7/17/12…factcheck, Factcheck, FACTCHECK!!!

From Keep Calm and Carry On: “Hurrying and worrying are not the same as strength.” – Nigerian proverb…aren’t these the guys who have all those internet scams? TB

“I have made this letter longer, because I have not had the time to make it shorter.” - Blaise Pascal…TB took solace in this quote.
 
Bloomberg Quote of the Day: “Education is a progressive discovery of our own ignorance.” – Will Durant

Bloomberg Top Stories:

*Goldman Sachs Revenue Declines Less-Than-Expected 11% as Revenue Declines – ?

*HSBC Probe Shows U.K. Bank Allowed Money Laundering, Dodged Iran Sanctions – !

*U.S. Stock Futures Gain as Dollar Drops on Bernanke; French Bonds Advance

*German Investor Confidence Declines to Lowest Level Since January – not good!

*Coca-Cola Profit Tops Analysts’ Estimates on Higher North American Prices

*CMBS Leverage Reaches Most Since 2007 as Standards Loosen – LOOSEN???

*Euro Seen at $1.15 as ECB Rate Cut Drags Bund Yields Down – Barron’s: 1:1?

*China Economic Slowdown Stymies Wen Plan ot Rein in Shadow-Banking Risks

*Miller Proves Treasury Risk Maven on Volcker Rule to Fannie-Freddie Remake – !!!

*Clashes in Syrian Capital Damascus Bring Battle Closer to Seat of Power

*U.S. Envoy Vows Probe After Navy Gunfire Killed Indian Fisherman Off Dubai

*Romney May Deflect Bain-Related Attacks With Early Choice on Running Mate

*North Korea Promotes General Hyon in Biggest Power Shift Under Kim Jong-Un

*Paternoville Changed to Nittanyville Outside Penn State Stadium

Volume plunged to the lowest level since July 9, 2.87B vs 3.2B shares. Since 7/29’s QE surge of 4.56B (above average) it has traded between 2.06B and 3.65B shares – 3B average which is pathetic). NYSE stocks executed without the aid of the ETN market also dropped to 602M vs 683M shares – as stocks turned down again after just one ‘up’ session in eight! This is the 10th straight session where volume was less than 800M. This is the second lowest volume since July ! and third lowest of the year! The average for 2012 is just 811M shares and since 7/2 just 667M shares, levels not seen since week ended 12/30/11! 44 of the last 71 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 – 936M is 12 month average. Since 11/1 there have been just 14, 1B share days…ten in 2012! Since 2/6 there have been FOURTEEN sessions less than 700M shares. 156 of the last 175 sessions have been less than the 12 mo average (89%)!

Advance/Declines were negative again and have been positive only twice in eight sessions. Here are last five: -1.3x vs +4.9x vs -1.7x vs +1.1x vs -2x on NYSE and -1.8x vs +2.8x vs -1.5x vs 1:1 vs -2x on Nasdaq. Breadth was similar: -1.6x vs +7.4x vs -2.7x vs -1.1x vs -4.6x on NYSE and -1.4x vs +3x vs -2.6x vs -1.9x vs -3.7x on Nasdaq. Just a one day wonder! Don’t forget Friday’s options expiry! New 52 week highs dipped to 302 vs 360 (7/3’s 504 is the high), while new lows rose to 84 vs 62. The ratio is +3.6x vs +6x vs +1.3x vs +2.3x vs +3.8x vs +5x vs +5.7x vs +14x vs +20x. The S&P VIX rose modestly to : 17.11 +.37.

Here are the results of last 5 sessions – 8:1 down: Dow -0.4% vs +1.6% vs -0.3% vs -0.4% vs -0.7%; Transports -0.8% vs +2.2%! vs -0.5% vs -0.2% vs -1.3%!; Dow Utilities -0.3% vs +1% vs flat vs +0.5% vs +0.2%; S&P 500 -0.2% vs +1.7% vs -0.5% vs flat vs -0.8%; Nasdaq Composite -0.4% vs +1.5% vs -0.8% vs -0.5% vs -1%; Nasdaq 100 -0.3% vs +1.6% vs -1% vs -0.6% vs -1%; Russell 2000 -0.5% vs +1.4% vs -0.3% vs -0.4% vs -1.2%; NYSE Financials -0.3% vs +2%!!! vs -1% vs +0.7% vs -0.8% (KBW Banks -0.1% vs  +3.3%! vs -1.4% vs +1.2% vs -0.9%; Nasdaq Banks -0.6% vs +2.1%! vs -0.4% vs +0.8% vs -0.4%). NYSE Financial Leaders: BAC -0.1% vs +4.6%!!! vs -2%! vs +2%! vs -1.5% vs -1.3% vs -2.1% vs -3%!; JPM -2.7% vs +6%!!! vs -1.6% vs +1% vs +0.9% vs +0.2% vs -4.5%!!! vs -4.2%!!!;  C UP 0.6% vs +5.4%!!! vs -2.3% vs flat vs -0.9% vs -0.9% vs -1.8%. Not leaders, but…WFC +0.3% vs +1.3% vs -1.3% vs -2% vs -0.9% vs +0.6%; USB +0.2% vs +2.2%! vs -0.2% vs +1.2% vs -0.4% vs flat. If banks are doing so ‘well,’ where are the dividend increases?

