9/10/12…how they, and we, are failing ‘us’

From Keep Calm and Carry On: “I believe that thrift is essential to well-ordered living.” – John D. Rockefeller…easy for HIM to say!

“Cannot people realize how large an income is thrift?” – Cicero

TB saiz: “fool me once, shame on you, fool me twice, shame on you, fool me thrice…” That is the mournful cry of the American voter/taxpayer.

Bloomberg Top Stories:

*Diamond Forgoes $31 Million Bonus as Letters Reveal FSA’s Barclays Concern –Dimon though? Not a chance as the board determines HIS bonus; he is chairman!

*Tucker’s Libor Testimony May Stock Lawmaker Concern About BOE’s New Powers

*Stocks Rise as Spanish Bond Yields Drop on EU Loans to Banks; Oil Declines

*Investment Bankers Face Termination as European Fees Sink to Nine-Year Low – hah!

*Spain to Get Accelerated $123 Billion Bank Aid as EU Weight Direct Lending

*Agius Says BOE’s King Told Him Diamond No Longer Had Support of Regulator

*Bullard Says Fed Prepared to Consider More Action If U.S. Economy Worsens – 0%?

*Google Said Nearing $22.5 Million Settlement Over Brower Privacy Breach – million?

*GM to Offer ‘No Haggle’ Pricing, 60-Day Money-Back Guarantees for Chevys – !!!

*Barclays Libor Quote Rises Most Since 2009 Amid Scandal – transparency is good!

*Libyan Election Results Indicate U.S.-Educated Academic Beating Islamists

Tax Increase for All Is Threatened as Congressional Democrats Just Say No – NO!!!  

Volume rose slightly from a near 12 month low in a slightly negative session: 2.78M vs 2.64B shares with all indices off from 0.1% to 0.3%. NYSE stocks executed without the aid of the ETN market also inched up to 652M vs 596M shares from Thursdays low of 466M shares. This is the fifth straight session where volume was less than 800M shares with a high last week of just 736M shares day and the average is 627M shares, lowest since the week ended 12/30/11! 39 of the last 66 sessions have been less than 800M shares. 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 – 942M 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 TWELVE sessions less than 700M shares. 151 of the last 170 sessions have been less than the 12 month average (89%)!

Advance/Declines were negative for a third day: -1.2x vs -2.1x vs -1.3x vs +3.9x vs +2.4x on NYSE and -1.4x vs -2.5x vs -1.2x vs +2.7x vs +1.8x on Nasdaq. Breadth was similar: -2.2x vs -4.6x vs -2.7x vs +3.4x vs +1.7x on NYSE and -1.6x vs -3.9x vs -1.1x vs +3.4x vs +2x on Nasdaq.. New 52 week highs however rose to 308 vs 244 (7/3’s 504 is the high), as did new lows to 58 vs 43. The ratio is +5x vs +5.7x vs +14x vs +20x vs +12.5x. The S&P VIX climbed to 17.98 +.88…the low for 2012 is 13.66 on 3/16!

Here are the results of last 5 sessions: Dow -0.3% vs -1% vs -0.4% vs +0.6% vs -0.1%; Transports -0.3% vs -1% vs +0.2% vs +0.6% vs -0.1%; Dow Utilities -0.3% vs -0.4% vs -0.5% vs -0.3% vs +0.7%; S&P 500 -0.2% vs -0.9% vs -0.5% vs +0.6% vs +0.3%; Nasdaq Composite -0.2% vs -1.3% vs flat vs +0.8% vs +0.6% vs +3%; Nasdaq 100 -0.1% vs -1.3% vs +0.1% vs +0.8% vs +0.4%; Russell 2000 -0.3% vs -1.3% vs -0.1% vs +1.3% vs +1.2%; NYSE Financials -0.3% vs -1% vs -1.4% vs +0.7% vs +0.8% (KBW Banks -0.5% vs -0.8% vs -1.5% vs +0.4% vs +0.6%; Nasdaq Banks -0.6% vs -0.5% vs -0.5% vs +0.7% vs +0.8%). NYSE Financial Leaders: BAC -1.3% vs -2.1% vs -3%! vs +0.1% vs -1.6%; F-0.5% vs -0.7%. Not leaders, but… JPM +0.2% vs -4.5%!!! vs -4.2%!!! vs -0.3% vs +1.5%; C -0.9% vs -1.8% vs -3%! vs +0.7% vs flat; WFC +0.6% vs -0.2% vs -1% vs -0.2% vs flat; USB flat vs -0.9% vs -0.9% vs +0.4% vs +0.9%.

