6/29/12…a santé

From Keep Calm and Carry On: “Our life is frittered away by detail. Simplify, simplify. – Henry David Thoreau 

Bloomberg Top Stories:

*Spain Gets Relief as Europe Leaders Outflank Merkel in Bid to Blunt Crisis – again???

*Stocks Climb With Euro as Europe Relief Plan Spurs Rally in Spanish Bonds – oyvey!

*Barclays Big-Boy Breaches Mean Libor Blueprint Not Enough, Investors Say

*JPMorgan Cushions Drew’s Retirement With $21.5 Million in Stock, Options – what is the price of silence? Either she screwed up…or she didn’t…and if not Dimon told her!

*Paulson Forgoes Prognostication After Sequel to Greatest Trade Is Big Flop!

*Basel Regulators Said to Agree on Changes to Planned Bank Liquidity Rule

*Leveraged Loan Sales Tumble 30% in U.S. as Buyouts Dwindle – hmmm

*Natural Gas Decline to $2 Seen After Worst-to-Best Rebound – yep crude at <$78!

*Facebook Engineers Fleeting Social to Chase Database Startup Billion – FB $31.36

Volume rose to 3.814B shares vs 3.24B shares as the Dow recovered from a 177 point swoon and closed off just 25 points. The first drop came at the open – 104 points followed by a second 78 point plunge following the Supreme Court announcement. Then it bounced, dipped again, and climbed 102 points in the final half hour…makes you want to dive right in, doesn’t it?  NYSE stocks executed without the aid of the ETN market ssurged to 907M vs 684M (lowest since May 25th) but the pattern was the same – other than 200 million shares at the close. Thus it was not the buying frenzy one would have expected..4 of the last 60 sessions have been less than 800M shares!!! Since 2/29 there have been just 14 ‘average’ days (mostly down!), including 3/16’s prior high for 2012 of 4.65B and just 13 have been above 900M – 944M is 12 month average. Since 11/1 there have been just 13, 1B share days…nine in 2012! Since 2/6 there have now been EIGHT sessions less than 700M shares. 146 of the last 164 sessions have been less than the 12 month average!

Advance/Declines were MIXED! +1.3x vs +3.6x vs +1.8x vs -3.3x +2.2x on NYSE and MINUS 1.6x vs +2.3x vs +1.2x vs -2.9x vs +2.4x on Nasdaq. Breadth was also mixed: +1.1x vs +4.3x vs +1.9x vs -8.6x!!! vs +2.2x vs -13.7x!!! on NYSE and -2.8x vs +3.2x vs +1.4x vs -6.5x! vs +3x vs -5.7x on Nasdaq.. New 52 week highs fell to 149 vs 197 (high was 420 on 3/26), while new lows CLIMBED to 121 vs 94. The ratio is now about 1.2x vs 2x vs 1:1 vs -1.6x vs  +1.3x. The S&P VIX rose slightly to 19.71 +.26, below the 40/50/200 day averages, but not before shooting up to 21.19. Last Friday it closed at 18.14 with an intraday low of 17.90! Keep that in mind today.

Here are the results of last 5 sessions – this drops the 2%+ losses of last Thursday: Dow -0.2% vs +0.7% vs +0.3% vs -1.1% vs +0.5%; Transports UP 0.8% vs +0.5% vs +0.4% vs -1.9% vs -0.8%; Dow Utilities +0.1% vs +1.2% vs +0.3% vs -0.4%; S&P 500 -0.2% vs +0.9% vs +0.5% vs -1.6%! vs +0.7%; Nasdaq Composite -0.9%! vs +0.7% vs +0.6% vs -2% vs +1.2%; Nasdaq 100 -1.1%!! vs +0.8% vs +0.6% vs -2% vs +1.2%; Russell 2000 -0.1% vs +1.5% vs +0.4% vs -1.7% vs +1.4% vs; NYSE Financials -0.4% vs +1.2% vs +0.6% vs -2.2% vs +1.1% (KBW Banks -0.4% vs +1.4% vs +0.6% vs -2.7% vs +1.4%; Nasdaq Banks flat vs +1.5% vs +0.7% vs -2% vs +1.7%; NYSE Financial Leaders: BAC -0.4% vs +2% vs +0.2% vs -4%!!! vs +1.5% -3.6%!; GE +0.4% vs +1.7% vs +1.4% vs -1.5%; JPM -2.5% vs +3% vs +1.2% vs -1.9% vs +0.1% vs -2.3%; C -2.6% vs +1.3% vs –0.1% vs 4.4%! vs +0.5% vs -3.6%. Not leaders, but…WFC -0.8% vs +1.3% vs +3.4% vs -1.8% vs -0.5% vs -1.4%; USB flat vs +0.3% vs +0.5% vs -1.8% vs +1.6% vs -1.5%. NOTE BofA is trading in a range of $8.11 to $6.72. Citi and JPM were crushed!