European stocks mixed, Asia …Germany up on WEAK investor confidence? FTSE -0.3% vs -0.1% vs +0.4% vs -1.1% vs -0.1%; CAC 40 +0.5% vs -0.5% vs +0.5% vs -0.5% vs -0.3%; DAX +0.5%??? vs -0.3% vs +1% vs -0.8% vs +0.5%; Nikkei +0.4% vs +0.1% vs +0.1% vs -1.5%! vs -0.1% vs -0.4%; Hang Seng +1.8% vs +0.2% vs +0.4% vs -2%!!! vs +0.1%; Korean KOSPI +0.2% vs +0.3% vs +1.5% vs -2.2%!!! vs -0.2%; Indian Sensex flat vs -0.6% vs -0.1% vs -1.5%! vs -0.7%. U.S. stock futures up on earnings reports but slipping: DOW +37 vs +67; SPX +5 vs +7.50; NDQ +10.25 vs +15.

Bonds slightly weaker but remain strong: 10 yr 1.49% -1/8 – record low 6/1 of 1.442%!; 30 yr 2.58% -7/16. Long TIP 0.35% -3/8 A new record low of 0.33% taking out 0.347% on 6/1. The 5 yr TIP yields -1.23%!; 10 yr -0.65%. Bills 0.06% 1 month!!!; 0.09% 3 months; 0.14% 6 months. Reverse Repo 0.29%. 3 mo. Libor 0.46%, and 0.73% – still down without rounding! European problem sovereign 10 years, Germany-benchmark: 1.25% +2 bp’s; Italy 6.01% -7; Spain 6.71% -2; Greece 23.65% -31?!?; Portugal 10.11% +7; Ireland 6.01% +1.

Gold closed slightly weaker on an ‘inside’ session and failed to reach $1600 for a 7th day, closing 1591.60 -.40. 7/12’s intraday low of $1547.60 is lowest since June 1. The hit is $172 since 2/28! 2/28’s $1792.70 intraday high not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. Res is $1592, the 40 day and $1591, the 50 day – crossing!, then $1665, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Overnight it is $1592.1 +.50. Crude rose again to $88.43 +$1.33. The intraday low on 6/28 of $77.28 was lowest since 10/5/11. SUP at the 40 day (85.01), and now the 50 day (87.02), then the 200 day (96.12)…40/50 still falling! 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 now $88.77 +.34.

Friday’s rally was a one-day wonder most likely due to the 6% jump in JPMorgan on loss being better than feared and Wells Fargo. A rally led by financials is not much of a rally, particularly when it spells ‘relief’ and is just ahead of options expiry. Yesterday, Citi was better but the bank is still in miserable condition for Basel III unlike JPM and WFC. TB can’t believe the press had the nerve to call Friday’s rally of bank stocks: investor buying! How about specs? How about covering shorts? How about…you get it.

So we now have just one up day in the past eight and volume is at lowest since July 2. NYSE TRUE volume (ex-ETN trades), is ridiculously low…typical of summer doldrums but at extremes, while even the fast-trading freaks can’t make total volume look good.

Still bullish? Read the headlines above and stay sidelined!

. . .  – – –  . . . (SOS!)  . . .   – – –  . . .  (SOS!) . . .   – – –  . . .  (SOS!) . . .   – – –  . . .  (SOS!)  Note exclamation points added to the SOS’s! It’s ramping up!

…TB is always telling you to FACTCHECK…particularly those of you who send him extremist posts. TB went to factcheck.org over the Romney/Bain issue and as all other reputable sources have reported, yes he held the titles, yes he was CEO/Managing Director etc. but NO he did not run the firm. Memo to Obama: get off it! You made your point, scored big, but it is out of control…your team’s insinuation that a crime was committed is an outright lie! BUT it may now force the Mittster to release more financial information. Ed Gillespie’s ridiculous comment that he is only following the precedent set by McCain and Kerry of two years is also a lie. Kerry originally offered two years but eventually provided five…that is the lowest number by a candidate since Mitt’s dad offered 12. In light of the Bain issue he should do the same. Of course, he doesn’t want to because people can’t get their hands around those kind of numbers…can they? Can you?

