3/23/12…I’m a banker and I’m here to help you

Bloomberg Top Stories:

 

*China Banks Said to Underestimate Risk of Local Government Loan Defaults – see,  just like us!

*Stocks Fall as Futures Pare Gains Before U.S. Homes Data; Commodities Rise – oh yawn!

*Fed’s Bullard Sees Years of Elevated Inflation From Mistimed Stimulus Exit – but wait? We were told there would be no inflation for as far as the eye can see…at least till mid-2014???

*Hidden Fund Fees Mean U.K. Investors Pay Double U.S. Rate – it could happen here too!*

*Portugal Town Halls Face Default on $12 Billion Debt Without State Rescue – it’s spreading!

*Shrinking Convertibles Spur Best Annual Start Since 2009 – could it be no confidence in stocks?

*Credit Suisse Cuts Dougan’s Pay 55% to $6.37 Million After Earnings Slump –  try that here?

*French Business Sentiment Rises as Sarkozy Lifts Growth Forecast

*Credit Suisse Ends Curb on VIX  Note After Month of Swings Whipsaws Holders – AVOID VIX!

*JPMorgan Sued by Currency Trader Over $3 Million Decimal-Point Trading Error – FX trader??? …says he took job due to a typo in contract which paid him 10 times intended!!!

*UBS Hires BofA’s Orcel to Revive Investment Bank After Losses – they never learn, do they?

*Priceline.Com May Reach $1,000 Stock Price Before Apple – think about this, will you???

*Gasoline Price Drop on Lower Demand Seen in Futures Market – get real Specualation~

*Madoff FBI Files Show How He Hoodwinked Workers to Keep Ponzi Scheme Alive – sick!

*U.S. Sgt. Bales Said to Face 17 Counts of Murder in Afghan Shootings – guilty but so is U.S.!

*Obama Hate-Crime Prosecutions Rise as U.S. Probes Shooting of Florida Teen – and should!       

 

Volume rose modestly to 3.73B fro 3.54B shares after hitting new 2012 highs on BOTH NYSE listed stocks (4.85B) AND on those traded directly on the NYSE (1.65B) last Friday. Meanwhile, NYSE stocks executed on the Big Board dipped to 746M shares vs 766M about 250M below the 12 month average. So far this week it has averaged just 730M shares or 280M  below average. Since 11/1 there have been just eight 1B share days…only three in 2012! Since 2/6 there have been FIVE sessions less than 700M shares. 88 of the last 95 sessions have now been less than 1B! . Advance/Declines were NEGATIVE:-2.8x! vs  -1.1x vs -2x vs +1.8x vs -1.2x on NYSE and -2.2x! vs +1.1x vs -2.2x vs +1.8x vs -1.1x on Nasdaq. Breadth was even worse: -7x!!! vs -1.1x vs -1.5x vs +2.1x vs +1.5x on NYSE and -2.2x vs +1.1x vs -1.5x vs +2.5x vs +1.1x on Nasdaq. New 52 week highs slumped to 107 vs 189, while new lows rose slightly to 49 vs 35. The ratio is now +3x vs +6x. The S&P VIX rose modestly to 15.57 +.44. Last Friday’s intraday low of 13.66 was lowest since 6/20/07’s 12.75.

 

Here are the results of the last five sessions: Dow -0.6% vs -0.4% vs -0.5% vs +0.1% vs -0.2%; Transports -2.1%!!! vs +0.8% vs -1.2% vs +0.2% vs flat; Dow Utilities flat vs -0.2% vs +0.4% vs -0.4% vs -0.2%; S&P 500 -0.7% vs -0.2% vs -0.3% vs +0.4% vs +0.1%; Nasdaq Composite -0.4% vs flat vs -0.3% vs +0.8% vs flat; Nasdaq 100 -0.2% vs flat vs +0.2% vs +0.8% vs -0.1%; Russell 2000 -1%!!! vs +0.1% vs -1.0% vs +0.9% vs -0.1%; NYSE Financials -1.2%! vs -0.6% vs -0.3% vs +0.6% vs +0.5%. NYSE Financial Leaders: BAC -2.2%! vs +0.1% vs +2.9% vs -2.8% vs +6.1%; C -2.4%! vs -0.7% vs +2.5% vs +1.3% vs +1%; GE -1.1%; F -2%!

 

Global equity markets weak, especially Asia. India now down 3.3% in 7 sessions: FTSE -0.4% vs -0.8% vs +0.1% vs -1.2% vs -0.3%; CAC40 -0.7% vs -1.5% vs flat vs -1.3% vs -0.6%; DAX -0.6% vs -1.3% vs -0.1% vs -1.4% vs -0.5%; Nikkei -1.1%! vs +0.4% vs -0.6% vs +0.1% vs +0.2%; Hang Seng -1.1%! vs +0.2% vs -0.2% vs -1.1%!!! vs -1%!!!; Korean KOSPI FLAT for a 2nd session vs -0.7% vs -0.2% vs +0.6% vs -0.5% vs -0.1%; Indian Sensex +1% vs -2.3%! vs +1.7% vs +0.3% vs -1.1% vs -1.2%. U.S. stock futures weaker: DOW -26; SPX -1.60; NDQ +.25. Bonds continuing to rally for a third session but still trying to recover from the selloff: 10’s and 30‘s still well above 2% and 3% respectively: 10 yr 2.25% +1/4. RECORD low 9/23 of 1.6855%; 30 yr 3.33% +7/16; Long TIP 0.85%, it was 0.57% at high. The 5 yr TIP yields MINUS 1.20%; 10 yr -.14%. Bills 0.07% 1 month; 0.14% 3 months, 6 months 0.13%. Reverse Repo 0.21%. 3 mo. Libor 0.47%, and 0.74%, stable.

