3/12/12…what price glory?

This week’s economic calendar is quite full with at least one data release each day. While the data will emphasize manufacturing activity and inflation, the highlight of the week will be February Retail Sales (Tuesday). We will also get the February Treasury Budget (Monday), January Business Inventories (Tuesday), the Q4 Current Account and February Import & Export Prices (Wednesday), the February PPI, the March Empire State Manufacturing Survey, and the March Philadelphia Fed Survey (Thursday), and the February CPI, February Industrial Production, and preliminary March Consumer Sentiment (Friday). In addition to the economic data, the Federal Open Market Committee will hold a one-day meeting (Tuesday). Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA.


Bloomberg Top Stories:


*Goldman Buoyed by Credit Rally Seen Leading Bank Gains After 2011 Losses – so???

*Commodities Snap Three Days of Gains as Stocks Fall on China Export Data

*Euro Weakness Waning as Draghi Cash Prompts Forecasters to Drop Bear Views

*Sovereign Bond Risk Climbs to Eight-Week High After Greek Swaps Triggered – told ya!

*Portugal Yield Above 13% Suggests Greek Debt Deal Not Unique

*Banks Buying Treasuries at Seven Times 2011 Pace as Deposits Beat Lending – sheesh!

*Coca-Cola Breaks Libor Floor in $2.75 Billion Bond Sale  – Libor MINUS 5 bp’s! Ouch!

*Afghans Bury Victims of American Soldiers Rampage as Restraint Urged – get out, now!

*Soldier’s Killing Spree Threatens to Erode Support for Afghanistan Mission      


Volume has been stable at 3.5B shares for the last three sessions, contrast to 4.16B on Tuesday’s big downdraft, and the Dow remains well below 13k. High on the Dow Friday was 12968, highest since the downdraft with yesterday’s high at just 12,968, closing at 12,922 while last Wednesday’s high was the highest of the recovery at 13,055.75. NYSE stocks executed on the Big Board were stable for a second session at 719M or about 300M below average. A week ago Wednesday’s was the highest of 2012, 1.11B shares. 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. 81 of the last 86 sessions have now been less than 1B! Advance/Declines were positive for a third straight session: +2.3x vs +3.9x vs +3.7x vs -10.4x!!! vs -1.5x on NYSE and +2.6x vss +2.6x vs +2.9x vs -4.6x! vs -1.2x on Nasdaq. Breadth was less so: +1.8x vs +5.8x vs +4.7x vs  -24x!!! vs -2.4x on NYSE and +2.5x vs +2.7x vs +3.6x vs -6.5x!!! vs -3x on Nasdaq. New 52 week highs increased by 50% to 294 vs 206, while new lows slipped to 28 vs 31. After just one negative, the first in weeks, it is back to nearly 10x positive. The S&P VIX, after climbing to 20.87, highest since 2/10 while gapping up for two straight sessions fell again and is now at the lowest since 2/23, where the selloff began closing at 17.11 -.84. A good thing or a bear trap?


Here are the results of the last four sessions: Dow +0.1% vs +0.6% vs +0.6% vs -1.6x; Transports +0.3% vs +1.4% vs +0.5% vs -1.5%; Dow Utilities +0.4% vs +0.2% vs -0.1% vs -0.4%; S&P 500 +0.4% vs +1% vs s+0.7% vs -1.5%!!! Nasdaq Composite +0.6% vs +0.9% vs -1.4%; Nasdaq 100 +0.4% vs +1.3X vs +0.7% vs -1%; Russell 2000 +1.3% vs +1.3x vs +1.1% vs -2.1%!!!; NYSE Financials +0.3%? vs +1.4% vs +1.1% vs -2.8%!!! NYSE Financial Leaders: BAC -0.1% vs +0.5% vs +4% vs -3.3%! vs -2%!; C +0.6%.


