12/6/11…stormy weather

…stormy weather

Bloomberg Quote of the Day: “If you think you can, you can. And if you think you can’t, you’re right.” – Mary Kay Ash

TB’s Quote of the Day: “Sometimes thinking you can isn’t enough! – Shel Silverstein from The Little Blue Engine That Couldn’t.

TB asks: How come it is OK to be a perma-bull on stocks but not OK to be a perma-bear? Why is that?

Don’t forget, today is the first day of hearings for the House Financial Services Committee on insider trading by members of Congress. For once, they know what they are talking about, especially the Chairman, Spencer Bachus (R-Alabama). Follow closely, it will come to naught…that is TB’s take.

 

Bloomberg Top Stories:

*Schaeuble Says S&P Downgrade Threat Adds Incentive to EU Debt-Crisis Talks

*German Bonds Decline After S&P Warning on Euro Ratings; U.S. Futures Rise

*Basel Rules Face Change With No-Risk Sovereign Debt Focus as Crisis Widens

*Sovereign-Debt Test U-Turn May Be Too Late to Shore Up EBA’s Credibility  

*BOE Establishes Sterling Liquidity Facility in Case Credit Problems Flare

*Goldman’s Hawker Faces Covenant Breach as Bonds Plunge

*Copper Stocks Show China Weathering Global Turbulence

*Frontline Plans to Split as Oil Tanker Rates Decline to Lowest Since 1999

*Chavez Windfall for Bond Investors Mean 60% Returns After Nationalization

*Kabul Mosque Suicide Explosion Kills at Least 45 People on Shiite Holy Day

*Arab League Rebuffs Assad as Clinton Plans Talks With Syria’s Opposition

*Gingrich Scolds Pelosi for Suggesting She’d Air Ethics Charges Against Him

*Cuomo Joins Brown Seizing Chance to Tap Tax-the-Rich Sentiment

Blagojevich Could Get 20-Year Term for Trying to Sell Obama’s Senate Seat  


Volume was steady for a second session at 4.1B shares, about average. Meanwhile, NYSE stocks executed on the Big Board were only modestly higher to 893M, from 833. The last three sessions have been less than 900M shares and 15 of the last 17 sessions have been less than 1B! Don’t forget those stop losses for stocking stuffers! Advance/Declines were positive:+3.5:1 vs +1.4:1 vs -1.5:1 vs +30:1 on NYSE and +2.2:1 vs +1.5:1 vs -1.6:1 vs +4.5:1 on Nasdaq. Breadth was finally positive following two mixed sessions: +5x vs +1.6x vs +1.2x vs +30x on NYSE and +3x vs -1.1x vs +1.3x vs +10x on Nasdaq. New 52 week highs rose to 201 from 172 while new lows declined again to 52 from 62. The ratio rose to about 4x positive. VIX ROSE despite the solid rally…ask questions!  It closed 27.87 +.32, remaining above the 26.46-27.01 gap up from 10/27 and 10/31. Meanwhile the 12 mo. ave. lies at 23.65 – fear still prevails!

Here are the results of the past four sessions: Dow +0.6% vs flat vs -0.2% vs +4.2%!!!; Transports +1.5% vs +0.8% vs -0.8% vs +4.8%; S&P 500 +1% vs flat vs -0.2% vs +4.3%; Nasdaq Composite +1.1% vs flat vs +0.2% vs +3.8%; Nasdaq 100 +1.1% vs -0.3% vs +0.6% vs +3.8%; Russell 2000 +1.6% vs +0.6% vs +0.9% vs +5.9%!!!; NYSE Financials +1.8% vs +1.3% vs  -0.9% vs +5.9%.  Leaders: BAC +2.7% vs +1.7% vs +7.3%!!! C +5.9%; MS +6.8%.

Global markets weak, especially Asia…rethinking? FTSE +0.2% vs +0.7% vs +1.5% vs +0.5% vs +2.9%; CAC 40 -0.5% vs +1.4% vs +1.9% vs flat vs +3.5%;  DAX -0.8% vs +0.8% vs +1.7% vs -0.5% vs +4.2%!; Nikkei -1.4% vs +0.6% vs +0.5% vs +1.9% vs -0.5% vs +2.3% vs +1.6%; Hang Seng -1.2% vs +0.7% vs +0.2% vs +5.6%!!! vs -1.5% vs +1.2% vs +2% vs -1.4% vs -2.1%!!!; Korean KOSPI -1% vs +0.4% vs flat vs +3.7% vs -0.5% vs +2.3% vs +2.2% vs -1% vs -2.4%!!!; Indian Sensex closed vs -0.3% vs +2.2% vs +2.2% vs +0.7% vs -1% vs +3%, up only six times in the last 18 sessions due to huge withdrawals from India funds: U.S. stock futures higher again…but: DOW +36; SPX +3; NDQ +8. Also running out of steam? Bonds weaker for an EIGHTH straight session with 10’s and 30’s  well above 2% and 3% respectively. 10 yr 2.07% -1/4. RECORD low 9/23 of 1.6855%; 30 yr 3.04% -5/16; Long TIP 0.77% -3/8. 0.57% at high three weeks ago. The 5 yr TIP yields MINUS 0.95%! 10 yr -0.04%. Libor 0.54% 3 mo., and 0.76% 6 mo. – 3 mo. above 0.50% and six month now above  0.75%…starting to creep up again! Bills 0.00% from one month out to three months. Six months 0.04%.

