2/28/12…it’s all about the balance

Bloomberg Top Stories:

 

*Durable Goods Orders in U.S. Drop 4%, Marking Worst Decline in Three Years – bulls heed!!!

*U.S. Dec S&P/Case-Schiller Home Prices Fall 4.0% vs Year Ago – housing revival???

*U.S. Stock-Index Futures Erase Early Gains After Durable Goods Orders Fall

*ECB’s Special Greek Lender Status Risks investor Retaliation – isn’t that special?

*Gross Advises Investors to Adopt Defensive Strategy as Rates Approach Zero – got cash?

*Austria Funds Volksbanken Rescue With Bank-Tax Increase to Protect Rating

*Oil Tankers Seen Falling 42% as Japan Weakens Most Snice Tsunami – was prior  jump Japan?

*Black & Decker to Parker Hannifin Seen Whetting Buffett Appetite

*Manhattan Lures REITs Capitalizing on Rising Rents as Sales Lag – the future is in ‘rents’!!!

*Wells Capital’s Paulsen Predicts ‘Lousy Year’ for Treasuries Amid Growth

*BP Investors See Spill Settlement Narrowing $44 Billion Value Gap

*Nomura Reeling From Lehman Hangover as Shibata Pledges No Retreat to Tokyo – red flag!

*Syrian Forces Shell Towns in North After Assad Says Voters Back Referendum – SICK!!!

*Michigan Primary Tests Santorum Challenge to Romney Before Super Tuesday

*Ohio High School Shooting Victim Declared Brain Dead, Bringing Toll to Two   

 

Volume rose slightly to 3.48B shares from 3.32B. Stocks were only slightly higher but the Dow was FLAT for a second straight session…this time joined by the Russell 2000…the rest were barely higher. NYSE stocks executed on the Big Board rose slightly to 732M shares from 641M shares…still about 300 million below average. Since 11/1 there have been just six 1B share days…only one in 2012! 73 of the last 79 sessions have now been less than 1B! Advance/Declines were mixed: 1:1 vs +1.2x vs +2.4x vs -1.3x vs 1:1 on NYSE and -1.2x vs -1.2x vs +2.6x vs -2x vs -1.6x on Nasdaq. Breadth was slightly positive: +1.3x vs +1.1x vs +2.4x v -2.2x vs 1x on NYSE and +1.3x vs +1.4x vs +2.5x vs -3x vs -1.6x on Nasdaq. New 52 week highs fell back to 251 from 281 while new lows bounced back to 27 vs 12. Watch the new highs! The ratio was more than halved to 9x positive from 24x, but it is just high frequency trading! The S&P VIX however ROSE to 18.19 +.88…but on the early session selloff it rose to 19.25 highest since 2.17.

Here are the results of the past five sessions: Dow FLAT vs FLAT vs +0.4% vs -0.2% vs +0.1%; Transports +0.6% vs -0.4% vs +0.7% vs -0.7% vs -1.5%; Dow Utilities -0.1% vs +0.6% vs -0.4% vs flat vs -0.1%; S&P 500 +0.1% vs +0.2% vs +0.4% vs -0.3% vs +0.1%; Nasdaq Composite +0.1% vs +0.2% vs +0.8% vs -0.5% vs +0.2%; Nasdaq 100 +0.1% vs +0.4% vs +0.6% vs -0.5% vs +0.2%; Russell 2000 FLAT vs -0.3% vs +1.6% vs -0.8% vs +0.2%; NYSE Financials +0.2% vs +0.1% vs +0.9% vs -1.1% vs -0.1%. NYSE Leaders: BAC +2% vs -1.8% vs  +0.9% vs -3% vs +1.1%; GE -0.8%; WFC UP 2.8%! – Buffett. BAC has been among the most active stocks virtually every day (usually number one) since last August!!!