Global equity markets generally slightly weaker: FTSE -0.1% vs -0.1% vs +1.3% vs +0.4% vs -1%; CAC40 -0.1% vs +0.1% vs +1.9% vs +0.7% vs -1.6%; DAX +0.1% vs +0.2% vs +0.7% vs -1.5% vs -0.5%;  Nikkei -0.4% vs +1.7% vs +2% vs -0.6% vs -0.6%; Hang Seng +0.2% vs +0.9% vs +1.3% vs -0.9% vs -2.2%; Korean KOSPI -0.8% vs +0.9% vs +0.9% vs -0.9% vs -0.8%; Indian Sensex -0.4% vs +2.1% vs closed vs -0.2% vs -1.1%. U.S. stock futures slightly weaker: DOW -7; SPX -1.60; NDQ -1.75. Bonds a little better: 10’s at 2%, 30‘s still above 3%: 10 yr 2.00% +1/4. RECORD low 9/23 of 1.6855%; 30 yr 3.15% +9/16; Long TIP 0.78% +3/8. 0.57% at high. The 5 yr TIP yields MINUS 1.43%; 10 yr -0.28%. Bills 0.05% 1 month; 0.08% 3 months, 6 months 0.14%. Reverse Repo 0.23%. 3 mo. Libor 0.47%, and 0.74%, stable.

Gold closed at $1711.50 +$12.70…overcoming a $1677 low shortly after payrolls…just $6 below the 40 day m/a, but above the 200 day and 500 day.  Last Tuesday’s $1792.70 intraday high, not seen since 11/16! It has been above $1600 since Jan. 31, and is now $1702.30 -$9.20. The record high is $1923.70, a buying climax on 9/6. Res is $1718, the 40 day; sup $1695, the 50 day, and $1679, the 200 day, all rising! Major support is $1652, the 1/25/13 low! Crude closed higher at $107.40 +.72. It is now $106.06 -$1.34, with support at the 40 day (102.12), the 50 day (101.93), and major support at $94.89, the 200 day, all rising. Resistance remains at $110.


(the ellipsis has moved so that this section will be solely about markets and the economy. The ‘meat’ will be there. TB)


Despite payrolls beating the median and consensus, and the unemployment rate unchanged despite the labor force growing by 500m, the market opened very tenuously and it took a long time to sort out. For an hour the Dow traded up less than 40 points, then peaked at +58 an hour after that. It then drifted lower until it fell sharply about an hour before the close, although it only went 1 point into the red then traded slowly higher into the close for a gain of just 14 points…and that was on GOOD news! This would indicate that there are more concerns out there, and rightly so, as the Greek/Euro crisis continues to oscillate with Portugal and Spain waiting in the wings.


What you should be aware of is huge hedge fund redemptions which have lowered even the artificial liquidity and further enhanced the impact of high frequency traders on market direction.


You decide if stock market offers value…TB already has…it offers RISK!!!


Happy trading…nothing to see here.


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

…originally written as a musical, made into a silent movie (by the way The Artist has moved nearly to the top of TB’s ‘A’ list),and then in 1952 a movie on war, rivalry, and romance, about two soldiers (James Cagney and Dan Dailey) putting aside their rivalry to fight a war. Despite the sound of it, it was a comedy. Sounds like the new, improved GOP to ole TB…although putting aside rivalries may take some time.. What’s with TB? Friday was Alfie, now this?


What brought this up is Newt who has even surpassed the GOP leadership in blaming Obama for everything, saying that oil is up due to Obama’s lack of an energy policy. This of course ignore fact! First, there hasn’t been a true energy policy in this country in fifty years or more…the oil companies don’t want one. How else does one explain crude going to the moon, while natural gas is near record lows? Yet, we have enough of nat gas to power everything for at least 50 years! Seems like in that period of time we should be able to find a better answer, no?


Wake up, Newt, or at least try to be honest instead of pandering to the people. Over the past 12 months, the AVERAGE price of crude has been $97.02, with a high on 5/2/11 of $114.83 and a low of $74.95 on 10/4/11 – hmmm wasn’t that about the time that Libya erupted followed by Iran? Never you mind. Oh, and looking back over his term it went from a ridiculous low of $32.70, just after he took office in a financial crisis – never mind that on Dubya’s watch it rose from $16.70 on 11/19/01 about the time the stimulus and housing boom began to a RECORD high of $147.27 on 7/11/08…what about that, Newt?…and you had both the Pres and VP as oil men too! Come on!


The GOP has made so many misstatements why pick on this one? Because it is not only an outright lie but because a Pew study reported in the WSJ Sunday asked who was to blame: 18% said Obama…number one answer; but 14% blamed oil companies; only 11% the Middle East crisis; 9% D.C. politicians; and 4% each for Wall Street and consumers!!! Consumers? Where the hell did that come from? So, Newt, you are doing a great job of disinforming the American people.


