5/25/12…in memorium…of a once great industry

Mea Culpa: Having returned from vacation, TB mistakenly counted days and options expiry was LAST Friday, not today…still the market trading that way! Thanks John B. No one else saw it!

From Keep Calm and Carry On: “I cannot help but raise a dissenting voice to statement that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future .” – E H H Simmons, President, NYSE 1/12/1928

“While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover.” – Herbert Hoover 5/1/1930 – in case you didn’t know he has a conservative think-tank named after him: The Hoover Institute

Bloomberg Quote of the Day: “The bitterest tears shed over graves are for words left unsaid and deed left undone.” – Harriet Beecher Stowe

TB saiz: We have reached a day of reckoning when those who have benefitted the most from this great country believe they did it on their own and those who would  believe this have never done service for anyone other than themselves…think about that.


Bloomberg Top Stories:

*Merkel Open to Debt-Sharing Compromise as Monti Sees Way to Persuade Her

*Frozen Europe Means ECB Must Report to Emergency Liquidity Assistance Plan

*Euro Advances on Speculation of Joint Bond Sale as European Stocks Decline

*Societe Generale Search for Crisis Funding Takes Bank to German Car Buyers

*Rescue Proves Elusive as ECB Resists Rajoy’s Bond-Buying Urge

*Renesas Electronics Said to Plan Raising $1.3 Billion, Cutting 10,000 Jobs – success?

*Chesapeake Conflicts of Interest Surface With Thunder in Playoffs – whose money is it?

*Emerging Market Stock  Sell-off Starting to Infect Bonds – actually began three weeks ago!

*Greeks Run  Economic Professor Out of Country for Telling Truths – as Mike Lewis said!

*Muslim Brotherhood Says Mohamed Mursi Leads in Egypt Presidential Election – hmmm

*Iran UN Inspectors Find Uranium Enriched Close to Weapons Grade, AP Says – !!!

*Single Women Voters Focus of Appeal on Equal Pay by U.S. Senate Democrats


A modest gain for the Dow in yet another ‘down, dirty and sloppy’ trading session in which the two Nasdaq indices and the Russell 2000 declined! Since peaking on 5/1 at the highest level since the crash, 13338.66, the Dow has been DOWN for 13 of the past 17 sessions, and the loss is still 5.1% below that days close. Also, the 12 of the past 16 sessions have resulted in LOWER LOWS. The last four sessions have only overcome the decline of 5/18 with only a ‘dead cat bounce’ at best of the big drop on 5/17. Again yesterday, the Dow spent more than half the session in the red, finally rallying in the final half hour to close 10 points off the session high. The Dow is up just 2.5% ytd but still 5.2% below the 3/30/12 close!  Dow Utilities remain the only index up qtd, by 1.7%! As for Financials, so far this quarter they are still off 11.3% surpassed only by Telecom -18.6% and Semis -16.3%, and Oil Services -12.7%. Gold and Silver are still off -10.5%! Ouch! Transports, up 2% over the past two sessions, were the big winner again yesterday, thanks to truckers and rails, and led by Alaska Air – and FedEx for a second straight session. Each added 7 points to the 41 point gain.

NYSE stock volume plunged to 3.7B shares from 4.06B, lowest in eight sessions and back to the levels of early May. NYSE shares executed on the Big Board also dropped to 796M vs  863M – lowest since 5/11. 19 of the last 35 sessions have been less than 800M shares!!! Since 2/29 there have now been just SEVEN ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B, but average has fallen to 820M and just eight have been above 900M – 960M is 12 month average. Since 11/1 there have been just nine 1B share days…only five in 2012! Since 2/6 there have been FIVE sessions less than 700M shares. 126 of the last 140 sessions have been less than the 12 month average! Advance/Declines were slightly positive: +1.4x vs +1.5x vs +1.1x vs +5.8x vs -3x vs -6.3x!!! vs -2.1 vs -1.8x vs -5.4x!!! vs -1.5x on NYSE and +1.1x vs +1.2x vs -1.6x vs +3.4x vs -2.6x vs -4.2x!!! vs -2x vs -1.2x vs -3.1x vs -1.5x on Nasdaq. Breadth was weak and mixed: +1.1x vs +1.8x vs -1.1x vs +3.8x vs -2.2x vs -7.5x!!! vs -2.5x vs -4x! vs -7x!!! vs -2.3x on NYSE and MINUS 1.9x vs +1.4x vs -1.3x vs +5.5x vs -1.7x vs -7.9x!!! vs -2.6x vs -2.3x vs -2.9x vs -1.1x on Nasdaq. New 52 week highs rose sharply but to a still weak 66 vs 43, the low was 34 (high was 420 on 3/26), while new lows plummeted to 121 vs 272! Ratio is still negative by -2x. The S&P VIX, declined to a still high 21.54 vs 22.33. Long weekend awaits, then next Friday’s employment data…avoid!!!

Think about this: Apple after being a big winner Wednesday (+2.4% adding 7 points to the NDQ 100), lost 4 points exacerbating the decline. The market IS Apple!