European stocks rising after two straight losing sessions, Asia weak for a third, ex-India: FTSE +0.8% vs -0.4% vs flat vs +0.6% vs +0.4%; CAC 40 +1% vs -0.2% vs -0.4% vs +0.2% vs +0.4%; DAX +1.2% vs flat vs -0.4% vs +0.8% vs +0.7%; Nikkei -0.4% vs -1.4% vs -0.7% vs -0.3% vs +0.7%; Hang Seng -0.2% vs -1.9% vs -0.1% vs +0.5% vs +1.5%; Korean KOSPI -0.4% vs -1.2% vs -0.9% vs +0.1% vs +0.9%; Indian Sensex UP 1.3% vs -0.7% vs -0.1% vs +0.4% vs +0.2%. U.S. stock futures higher but giving up half of overnight gains: DOW +37; SPX +2; NDQ +7.

Bonds pretty stable holding Monday’s modest gains: 10 yr 1.51% flat – record low 6/1 of 1.442%!; 30 yr 2.62% +5/64. Long TIP 0.41% +3/32. Record low yield of 0.347% on 6/1. The 5 yr TIP yields -1.18%; 10 yr -0.62%…both strong again! Bills 0.06% 1 month; 0.09% 3 months; 0.14% 6 months. Reverse Repo 0.23% vs 0.28%! 3 mo. Libor 0.46%, and 0.73% – steady. European problem sovereign 10 years, Germany-benchmark: 1.31% -7 bp’s; Italy 5.94% -13; Spain 6.76% -23!!!; Greece 24.71% -1; Portugal 9.86% +6; Ireland 5.96% +2.

Gold closed up but below $1600 for a second day and never touched it: 1589.10 +$10.20 with a lower high and lower low. It still lacks traction to sustain any rally. 6/22’s intraday low of $1555.60 was lowest since June 8th! The hit is $175 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 $1590, the 40 day and $1599, the 50 day, then $1667, the 200 day. It is now $1593.70 +$4.60. 5/2’s o/n low of $1526.70 was lowest since 12/29! Crude rose but not in comparison to recent losses closing at $85.99 +$1.44 on an INSIDE session. The intraday low on 6/28 of $77.28 was lowest since 10/5/11.RES at the 40 day (86.05), the 50 day (89.06), then the 200 day (95.96)…40/50 still plunging! First REAL 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 weaker overnight at $85.21 -.78.

Markets still indicating a near total lack of retail participation. Yesterday, every index was off 0.2%-0.3% EXCEPT the NDQ 100 which was off 0.1%. Ahem…that was due to the only significant advancing stock, Apple, which added 6.5 points to the index. Ex-Apple? -0.2%. Friday they ranged from -0.9% to -1.3% – most importantly it was the two Nasdaq indices AND the Russell 2000 that declined 1.3%!

It is going to be a long hot (record?) summer…best to stay cool, calm, and collected.

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

…as they say, everything in Washington is political. Yesterday was no exception as Obama shocked everyone by promoting extending the tax cuts for those making less than $250,000. (If you don’t understand the tax code recall that it is the marginal rate that affects what you pay…so it is actually a tax cut for all except on income above $250,000, but that would make it sound like he was benefitting the wealthy too, so he didn’t say it.

This time however, as the Dems gear up to do battle with the GOP over letting the Bush tax cuts expire, it was a…well…stupid thing to do! One has to ask just what he was thinking…besides being re-elected that is!

On the GOP side, while they say the economy (jobs) are the number one issue, they are once again preparing to do battle on healthcare…when will the insanity ever end? This too is stupid but necessary to placate the extreme right in the party.

