3/6/12…Tuesday…but is it really Super?

Bloomberg Top Stories:


*Stocks Drop for Third Day on slowing Economy; Copper, Spanish Bonds Fall

*Private Investors Holding About 20% of Greek Debt to Participate in Swap

*IMMF Sees Portugal Returning to Bond Market in 2013 With No Investor Losses

*Banker Bonus Limits Proposed by European Lawmakers to Rein in Risk Taking

*Brazil’s 2.7% Growth Last Year Was Second-Weakest Performance Since 2003

*Qualcomm to Buy Back as Much as $4 Billion of its Shares, Boosts Dividend – careful!

*Porsche’s Former CFO Said to Be Among Three Charged With Refinancing Fraud

*Cows Consume More Corn Than Cars as Ethanol Use Slows – they produce most methane too!

*Billionaires Buying Gasoline Tankers as Fuel Demand Accelerates – see shortage of tankers

*Asia Hedge Funds Started After Crisis Falter as Initial Backers Pull Cash

*Goldman Secret Loan to Greece Reveals Two Sinners With Client Taken Apart – so? SOP!

*Romney Seeks Breakout in Super Tuesday Votes to Thwart Santorum Challenge

*Putin Grapples With Urban Russia’s Ire as Challenge for Third Kremlin Term – duh!!!

*European Union Seeking Nuclear Talks With Iran on Behalf of World Powers

*Tax Hunt Pushes Global Wealthy Into Offshore Trusts for Children in U.S. – all about the money!

(the recent amnesty program brought in $4.4 billion from Americans with offshore accounts!)

 

Volume declined slightly again to 3.28B shares from 3.3B shares, as the Dow closed -0.1% or call it FLAT for a second straight session…just as we had two of them a week ago…a total lack of conviction! Since breaking out above 13k last Tuesday (13005 high), it has tested that level six times but for a THIRD straight session closed below it, leaving just one close above. Worse, the last two sessions it has failed to even trade above it, with yesterday’s being an even lower high and lower low…talk about losing steam! Wednesday’s high was the highest of the tests at 13055.75. NYSE stocks executed on the Big Board rose slightly to a weak  703M vs 699M shares, still about 300M below average. Wednesday’s was 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…only two in 2012! Since 2/6 there have been four sessions less than 700M shares. 77 of the last 82 sessions have now been less than 1B! Advance/Declines were negative for a second session: -1.5x vs -1.1x vs +2x vs -2x vs +1.1x on NYSE and -1.2x vs -2.5x vs +1.3x vs -3x vs -1.1x on Nasdaq. Breadth was similar: -2.4x vs -1.7x vs +2.4x vs -2.7x vs on NYSE and -3x!!! vs -1.6x vs +1.9x vs -3.2x vs +1.7x vs +1.3x on Nasdaq. New 52 week highs plunged to 141 from 207 while new lose climbed to 55 vs 42.The ratio fell to about 3x positive vs 5x. The S&P VIX gapped up with a high of 18.90 and closed at 18.05 +.76!!!   Caution advised!!!

Here are the results of the past five sessions: Dow -0.1% vs FLAT vs +0.2% vs -0.4% vs +0.2% vs FLAT vs FLAT; Transports -0.7% vs -1% vs +1.1% vs -0.2% vs -0.1%; Dow Utilities +0.2% vs +0.1% vs +0.4% vs -0.2% vs +0.4%; S&P 500 -0.4% vs -0.3% vs +0.6% vs -0.5% vs +0.3%; Nasdaq Composite -0.9%!!! vs -0.4% vs +0.7% vs -0.7% vs +0.7%; Nasdaq 100 -1%!!! vs -0.1% vs +0.8% vs -0.4% vs +1%; Russell 2000 up after being Friday’s big loser: +0.2% vs -1.6% vs  +0.5% vs -0.4% vs -0.4%; NYSE Financials -0.4% vs -0.5% vs +1.2% vs -0.6% vs +0.4%. NYSE Leaders: BAC -2%! Vs +0.1% vs +1.9% vs -1.6% vs +1% vs +2% vs -1.8%; GE -0.6% vs -0.8%; C -1.2%!!!

