1/24/12…who am I, why am I here?

TB’s Definition of the Day: Electile Dysfunction: the inability to become aroused over any of the choices for President put forth by either party. – sent by a friend, TB wishes he had thought of it!  

Bloomberg Top Stories:


 *EU Calls for More Bondholder Concessions as Greece Seen Going ‘Off Track’ – hmmmm

*Stocks in Europe Drop on Greek Debt-Talk Stalemate; Natural Gas Advances

*Bernanke Transparency Drive Poses Risk Rate Forecast to Be Viewed as Vow

*Pandit Pariah No More as U.S. Bankers Hunting Deals in Ascendance at Davos

*McDonald’s Fourth-Quarter Profit of $1.33 a Share Tops Analysts’ Forecast – $1.30

*Travelers Profit Misses Estimates as Investment Income, Reserves Decline

*Hungary Unexpectedly Holds EU’s Highest Benchmark Rate as Forint Recovers

*NYSE-Deutsche Boerse Said to Lack Support to Overturn EU’s Takeover Veto

*U.K. Regulators May Set Specific Bonus Rule for Hedge Funds, Private Equity

*Oil-Embargo Rally Muted by Saudi Pledge, Libyan Recovery

*Ford Expects Fusion to Grab Profits Even Without Camry’s Sales Crown

*Six-Month Junk-Issuance Drought Ending as JBS Taps Market in Brazil

*Super-Rich Playing Snow Polo as Davos Igloo Agitators Vie With Duran Duran

*Romney’s Tax Returns Show 13.9% Rate on Income of $21.6 Million for 2010

(Yep he’s the man to fix the taxing problem…13.9%…wouldn’t you kill for that? Meanwhile, Gingrich only released the 2006 Freddie Mac contract…what a pair to draw to)

Volume dropped slightly to a below average 3.75B shares from 3.9B shares on a mixed session. Dow Transports were the big loser, -0.8% while NYSE Financials rose 0.6% (it has been up for five straight sessions now), while the two Nasdaq indices and Russell 2000 were listless. NYSE stocks executed on the Big Board plunged to 723M shares from 927M shares, lowest since 1/9 and now about 300 million short of the twelve month average. 46 of the last 49 sessions have been less than 1B! Advance/Declines were mixed: +1.4:1 vs +1.4:1 vs +1.9:1 vs +3.9:1 vs +1.5:1 on NYSE and MINUS 1.2:1 vs +1.5;1 vs +1.4:1 vs +3.3:1 vs +3.3:1 on Nasdaq. Breadth was also mixed: +1.4x vs +1.2x vs +2.2x vs +6.9x vs +1.1x on NYSE and MINUS 1.1x vs +1.4x vs +1.8x vs +4.5x vs +1.4x on Nasdaq. New 52 week highs rose to 224 from 199 while new lows were halved to 14 vs 27. The ratio is about 15x positive! The S&P VIX rose slightly to 18.67 +.39, following the lowest reading since 7/22…just before the selloff began AND far too complacent!!!

Here are the results of the past five sessions: Dow -0.1% vs +0.8% vs +0.4% vs +0.8% vs +0.5%; Transports DOWN 0.8% vs -0.4% vs +1.6% vs +1% vs -0.1%; Dow Utilities +0.3% vs +0.3% vs -1% vs flat vs +0.2% vs -0.1%; S&P 500 +0.1% vs +0.1% vs +0.5% vs +1.1% vs +0.4%; Nasdaq Composite -0.1% vs -0.1% vs +0.7% vs +1.5x vs +0.6% vs -0.5%; Nasdaq 100 FLAT vs -0.2% +0.7% vs +1.4% vs +0.9%; Russell 2000 -0.2% vs +0.3% vs +0.4% vs +1.8% vs +0.2%; NYSE Financials +0.6% vs +1% vs +1.7% vs +1.6% +0.1%. NYSE Leaders:  BAC +2.6% vs +1.6% vs +2.4% vs +4.9% vs -2.1% vs -2.7% vs -1.2% vs +3.6% vs +5.7%; C +0.7% vs +1.1% vs +1% vs +2.9% vs -8.3%!!!; GE -1.1% vs flat vs +0..7% vs +1.5% vs -0.7%; WFC +1.2%.