Next president? U-pick-em! Who knows how it will all end but we, the people, will be short-changed by either one of the contenders as neither has a plan…if they did they would ‘splain it to us.

The House Ethics Committee cleaned up rules on insider trading for Congress…sort of. They can still act on information they obtain from witnesses who are top corporate officials, etc. If you or I did that it would be trading on insider information.

In the wake of Enron, Congress enacted Sarbanes-Oxley and applied it to the top 200 (?) companies…far more than necessary. It raised costs by not allowing an auditor to also act as consultant (bundling), which was essential to keeping costs down for smaller businesses, where it would be foolish or impossible to engage in Enron-like activities. To date, no CEO has been prosecuted under S-O despite the biggest financial crisis in 80+ years. Boy do they know how to send a message! Likely candidates? Lehman Brothers CEO Dick Fuld, Citi Chairman Vikram Pandit, JPM’s Jamie Dimon, and most definitely Jon Corzine of MF Global. Not enough evidence to convict? Who cares??? Shame them!

Yesterday, the House put finishing touches (no pun intended) on derivatives regulation by setting forth rules…BUT they failed to define just what a ‘swap’ is! How can you regulate something without making it clear what it is that you are regulating? Inquiring minds want to know…f’get about it!

Moving lower in the pecking order but higher in power and influence.

Banks – ah banks! Those who created the financial crisis…you didn’t really believe it was that itinerant farm worker from Bakersfield who got a $300,000 mortgage, did you?

As in the last statement though, define a bank! It used to be an institution that takes deposits (which are insured) and makes loans. That’s it, pure and simple. But now Goldman Sachs and Morgan Stanley are banks…Merrill Lynch is owned by a bank. If they hadn’t gone under Bear, Stearns and Lehman would be banks….Wachovia would have ended up just the way it did.  When the made Goldamn, a bank CEO Lloyd Blankfein said they would never take deposits OR make loans…but it was nice to be a bank and come under the wing of the Federal Reserve! So let’s dig deeper:

*The Fed under the stalwart leadership of Sir Alan of Greenspan failed to regulate mortgage companies although that was within their power (even if not, Paul Volcker would have done it and said, “if you don’t like it, take me to court!”). He also failed to heed the advice of Dallas Fed president Ed Gramlich to stop the growth of sub-prime mortgages. He also accomplished a trifecta: failing to recognize not one but THREE bubbles!

*The NY Fed which directly controls the financial sector. While they were deliberating making Goldman  and Morgan Stanley banks, the chairman, Stephen Friedman, was still a director of Goldamn…and was accumulating stock at the lows! Did he suffer the same fate as Martha Stewart, whose crime was a pittance (she was not convicted of insider trading but lying to investigators)? Nope, he had to get rid of the stock and resign as chairman…talk about being slapped hard…or not!

*Then came MF Global who became a primary government securities dealer of the Fed. Not only was Senator/Governor Jon Corzine a former chairman of Goldamn, but he misrepresented the financial condition. When it failed, people were appalled that the Fed didn’t see it coming. Ah but the rules were changed a few years back: not only did the Fed no longer examine the books of the primary dealers, they said it was not their responsibility. If that satisfies you, then you don’t understand banking or the Fed!

*Now, Jamie Dimon is in the hot seat, and was also on the board when they debated selling Bear, Stearns to JPM of which he was/is chairman/CEO, but he remains on the board even as his bank is being investigated! Hmmm…he is acting in a regulatory capacity when he is leading the charge against more regulation and while defending his bank and his actions as CEO!

*Wait it gets better and thanks to Simon Johnson for pointing this out: Fed rules specifically state that the chairman of the NY Fed MUST have extensive knowledge of banking, yet the chairman is a professor and dean of a business school. He is an economist but has never written even one paper on banking. This is like Jamie Dimon’s board where the outside directors know about as much about banking as you do.

Want more? Write them yourself…or send your nominations to TB for review.

(Please forgive any typo’s that say ‘Goldamn’ when TB meant to say ‘Goldman’)

May you have an exciting day!

TB

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