 

Global equity markets VERY weak: FTSE -1%! vs -0.1% vs -0.2% vs +0.7% vs flat; CAC40 -1.6%! vs -0.1% vs +0.1% vs +0.9% vs +0.6%; DAX -1.5%! vs -0.5% vs -0.1% vs +0.8% vs +0.5%; Nikkei -0.6% vs -0.8% vs +0.7% vs -0.2% vs flat; Hang Seng -2.2% vs -1.4%! vs +0.8% vs -1.4% vs +0.5%; Korean KOSPI -0.8% vs -0.9% vs +0.2% vs closed vs +1.3%; Indian Sensex -1.1% vs -1.6% vs +0.3% vs -1% vs +0.1% vs +1.6%. U.S. stock futures tanking: DOW -88; SPX -10.40; NDQ -19!!!. Bonds rallying: 10’s still below 2%, 30‘s still above 3%: 10 yr 1.97% +5/16. RECORD low 9/23 of 1.6855%; 30 yr 3.11% +7/8; Long TIP 0.82% +15/16. 0.57% at high. The 5 yr TIP yields MINUS 1.38%; 10 yr -0.24%. Bills 0.06% 1 month; 0.08% 3 months, 6 months 0.13%. Reverse Repo 0.22%. 3 mo. Libor 0.47%, and 0.74%, stable.

Gold off again closing at $1703.90 -$5.90…now below the 40 day m/a (1712), low was $1694.40. Tuesday’s $1792.70 intraday high, not seen since 11/16! It is still above the 200 day ($1676), and has been above $1600 since Jan. 3. It is now $1676.90 -$29.90!!! The o/n low!!! The record high is $1923.70, a buying climax on 9/6. Res is $1712, the 40 day, support $1689, the 50 day m/a, both rising. Crude was little changed, closing at $106.72 +.02. It is now $105.77 -.95, with support at the 40 day (101.65), the 50 day (101.42), and major support at $94.74, the 200 day, all rising. Resistance remains at $110.

 

…Super Tuesday??? Not for stocks and what is so super about it anyway? Ohio is only state that really counts, a tossup between Romney and Santorum, in several states Santorum didn’t even qualify for the ballot as they didn’t think they would get this far, and lovable Newt should sweep his home state of Georgia…combined that is one big yawner!

 

It may not be so super for stocks either as at this writing the Dow is -88 points following yet another flat session (-0.1%), while the two Nasdaq indices were trashed losing about 1% each

The culprit? Apple (didn’t TB warn of this on Friday and not for the usual reasons of earnings?). No sir, it was hedge fund selling…more on that later. The stocks traded up early on but then, around noon it plunged 4 points in 10 minutes and never recovered, closing -$12 (remember it is 10% of the NDQ 100!).

 

Now about those hedge funds. Apple is a top holding of hedge funds. On Feb. 18th it took a similar dive but since recovered as five big funds sold the stock. Is it that they don’t like it? Probably not but it is highly liquid and at over $500 a share can raise a lot of cash quickly. In a report released yesterday in January funds had $15.2 billion in outflows – highest since July 2009. Why? Think about it returns are miserable and you have a flat 2% minimum fee…in addition, many have lockout or ‘gate’ periods where you cannot redeem your shares. Thus January is a logical time and could be due to consultants reallocating assets.

 

This is what TB is talking about when he says there is a false sense of LIQUIDITY!!! It is fleeting and this backs up the beliefs of some, like Jeremy Grantham and TB that stocks are due for a 20% or more correction…soon. Remember last year the best advice you could have had was sell in May and go away…you would have slept better and made more…will it happen again? After all, it is an election year. You decide…it’s your money and your risk tolerance.

 

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

Iceland, Israel, and the U.S. of A.

