1/25/12…state of what?

Bloomberg Top Stories:


 *ECB Said to Oppose Losses on Its Greek Debt as Lagarde Presses Governments

*U.K. Teeters on Brink of Recession as King Signals More Stimulus – it can’t happen here!?!

*Business Confidence in German Rises More Than Forecast to Five-Month High

*Merkel Becomes Master of Markets With Euro Austerity Mollifying Investors

*Stocks Drop in Europe as Ericsson Profit Disappoints; Nasdaq Futures Rise

*Boeing Forecasts Full-Year EPS as High as $4.25, Below Analysts Estimates

*Fed Likely to Focus on Housing-Debt Purchases in Any Move to Spur Economy

*Gold Proving Safest Commodity as Goldman Forecasts Record

*General Dynamics Profit Falls 17^ on Charges for Jet Unit

*United Technologies Net Rises as Aerospace Drives Demand for Pratt Engines

*Business Confidence in German Rises More Than Forecast to Five-Month High

*Merkel Becomes Master of Markets With Euro Austerity Mollifying Investors

*Gross Counters Gundlach Pushing U.S. Bank Bonds DoublLine Shuns as Risky

*Largest U.S. Banks Beating Basel III Deadline on Equity

*Billionaires Occupying Davos as Richest 0.01% Bemoan Inequality of Incomes

*Capitalism Seen in Crisis by Global Investors Citing Widening Inequalities

*Somalia Hostages Freed by U.S. Special Forces in Pre-Dawn Helicopter Raid

Volume dropped slightly again to a below average 3.66B shares from 3.75B shares on a negative session. Dow Transports and Utilities were the big losers, while the Russell 2000 rose 0.7%, again the two Nasdaq indices were listless. NYSE stocks executed on the Big Board rose slightly to 743M shares from 723M shares, still near lowest since 1/9 and about 300 million short of the twelve month average. 47 of the last 50 sessions have been less than 1B! Advance/Declines were slightly positive: +1.2:1 vs +1.4:1 vs +1.4:1 vs +1.9:1 vs +3.9:1 on NYSE and +1.5:1 vs -1.2:1 vs +1.5;1 vs +1.4:1 vs +3.3:1 on Nasdaq. Breadth was similar: +1.2x vs +1.4x vs +1.2x vs +2.2x vs +6.9x on NYSE and +1.2x vs -1.1x vs +1.4x vs +1.8x vs +4.5x on Nasdaq. New 52 week highs plunged to 161 from 224 while new lows rose to 24 vs 14. The ratio is about 11x positive! The S&P VIX rose slightly to 18.91 +.24, backing away from the lowest reading since 7/22…just before the selloff began still complacent!!!

Here are the results of the past five sessions: Dow -0.3% vs -0.1% vs +0.8% vs +0.4% vs +0.8%; Transports -0.7% vs -0.8% vs -0.4% vs +1.6% vs +1%; Dow Utilities -0.8% vs +0.3% vs +0.3% vs -1% vs flat vs +0.2%; S&P 500 -0.1% vs +0.1% vs +0.1% vs +0.5% vs +1.1%; Nasdaq Composite +0.1% vs -0.1% vs -0.1% vs +0.7% vs +1.5x vs +0.6%; Nasdaq 100 -0.1% vs flat vs -0.2% +0.7% vs +1.4%; Russell 2000 UP 0.7% vs -0.2% vs +0.3% vs +0.4% vs +1.8%%; NYSE Financials -0.4% vs +0.6% vs +1% vs +1.7% vs +1.6% +0.1%. NYSE Leaders:  BAC +0.6% vs +2.6% vs +1.6% vs +2.4% vs +4.9%; NOK -8%!!!; EMC +7.3%!!! S -3.6%; F +1.3%.