But Obama has nothing over the GOP on lies such as first blaming Obama for the deficits, most of which came on Dubya’s watch at the end of his term but not his fault, although the tax cuts which favored the top 2% and caused the wealth gap to explode, did! Upset over the accusations against Romney? Where were you when the GOP extremists were challenging Obama’s citizenship…yet no one from the GOP side would stand up and call it what it was…a damnable lie! Romney even met with Trump while he was still blathering about it.

Here is an interesting one from factcheck.org: “The ACA (Obamacare) is the largest tax ever levied on the American people. That gets a partially correct: yes, in current dollars that is a true statement, but in constant dollars the 1982 Reagan tax hike is grossly higher! In terms of economic impact the largest was the 1945 tax hike. Yep, figures lie and liars figure…what would our politicians and wannabe’s do without them?

How could there be discussion of taxes on every talk show this weekend without even ONE moderator or panelist pointing out that Obama’s proposal is to retain the Bush tax cuts for those earning less than $250,000? That means if you are making $260,000 you are taxed at the higher marginal rate on just $10,000….NOT the entire $260,000. Still so opposed to it? Then fine, let the Bush tax cuts expire and everyone will pay higher taxes. Sounds like King Solomon and the two women fighting over the baby, doesn’t it?

THEN the GOP claims that it will hurt small businesses…perhaps 2% of those also. Why? Because a small business is one with less than $5 million! If you call that a small business you are not thinking the same as TB…that is one reason why small businesses never gain any traction while big business gets all the benefits that Congress passes. The lobbying money for small business obviously comes from the larger members of this class. Get real! The GOP has truly become the business of big business…TB doesn’t know what to call the Dems!

The GOP continues to say that this is the worst jobs recovery since WWII and puts the blame squarely on Obama…even though they slashed his stimulus and have balked at everything he has tried since Obamacare passed under a Dem Congress. But statistics show that following a financial crisis it takes at least four and a half years for employment to improve…and perhaps longer as we saw following the 1929 crash which only ended with WWII. Also, the economy was WEAK prior to the financial crisis and bank stocks peaked more than a year before the actual event! Take out the financial sector and growth was stagnant in 2006-2008.

Why do we continue to focus on ‘since 1945’ when that is exactly why we had a subprime debacle? We need to look back to the Great Depression for answers and tips on how to and how not to proceed.

Oh, and on the ACA…several GOP governors jumped in to say they would not sign up for the Medicaid provision. The latest was the outspoken Rick Perry of Texas (the one who was going to eliminated several departments but couldn’t remember which ones). In other words, on the proposition that they were doing this to save the country money and not expose their citizens to taxation (?) they will not be receiving payments of 90% of the cost initially and while declining, that will be years away. Louisiana Governor, Bobby Jindal was very outspoken on this despite the fact that his state ranks 49th in healthcare! For the record, Minnesota bested Wisconsin this year for first place! It sure seems that this is going to bite them and the party in the next election and when they run for re-election because although a majority of voters polled reject Obamacare they are very strong for some of its provisions. So while the GOP accuses Obama of putting nothing on the table, they offer nothing and in fact have voted in the House 33 times now to repeal that knowing it won’t get past the Senate. On Meet the Press Sunday, they figured that in total this vote has consumed over two weeks of congressional time…at a cost of millions per day. What say you?

There is a Senate bill that would require any donation to a Superpac be made public within thirty days. The Supreme Court, in Citizens United voted unanimously that this should be the case – separate from the decision. Will it survive a GOP filibuster? Why can’t both sides see that this can bite either side and shouldn’t corporations who support these groups be held accountable to the voters and their shareholders…we are talking hundreds of thousand to millions per donation here! Wake up America!

As the Barron’s editorial stated this week, we have two choices: democrats who tax and spend heavily or republicans who don’t tax and spend heavily. You pick ‘em.

The first blunder of the GOP was their vow to make Obama a one-term president as soon as he was elected. The second was ‘anyone but Obama’ and the third was the wackiest list of candidates one could imagine all trying to be more to the right of the others, except Romney. Can he pull it together? If not, it will be the first time a president has been reelected with an unemployment rate above 7.4%! That will be hard to overcome, so they keep throwing money at it and the marginal utility of money declines at some point.

TB will close with ‘lovable Joe Pa’…Joseph Paterno. What a guy! Well, he won big and did well for Penn State until he failed to stop one of his own assistants from molesting young boys in his own locker room! What were they even doing there in the first place? But Joe Pa told superiors…and they failed to act…not his fault. Not his fault? Would you continue to keep a child molester working for you…especially with young adults? Is winning at any cost all that matters to our colleges and universities? Apparently so. Also, his humble home provided cover while he also owned a $3.5 million mansion at the Jersey Shore. What have we become? Jaded at every level from government to business to college sports. Kind of reminds you of Rome before the fall, doesn’t it?

Have a great day!

TB

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