/a at $93.52-90.87, also still moving up.


…who is (are) the fools? Those of us who allowed Jon Corzine to act recklessly as governor…crashing his car at 90mph and nothing happening, hiring his girlfriend in a position that did not require her reporting to work and for which she had no duties…well, maybe one. That is singling out those of us from New Jersey of course (sorry, John), but also the principle shareholder in MF Global who appointed him. Or perhaps it is the CFTC whose chairman Gary Gensler (has a nice ring to it), said that there was no reason for them to suspect problems. Could it be that they relaxed a rule allowing dealers to ‘borrow’ from clients accounts on bond transactions since the risk was so small? Or was it the SEC who didn’t make Corzine retake the principal’s exam, not that it would have mattered. See he was in a position like Bernie Madoff where no one dared question him. That is the state of regulation and investor protection in this company. Meanwhile, had it not been for Bloomberg filing a freedom of information act suit, we would not know that the bailout number was $7 trillion, not $720 million…must have been using British numbering system.


. . .   – – –  . . .

TB is reading Inside Wall Street by Mike Mayo. This should be required reading for all bank officers…but management would prefer they not read it. It would also be wise for those buying bank stocks to read it, because they won’t. It is comforting to TB to read someone else who also understands banking telling it as it is…TB felt at times he was reading his own columns but more detailed and some interesting stories…a word of caution, you won’t much care for bankers after you read it (he also refers to the brokerages as bankers which is confusing and shows how that concept has crept into our vocabulary when they are anything but bankers!).


But it extends to all corporate management…oops, BIG company corporate management where you make eight figure salaries when you do good and if you fail you get an eight figure kiss-off. Where are the shareholders objections to this? In the wastebasket as the board answers to its chairman, not the owners…who in most cases IS the CEO also, and they are beholding to him.


That was a fatal flaw of Sarbanes-Oxley as it punished the thousands of honest CEO’s of smaller companies for the sins of a few…thank you, Enron.


Wow, there is the segue TB wanted. Yesterday, TB heard some former Enron officers say that Enron was a good company attacked by overly-zealous regulators and prosecutors…oh, really? Arthur Anderson and the company couldn’t beat federal prosecutors? Come on. Now, TB did sympathize with them on one point: most of them were very strong and new nothing of the abuses. But that is where they crossed the line: instead of separating themselves from the den of thieves they said they were maliciously prosecuted. As Governor Davis and the taxpayers of California for one if it was malicious. It was worse…it was rulthless market manipulation and it is sad that Ken Lay died while his case was on appeal as he was guilty along with Skilling and Andrew Fastow…either complicity or by dereliction of duty. The smartest guys in the room, make TB sick! Thanks to Bethany Mclean for busting it wide open!


In closing, back to the fools who have fooled you. Apparently not, as a study back to 2005 shows that Congress hasn’t had an approval rating of higher than 45% in all those years. Yet, the incumbents (until the last election), continue to survive. We need election reform and we need leaders…before it is too late.


Have a great weekend!





  1. Yarnman said

    TB–I came across an interesting comment this morning, on BondDad’s blog, that mentioned that Eurobanks, among other non-US banks, hold close to half of the dollar assets held outside the US. Of course, the other half of dollar assets is held within the US. Although the pundits keep saying that a crash of Eurobanks will hurt US export business with Europe, the subtle difference is that a crash of Eurobanks will affect US borrowers even more deeply as their Euro credit lines dry up. We’ll see! In the meantime, we can play the Santa Rally with tight stop/limits. After all, we gotta get good year-end potfolio balances for enhance those good old IRA RMD’s (Require Minimum Distribution)! –Yarnman

    • traderbill said

      I believe that data is correct. I just finished Inside Wall Street by Michael Mayo, and it confirms EVERYTHING I have been saying and much more. His perspective as a sell-side credit analyst provides great insight.

      Also, on Friday on NPR I heard Bethany Mclean (The Smartest Guys in the Room) speak at the Chattaqua Institute. Ditto, EVERYTHING I have been saying and more.

      I am so convinced we need Reform Corporate America instead of OWS and we need to vote out virtually all incumbents. Then next time, if they don’t perform, vote out those who replaced them.

      I highly recommend Mayo’s book!

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