3/16/12…how to succeed in business…or politics…without really trying

Bloomberg Top Stories:

 

*Italy Said to Pay Morgan Stanley $3.4 Billion to Exit Derivative Contracts – thieves at work!

*Stocks in Europe Advance as Oil Rises on U.S. Growth; Treasuries Decline – sustainable?

*Goldman’s Cindy Brower Said to Leave After 19 Years as Wendy Sacks Quits – Outflows!

*Buffett Awards Wall Street-Sized Compensation That Wins Praise From Dimon – figures!

*Treasury Bond Plunge Deflects Cash Toward Corporate Debt – bonds WILL come back!

*IBM’s Stock Increase Hinges More on Business Basics Than Self Celebration

*Norway Risking Bubble in Housing as Krone Steals Policy Agenda – follow this!

*Drop in Bullish Oil Bets Seen Signal of Peak in Iran Rally – see, it wasn’t Obama’s fault!

*Gold Bulls Weakest in Two Months as U.S. Economy Strengthens – it will come back too!

*Hidden Billionaires in Plain Sight Emerge With Rising Global Stock Markets

*Chinese Espionage Boom Against U.S. Firms Involves Humans Not Just Hacking

*Merkel Faces Growing Criticism From Own Party Opposed to Deal on Firewall – heed!

*Archbishop of Canterbury Is to Step Down After Divisions Over Women, Gays     

Volume has averaged 4.4B shares for three straight sessions. Yesterday’s was 4.25B vs 4.45B shares. NYSE stocks executed on the Big Board however slipped for a second straight session, indicating little ‘true’ retail remains below the 1B mark at 844M shares vs 853M vs 907M, about 150M below average. Since 11/1 there have been just seven 1B share days…only two in 2012! Since 2/6 there have been FIVE sessions less than 700M shares. 84 of the last 90 sessions have now been less than 1B! An illusion of liquidity which may exhibit itself following the quadruple witching (options expiry).  Advance/Declines were positive: +1.5x vs -2.8x vs +4.2x vs -1.2x vs +2.3x on NYSE and +2x vs -2.2x vs +3x vs -1.3x vs +2.6x on Nasdaq. Breadth was stronger: +4x vs -1.3x vs +12.6x! vs -1.7x vs +1.8x on NYSE and +2.8x vs -1.3x vs +6.2x!! vs -1.6x vs +2.5x on Nasdaq. New 52 week highs fell for a second session to 252 vs 326 vs 386, while new lows rose slightly to 49 vs 44. The ratio is now +5x vs +7x vs +14x. The S&P VIX, rose slightly to 15.42 +.11 despite the solid gains and new recovery high on the Dow (13253, closing just below), two days after its lowest level in nearly five years (7/16/07), 14.80! A good day to observe, not react!

Here are the results of the last five sessions: Dow +0.4% vs+0.1% vs +1.7% vs +0.3% vs +0.1%; Transports +3.3%!!! vs -1.4% vs +2.1% vs -0.3% vs +0.3%; Dow Utilities -0.1% vs -1.4% vs +0.3% vs +1.1% vs +0.4%; S&P 500 +0.6% vs -0.1% vs +1.8% vs flat vs +0.4%; Nasdaq Composite +0.5% vs flat vs +1.9% vs -0.2% vs +0.6%; Nasdaq 100 +0.2% vs +0.4% vs +1.9% vs flat vs +0.4%; Russell 2000 +1% vs -0.9% vs +2.1% vs -0.3% vs +1.3%; NYSE Financials +1.3% vs -0.1% vs +3.3% vs -0.3% vs +0.3% vs +1.4%. NYSE Financial Leaders: BAC +4.5%! vs +4.1%! vs +6.3%!!! vs -0.8% vs -0.1% vs +0.5% vs +4% vs -3.3% vs -2%; RF (Regions Bank) +4.4% vs +6.9%; C +3% vs -3.4% vs +6.3%!!! vs +0.5% vs +0.6%; GE +1.9% vs +1% vs +2.4%.

Global equity markets little changed, generally higher, except India and Korea : FTSE +0.4% vs -0.1% vs +0.4% vs +0.8% vs -0.1%; CAC40 +0.2% vs +0.1% vs +0.8% vs +1.1% vs -0.1%; DAX +02% vs +0.3% vs +1.3%! vs +1% vs +0.1%; Nikkei +0.1% vs +0.7% vs +1.5%! vs +0.1% vs -0.4%; Hang Seng -0.2% vs +0.2% vs -0.2% vs +1% vs +0.2%; Korean KOSPI -0.5% vs -0.1% vs +1%! vs +1.1%!; Indian Sensex -1.2%!!! vs -1.4%!!! vs +0.6% vs +1.3% vs -0.4%. U.S. stock futures higher: DOW +36; SPX +3.20; NDQ +6.50. Bonds still bleeding: 10’s and 30‘s well above 2% and 3% respectively: 10 yr 2.34% -9/16. RECORD low 9/23 of 1.6855%; 30 yr 3.45% -11/162; Long TIP 0.90% -13/16, on 2/27 it bottomed out at 0.70%. It was 0.57% at high. The 5 yr TIP yields MINUS 1.23%; 10 yr -0.07%. Bills 0.07% 1 month; 0.08% 3 months, 6 months 0.14%. Reverse Repo 0.30% vs 0.26%!!! 3 mo. Libor 0.47%, and 0.74%, stable.