Here are the results of last 10 sessions:  Dow +0.3% vs-0.1% vs flat vs +1.1% vs -0.6% vs -1.2%! vs -0.3% vs -0.5% vs -1%! vs -0.3%; Transports +0.8% (best performer) vs +1.2% (best performer) vs +0.1% vs +2.9% (best performer) vs -1.3%!!! (worst performer!) vs -3.2%!!! vs -0.1% vs +0.1%  vs -0.8% vs +0.1x; Dow Utilities +0.4% vs -0.6% vs +0.5% vs +0.3% vs flat vs -0.7% vs -0.1% vs -0.5% vs -0.4% vs +0.1%; S&P 500 +0.1%! vs +0.2% vs +0.1% vs +1.6% vs -0.7% vs -1.5%!!! vs -0.7% vs -0.6% vs -1.1% vs -0.3%; Nasdaq Composite DOWN 0.4% vs +0.4% vs -0.3% vs +2.5% vs -1.2% vs -2.1!% vs -0.7% vs -0.3% vs -1.1% vs flat; Nasdaq 100 DOWN 0.6% vs +0.3% vs -0.2% vs +2.7% vs -1.2% vs -2.1%!!! vs -0.7% vs -0.4% vs -1% vs flat; Russell 2000 DOWN 0.6% 9by 6:1!) vs +0.7% vs -0.7%! vs +2.3% vs -0.9% vs -2.3%!!! vs -0.7% vs -0.2% vs -1.4%!!! vs -0.2%; NYSE Financials FLAT vs +0.1% vs +0.5% vs +1.4% vs -1.1% vs -2.2%!!! vs -0.9% vs -1.9% vs -1% (KBW Banks +0.1% vs +0.8% vs +1.1% vs +0.6% vs -1.6% vs -1.7% vs -2.6%, Nasdaq Banks +0.6% vs +0.5% vs -0.3% vs +0.8% vs -0.7% vs -1.2% vs -1.4%); NYSE Financial Leaders: BAC -0.4% vs +2.7% vs +2.2% vs – 2.7% vs +0.6% vs -1.8%! vs -0.7% vs -2.7%! vs -2%!, (ranked by volume!). Not leaders, but…C -1.8% vs  +2.6% vs +0.9% vs -1.5% vs -1.9%! vs -1.2% vs -4.1%! vs -4%!; JPM -0.9% vs +0.5% +4.6% vs -2.9% vs -1.3% vs -4.3%!!! vs +1.3% vs -3.2% vs -9.3%.

European stocks slightly weaker, Asia up slightly: FTSE  -0.3% vs +1.4% vs -1.9% vs +1.2% vs +0.6%; CAC 40 -0.1% vs +1.1% vs -2.2%! vs +1.2% vs +0.8%; DAX +0.2% vs +0.7% vs -1.8% vs +1% vs +1%; Nikkei +0.2% vs +0.1% vs -2.2% vs +1.1% vs +0.3% vs -3%!!!; Hang Seng +0.3% vs -0.6% vs -1.3% vs +0.6% vs -0.2% vs -1.3% vs -0.3% vs -3.2%!!!; Korean KOSPI +0.5% vs +0.3% vs -0.9% vs +1.6% vs +0.9% vs -3.4%!!! vs +0.3% vs -3.1%!!!; Indian Sensex FLAT vs +1.7%!!! vs -0.5% vs -1% vs +0.2% vs +0.5% vs +0.3% vs -1.8%!. U.S. stock futures little changed: DOW -4; SPX +0.50; NDQ +4.50.

Bonds up slightly following yesterday’s loss. l0’s and 30’s still well below 2% and 3% respectively: 10 yr 1.77% +3/32, RECORD low 9/23 of 1.6855%; 30 yr 2.86% +3/16; Long TIP 0.61% +1/8. New record low yield 5/21 of 0.535%. The 5 yr TIP yields MINUS 1.05% – slipping!; 10 yr -0.43%. Bills 0.07% 1 month; 0.09% 3 months; 0.14% – steady. Reverse Repo 0.25% 3 mo. Libor 0.47%, and 0.74%; also steady. European problem sovereign 10 years, Germany-benchmark: 1.39% unched; Italy 5.54% unched; Spain 6.16% +4bp’s; Greece 28.56%!!! -11; Portugal 11.80% -8; Ireland 7.03% unched.

Gold and Crude barely up following Wednesday’s slaughter. Gold closed at $1549.80 +9.20. The hit is now $234 since 2/28, a loss of 13.5%! 2/28’s $1792.70 intraday high was not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. Res is $1629, the 40 day and $1636, the 50 day, then $1700, the 200 day. It is now $1564.20 +$4.40. Wednesday’s o/n low of $1526.70 was lowest since 12/29! Crude closed $90.66 +.76. On 4/26 it closed at $104.55…that is a 15% LOSS!!! RES at $96.39, the 200 DAY, the 40 day (100.01), the 50 day (101.31). First res $92.52-54, the lows of 12/16-12/17, a prior double bottom, MINOR sup at $89.17, the 11/1/11 low!!! It is now $91.06 +.40.

