6/13/12…I’m special…you not so much

TB’s Quote of the Day (repeated): “The financial system has been transformed into a self-serving, grotesque casino that misallocates scarce savings, begs for and encourages speculative bubbles, refuses to restructure bad debt, and demands that the most reckless stewards of capital should be rewarded through bailouts that transfer bad debt from private balance sheets to the public balance sheet.” – John Hussman of Hussman Funds in shareholder letter…perhaps now someone will believe TB!


From Keep Calm and Carry On: “If at first you don’t succeed, try, try again, then quit. There’s no point in being a damn fool about it.” – W.C. Fields


“How can they say my life is not a success? Have I not for more than 60 years got enough to eat and escaped being eaten? – Logan Pearsall Smith


Bloomberg Quote of the Day: “No man sees far; the most see no farther than their noses.” – Thomas Carlyle…Pinocchio would be brilliant in that case!


Bloomberg Top Stories:


*Retail Sales in U.S. Fall for a Second Straight Month in Sign of Slowdown…slowdown???

*Stocks Drop With Futures After U.S. Retail Sales Report; Euro Strengthen

*Libor Traders Said to Escape Criminal Charges as U.K. Weighs Record Fines – no jail???

*Greek Bank Deposit Withdrawals Are Said to Have Increased Before Election – Euros to Drachmas…what would you do? Bail!

*Credit Agricole Seeking End to Greek Imbroglio as Risk of Euro Exit Looms

*Dimon’s Hedges Mask ‘Anything Goes’ JPMorgan Trades, Senator Markley Says – hear hear

*Bank Failures Abating as U.S. Replenishes Insurance Fund – of course they are…sheesh!

*Merkel Debt-Crisis Choice Pits European Fate Against German Voter Interest

*Clinton Decries Russian Aid for Assad as UN Calls Syria Conflict Civil War

*Arizona Voters Pick Former Gabrielle Giffords Aide Barber to Fill Her Seat – it was close.


The Dow opened up and hit the session high, up 99 points immediately then slowly declined for the remainder of the session to closing up 162 (vs -143) but not significantly above Friday’s high and still 6 points below the close of 5/29…in other words we can’t shake that monkey form the 5/17 plunge and are still 600 points below the May 1 high when the selloff began. Don’t be a sucker. While the Dow is up 2.95% ytd it is still down 4.8% for the quarter…all the global indices are also down mostly in double digits.

For a third straight session NYSE stock volume was weak at 3.38B shares (range is 3.3B-3.38B shares). June 1st’s 4.6B, highest since March 16 will probably not be seen for the rest of the summer. NYSE stocks executed without the aid of the ETN market (where the high freq geeks play) dipped to 724M vs 740M shares, three straight at <800M shares and well below the average since 3/1 of 824M shares. 26 of the last 47 sessions have been less than 800M shares!!! Since 2/29 there have now been just 11 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B and just ten have been above 900M – 955M is 12 month average. Since 11/1 there have been just eleven 1B share days…only seven in 2012! Since 2/6 there have been SEVEN sessions less than 700M shares. 136 of the last 152 sessions have been less than the 12 month average! Advance/Declines were positive: +3.6x vs -3.9x vs +2.4x vs -1.2x vs  +7.1x on NYSE and +2.3x vs -3.4x vs +2x vs -1.5x vs +4.7x on Nasdaq. Breadth was too but compare to Monday: +6x v -11.3x!!! vs +3x vs -1.4x vs +11.8x!!! on NYSE and +3.9x vs -6.5x vs +3.9x vs -2.9x vs +12.4x!!!…vs -23.9x!!! on Nasdaq. New 52 week highs were HALVED to 79 vs 156 (high was 420 on 3/26), while new lows climbed to 129 vs 119.. The ratio TURNED NEGATIVE after just four straight positives at -1.6x! vs +1.5x vs +1.5x vs +2x vs +2.5x vs -2x vs -8.7x!!! The S&P VIX declined but by just about half of Monday’s 11% jump to a still high 22.09 -1.47 and remains well above the 40/50 day at 20!

Here are the results of last 5 sessions: Dow +1.3% vs -1.1% vs +0.8% vs +0.4% vs +2.4%; Transports +0.9% vs -1.4% vs +1.1% vs -0.1% vs +3%; Dow Utilities +0.3% vs -0.4% vs +0.4% vs +0.7% vs +1.3%; S&P 500 +1.2% vs -1.3% vs +0.8% vs flat vs +2.3%; Nasdaq Composite +1.2% vs -1.3% vs +1% vs -0.5% vs +2.4%; Nasdaq 100 +1.2% vs -1.7%!!! vs +0.9% vs -0.4% vs +2.4%; Russell 2000 +1.2% vs -2.4%!!! vs +1.2% vs -0.6% vs +2.6%; NYSE Financials +1.6% vs -1.7% vs +0.5% vs flat vs +3% (KBW Banks +2% vs -2.3% vs +1.7% vs +0.1% vs +3%; Nasdaq Banks +1.6% vs -2.1% vs +1.3% vs +0.3% vs +1.8%); NYSE Financial Leaders: BAC +2.9% vs -3.7%!!! vs +1.9% vs -2.9% vs +7.6%!!! vs +3% vs -2%! vs -4.5%!!!; GE +1.9%; C +4.3% vs -4.7%!!! vs +3.2% vs -0.9% vs +5.3%! vs +3.7% vs -2.2% vs -4.2%. JPM +2.9% vs -2.6% vs +2.7% vs -0.8% vs +3.4% vs +3.2% vs -2.9% vs -3.7%! Not leaders, but…WFC +1% vs -1.4% vs +0.8% vs +0.7% vs +1.5% vs +1.5% vs -0.5% vs +1.1% vs -5.9%!!! USB +1% vs -0.8% vs +2% vs -0.4% vs +1.6% vs +1.4%. Note that the percentage gains were an offset to Monday on the Dow but less on the others, especially the two Nasdaq indices and the Russell 2000…also recall that an equal gain from a lower level is still a net loss.  