Global stocks flying on Spanish bailout…talk about a relief rally!: FTSE +1.4% vs -0.6% vs +0.6% vs +0.2% vs -0.7%; CAC 40 +2.6% vs -0.3% vs +0.5% vs +0.1%; DAX +2.5% vs -0.9% vs +0.3% vs flat vs -1.8%; Nikkei +1.5% vs +1.7% vs +0.8% vs -0.8% vs -0.7%; Hang Seng +2.2% vs -0.8% vs +1% vs +0.5% vs -0.5%; Korean KOSPI +1.9% vs +0.1% vs flat vs -0.4% vs -1.9%; Indian Sensex +2.6% vs +0.1% vs +0.4% vs +0.1% vs -0.5%….the Rupee gains 2.1% o/n, biggest jump in 3+ years! U.S. stock futures strong: DOW +134; SPX +18.70; NDQ +36 – hey! It’s quarterend!!!

Bonds tanking overnight on the global stock rally: 10 yr 1.63% -1/2 – record low 6/1 of 1.442%!; 30 yr 2.73% -1-1/8; Long TIP 0.50% -1 pt. Record low yield of 0.347% on 6/1. The 5 yr TIP yields -0.99%;10 yr -0.50%. Bills 0.03% 1 month; 0.08% 3 months; 0.15% 6 months. Reverse Repo 0.25%. 3 mo. Libor 0.46%, and 0.73% – steady. European problem sovereign 10 years, Germany-benchmark: 1.61% +10 bp’s; Italy 5.91% -26!; Spain 6.50% -36!!!; Greece 25.17% -46!!!; Portugal 9.70% -6; Ireland 6.23% -58!  

Gold tanked again putting $1600 and resistance at $1608-17 out of range. It closed at $1550.40 -$28!!! Last Friday’s intraday low of $1555.60 was lowest since June 8th! The hit is $239 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 is $1593, the 40 day and $1605, the 50 day, then $1673, the 200 day. Figure this out…t is now $1587.30 UP $36.90!!!. 5/2’s o/n low of $1526.70 was lowest since 12/29! Crude finally moved large and got pounded at $77.69 -$2.42. The intraday low of $77.28 was lowest since 10/5/11. It has been below $85 since June 1!  RES at the 40 day (87.95), and the 50 day (91.19), then the 200 DAY (96.01), – 40/50 still plunging. 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 remains at $74.95, the 10/4/11 low!!! It too is now rallying at $80.95 +$3.26. Treacherous waters!!!

Yesterday’s decline followed by rally while on good volume this time lacked breadth. Worse, both advance/declines and breadth were MIXED with the Nasdaq being the loser. Both Nasdaq indices fell by about 1%…but the Russell 2000 small cap  was off just 0.1%? If you can make sense of this…other than high frequency trading noise…HONK!

What is a quarterend without a rally? The European powers that be are providing this one! Do you feel like Charlie Brown when Lucy is nice to you…holds the football for you then jerks it out so you land on your keester? Yet we react to the headlines again and again while they pile up bandaids on an arterial wound! Will we ever learn? Oh, and don’t forget those big drops in gold and crude yesterday that were REVERSED overnight!!! Is that rational? No! Its quarterend! What have we wrought?

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

…to your health! TB is not a lover of Obamacare but something had to be done and after 100 years of trying to find a solution a law was enacted.

Chief Justice Roberts did a courageous thing (perhaps because he can’t be deposed) in not throwing the nation into chaos, and brilliantly declared it to be a tax and thus not subject to the commerce clause. Either side can be argued but he must have felt the damage from throwing it out entirely would be worse. Logic prevailed.

More than that since both sides are opposed to taxing the middle class (the GOP taxing anyone), perhaps – but only after the elections – will something be done to overhaul it.

The propaganda against it has distorted the case and Obama failed to clearly explain the benefits. By the way the CBO report states that they see no significant impact on employment in either instance. If you believe that this is all that is preventing hiring or paying decent wages (except to management!), then you haven’t examined the condition of the economy or the reasons why we got here and why we remain here.

The commerce clause is an interesting situation. Did the founding fathers ever envision air travel? Space travel? When it took weeks or even months to reach a destination it had to be assumed that a child born here was a citizen. But today, while we whine about illegal immigrants, not one comment has come from Congress about illegals having children born here and thus being U.S. citizens; or the visitor who just happens (or plans?) to be here when their child is born. Why isn’t there any movement to change this? It it because the Constitution is so sacrosanct? Yet we had an amendment to stop drinking of all things which promoted crime, made most Americans criminals, and Congress continued to drink as before.

No, as foresighted as the framers were they were not omniscient. Do you believe they ever foresaw people moving from one state to another at the opposite end of the nation? For that matter even to other countries to work…or a global economy where what happens in one country affects the rest.

For all the complaining about the bill…note that some of the major health insurers have willingly adopted some of the key elements of the act, but to allow pre-existing condition coverage all people must be members. That cannot and will not be done at the state level.

Hopefully if and when the two sides finally sit down and act responsibly, the real issues will addressed: huge fee discrepancies for healthcare – especially for insured vs non-insured, hospital costs (magnified by uninsureds going to the emergency room, and malpractice reform. You decide but don’t listen to the propaganda…try facts.

If you ever needed proof that Ina Drew didn’t act alone it was the bank first giving her retirement, but then adding $21.5 million in stock and options to the deal. Is that the price of silence? To TB you bet it is. Money talks and it does it well. Dimon…give back your bonus! …and don’t say your mindless, clueless board makes those decisions…after all YOU are the chairman of it as well as CEO. Try acting responsibly.

Go have fun this weekend and forget the markets!

TB

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