European equity markets weaker, Japan and India up, Hong Kong and Korea closed for Chinese New Year, gung hay fat choy!: FTSE -0.8% vs -0.1% vs +0.6% vs -0.1% vs +0.9%; CAC 40 -1.1% vs -0.5% vs +1.7% vs -0.2% vs +1.6%; DAX -1.1% vs -0.3% vs +0.8% vs +0.2% vs +1.9%; Nikkei +0.2% vs -0.5% vs +1.5% vs +1% vs +1% vs +1.1% vs +1.4%; Hang Seng closed; Korean KOSPI closed; Indian Sensex +1.5% vs +0.4% vs +0.6% vs +1.2% vs -0.1% vs +1.7% vs +0.7% vs -0.9%. U.S. Futures weaker: DOW -46; SPX -7; NDQ -10. Bonds slightly better: 10’s and 30’s still above 2% and 3% respectively. 10 yr 2.05% +1/32. RECORD low 9/23 of 1.6855%; 30 yr 3.12% +3/32; Long TIP 0.80% +5/16; 0.57% at high. The 5 yr TIP yields MINUS 1.00%; 10 yr -0.01%. 3 mo. Libor 0.56%, and 0.79%, steady. Bills 0.01% 1 month; 0.04% 3 months, 6 months 0.07%. Reverse Repo 0.18% vs 0.20%

Gold closed higher and well above the 200 day ($1641). It has been above $1600 for 9 straight sessions. It closed at $1678.30 +$14.30, with a high of $1681.80, highest since 12/11 but is now $1666.50 -$11.80. The record high is $1923.70, a buying climax on 9/6. Res/Sup is $1668, the 50 day, further support $1650, the 40 day m/a. Crude closed higher at $99.58 +$1.12, following lowest close since 12/21. It is now $99.25 -.33. RES is again $100, support the 40 day (99.40) and the 50 day (99.20), major support at $95.35, the 200 day.

…borrowing the famous quote from Admiral Stockdale when he was blindsided into a vice-presidential debate by his ‘friend’ Ross Perot, and made to look like a fool, the markets have no clear trend and are suffering again from declining volume when ‘average’ was a good thing.

Quarterly earnings reports are mixed at best so there is nothing to trade off, since we have lost interest in the Greco/European crisis…something we will pay dearly for at some point. Not much else worthy of mention except to say that the Nasdaq seems to have lost its luster along with Transports while Financials are beginning to surge…for the wrong reasons as TB sees it.

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

Thanks to The Baseline Scenario, for another great article, this time on the argument against the Volcker Rule attached to Dodd-Frank. They warn to not trust the just released report commissioned by the Securities Industry and Financial Markets Association (SIFMA),

whose mission statement is: “On behalf of our members, SIFMA is engaged in conversations throughout the country and across international borders with legislators, regulators, media and industry participants.” Thus this was not an objective report and designed to thwart any and all changes to financial regulations…the Volcker Rule being to specifically exclude proprietary trading from federal bailouts…aka ‘too big to fail.’

Thus this report is about as useful as any from a right or left wing think tank that skews the findings to match their goals. In this instance, as the writer points out there is no indication that the authors of the study were influenced…they just knew what the sponsors wanted and gave it to them. Simple economics…or freakonmics…where if you determine the ‘incentive’ you can forecast the conclusion. Of course the study makes it sound like all banks will be penalized when it is only the big banks and their risky practices that are affected. Isn’t that how we got in this mess?

As for the argument that we need to encourage this in order to compete with other big banks…didn’t we learn anything…aren’t the foreign banks in even worse shape than ours…yet, they want to be able to compete with that? Again, look at the incentives: short term profits for senior management and traders at the expense of long-term shareholders and taxpayers.

No bank should be too big to fail and bondholders should not be protected. Furthermore, TB believes that in the event of a bailout all CD rates from the failed institution should revert to the comparable U.S. treasury rate. This would eliminate the incentive to put your money with a failing institution and thus cause them to fail before the losses magnify. This was made very clear during the S&L crisis of the 1980’s when institutions like American Savings were writing CD’s at the highest rates to attract despositors and more importantly to hold on to ones who were considering withdrawing funds.

When TB was a salesman, he sold a five year Continental Illinois CD to a credit union. The rate was 15%! When the bank, the first to come under the Reagan imposed ‘too big to fail’ rule, the CD and all others became government obligations and paid that 15% for more than four years! That is criminal! All that was needed was a clause that provided that exemption. The FDIC exists to protect depositors, not enrich them for their stupidity!

Isn’t it interesting as the pressure mounts to release financial information that both Romney and Gingrich are doing so selectively? Romney by only providing two years and yet what we found was that even then he paid a 13.9%, not that it is illegal just points to the unfairness of the tax code…after all that was on $21.6 million!!! As for Gingrich, he only provided his 2006 Freddie Mac contract…why just that one. TB accepts that he was not a lobbyists…or at least a ‘registered’ one…but what he did looks, talks, and walks like a lobbyist…QUACK!!! Yet these two men are going to fix things for us??? Not that Obama will do any better…let’s see what he has to say in his SOTU speech tonight (with special attention paid to the reactions on the right side of the aisle…will they once again disrespect his office?

As today’s definition says…we are suffering from Electile Dysfunction…no cure for it, at least not for four more years! Ugh!

Hope you have a great day!




  1. ldh said

    love the dysfunction quote, TB!

    • traderbill said

      Best I have seen lately!

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