7/3/2012…hot Fourth…cold market

From Keep Calm and Carry On: “It is unfortunate we can’t buy many business executives for what they are worth and sell them for what they think they are worth.” – Malcolm Forbes…what they’re worth? We can’t even get rid of them cheaply!    

Bloomberg Top Stories:

*Stocks Rise as Commodities Advance no Stimulus Speculation; Corn, Oil Gain isn’t it nice that they explain these things to us…operative word here is ‘speculation’! TB

*Diamond Quits as Political Pressure Mounts Following Barclays Libor Fine

*Osborne Hails Diamond Departure With Pledge to Fix Banks Amid Libor Probe

*Federal Reserve Weighs Weaning Banks Off Mony Funds as SSEC Rules Languish

*Stocks Pessimism Posts Longest Streak in U.S. Survey Since October Bottom!

*Spain’s Waning Social Security Fund Risks Undermining Bonds!

*Blackstone Makes Foray Into Foreclosed Homes for Rentals – honk if you’re happy

*Wall Street Supporters in Congress Are Unmoved by Probes, Trading Debacles – that tells volumes and why Dimon won’t get even his hand slapped…and keep his bonus!

Volume plummeted again as we are in full summer doldrums now: 3.25M vs 4.56B shares on a very mixed day with no real winners except the Russell 2000 and Dow Utiltites. Rightfully, after opening up, the Dow plunged on the release of the ISM Manufacturing Survey which suffered its first decline in nearly three years! But then spent the rest of the session recovering from the lows and closing off just 8 points. Is this rational? Not to TB’s way of thinking, but then, what does he know? NYSE stocks executed without the aid of the ETN market also plunged from their 1.09B share day on Friday to a weak 736M shares…a half hour before the close it crossed 500M shares! 35 of the last 62 sessions have been less than 800M shares (Corrected!) Since 2/29 there have been just 15 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B (4.85B including ETNs)and just 14 have been above 900M – 945M is 12 month average. Since 11/1 there have been just 14, 1B share days…ten in 2012! Since 2/6 there have now been EIGHT sessions less than 700M shares. 147 of the last 166 sessions have been less than the 12 month average!

Advance/Declines were modestly positive: +2.4x vs +6.6x vs +1.3x vs +3.6x vs +1.8x on NYSE and +1.8x vs +5.8x vs -1.6x vs +2.3x vs +1.2x on Nasdaq. Breadth was similar: +1.7x vs +6.2x vs +1.1x vs +4.3x vs +1.9x on NYSE and +2x vs +5.9x vs -2.8x vs +3.2x vs +1.4x on Nasdaq.. New 52 week highs rose again to 463 vs 405 (a new high), while new lows dipped further to 37 vs 41. The ratio is now about +12.5x vs +10x vs +1.2x vs 2x vs 1:1x. The S&P VIX continued to fall to 16.80 -.28…the low for 2012 is 13.66 on 3/16!

Here are the results of last 5 sessions: Dow -0.1% vs +2.2% vs -0.2% vs +0.7% vs +0.3%; Transports -0.1% vs +2.8% vs +0.8% vs +0.5% vs +0.4%; Dow Utilities UP 0.7% vs +0.7% vs +0.1% vs +1.2%; S&P 500 +0.3% vs +2.5% vs -0.2% vs +0.9% vs +0.5%; Nasdaq Composite +0.6% vs +3%! vs -0.9% vs +0.7% vs +0.6%; Nasdaq 100 +0.4% vs +3.1%! vs -1.1%! vs +0.8% vs +0.6%; Russell 2000 +1.2%!!! vs +2.9%! vs -0.1% vs +1.5% vs +0.4%; NYSE Financials +0.8% vs +2.8%! vs -0.4% vs +1.2% vs +0.6% (KBW Banks +0.6% vs +2.7% vs -0.4% vs +1.4% vs +0.6%; Nasdaq Banks +0.8% vs +1.9% vs flat vs +1.5% vs +0.7%). NYSE Financial Leaders: BAC -1.6% vs +5.7%! vs -0.4% vs +2% vs +0.2%; F -2.1%! vs -5%!!!; GE -1.7% vs +3.2% vs +0.4% vs +1.7% vs +1.4%. Not leaders, but… JPM +1.5% vs -0.4% vs -2.5% vs +3% vs +1.2%; C flat vs +3.9% vs -2.6% vs +1.3% vs –0.1%; WFC flat vs -0.1% vs -0.8% vs +1.3% vs +3.4%; USB +0.9% vs +2.3% vs flat vs +0.3% vs +0.5%. NOTE:  while the banks look like they are doing well, the sixth day was dropped which was very weak!