 

Seem so distant, but what is the lesson here? First, let’s look at Iceland, ground zero for the banking crisis. If you read Michael Lewis’ book Boomerang, you will see that the Icelandic banks were not run by bankers but fisherman! Fishermen who got rich by buying more and more boats and then leasing them out. Aha! That qualifies them to be bankers…not! Yet to hear the Prime Minister tell it (just indicted yesterday for allowing it to happen…and more surely to follow), there was no way of forecasting the crisis…balderdash!  It was as obvious as the nose on your face…didn’t anyone even talk to these inept bankers??? If so, they would have known, right?

 

Now the connection to the U.S. and to the UK. First, Britain, why did all those municipalities buy Iceland bank CD’s? Worse, they gave them pounds and that was a huge part of the problem as the Icelandic Krona is scantily traded…so when things went bad, they really went bad, taking the Brits – including the City of London, with them.

 

But the U.S. was even worse as we had not one but two academics supporting the idea of deregulating the banks. Both of these wunderkind are way conservative and used the Icelandic banks to justify further deregulating the U.S. banks, thus joining culprits, Greenspan, Rubin, Summers, and Gramm (see both sides were involved…it’s not about politics, it’s all about the money!). The first was Frederic Mishkin who authored a report called Financial Stability in Iceland shortly after resigning from the Fed Board in 2008 to return to academia, at Columbia University. If you saw Inside Job you know that he was paid $124,000 to author this report lending his credibility as a former Fed Governor. Most importantly, he didn’t mention that wee fee he was paid to write it which might have influenced his thinking…you think? Glenn Hubbard supported this and as former Chairman of the Council of Economic Advisors added more credibility, and worse when pressed for Inside Job he stammered repeatedly, refused to say what outside compensation he receives and from where, and despite his role as Dean of the Columbia University School of Business didn’t see that ethics played a role.

 

It is likely that the Greenspan Fed paid attention to the Mishkin study since he was a brethren. Further pushing us to the brink. If you don’t get this, than TB can’t help you.

 

Now on to a simpler issue, Israel. In his 1991book, From Beirut to Jerusalem, Tom Friedman talked about Israel and Palestine. First, the Israeli’s are constitutionally bound to educate the Palestinians…but then they erect barriers so they cannot get to their jobs if they manage to get them. Second, and most importantly, the average Israeli family has two children, the Palestinians, FIVE. The average age of Palestinians is fifteen. What do you think will happen to the balance.

 

We have a similar situation in the U.S. only since globalization took hold it has become a problem. Minorities have trouble finding jobs, especially the 20-24 year range where unemployment is greater than 45%. More children are being born…but thanks to birth control, which the GOP refuses to accept, that has been a major cause in the decline in the crime rate. Some on the right, call this discriminating against minorities, but their idea of life is conception to birth, then you are on your own. Deal with it. The point is that the ranks of the middle class are shrinking…decimated?…while the upper 1% amasses not only monetary wealth but asset wealth.

 

Where do you think this will lead? Unless you want to live in a major city in a high rise and never go outside as happened in the film Bladerunner, life as we know it will not be a pleasant experience.

 

On another topic,Minnesota Gov. Dayton, vetoed the GOP led, second version of a gun law that would allow anyone to kill anyone, anywhere, if they felt threatened…not were threatened but ‘felt’ threatened! He did the right thing as all law enforcement (and TB a graduate of the L.A. County Sheriff’s Academy) were opposed to it as a dangerous law. Imagine, a police officer would be prosecuted for killing someone he ‘perceived’ as a threat, yet a private citizen could shoot his neighbors kid. The law already protects you against invaders in your home…the habitable part, not the garage. The NRA was behind this bill…it was a good organization that has gotten out of control.

 

Lastly, a local school board finally stepped up to stopping bullying at schools. This caused one member who had been adamantly opposed to resign…good riddance. Administrators and teachers are not doing enough to prevent this and how many shootings does it take to see where it leads? Enough is enough!

 

Have a terrific day,

TB

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: