2/27/12…primary games

This week’s economic calendar is much busier than this week’s was. The highlights of the week will be the second estimate of Q4 GDP (Wednesday) and the February ISM Manufacturing Survey (Thursday). We will also get January Pending Home Sales (Monday), January Durable Goods Orders, the December Case-Shiller Home Price Index, and February Consumer Confidence (Tuesday), the February Chicago Purchasing Managers Index (Wednesday), January Personal Income, January Construction Spending, and February Motor Vehicle Sales (Thursday). In addition, the Federal Reserve will release its Beige Book (Wednesday) in preparation for the March 13th FOMC Meeting. Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA

 

 

Bloomberg Top Stories:

 

*Stocks Decline From Seven-Month High as U.S. Futures Fall; Yen Strengthens

*European Leaders Focus on Boost $672 Billion Firewall After G-20 Rebuff

*Buffett Says $2 Billion Energy Future bond Bet at Risk of Being Wiped Out – as he did with $

*BP Said to Weigh $14 Billion Settlement Proposal for Gulf of Mexico Spill – drill baby, drill!

*Banks Win Reprieve With $308 Billion of Losing Home Equity Debt – can use as credit on new

*HSBC Sticks to 2013 Profit Target After Pretax Trails Analysts’ Estimates

*Default Risk in Europe Nine Times Higher Than Treasuries After Greek Pact – just 9?

*Frontier Stocks Lose in Best Rally Since 1991 as Smallest Economies Falter

*Bullish Commodities Futures Top 1 Million Contracts for First Time in ‘12

*Most Refunding Since 2007 Powers Local Governments’ Recovery – for how long???

*Putin Assassination Plot Foiled as Two Militants Are Arrested in Ukraine

*Romney Works Turnout to Avoid Embarrassing Defeat to Santorum in Michigan

*China Congress of Billionaires Makes Capitol Hill Peers Look Like Paupers – peers???

*Christie Takes to Airwaves to Pitch New Jersey Budget That Seeks Tax Cuts – Whitman again?

Volume plunged to 3.32B shares from 3.76B shares Friday. Stocks were generally higher but the Dow was FLAT and Transports and Russell 2000 off…the rest were modestly higher. So far this year there have been at least TEN sessions where the Dow or S&P performed opposite the other major indices! NYSE stocks executed on the Big Board also plunged to 641M shares from 763M shares…about 400 million below average and lowest since Dec. 30th. Since 11/1 there have been just six 1B share days…only one in 2012! 72 of the last 78 sessions have now been less than 1B! Advance/Declines were mixed: +1.2x vs +2.4x vs -1.3x vs 1:1 on NYSE and -1.2x vs +2.6x vs -2x vs -1.6x on Nasdaq. Breadth was slightly positive: +1.1x vs +2.4x v -2.2x vs 1x on NYSE and +1.4x vs +2.5x vs -3x vs -1.6x on Nasdaq. New 52 week highs surged again to 298 from 253 while new lows slid to 12 vs 27. Watch the new highs! The ratio is back to a strong 24x positive, but is it just high frequency trading? The S&P VIX however ROSE to 17.31 +.51, complacency?

Here are the results of the past four sessions: Dow FLAT vs +0.4% vs -0.2% vs +0.1%; Transports -0.4% vs +0.7% vs -0.7% vs -1.5%; Dow Utilities +0.6% vs -0.4% vs flat vs -0.1%; S&P 500 +0.2% vs +0.4% vs -0.3% vs +0.1%; Nasdaq Composite +0.2% vs +0.8% vs -0.5% vs +0.2%; Nasdaq 100 +0.4% vs +0.6% vs -0.5% vs +0.2%; Russell 2000 DOWN 0.3% vs +1.6% vs -0.8% vs +0.2%; NYSE Financials +0.1% vs +0.9% vs -1.1% vs -0.1%. NYSE Leaders: BAC -1.8% vs  +0.9% vs -3% vs +1.1%. BAC only active financial and has been among the most active stocks virtually every day (usually number one) since last August!!!