Gold sold off on Monday but is still above $1700. It closed at $1734.50 -$6.80 and is now $1721.50 -$13. The record high is $1923.70, a buying climax on 9/6. SUP is $1703/1720, the 40/50 day m/a’s. Res at $1800-1806, the November highs. Crude spiked on Monday to $102.44 but was immediately rejected, closing $100.99 +.03, and is now $101.23 +.24. $100 holding – so far! Support at the 200 day (95.98), still rising. Major support is the 40/50 day m/a at $94-72-94.37, also still moving up.

…but not for the stalwart bulls who see anything as a reason to rally. They are so focused on Europe that they missed the declines in Factory Orders (odors?) which declined, with shipments mixed and inventories UP!, and the ISM Non-Manufacturing Survey which showed declines in growth but also in employment!

TB provided you with the returns on stocks going back to one year and unless you were very light on your feet, you can’t be proud of your performance. Ask Bill Miller who beat the S&P 500 successfully for longer than any man, woman, child, or small dog. He threw in the towel, or perhaps it was thrown in for him. This is not to knock him, nor Bill Gross for his 180 degree out of sync call on treasuries. No, these guys know what they are doing but if they can’t do it why do you believe those talking heads on CNBC can? Do you feel lucky? …well do ya?

It is not in vogue to be anti-stocks…although anti-GROWTH stocks seems to be a theme with popularity…so long as they pay big dividends and don’t have defined benefit pension plans. Not that this deters GE who hasn’t made a contribution to its plan in more than two decades and is finally not offering it to new employees. Would probably close it out but cost to defease it would be prohibitive…but then, that’s GE…by the way, the stock is back to $16 where it seems permanently trapped – hit a low of $14.02 on 10/4! Of course the dividend has been boosted by 2 cents to 16 cents…finally up to a 3.7% yield from 10 cents during the crisis, phase one that is. TB still wonders why more people didn’t do as he did during the selloff from the mid-20’s and swap – even money at one point into the preferred which pays a 6.1% diviidend (caveat: it is now trading above $25.50 and can be called on thirty days notice…but watch for dips!).

Few of those recommending dividend stocks say much about preferreds. One reason is liquidity. You cannot just place a buy/sell order, you have to work it or they will have you for lunch. Still, the story is compelling. Even for BofA, whose series H preferred pays 8.20%….TB knows, there are risks…but would they suspend the dividend? Not likely, and BofA may underperform but it isn’t going bust anytime soon…hopefully at least. Also it is trading about $22, which produces a yield of 8.22%. There are others out there for you to find for yourselves. Again, these are just ‘ideas,’ not recommendations.

John Stumpf, Chairman and CEO (a bad combination for investors but at least this bank is well managed), just announced he wants to buy back more stock and pay investors more dividends. Now that is a positive…of course the dividend is a meager 1.8% so don’t expect it to perform miracles. Over the past 12 months it is off 7%, 5.4% with dividends reinvested, but preferred is of interest. The series J pays 8% but sells at a premium of $3 for a yield of 7.14% – with SIX years of call protection…hmmm.

One reason so many stock bulls shun dividends…except in companies that are increasing them, and this of course precludes preferreds, is there is no inflation protection. Would someone please tell TB just how much inflation protection your stock portfolio has provided you over the past eleven years…more if you got wrapped up in the late 90’s irrational exuberance stock rally?

That’s enough for you to think about for today…you decide. TB or not TB…that is the question.

. . .   – – –  . . . note that the same old SOS applies…perhaps more so after the rally!

Politics is downright weird. On Sunday, outgoing and ‘out-going’ representative Barney Frank was interviewed on This Week. He was very candid. On FNMA and FHLMC he said sure I supported them but despite comments to the contrary so did Gingrich. This is a fact that TB has presented before. Both GSE’s contributed heavily to members of both parties that served on the Financial Services Committee. The Dems endorsed them while the GOP bad-mouthed them but made no effort to stop them. So stop blaming Frank and Dodd for our problems.

Frank also correctly commented that on the mortgage crisis, the GSE’s were late to the party. They began playing in subprime AFTER it was saturated. Daniel Mudd, CEO of FHLMC, was interviewed by the SF Chronicle…about a month before losing his job. He specifically stated that subprime was only a small portion of their portfolio and was only represented in CMO’s. There you have it…he, like many other CEO’s had no idea what that meant…he trusted the rating agencies…a disease that has afflicted many and should be inscribed on their tombstones.

He then said that he had received two House reprimands from the Ethics Committee…just like Newt…of course, as exemplified in the Charlie Rangel case, that is a joke! But Frank isn’t running for president.

The GOP continues to embarrass itself by allowing a debate with Donald Trump as moderator. Will Trump ask for a show of hands if they think Obama is a U.S. citizen? Graduated from Harvard? Once again, Jon Huntsman showed his dignity saying he would not participate. It should be a black mark against any candidate for being there. Note that Newt flew to New York to meet with Trump. His excuse: he knows how to create jobs…no, Newt he has MONEY! Something you need. All we can learn from Donald Trump is how to start companies, get people to invest in them…or lend to them…then renege as they go down the tubes and then buy them back on the cheap. That is The Donald’s M.O.

Tb sincerely hopes Huntsman does well in New Hampshire, despite the newspaper endorsement of Gingrich…who is also heartily endorsed by Cain…hmm, what to Cain, Trump, Gingrich all have in come…they love women…well, sort of…

Seriously, Hunstman has been ambassador to Singapore and China…pretty good credentials TB would say, also that he is from outside the beltway, and doesn’t contradict his words with his actions…but he is a moderate…no, no, no…we can’t have a thinking president, can we?

Have a great day…and don’t let the Buzzard’s get you down!

TB

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