European equity markets weaker, Japan and India up, Hong Kong still  closed for Chinese New Year, gung hay fat choy!: FTSE -0.7% vs -0.8% vs -0.1% vs +0.6% vs -0.1%; CAC 40 -0.9% vs -1.1% vs -0.5% vs +1.7% vs -0.2%; DAX -0.6% vs -1.1% vs -0.3% vs +0.8% vs +0.2%; Nikkei +1.1% vs +0.2% vs -0.5% vs +1.5% vs +1%; Hang Seng still closed; Korean KOSPI +0.1%; Indian Sensex +0.5% vs +1.5% vs +0.4% vs +0.6% vs +1.2%. U.S. Futures weaker EXCEPT Nasdaq: DOW -54; SPX -5; NDQ +13??? Bonds doing better: 10’s and 30’s still above 2% and 3% respectively. 10 yr 2.04% +3/16. RECORD low 9/23 of 1.6855%; 30 yr 3.13% +3/8; Long TIP 0.79% +5/8; 0.57% at high. The 5 yr TIP yields MINUS 1.05%; 10 yr -0.04%. 3 mo. Libor 0.56%, and 0.79%, steady. Bills 0.02% 1 month; 0.04% 3 months, 6 months 0.07%. Reverse Repo 0.16% vs 0.18%.

Gold closed weaker but still well above the 200 day ($1642). It has been above $1600 for 10 straight sessions. It closed at $1664.50 -$13.80, with a high of $1681, highest since 12/11 and is now $1653.90 -$10.+0. The record high is $1923.70, a buying climax on 9/6. Res/Sup is $1666, the 50 day, further support $1649, the 40 day m/a. Crude closed lower at $98.95 -.63, still near lowest close since 12/21. It is now $97.92 -$1.03!!! RES is again $100, and the 40 day (99.42), the 50 day (99.20), and $95.28, the 200 day.

…still a lack of direction to the markets and Obama’s SOTU speech hasn’t had much impact on the markets so far…most important today is the FOMC meeting. In the last 50 sessions, stocks have had just THREE average volume sessions, the highest being an options expiration on Dec. 16, the last of the year. There have been no other 1B share days on the NYSE (not to be confused with NYSE stocks traded on ETN’s primarily by high frequency traders).

Remember the old adage: sell in May and go away? It was true last year and might be true again this year as the presidential race heats up. Ah, but what about that monumental rally in Q4? It didn’t quite offset the plunge in Q3 and you would have done as well to be in cash from May 3!!!

Meanwhile, with little or no selling resistance, the market has continued to eke out higher highs, the one on Monday barely beating the double top from July, just before the plunge (12720 vs 12751 and 12752), before closing yesterday at 12675. Earnings reports have been erratic and not instilling confidence in getting into the market. Will we get the dreaded selloff this month or early February? Time will tell…always does…

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

Remember when Dubya was president and every time he gave his SOTU the media would say he has to give the speech of his life. Miraculously, he did it to their chagrin.

Last night was such a time for Obama and he pulled it out sounding not like the socialist he is billed as but a populist…TB along with most others could find little to fault except perhaps his 30% tax on millionaires which hopefully doesn’t mean another minimum tax like the AMT.

Many times TB has said that Obama has enough faults to go after and failures as a president, but to blame HIM for the $4 trillion deficit is simply wrong. True, it began to rise sharply in 2009 after all those TARP bills shoved in at the end of the Bush administration…and all bipartisan…something we haven’t seen since. Thankfully, they happened but sadly, the politicos and lobbyists have succeeded in killing meaningful financial reform and the same players are, for the most part, running the show and reaping humongous bonuses…bankers thru recapture of loan loss reserves that were built up due to their own stupidity and short-term vision. Who can forget Chuck Prince’s “while the music is playing you have to keep dancing.” Too bad he didn’t sit down!

As for the GOP rebuttal, Mitch McConnell did a good job and illustrates why he might have made a better candidate than either Romney or Gingrich.

Regarding Romney, we shouldn’t blame him for his low tax rate but a poorly designed tax code…except for those who put in the rules, but for him to consider $350,000 for speaking as small change, is an insult to the rest of us.

Gingrich is hedging. While technically not a lobbyist, he came as close as possible and didn’t have to file those reports. This is typical of the power in the GOP who blasted FNMA and FHLMC yet took their donations…sticks and stones.

Don’t forget also that despite their continual blasting of Obamacare, both at times supported similar proposals. The point is: don’t believe everything you read…even here!…especially here???

Have a great day.



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