Global equity markets WEAK: FTSE -1% vs -0.1% vs +0.3%; CAC40 -1.4% vs +0.4% vs +0.2%; DAX -1.5% vs +0.5% vs -0.4%; Nikkei -0.1% vs +0.5% vs +0.4%; Hang Seng -0.9% vs +0.1% vs -0.8%; Korean KOSPI -1.4%! vs +0.6% vs -1%; Indian Sensex -2.7%!!! vs -0.8% vs -0.4%. Stocks opening weak: DOW -89; SPX -10; NDQ -21.50. Bonds rallying sharply: 10’s below 2% but 30’s still well above 3%: 10 yr 1.92% +1/2. RECORD low 9/23 of 1.6855%; 30 yr 3.05% +1-1/16; Long TIP 0.68% +15/16; 0.57% at high. The 5 yr TIP yields MINUS 1.46%!!!; 10 yr -0.35%. Bills 0.07% 1 month; 0.10% 3 months, 6 months 0.13%….slowly climbing. Reverse Repo 0.23%. 3 mo. Libor 0.49%, and 0.75%, stable.

Gold closed lower at $1776.40 -$9.90 a day after an intraday high just above $1789, highest since 11/16! It is well above the 200 day ($1669), and has been above $1600 since Jan. 3. It is now $1770.00 -6.40. The record high is $1923.70, a buying climax on 9/6. Sup is $1690, the 40 day, further support $1674, the 50 day m/a. Res is $1800, the 11/14 high! Crude very strong on Iran fears, closing at $109.77 +$1.86! It is now $108.46 -$1.31, with support at the 40 day (100.68), the 50 day (100), and major support at $94.48, the 200 day, all rising. Think about this: domestic oil production is at an all-time high and imports at an eight year low…are we being had? What about nat gas???

… tomorrow is voting day in Michigan and Arizona and the GOP leadership (sic) must be wishing that Santorum would just go away…quietly. TB listened to the Arizona debate Friday night…not a big social calendar…and thought they were much more civil…could it be that they were all seated? Once again though they criticized Obama for doing the RIGHT thing. First, they blame the rising price of oil on him…NOW they say he should have never apologized for the Quran burning episode. How much do we have to see of Muslim beliefs to know that was a stupid thing to do? Hell, they would kill over a cartoon of Mohammed, so what did we expect? Book burning is stupid anyway as it only solidifies opposition (think when Salinas, Bakersfield and other cities burned The Grapes of Wrath). THEN, Romney said he would add 100,000 troops to the armed forces…all this while slashing taxes and cutting the budget. If you think this belongs in the lower section of this missive then you aren’t paying attention to the price of oil.

There is no denying that this has been a big rally…but strong (i.e. depth)? There have been at least ten sessions this year where the Nasdaq went in the opposite direction of the Dow and/or the S&P 500. There have been only six sessions with 1 billion shares since 11/1 – only ONE this year, that means 72 of the last 78 sessions have been less than 1 billion shares. Take out the ETN trading (flash trading) and Friday’s of 641m shares on the NYSE was the lowest since Dec. 30th – nearly 400 million shares below average…yet we are rallying? On what???

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

Since TB is always tossing out the term GOP and Dems, he will now state that for his entire life he was a Republican…until he began to question Reaganomics…that does not make him a Democrat. The GOP has lost its ‘center’ – more accurately it threw them out in favor of the wealthiest Americans and now when faced with a global financial crisis, they continue to pander to the religious right…especially now that the economy and jobs situation are improving (however weakly). We have a total lack of discourse and yet topics like birth control and right to life keep coming to the fore…but it seems their concern for life begins at conception but responsibility for it ends at birth.

Simon Johnson in the latest Baseline Scenario, cites data from the Committee for a Responsible Government (which he is not a fan of), that says Romney would cut taxes by 20% repeal AMT and estate tax. Santorum would reduce taxes by $6 trillion over the next decade; Gingrich by $7 trillion, and the ever conservative Paul by a mere $5 trillion…how in hell would they manage to balance the budget…especially if we dip back into recession…a very real possibility! If only about 50% of Americans pay income tax it is obvious who would benefit. Note: not paying income tax means high deductions for most Americans – even up to $100,000.

Reform the tax code the GOP says? So did Reagan and what did we get? Nothing – except where it means LOWER taxes for the wealthiest. That is the system…the financial lobby joins with the tax lawyers, accountants, and preparers to keep it complicated, baby. It’s all about the money! Not at all about what is right and necessary for America. Right at the head of all these is the grossly incompetent (need TB say un-American?) Grover Norquist who extorts falling into line for all but a few members of Congress. Such is the world we live in…deal with it! If you can.

By the way, you cannot cut taxes, slash the deficit and still make a better world for your kids and grandkids!

Hope you had a wonderful weekend…happy trading!

TB

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