Global stocks higher, especially Asia: FTSE +0.4% vs +0.5% vs +1.4% vs -0.6% vs +0.6%; CAC 40 +0.4% vs +1.2% vs +2.6% vs -0.3%; DAX +0.7% vs +1% vs +2.5% vs -0.9% vs +0.3%; Nikkei +0.7% vs flat vs +1.5% vs +1.7% vs +0.8%; Hang Seng +1.5% vs +2.2% vs +2.2% vs -0.8% vs +1%; Korean KOSPI +0.9% vs -0.1% vs +1.9% vs +0.1% vs flat; Indian Sensex +0.2% vs -0.2% vs +2.6% vs +0.1% vs +0.4%. U.S. stock futures trading in a very narrow range: DOW -2; SPX +0.50; NDQ +3.75.

Bonds weaker but only after a strong rally that took the 10 yr yield down to 1.55% intraday: 10 yr 1.59% -1/16 – record low 6/1 of 1.442%!; 30 yr 2.71% -1/4; Long TIP 0.50% -1/4. Record low yield of 0.347% on 6/1. The 5 yr TIP yields -1.07%; 10 yr -0.54%. Bills 0.04% 1 month; 0.09% 3 months; 0.14% 6 months. Reverse Repo 0.38% rising! 3 mo. Libor 0.46%, and 0.73% – steady. European problem sovereign 10 years, Germany-benchmark: 1.54% +2 bp’s; Italy 5.66% -5; Spain 6.25% -5; Greece 25.09% +28; Portugal 9.70% – flat; Ireland 6.00% -7!

Gold briefly traded above $1600 then closed below again…it lacks traction, closing at $1597.70 -$6.50. A week ago Friday’s intraday low of $1555.60 was lowest since June 8th! The hit is $187 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 $1591, the 40 day and $1603, the 50 day, then $1671, the 200 day. Up again now  at $1611.80.20 +14.10! 5/2’s o/n low of $1526.70 was lowest since 12/29! Crude was weak again closing at $83.75 -$1.21. The intraday low on 6/28 of $77.28 was lowest since 10/5/11. It has closed below $85 since June 1!  RES at the 40 day (87.14), and the 50 day (90.46), then the 200 day (95.96), – 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 is higher overnight to $85.83 +$2.08 – meaningless…it has so far to go!

It is pointless to comment on yesterday’s market except to say that when one has a rally of the magnitude we had on the last day of a quarter (suspect), yet no follow thru the next session that the going will continue to be rough. It will be a long, hot summer and once the campaign rhetoric begins in full force it will only get worse.

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

…it is hot enough to fry an egg on the sidewalk but the market lacks clear direction. The last five days look pretty good but that is only because the sixth dropped off. Today’s quote is particularly relevant as a bunch of boys parading as CEO’s think they are so good their companies couldn’t operate without them, when in truth for most the cost of getting rid of them is too high. Yet we, the shareholders, have to continue to pacify them.

Look at these headlines:

Glaxo Smith Kline fined $3 BILLION – a record! – for various offenses on Paxil and other drugs including recommending them for treatments not approved (weight loss for teens which ended in some suicides), paying for doctors to attend events, etc. This is the same company that had to settle a whistleblower suit over unsafe production…including non-sterile water…and mixing up drugs with others. Some governance!

Microsoft writing down $7.3 billion after company they bought (AQuantive) did not deliver…not implying bad management just a huge writedown.

Barclay’s chairman and the CEO have now stepped down over rigging of Libor rates to improve their profits and hide perceptions of the banks well-being.

A total lack of responsibility or contrition at JPMorgan by Jamie Dimon who sees no need to give back any of his bonus. Also, as yesterday’s story indicated, he remains on the board of the New York Fed. Resign? Hell no! Also in the link provided yesterday, the chairman of the NY Fed is Lee C. Bollinger, president of Columbia University, and while an intelligent man has NO banking experience…has never even conducted a study on banking…yet the Federal Reserve Act states that the chairman “shall be a person of tested banking experience.” When is the Fed going to start playing by the rules the rest of us have to pay…this for the most powerful institution in this country, indeed the world?

An ex-JPMorgan trader, Andrew Feldstein, bet against the bank with his hedge fund and helped the bank unwind the losing trades. He helped them create the credit derivatives market!

Ah but wait for those quarterly earnings to be announced in three weeks…they will prove that things are still rosy for corporations…right? Won’t they? Things are fine, right?

Have a wonderful day…and Fourth!

TB

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