Bloomberg Top Stories:
*Stocks Advance for Second Day on German Output; Euro Strengthens on Greece – again???
*Greece Readies Record Debt Swap With At Least 60% of Investors Committed
*ECB Keeps Benchmark Rate at Record Low Before Inflation Forecast Revision
*King to Face Renewed BOE Policy Maker Rift as Dispute on Inflation Simmers – sizzle!
*Apple Said to be Targeted With E-Book Publishers in U.S. Price-Fixing Suit
*McDonald’s Worldwide Sales Trail Estimates for the First Time Since August – oops!!!
*BlackRock Favoring Loans Pummeled by Bernanke Rate Pledge
*DKSH of Switzerland to Raise $986 Billion in Biggest Europe IPO This Year
*Stratocaster Guitar-Maker Fender Files for $200 Million IPO – that’s a lot of guitars!
*China Puts Jump to Three-Year High as Economic Dominance Shrinks – this is significant!
*Hedge Funds Poised for 20% Tax Deduction in GOP Small-Business Bill – small business???
*Romney Prepares for Long Quest as Republican Race Turns to Unfriendly Turf – YAWN!!!
*Nuclear Powers Seek Sustained Iran Talks, Access to Secret Parchin Site
*Khamenei Says Obama’s Iran Comments on Use of Diplomacy Are ‘ Good Words’ go GOP!
*Temperatures May Rise into 70s Next Week in Northeast, Midwestern U.S. – no global warming!
Volume reversed to 3.56B shares from 4.18B shares, or in line with Monday’s 3.228B shares in a rally that smacked of some short covering and nothing more in what was clearly a ‘dead cat bounce.’ Goodbye Dow 13k as Wednesday’s high was the highest it got at 13055.75. NYSE stocks executed on the Big Board fell to 801M vs 878M shares, l about 200M 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. 79 of the last 84 sessions have now been less than 1B! Advance/Declines were positive but unimpressive compared to the prior two negatives: +3.7x vs -10.4x!!! vs -1.5x vs -1.1x on NYSE and +2.9x vs -4.6x! vs -1.2x vs -2.5x on Nasdaq. Breadth was similar: +4.7x vs -24x!!! vs -2.4x vs -1.7x on NYSE and +3.6x vs -6.5x!!! vs -3x vs -1.6x on Nasdaq. New 52 week highs reversed for a second day to 101 vs 55 vs 141, while new lows were halved to 45 vs 91 vs 55. Pretty unstable that! After one negative, the first in weeks, it returned to +2x. The S&P VIX, after gapping up for two straight sessions fell but is still above Monday’s low, closing at 19.07 -1.80 – Tuesday’s 20.87 was highest since 2/10. Caution advised!!!
Here are the results, look at comparison to Tuesday: Dow +0.6% vs -1.6x; Transports +0.5% vs -1.5%; Dow Utilities -0.1% vs -0.4%; S&P 500 +0.7% vs -1.5%!!! Nasdaq Composite +0.9% vs -1.4%; Nasdaq 100 +0.7% vs -1%; Russell 2000 +1.1% vs -2.1%!!!; NYSE Financials +1.1% vs -2.8%!!! NYSE Financial Leaders: BAC +4% vs -3.3%! vs -2%! vs +0.1% vs +1.9% vs -1.6% vs +1% vs +2% vs -1.8%; GE +1.9% vs -2.3% vs -0.6% vs -0.8%; C +3.5% vs -4.6%!!! no logic!
Global equity markets rallying in sync: FTSE +1.3% vs +0.4% vs -1%! vs -0.1% vs -0.2%; CAC40 +1.9% vs +0.7% vs -1.6% vs -0.1% vs +0.1%; DAX +2%!!! vs +0.7% vs -1.5%! vs -0.5% vs -0.1%; Nikkei +2% vs -0.6% vs -0.6% vs -0.8% vs +0.7%; Hang Seng +1.3% vs -0.9% vs -2.2% vs -1.4% vs +0.8%; Korean KOSPI +0.9% vs -0.9% vs -0.8% vs -0.9% vs +0.2%; Indian Sensex closed vs -0.2% vs -1.1% vs -1.6% vs +0.3%. U.S. stock futures strong: DOW +90; SPX +11.10; NDQ +17.25 – remember Friday is payrolls and thus could be volatile. Bonds weaker: 10’s back to 2%, 30‘s still above 3%: 10 yr 2.00% -7/32. RECORD low 9/23 of 1.6855%; 30 yr 3.16% -5/8; Long TIP 0.83% -5/8. 07.57% at high. The 5 yr TIP yields MINUS 1.40%; 10 yr -0.23%. Bills 0.05% 1 month; 0.07% 3 months, 6 months 0.14%! Reverse Repo 0.22%, steady. 3 mo. Libor 0.47%, and 0.74%, stable.