Thanks to TB’s trusty Bloomberg, the price of a barrel of crude averaged about $28 through the 1980’s…older data to the 1975 energy crisis is not available. The brief 1985 surge which resulted in the collapse off Penn Square taking Continental Illinois with it (and thus instituting ‘too big to fail’) it peaked at $31.82 (although loans had been made based on the incredible – then- price of $50 and that was the culprit), was just another financial bubble…the first of many to come: S&L’s, commercial banks, LTCM, mortage/financial crisis. The 1990 oil price surge, from $15 to $41 in just FOUR months, was scary but nothing matched the 1975 one due to OPEC flexing its muscles. Note also how people don’t talk about the price of a can of beer or a gallon of milk, but oil???


Using an inflation calculator from 1975 (when there was a true shortage and gas lines), $5 then is the equivalent of $21.07 a gallon now. So think about it Newt? Your numbers and values are way off! So blame Obama that gas is less than 25% of what it would be if this were a real crisis.


Drill, baby, drill. Ah, the mantra of the GOP, but: netting out taxes the price of a gallon of gas in Germany is close to that of the U.S. Yet, the U.S. produces 5 million barrels of oil a day, Germany about 288,000. Oh and how about this: while the front contract, the most heavily traded and dominated by speculators is $106…the August 2014 contract is $100! Yet TB heard some CNBC talking head talking about crude being at $110 …talk about misinformation and disinformation.


Now one other topic that set TB off: a Minnesota state senator, Mary Franson from out in the sticks likened food stamp recipients to animals: she said that signs read don’t feed the animals or they will become dependent yet we feed the poor. You can’t make this stuff up! Not only is Franson a republican but when TB wrote her to voice his opposition, her website, which doesn’t state party affiliation has a tab to write her as Patriots for Mary Franson…you can’t make this up, although she is misguided. While there is some abuse in food stamps (like the lottery winner who was charged for using them), besides the unemployed are those working in jobs that simply don’t pay enough to exist above the poverty level. Worse, those jobs don’t pay benefits…like health insurance and despite what we are told there is a huge cost to society of that. To illustrate how bad the situation is in her county (Todd), the unemployment rate is just 5.8%! But 8% are getting food stamps…why? Because wages haven’t kept pace with inflation in this largely ag county. TB hopes you will think the next time you hear someone talking about people with no ‘skin in the game.’ They have no skin to give…it is CEO’s with generous pay packages that get golden parachutes if they fail that have no skin in the game. It is heads I win, tails you lose.


If TB is correct the minimum wage in 1975 was about $5 so to be the same it would have to be $21 today to break even. Scanning the hourly earnings from Friday’s report the average is around $25 with leisure, a fast grower at just $13! A salary of $50,000 in 1975 would require $210,000 today to be equal, or $100,000 would require $421,000– take what you were making then and multiply by four. If you are younger take 2.5 times your 1981 income, when the wealth gap started to widen. This also indicates how grossly overpaid mediocre CEO’s have become. By the way, an income of $100,000 in 2000 requires $131,000 today to be equal…and don’t forget what has happened to your home value since 2006.


Then there is the economy that both


Lastly, if you watched the interview with the former head of Israel’s Mossad, the best intelligence gathering unit in the world, you see why the chest thumping about Iran (especially Romney and Gingrich) is dangerous and it is even more dangerous that Senator Sessions (R), blasted Leon Panetta by trying to twist his words that consensus building in the international community trumps Congress on war (the CIA had to issue a statement correcting him). Bush senior believed it, a former CIA head, while his son ignored that advice and thus put us into two wars simultaneously that have had bad results and are the longest in U.S. history. If you want to help Israel, don’t let them destroy themselves in a retaliatory attack…take a look at the size of Iran vs. Iraq…and remember that a lot of U.S. sympathizers there will turn against us if attacked.

War is not the answer, neither is containment but now that a Muslim leader has issued a fatwah against the government, let’s not seize defeat from the jaws of victory.


The above is exactly why TB is no longer a republican but he is also not a democrat. Both parties are ignoring the needs of the people while enriching and empowering themselves and their parties. It has got to stop before it ruins the greatest country on earth.


Have a great day and week!




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