Facebook (FB) rose another $1.03 to $33.03 (+3%), but remains off 13.1% from the price ‘fixing’ and 25% from the opening day high. Amid all the signs of highly overpaid managers who conspired with their favorite institutional insiders against the retail investor you have to shake your head and wonder why? …unless it is ‘attempted’ short covering which has to be very difficult here. The entire structure of IPO’s must be examined and repaired to provide confidence and transparency. If not…

No change…TB’s advice is to stay sidelined here and perhaps install some trailing stops to avoid losses. After today we will be in the doldrums…and a week from Friday we get the payrolls numbers. Imagine the rally in the leadership-challenged Hewlett-Packard after announcing 27,000 layoffs…do you think it is going to be a good number? But hey, you decide…it’s YOUR money!

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

TB would like to see the statistics on the wealthiest billionaires in this country. How many of them believe they alone are responsible for their success…how many have ever done anything for anyone else other than themselves? Not that this should be a requirement but it would explain a lot. What is unfathomable is their belief that they are paying too much in taxes…if they are, they are fools or too cheap to hire good tax advisors. For many, their idea of charitable giving is paying $100,000 to hear Bruse Springsteen or some other superstar. Little of that money really filters down to the charities it is for, but the tax deduction remains.

They don’t credit the education they received courtesy of the taxpayers, the amount spent on the defense of this great nation and democracy to allow them the opportunity to attain their wealth. For those in financial services or tech, they don’t even think about the money spent on the internet by the government and developed by scientists working for universities (not Al Gore), that made our high-speed communication possible. Those men, other than from possible jobs in the industry got nothing for their efforts. Nor did they expect it. Instead, young kids, develop ‘toys’ for other young people and become billionaires…all well and good, but when some of them are willing to renounce their citizenship to avoid taxes and risk losing what they had by moving to some emerging market nation, that is disgusting . For Eduardo Saverin, it is all moot…he  has damaged his reputation and that of his company, since the tax is still due because the clock started ticking when Facebook began…sorry Eduardo, you are the big loser! What has Eduardo ever done for anyone else? The same could be said for the others at Facebook and most young people today.

But there should be a special place in hell for those in TB’s once-beloved industry where he made a good living for forty years: financial services. At least since WWII it was mostly veterans who entered the industry. It was a father-son business…TB was accepted in by his first boss, F. Alden Damon, and taught the principles of the business. You didn’t enter the industry to get rich quick but for a career…one that made a good living but no better than a doctor, and well below the best ones. TB went from banking to investment banks to investment management, but since the mid-1990’s investment banking became an end, not a conduit for American industry and growth. Slowly and steadily greed took over until in the last go around only financial services grew – disproportionately to the rest of the economy and built on false assumptions and myth that trees grow to the sky.

Alongside the overpaid financial boys – and the vast majority are men, place those founders of companies and CEO’s who placed their own wealth above their shareholders…Ken Lay, Sandy Weill, Dick Fuld, Jon Corzine, Bob Rubin, Angelo Mozillo (and the rest of the thieves of mortgage banking), Best Buy founder Richard Schulze, and now Chesapeake Energy co-founder Aubrey McClendon. All of these, plus Jamie Dimon, are in contempt of their shareholders…but without a ‘do anything for money financial sector this would not be possible. How much is too much? As Ivan Boesky said, it is never enough…money is just a counter against what someone else has…and they would destroy their companies or even this great nation to be number one. They are doing it as we speak. Sad but true.

Of course WE bear that responsibility. We did it with the Viet Nam war which resulted in the elimination of the draft and with it any sense of duty to our nation. Pity…pity us.

TB served, and in Viet Nam, but he is no hero…he did what he was brought up to do. Afterwards, he came to see that many of the protestors were correct (as with Occupy Wall Street), although many were opportunist who just didn’t want to risk their lives. But what they hey, the great draft dodger was Dick Cheney through his multiple exemptions, or Dan Quayle who was given a nice safe job with the National Guard, or Dubya who accepted millions in flight training then avoided even attending meetings. Nice role models, right? They had no conviction…just didn’t want it to be them.

As a kid, TB loved watching war movies…but he always had the feeling that if he was in combat he would be killed. That is not a good way to be a soldier. Still, he wanted combat and in the Navy he was involved in it, but never considered himself at great risk. If something bad happened, so be it. But he lost three high school friends to that war.

Ask yourselves this question: seeing what this great nation has become…how our elected officials cannot even compromise – which is what governing is all bout – how they misuse the internet using scare tactics and lies to gain support…would you feel that sacrificing your life or limbs was worth it? Sadly, TB would not. He would be ashamed of what the people of this country have squandered and how the majority is losing ground by the day for the benefit of a few.  Think about it and you decide.

Please spend some time remembering those who fought and gave their lives for us this Memorial Day…perhaps even until the REAL Memorial Day on May 31st. Sad that we had to change these dates so people could always enjoy long weekends…is that what it is all about?



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