Gold closed at $1683.90 +$11.80…still below the 40/50 day m/a, but at least above the 200 day again ($1677). Tuesday’s low was $1663.40!!! Last Tuesday’s $1792.70 intraday high, not seen since 11/16! It has but has been above $1600 since Jan. 31, and is now $1698.20 +$14.30. The record high is $1923.70, a buying climax on 9/6. Res is $1691, the 50 day, and $1715, the 40 day, all rising! Support is $1652, the 1/25/13 low! Crude too was higher, closing at $106.16 +$1.54. It is now $106.73 +.57, with support at the 40 day (101.85), the 50 day (101.67), and major support at $94.80, the 200 day, all rising. Resistance remains at $110.
…yesterday’s dead cat bounce following Tuesday’s Greek selloff, may be succeeded by a rally on Greece yet again. When will this madness end? When will REAL retail enter the market?
Meanwhile, Gold is anything but dead at after plunging nearly $32 to the lowest close since 1/20, and closing BELOW the 200 day m/a, it rebounded yesterday by nearly $12 and another $12 overnight bringing it back to within $4 of $1700. Oil is holding which shows how reality is meaningless in oil, but perception is everything…Obama said yesterday they are looking into speculation…you know, the usual suspects…as if anyone with a brain doesn’t know that the front crude contract is manipulated by speculators…do you really believe there is a shortage of oil in the U.S.? The GOP wants to convince you it is and drill, baby, drill…but see the following:
A good friend sent an article on Greece, Israel, Syria, Turkey and other hitherto unknown oil producers…some of it is good, some bad. The good news is that there is enough oil that has just been found (conveniently?) to solve the entire Greek financial crisis…assuming they tax it or make enough off of it! The problems however are that Turkey says that an intrusion further into their waters would be dealt with; also as part of the EU agreement, Greece must sell off its ports etc…just when it will need them! Enter the U.S.: once again the Ugly American appears on the scene this time as Obama sent Hillary Clinton over with a ‘deal’ whereby a U.S. company would do the drilling with Greece AND Turkey each getting 20% of the revenues, while said company would retain 60%! Sounds like another ARAMCO to TB. Ah, but it gets better as the company is Noble Energy of Houston, Texas and guess who its lobbyist is: Bill Clinton! Remember him? The president who was going to stop the revolving door to government? Here is the link Greek Oil.
(Clinton also acted as a lobbyist for the Canadian shale oil producers and it was the State Department, under Hillary that had the final say on the pipeline, but Obama vetoed it…hmmm.
Add to this Goldman Sachs who profited from a Greek currency swap at the expense of both clients (not atypical as the MBS crisis showed), and America gets uglier and uglier as free market capitalism has evolved to free market greed, aka a license to steal!
. . . – – – . . . note that the same old SOS applies…perhaps more so!
If you didn’t read yesterday’s missive you need to before reading this. Also, just because a person is a psychopath or sociopath does not mean they are incapable of doing some good, it is just that their motives are their own self-gratification.
Some readers will be angry at this commentary today but TB is just expressing his own thoughts and not telling you to accept them like Rush Limbaugh. Instead, as always, the goal is to provide another view and that you evaluate it and make up your own mind. Polls have shown, and comments TB gets from readers indicate that liberals listen to liberal cable networks, and conservatives to ones that represent their view. This is precisely what has created the gridlock, and hatred in our Congress…something that would make the founding father turn over in their graves. TB for one, who served in the military would have not wanted to give his life to protect a country that has turned into one where greed and dissention prevails while the country crumbles from within.
This discussion primarily cites the GOP, not out of prejudice but because the Dems haven’t had to run against one another. It also criticizes Wall Street where TB has earned a living for forty years, was once proud to be a part of, and is now ashamed of, because of a few (1 in 10?), but who unfortunately pull the strings…then there are the imitators, such as members of Congress who love their power and don’t understand, or care to, that their power emits from those few sociopaths. Like Bayer, the psychiatrist quoted in the CFA and WSJ articles, TB believes it is higher…much higher than one in ten in the financial services industry that it is the ones who are the highest paid. Why? Because they have the most to gain. This is why TB was angered in the wake of Enron that Sarbanes-Oxley, said that ALL public companies could not use the same firm for accounting and financial consulting which was a huge cost to the smaller companies. Similarly, it should have extended to the top 100 or at most 200 companies. Why? Because it isn’t worth risking going to jail if you don’t stand to gain enough in a few years to retire wealthy.