 

Global equity markets mixed: FTSE -0.1% vs -1% vs -0.1% vs +0.3%; CAC40 -0.2% vs -1.4% vs +0.4% vs +0.2%; DAX -0.3% vs -1.5% vs +0.5% vs -0.4%; Nikkei +0.9% vs -0.1% vs +0.5% vs +0.4%; Hang Seng +1.7% vs -0.9% vs +0.1% vs -0.8%; Korean KOSPI +0.6% vs -1.4%! vs +0.6% vs -1%; Indian Sensex +1.6% vs -2.7% vs -0.8% vs -0.4%. U.S. stock futures little changed and mixed, but falling since Durable Goods: DOW -3; SPX -0.80; NDQ +1. Bonds slightly higher for a second session: 10’s below 2% but 30’s still above 3%: 10 yr 1.91% +3/16. RECORD low 9/23 of 1.6855%; 30 yr 3.03% +5/16; Long TIP 0.67% +1/2; 0.57% at high. The 5 yr TIP yields MINUS 1.46%!!!; 10 yr -0.36%. Bills 0.07% 1 month; 0.11% 3 months, 6 months 0.14%….steadily climbing. Reverse Repo 0.23%. 3 mo. Libor 0.49%, and 0.75%, stable.

Gold closed slightly lower at $1774.90 -$1.50 two days after an intraday high just above $1789, highest since 11/16! It is well above the 200 day ($1670), and has been above $1600 since Jan. 3. It is now $1783.30 +$8.40. The record high is $1923.70, a buying climax on 9/6. Sup is $1695, the 40 day, further support $1676, the 50 day m/a. Res is $1800, the 11/14 high! Crude also lower after rallying early on Iran fears, closing at $108.56 -$1.21. It is now $108.20 -.36, with support at the 40 day (100.68), the 50 day (100), and major support at $94.48, the 200 day, all rising. Resistance now at $110 – nearly got their last two sessions. Nat Gas prices low and lower.

 

…balance…balance in government…balance of power in the Middle East…balance in stocks induced by high frequency traders whose algorithms aren’t being set off and thus we go nowhere. TB cannot recall ever seeing two back-to-back FLAT sessions on the Dow…weird, especially after diving nearly 100 points after the open yesterday. But balance is not to be confused with equilibrium as these are fleeting events.

 

Bush upset the balance of power in the Middle East by invading Iraq…not that Saddam wasn’t a tyrant but what about the others we ignored…Mubarek, Assad, etc. Now we are paying for it with Iran being out of control and as if that isn’t enough, we set off the Taliban in Afghanistan by burning the Quran…who came up with that brilliant idea. But wait…Obama did the sensible thing to try to mitigate things and was assailed by all the GOP candidates except Paul for doing so. How many will die because of this stupidity? On the surface we have a balance of power in government: a Dem president, GOP House, Dem led in the Senate but with a 60% vote required on every important issue, it is gridlock. Even within the GOP, Grover Norquist and the Tea Party are in control. Talk about an imbalance and without balance no compromise can be reached. In other words a totally dysfunctional government when we need one to do the peoples businesss.

A crying shame…and the elections aren’t until November…where will the economy be by then? Not only that, who will be blamed for it…most likely not Obama. Anyone but Obama???

 

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

The middle class of America has been in decline for three decades now…but like the proverbial frog, didn’t know it due to the false illusion of wealth due to credit: the advent of credit cards, then home equity loans, then the housing boom, then low doc and finally no doc loans.

 

Suddenly, it all falls apart and one finds that all they have left is mortgaged homes, mostly underwater if you include home equity debt, leased cars, and credit card receipts. But we have McMansions…three Hi-Def TV’s…two leased BMW’s…student loans which now total $1 trillion, or more than all credit card debt…banks that would have failed had we, the people not bailed them out – without punishing or at least throwing out the perps and in fact paying them more money than ever. Don’t even bring up the subject of tax liabilities on those upside down homes. Where is the middle class now? Where will it be ten…twenty years from now…pity.

 

Lastly, another school shooting in Ohio, and while not justified, brought on by ridiculing a student. TB recalls the first one he heard of in Orinda, CA, where he lived…a sleepy town that had its first (possibly) murder there when a humiliated student killed one of those who had made a fool of her. It was all in fun…but not to the person. TB would argue that we were a lot more stable three decades ago and thus the frequency of these sad events just keeps growing. The use of portable electronics has amped it up as humiliating videos are added to the repertory of words.

 

Where will we be and what will this country look like in ten, twenty years? You decide.

 

Have a great day!

TB

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