3/1/12…March on!

Bloomberg Top Stories:


*Greek Default Insurance Doesn’t Need to Pay Out After Bailout, ISDA Says

*Stocks in Europe Rise as Spanish Banks Gain; Treasuries Fall for Third Day

*China Posts First Annual Decline in Holdings of U.S. Treasuries on Record – Important!

*Euro Finance Ministers Set to Approve Greek Rescue Plan as Lenders Gather

*Chrysler Sales Rise Tops Estimates as Gas Prices Lift Demand for 200 Sedan

*Dark Pools Win Record Stock Volume as NSE Trading Slows to 1990s Levels – what liquidity?

*Saudi Oil-Rig Use Soars as Obama Pressed on SPR Release – what about Nat Gas???

*Euro Support Waning as Foreign Funds Start to Withdraw – but Greece is fixed???

*Wall Street Talent War Seen as Cantor Fitzgerald Bankers Defect to China – hmmm

*Iran Nuclear Plans Provoke Heightened U.S. Warnings Before Netanyahu Visit

*Netanyahu Sees Israel Beating Developed Countries Amid Iran Nuclear Threat

*U.S. South, Midwest Facing Risk of More Tornadoes, Thunderstorms Tomorrow


Volume rose sharply to 4.42B shares from 3.55B shares, in a day that was an all-out war between bulls and bears…or perhaps just flash traders. Since breaking out above 13k last Tuesday (13005 high), it has tested that level four times but this is the first that resulted in a drop below the close that day, thus the 53 point decline was much more than it appeared. Yesterday’s high was also the highest of the tests at 13055.75. NYSE stocks executed on the Big Board surged to 1.11B shares, about 100M above average vs. Tuesday’s 755M shares. This is the highest of 2012, eclipsing the 1.03B share session on 1/31 (the beginning of the current phase of the rally. Since 11/1 there have been just seven 1B share days…this is only the second in 2012! 74 of the last 81 sessions have now been less than 1B! Advance/Declines were NEGATIVE: -2x vs +1.1x vs 1:1 vs +1.2x vs +2.4x vs -1.3x vs 1:1 on NYSE and -3x vs -1.1x vs -1.2x vs -1.2x vs +2.6x vs -2x vs -1.6x on Nasdaq. Breadth was similar: -2.7x vs +1.3x vs +1.3x vs +1.1x vs +2.4x v -2.2x vs 1x on NYSE and -3.2x vs +1.7x vs +1.3x vs +1.4x vs +2.5x vs -3x vs -1.6x on Nasdaq. New 52 week highs slipped to 260 from 277 while new rose to 32 vs 26.The ratio dropped to 7x positive from 10x! The S&P VIX rose slightly to 18.15 +.19.

Here are the results of the past five sessions: Dow -0.4% vs +0.2% vs FLAT vs FLAT vs +0.4%; Transports -0.2% vs -0.1% vs +0.6% vs -0.4% vs +0.7%; Dow Utilities -0.2% vs +0.4% vs -0.1% vs +0.6% vs -0.4%; S&P 500 -0.5% vs +0.3% vs +0.1% vs +0.2% vs +0.4%; Nasdaq Composite -0.7% vs +0.7% vs +0.1% vs +0.2% vs +0.8%; Nasdaq 100 -0.4% vs +1% vs +0.1% vs +0.4% vs +0.6%; Russell 2000 -0.4% vs -0.4% vs FLAT vs -0.3% vs +1.6%; NYSE Financials -0.6% vs +0.4% vs +0.2% vs +0.1% vs +0.9%. NYSE Leaders: BAC -1.6% vs +1% vs +2% vs -1.8% vs  +0.9% vs -3% vs +1.1%; F +1.1%; C -0.4% vs +1.7%; GE -0.5% vs +0.5% vs -0.8%.!


European equity markets weak: FTSE +0.7% vs flat vs -0.1% vs -1% vs -0.1%; CAC40 +0.9% vs +0.6% vs -0.2% vs -1.4% vs +0.4%; DAX +0.8% vs +0.5% vs -0.3% vs -1.5% vs +0.5%; Nikkei -0.2% vs flat vs +0.9% vs -0.1% vs +0.5%; Hang Seng -1.4%! vs +0.5% vs +1.7% vs -0.9% vs +0.1%; Korean KOSPI closed vs +1.3% vs +0.6% vs -1.4%! vs +0.6% vs -1%; Indian Sensex -1% vs +0.1% vs +1.6% vs -2.7% vs -0.8%. U.S. stock futures higher: DOW +35; SPX +4.30; NDQ +11.25 Bonds TRASHED: 10’s and 30’s again above 2% and 3% respectively: 10 yr 2.04%! -5/8. RECORD low 9/23 of 1.6855%; 30 yr 3.15% -1-3/8; Long TIP 0.75% vs 0.68% -1-1/4; 0.57% at high. The 5 yr TIP yields MINUS 1.36% vs -1.43%!!!; 10 yr -0.25% vs -0.34%. Bills 0.07% 1 month; 0.07% 3 months, 6 months 0.12%. Reverse Repo 0.25%. 3 mo. Libor 0.48%, and 0.75%, stable.