Gold closed below $1700 for a fourth straight session but after losing $78 in two sessions, closed $1659.50 +$16.50.  2/28’s $1792.70 intraday high, not seen since 11/16! It had been above $1600 since Jan. 31, and is now $1644.40 -$15.10. The record high is $1923.70, a buying climax on 9/6. Res is $1682, the 200 day and $1704, the 50 day, then $1721, the 40 day, about to roll over. Major support is $1652, the 1/25/13 low! Crude closed lower at $105.72 +.61. It is now $105.18 +.07, with support at the 40 day (102.70), the 50 day (102.39), and major support at $94.98, the 200 day, all rising. Resistance remains at $110.

Today’s options expiry is a quadruple witching (stock index futures, stock index options, stock options and single stock futures (SSF) all expire), plus bonds. There are only four of these a year, on the third Friday of March, June, September, and December. Think! The close today will show just where the market is really headed…near term.

. . .   – – –  . . .  (SOS)

…the number of movies in the slug now number SIX…How to Succeed in Business Without Really Trying starred the great Robert Morse. But we have improved on that them by making business (read financial sector) and politics interchangeable!

Mitt Romney combines both! Then there was Greg Smith who was good at Goldman but not THAT good, so he left and has been banished from the sector forever. Lloyd Blankfein, call him Mr. Lucky is still king…at least for now. Jamie Dimon (apologies to Dimon lovers but think he learned too much while working for Sandy Weill). Also, Goldman alums, Jon Corzine who starred as a Senator, Governor, CEO of MF Global, until he took them down while trying to sell the company to some other sucker so he could collect his bonus…TB puts him on a par with the captain of the Costa Concordia and Titanic…what a guy! Hank Paulson who went to Treasury and managed to bail out everyone except Lehman Brothers, where his brother was a top exec.

So how does one succeed in either business or politics? You have to be able to look someone straight in the eye (Blankfein adds a puzzled look on his face when asked a question that is too close for comfort), and lie thru your teeth. Note to helicopter moms and dads: stop telling junior not to lie, you will ruin his chances of success…think of it as training.

You have to be creative. Mitt passed that test by heading up a venture capital firm and now claims to be able to run any business and of course the government. The Newter (sic) claims to be able to accept money and not be a lobbyist while promoting a cause from an agency he loathed. All, including Obama have to be able to selectively review economic data for items that match their need du jour.

Or…you can be like the Koch brothers, get rich running the second largest private company in America, with a combined net worth of about $66 billion, then fund numerous foundations

How did we get here? First, long term goals became five year goals and then one year or even one quarter goals. For an investment banker or CEO that means: boost earnings for as long as I will be here then it’s not my problem.

Second, the brokers were primarily partnerships. As such, a partner could never get his principal out (not to be confused with principles which meant that in choosing new hires and overseeing how they were making money was of prime importance). Then they started going public…ostensibly because they needed more capital but in reality to get THEIR money out and replace it with other peoples for which they had no concern. Big producers got a big pat on the back without looking into how they were doing it or if so, not reporting flaws to management.

Third, the first rule of a brokerage that is a partnership is: think of the client first, the firm second, yourself third. In 1986, when the troubles began brewing, TB heard his sales manager say: think of the firm FIRST, the client second, and yourself third, to which TB told him that is a recipe for destroying the firm (much as Greg Smith told us about Goldman). A year later a well-respected firm had imploded due to mismanagement and excess leverage. Now it has morphed to: think about yourself FIRST, the firm second, and who cares about the client?

Forty years ago when TB came into this business that he loved, he had a mentor…a man who had been a principal in several key brokerage firms but switched to banking and thus taught TB both sides of the street for which he will be forever grateful. Sure, people made good money, but not anywhere like today. In 1984, while at Merrill Lynch, summer interns came through from Harvard, Columbia, etc. They sat with salesmen but when you talked with them their goal was to be in the business for five years then leave rich. TB scoffed at the idea, but that is what actually happened. They made more and more money, while sacrificing ethics and good business practices and that is how we got to where we were today.

Take some bright young people, bring them in and let them loose…where were the adults? Counting their money having cashed in from going public. TB still knows some people at Goldman, good people he respects. Just as when Michael Lewis wrote Liars Poker, in 1989m TB found it hard to believe that things were that bad. That is because he didn’t work in New York or London as Lewis and Smith did. TB believes 90% or more of people in the business are just honest, hardworking people, but those two cities are rife with corruption. If your boss is ripping off clients, you can bet you will too if you want to succeed…and once you start on that course there is no turning back…until you quit as planned or snap. Had Greg Smith made partner, or even managing director it is doubtful you would have ever heard his complaint. If you doubt this, why hasn’t anyone else come forward – have they no shame? Apparently not, money heals guilt.

All of a firm’s assets go down the elevator every night. 50 GS partners have left in the past year along with managing directors (like the two above) Main reason however is declining payouts.

Have a great weekend and Erin go brah!!! St. Pat’s on Saturday!!!

TB

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