Gold closed below $1700 for an 9th straight session making the hit off $134 since 2/28, closing $1642.50 -$7.80. 2/28’s $1792.70 intraday high was not seen since 11/16! It had been above $1600 since Jan. 31, but is now $1646.50 +$4.00. The record high is $1923.70, a buying climax on 9/6. Res is $1684, the 200 day and $1707, the 50 day, then $1718, the 40 day, rolling over. Major support was $1652, the 1/25/13 low, now res! Crude closed DOWN at $105.35 -$1.92, second major one this week! It is now $105.58 +.23, with support at the 40 day (103.65), the 50 day (102.85), and major support at $95.16, the 200 day…careful though as all are rising! Resistance remains at $110.

 

The indices were led by Dow Transports which fell 2.1%! All other indices were lower with both Nasdaq indices off the least following a day when both were FLAT – rare! Russell 2000 fell by 1% while NYSE Financials fell by 1.2% with both BofA and Citi off more than 2%.

 

Overnight, Dow futures traded down to 12966 (equivalent to about 13020 on the index). Today could be the day we break 13k to the downside? Will CNBC be celebrating that?

 

Gold continues to be very weak but there is some talk it will turn around. If so the specs will charge in to the ETF’s (GLD and IAU) and drive it up sharply…some say to new highs…you decide. Crude though is showing signs of weakness and the support levels – 40/50/200 day moving averages are moving up sharply.

  

. . .   – – –  . . .  (SOS)   . . .   – – –  . . .  (SOS)   . . .   – – –  . . .  (SOS)   . . .   – – –  . . .  (SOS)

You heard TB’s complaints here first, folks! The SEC has awakened from their long sleep and is now investigating high frequency trading…TB is shocked! SHOCKED! Imagine that being an unfair market advantage. But just as that is happening we have proof that technology can trump greed: an article yesterday says they are moving to Ethernet which is even faster than fiber-optics…aw, if so, they would lose hundreds of millions…pity! Not that that would help individuals so GO SEC! Do what you were chartered to do. Oh, and a headline this morning proclaims the end to insider trading by Congress…finally. What does it take to get THEM to work for US??? More money? But the insider trading has become chump change from what Wall Street gives them directly!

 

TB is on a mission to FIX Wall Street, the banks, and Congress. Although not due to him directly he is at least bringing their sins to light. Before it was proven, he challenged Goldman Sachs and JPMorgan.

 

Why Lloyd Blankfein has been allowed to remain CEO is beyond comprehension as he even sickens people within the firm. His testimony (along with the mortgage securities team) should have cost him his job immediately. Under Senator Carl Levin’s cross, he looked like a blithering idiot with his lies and pained facial expressions. Make no mistake both of these men are highly intelligent. Both graduated number one in their class from Harvard Law – a year apart – but one chose public service while the other chose greed. He has made a four-letter word of a fine firm and could care less so long as he benefits. He is one step removed from one of his predecessors Jon Corzine (three steps if you count becoming a senator then governor). What is wrong with him and his board?

 

As for JPMorgan, it has been headlines in corruption in municipal bond underwriting, consulting, and in selling overpriced derivative protection to cities and counties across the nation charging excessive fees. Jamie Dimon is a hero to some…the most brilliant banker in the land…which he most definitely is not. He is shrewd and cunning. He overlooks transgressions from subordinates so long as they make money for him.

 

A story came out in Fortune yesterday on how JPMorgan purchased the Retirement Plan Services division of American Century Insurance in June 2003 under an agreement to continue to promote funds of American Century. Just one month later they reneged by offering their funds instead. Clear breach of contract, fraud, and breach of fiduciary duty,  and a judge thought so too over JPM’s objections (Gip ‘em as sometimes called in the trade). American was awarded $373 million – in 2009 but JPM had the records sealed and never disclosed it publicly hiding the fees in an Asset Management account titled “non-client litigation” (what could be more obscure than that? Get this: JPM says it disagreed with the ruling but paid it anyway…$373 million??? JPM’s defense? Clients were not harmed as some of the JPM funds performed better than Americans. Is this the test of whether it is okay to breach a contract? But here is the best part: J.E. Staley, who at the time was CEO of JPM’s Asset Management division was serving on the board of American Century (at the time JPM owned 40% of American). There is the breach of fiduciary responsibility – to American’ shareholders! So what happened to Mr. Staley? Demoted? Fired? No! He is now CEO of JPM’s investment banking division! This is what is wrong with Jamie Dimon: he has no morals when it comes to business. This is typical behavior by him.

 

But the main reason TB has no respect for Dimon is his defamation of Brooksley Born over derivative regulation (along with Greenspan, Rubin and Summers), and later Elizabeth Warren while he was trying to insure that neither cut into the banks profits by protecting investors under the new consumer protection act. The bank lobby then aimed all of its guns against Warren and anyone else that was nominated, forcing Obama to make an interim appointment of another highly-qualified person, a former state attorney general. You have to look no further than to Sanford Weill and Jamie Dimon to understand how the banks wrested control from the federal government – and Congress! They bought it!…and then were bailed out at your expense, and guess what? It will happen again, sooner than you think! Can we survive it next time? Some say no way.

 

Have a great weekend…weather permitting,

 

TB

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