Gold plummeted to levels not seen since 1/25 closing at $1711.30 -$77.10!!!, Tuesday’s $1792.70 intraday high, not seen since 11/16! and low was $1698.40. It is still well above the 200 day ($1672), and has been above $1600 since Jan. 3. It is now $1706.50 -$4.80, o/n low $1695.10. The record high is $1923.70, a buying climax on 9/6. Sup is $1705, the 40 day, further support $1682, the 50 day m/a, both rising. Res is $1800, the 11/14 high! Crude bucked the trend in commodities, closing at $107.07 +.52 but following a $2.01 loss. It is now $107.24 +.17, with support at the 40 day (101.29), the 50 day (100.66), and major support at $94.60, the 200 day, all rising. Resistance at $110.


…kind of like ‘game on.’ Wow! What a day yesterday was. Despite futures being weak they managed to rally the Dow on the open thanks to Chicago PM, setting a session high 13055..68, then diving to the low at 12929.89, a swing of 125 points in just 1-1/2 hours, then rallied b ck to around 13010, before sinking once again to close at 12952, down 53 points. No joking about volume though as it was 4.42B shares for NYSE listed stocks, 1.11B actually trading on the Big Board, not ETN’s! This was highest since 1/31 and only the second 1B plus share day this year!


What kind of day was it? A down day: stocks down, bonds down, gold down…no safe haven and that should trouble you…if not you, it is troubling to TB. Think about it.

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

TB knows a lot of you are tired of his rants about the GOP and its candidates but in his gut he knows that we are still in a financial crisis and that no matter who is elected president, it isn’t going to change. He owes this to Simon Johnson, former Chief Economist to the IMF, and has warned of what happens when the financial sector gets too close to the government (it ALWAYS results in failure…and no it isn’t different this time!). Close? In bed with is more accurate…Congress and the executive branch are owned by Wall Street. Add to that the libertarian Koch brothers who funded the Tea Party and have each pledged $100 million to defeat Obama!


To this some of you counter what about George Soros? Socialist, communist, funds socialist movements. Remember Soros grew up under tyranny and TB believes he is interested in doing what is best for George…as in retaining his wealth but unlike Wall Street and the far right, he believes giving up some would be preferable. Didn’t the Robber Baron’s of the turn of the century learn that? Then of course there is good old, affable Warren Buffet who made his money over 50 years following the advice of his teacher/mentor, Benjamin Graham, the father of value investing.


Buffett flatly states he doesn’t pay enough taxes…but hasn’t voluntarily sent a check to the IRS. He also is giving all of his money to the Gates Foundation – when he dies as he believes he can earn more than they can…this is what is wrong with foundations…things need to be done now and there is no proof, given recent performance that Buffett is in the know. First, back around 2004 he lost $15 billion on a bet against the dollar and even took the blame for the poor performance in his annual letter…absent him they would have earned a tidy profit. Next he made a bad bet on stock futures in 2008 costing another $2 billion…poof! Into thin air. But the thing you can always count on is a rosy scenario.


Now let’s look at another value investor, Jeremy Grantham of GMO LLC, a very savvy individual. Google his name and then read the Wall Street Journal Marketwatch article. He is like TB on steroids, but first recall that in mid-1999 he took his clients to cash arguing that he could find no value in stocks…that move infuriated consultants and cost him 25% of his assets, yet in the end he was right…a bit premature but overall very diligent.


In the Marketwatch article, he states that capitalism is dangerous…and the Marx and Engels may have been closer to accurate when they said that once globalization and supranational corporations reach significant size that capitalism will be in its dying days. We no longer are a capitalist country…heck, with the big money even controlling who we get to vote for, we don’t even have a democracy. Tell me one candidate…or the current president, who is really willing to do something against the financial sector? The closest would be Ron Paul but his policies would send us into a deep recession from a feeble recovery.


TB believes that he, like Soros, sees the writing on the wall, but unlike Soros, he chose to be so audacious as to attract media attention. Remember he is not calling for communism, merely warning that this is how it gets it’s foothold. Someone needs to do it…we had better hope and pray that it works. We have either a duopoly, oligarchy, or whatever, but it certainly is no longer a country which can promise upward mobility…not with $1 trillion in student loans and the middle class stripped of their home equity.


Conservatives speak of the Reagan revolution…it was, it destroyed the bargaining power of unions…the very unions that defeated the robber baron’s. Today industrial unions are weak, but municipal unions are strong and out of control. Their members are maintaining their wealth while most others aren’t. Another imbalance.


Coincident with Reagan came the start of ‘too big to fail’ with the bailout of Continental Illinois which Sandy Weill and other bankers have exploited and continue to as the originate mortgages, sell them to other ‘too big to fail’ institutions of FNMA/FHLMC and keep the servicing fees…while BofA damns them. With this came sharp increases in CEO salaries…at least four financial crises, culminating in the largest the world has ever seen. Still there are cries for lowering taxes for the richest Americans while slashing the budget deficit in what can only produce HIGHER deficits according to the CBO. But what truly makes TB sick is when they say they are doing it for our children and grandchildren…wrong…for their children and grandchildren.


TB urges you to read the Marketwatch story on Grantham…see another perspective from a man who is clearly NOT a socialist or communist but is issuing a warning.


Have a contemplative day!




  1. ldh said

    go right to GMO’s website and read jeremy grantham’s q4 2011 letter, better yet!

    • traderbill said

      Thanks, Lyman! I used the WSJ one because I get all of this far right stuff from a few readers…FOX, etc. so it lends credibility.
      All the best,

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