So while TB believes the sociopaths (TB prefers reserving psychopath for those who kill not merely destroy financially their prey…but either way it is all about control, just as it is for the grifter), do number more than one in ten in his industry – but that is within NYC, TB believes that the number is very low outside the Big Apple…after all what it the purpose if not for money? One caveat on the names: TB is not a psychiatrist so those included her are because they exhibit most of the sociopath attributes, it does not imply they are true sociopaths.
TB has often questioned what kind of ego it takes to run for high public office (as opposed to community, i.e. Sarah Palin, who was fine as a mayor, peaked at governor …if one year is enough to ever know and that was amid much controversy…and was not qualified to be vice president as she proved in numerous interviews and a book now claims using GOP strategists comments). TB found it particularly disturbing in the GOP candidate race where Herman Cain, Michelle Bachman, and Rick Perry showed they possessed some of those sociopathic traits – you decide how many…if any.
To TB the closest thing to a sociopath visible today is Newt Gingrich. Look at his past, his affairs, his criticism of Clinton for an affair with an intern while he was having one himself! What kind of ego keeps him in the race when the rest of the GOP wants him to just go away and his peers from when he was Speaker have no love for him.
In the financial sector, one needs only look at Goldman’s Lloyd Blankfein (or Steven Friedman, who while still a GS director was Chairman of the NY Fed and bought GS shares while they were deciding whether to make Goldman a bank. He was forced to step down but not prosecuted, unlike Martha Stewart! …or Lehman’s Dick Fuld or Merrill’s Stan O’Neal who fiddled while the house came down, his successor Thain also fits the bill. Perhaps the worst though is former Goldman CEO, Jon Corzine, a Senator, Governor, and the reason for the collapse of MF Global while trying to sell it to make his money! THAT folks, is a sociopath (a friend who went to U. of Ill. with him had told TB he was a ‘true believer’ who wanted to do good…apparently Goldman influenced him).
After writing Liar’s Poker, which Michael Lewis thought would dissuade people from working in the financial sector, he said he was besieged by B school students asking him how to get a job in the industry.
A few months ago, TB was talking with a friend who is a senior executive at a major corporation. He said that of all the CEO’s he had worked for only one was brilliant, four were mediocre and not open to change, and one that was just plain bad. In TB’s career, he has worked for one who was excellent, a few good ones, two sociopaths who succeeded in enriching themselves while driving their firms into the ground, and two who were just plain inept.
TB also knows of one CEO of a West Coast investment firm, who TB will not name for fear of being sued. TB knew several who worked here…all had a five year plan to get out as he paid more than anyone else but demeaned every employee…often publicly. TB wishes he could provide more details as this man has clear sociopathic traits.
Moving on to corporations there was Dennis Koslowski of Tyco, Ken Lay of Enron, who by dying while his conviction was on appeal cannot be called a convicted felon.
In politics, those already mentioned, plus Clinton who had many of the attributes, especially a desire to be liked, and through a combination of skill and luck was a good president (TB did not vote for him). Nixon was probably the worst yet he ended the war in Viet Nam and opened trade with China, and arguably LBJ had a lot of the traits. But he also had empathy and did a lot of good. Truman, JFK, Ford, Carter, Reagan, and Bush Sr. were not. As for Bush II, he had the overconfidence in his abilities, but TB feels was heavily controlled by Cheney and Rumsfeld, both of them having many of the traits and who his father did not trust.
The jury is out on Obama, as TB cannot find enough details, but he does appear to have empathy, which is perhaps the key factor lacking in a true sociopath. Control does not seem to be his thing.
Sports…team sports are full of them…so much so that men’s team sports cannot even be considered that but a group of individuals out for themselves…a sweeping generalization but important as that is where youth is headed, thanks to driven parents. Yesterday, at Rotary, TB heard a youth basketball referee, Derek Wolden, discuss this and how disgusted he is with parents who try to dictate the game at the expense of all of the kids. His book is BasketballCases and his observations mirror TB’s from the mid-80’s!
Tomorrow: summing it all up.
Have a thoughtful day,
TB
Traderbill's Financial Markets Weblog 
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