European stocks slightly weaker, Asia a bit better: FTSE -0.1% vs +0.3% vs -0.6% vs +1.6% vs +1.4%; CAC 40 -0.2% vs +0.4% vs -0.7% vs +1.2% vs +2%; DAX -0.4% vs +0.4% vs -0.5% vs +1.5% vs +1.7%; Nikkei +0.6% vs -1% vs +2% vs -2.1% vs +1.2%; Hang Seng +0.8% vs -0.5% vs +2.4%! vs -0.9% vs +0.9%; Korean KOSPI +0.3% vs -0.7% vs +1.7% vs -0.7% vs +2.6%; Indian Sensex +0.1% vs +1.2% vs -0.3% vs +0.4% vs +1.2%. U.S. stock futures lower in a narrow range: DOW -25; SPX -4; NDQ -5.50.

Bonds modestly weaker again: 10 yr 1.68% -1/8 – record low 6/1 of 1.442%!; 30 yr 2.80% -9/16; Long TIP 0.55% -1/2. A new record low yield of 0.347% on 6/1. The 5 yr TIP yields -1.07%; 10 yr -0.50%. Bills 0.06% 1 month; 0.09% 3 months; 0.14%. Reverse Repo 0.28%. 3 mo. Libor 0.47%, and 0.74% – steady. European problem sovereign 10 years, Germany-benchmark: 1.50% +8 bp’s; Italy 6.14% flat; Spain 6.66% +1; Greece 27.89% +8; Portugal 10.13% +5; Ireland 7.02% -1.  

Gold closed above $1600, critical support and resistance, and just above res at $1610-12, closing at $1613.80 +$17! Since breaking above on June 1, it HAD traded in a narrow range of $1610-1642 before breaking down again. It closed above $1600 for just four straight sessions not seen since 5/9. The hit is $180 since 2/28! 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/sup is $1609, the 40 day and $1619, the 50 day, then $1688, the 200 day. It is now $1610.80 -$3.30. 5/2’s o/n low of $1526.70 was lowest since 12/29! Crude rose slightly but only after putting in another cycle low of $81.07!, closing at a weak $83.32 +.62. On 4/26 it closed at $104.55…that is a 20% drop! RES at the 40 day (94.81), and the 200 day (96.42), then the 50 DAY (96.44), – all dropping fast! First res $89.17, the 11/1/11 low, then $92.52-54, the lows of 12/16-12/17, a prior double bottom, MAJOR sup at $74.95, the 10/4/11 low!!! It is now $83.11 -.21! No QE3, no oil rally!

Once again we had the trademark of the high freak traders: all the major indices rose in a range of 1.2-1.4%!!!

Listen to this…the Libor traders involved in ‘fixing’ the libor rate will not face criminal prosecution…see it was just fraud, conspiracy to commit fraud, insider trading and much more…but they will be subject to fines…more hand slaps? How does one set a fine on what cost banks or borrowers billions of dollars in interest charges? In case you aren’t familiar with this case, the committee that sets the Libor rates was meeting within earshot of the trading room…also during the crisis they were omitting the rates paid by the lower quality banks that comprise the index…a serious breach of transparency and ethics.

All eyes and ears should be on D.C. today as the esteemed (sic) Jamie Dimon testifies before a joint congressional committee on just how his bank violated (?) Dodd-Frank.

Nothing more to say here.

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

…good morning boys and girls…this is Mr. Rogers and welcome to his neighborhood where each and every one of you are special…right Lady Elaine Fairchild?

It was Mr. Rogers who actually made us believe our kids were special…and of course to us they are, but we couldn’t let it stop there…we told their teachers they were special especially when those tenured fools gave them grades below what they deserved. They were then tutored…not in fundamentals but crash courses to fool the SAT’s. We went from college prep classes to ‘AP’ classes which offered a high grade of ‘5’ and a ‘3’ was the downside…thus grade inflation…accompanied by ego inflation. Never mind that when they got to college they hadn’t learned what they were supposed to in high school…helicopter moms then called their profs to tell them they had given them grades that were too low. Some even went so far to call their bosses when they finally graduated to tell them their kid was better than that…TB would have loved to have gotten one of those calls…lady…your kid just lost his job…because of your interference.

Yesterday TB mentioned Michael Sandel who wrote ”What Money Can’t Buy”  and is now reading it. It is an eye opener about what our society has become: everything and everyone has been commoditized…and thus for sale. People, body parts, free tickets to community sponsored concerts…seats to congressional hearings and Supreme Court decisions. Yes, lobbyists hire people to stand in line for them and then show up just before the hearings start and fill the seats…is it fair? Sure, if you want to go bad enough either get in line or hire your own homeless stand-in.

In economic theory there are no morals, no right or wrong, merely transactions. Should we buy or sell a life, limb, place in college, even U.S. citizenship (yes, it is for sale for $500,000!, just as we would a car or home? Sandel addresses these questions and asks where we as a country are headed and unless we change soon it will be too late to save it.

If you are comfortable with the money that bought the Wisconsin election you will love the presidential election as billions will ultimately be spent…$65 million in Wisconsin alone. But will it give us the best president? Is the U.S. government to be run the same way as a corporation? If so, we live in a very disturbing world. You decide.

Have a great day…and think for yourselves!



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