8/14…change

Bloomberg Quote of the Day: “Television – a medium. So called because it is neither rare nor well done.” – Ernie Kovaks – you have to love that one!

TB’s Quotes of the Day:

 

“Today, as then, the biggest threat to Western civilization is posed not by other civilizations, but by our own pusillanimity – and by the historical ignorance that feeds it.” – Niall Ferguson…think about this statement.

 

“A democracy cannot survive as a permanent form of government. It can last only until its citizens discover that they can vote themselves largesse from the public treasury. From that moment on, the majority (who vote) will vote for the candidates promising the greatest benefits from the public purse, with the result that a democracy will always collapse from loose fiscal policies.” – Thomas Babington McCaulay…depending on your persuasion you will think that he agrees with you…in fact he challenges both! Aren’t voting expenditures without raising taxes just as evil?

Bloomberg Top Stories:

*U.S. Retail Sales Increase More Than Forecast in First Gain in Four Months – a start!

*Stocks, Euro Rise as German Growth, U.S. Retail Sales Data Boost Optimism –achtung!

*Wholesale Prices in U.S. Rose 0.3% Last Month; Core Inflation Climbed 0.4%!

*JPMorgan to House Client’s Excess Collateral at Bank After Futures Losses

*Libor Scandal Neuters BBA as Incoming CEO Set to Lose Benchmark Oversight!!!

*Chesapeake Energy Uses Asset Sales to Plug Cash Drain – one way to do it! Ugh!

*Italians Say Goodbye to Ferraris as Austerity Smothers La Dolce Vita

*Hedge Funds on Hold With $74 Billion as Draghi Delays European Fire Sales

*Fracking Hazards Obscured as Companies Fail to Disclose Wells as Promised

*Ryan Helped Derail Simpson-Bowles Deficit Paln Romney Now Touts as Model -!!!

*Energy Views of Ryan Seen Easing Conservative Concerns Over Romney Record – ?

A modestly negative day in which only two indices barely made positive while Dow Utilities were the worst performer, -0.4%?, then the  Dow and Russell 2000, -0.3%. Volume plunged again to 2.48B vs 2.78B vs 3.07B vs 3.21B vs 3.64B vs 3.01B shares vs 3.75B vs  4.12B shares vs 4.34B! The range since 7/29’s QE surge of 4.56B (above average) remains 2.06B-4.28B shares with just 2 days above 4B! Today’s was the lowest since 7/3 2.06B, lowest of the year!  NYSE stocks executed without the aid of the ETN market also plunged only missing the lowest volume of the year by 18M shares!…and that was on a HALF DAY SESSION!: 484M vs 566M vs 576M vs 637M vs 728M vs 647M vs 754M vs 826M vs 1.03B! Just 7 of the last 30 sessions have surpassed 800M shares. NYSE volume is running just 20% of total NYSE volume and reached just 24% on the big volume day that was the start of the demise on huge volume. Last week it averaged a pathetic 631M shares! There is NO retail! The average for 2012 is just 804M shares and since 6/29 just 727M shares, levels not seen since week ended 12/30/11! 57 of the last 91 sessions have been less than 800M shares. Since 2/29 there have been just 19 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B (4.85B including ETNs) and just 17 have been above 900M – 888M is now the 12 month average. Since 11/1 there have been just 16, 1B share days…12 in 2012! Since 2/6 there have now been 21 sessions less than 700M shares. 172 of the last 183 sessions have been less than the 12 mo ave (89%)!

Advance/Declines were weak at -1.7x vs +1.2x vs +1.3x vs +1.1x vs +1.8x on NYSE and -1.3x vs -1.3x vs +1.2x vs -1.3x vs +1.8x on Nasdaq. Breadth was also weak: -1.8x vs +1.6x vs +1.8x vs +1.7x vs +2.4x on NYSE and -1.2x vs 1:1 vs +1.5x vs +1.6x vs +3.9x on Nasdaq. New 52 week highs plunged to 131 vs 170 (7/3’s 504 is the high), while new lows rose to 61 vs 52. The ratio declined to a weak +2.6x vs +3.3x vs +4x vs +4x vs +5.6x. The S&P VIX plunged again to 13.70 -1.04. 7/15’s 20.47 was highest since June 15th. 13.66 set on 3/16 is the low for the year! This can only be ascribe to huge call buying vs puts…which could spark a rally ahead of options expiry a week from Friday.

Here are the results of last 5 sessions: Dow -0.3% vs +0.3% vs -0.1% vs +0.1% vs +0.4%; Transports flat vs +0.3% vs -0.5% vs -0.3% vs +0.2%;Dow Utilities -0.4% vs +0.3% vs +0.1% vs -0.2% vs -0.1%; S&P 500 -0.1% vs +0.2% vs flat vs +0.1% vs +0.5% vs +0.2%; Nasdaq Composite +0.1% vs +0.3% vs -0.2% vs +0.9% vs +0.7%; Nasdaq 100 +0.1% vs +0.2% vs -0.1% vs +0.9% vs +0.7%; Russell 2000 -0.3% vs -0.2% vs +0.3% vs -0.2% vs +0.9%; NYSE Financials -0.1% vs +0.2% vs -0.1% vs -0.1% vs +0.6% (KBW Banks -0.1% vs +0.1% vs +0.1% vs -0.1% vs +0.8%; Nasdaq Banks +0.1% vs -0.4%! vs -0.2% vs flat vs +0.7%). NYSE Financial Leaders: BAC -0.3% vs +0.3% vs +0.3% vs flat vs +0.4%; GE -0.5%. Not leaders, but…C -0.4% vs +0.1% vs flat for two days vs +1%; JPM +0.6% vs +0.1% vs -0.6% vs +0.4% vs +2%; WFC +0.4% vs flat for two days vs -0.4% vs -0.1%; USB +0.1% vs +0.3% vs +0.1% vs -0.2% vs +0.2%; GS +0.6% vs -0.6% vs +1% vs +0.2% vs +1.2%; MS -0.4% vs -0.7% vs +1% vs +0.5% vs +2.5%; UBS -0.7% vs +0.5% vs -0.4% vs -0.8% vs +1.7%.

Global stocks rallying…the reason? You pick ‘em!.  FTSE +0.3% vs -0.3% vs -0.2% vs -0.4% vs flat; CAC 40 +0.2% vs -0.9% vs -0.4% vs -0.7% vs +0.9%; DAX +0.8% vs -0.8% vs -0.3% vs -0.5% vs +0.6%;Nikkei +0.6% vs -1% vs -0.8% vs +0.9% vs +0.9%; Hang Seng +1.1%! vs -0.3% vs +1.1% vs +0.4% vs +1.7%; Korean KOSPI +1.3%! vs +0.3% vs +2%! vs +0.9% vs +0.1%;Indian Sensex +0.5% vs flat vs -0.2% vs flat vs +1.1%. U.S. stock futures also up: DOW +46; SPX +5.60; NDQ +11.25.

Bonds continue to trade weak but within ranges…watch 10 yr for a break of 1.72%! 10 yr 1.70% -5/16 – record low of 1.40%; 30 yr 2.80% -15/16. Long TIP 0.47% -11/16. 0.28% is record low!The 5 yr TIP yields -1.23%; 10 yr -0.59%Bills 0.09% 1 month; 0.10% 3 months; 0.14% 6 months. Reverse Repo 0.22%. 3 mo. Libor 0.44%, and 6 mo. 0.72% – both trading below 0.45% and 0.73%. European problem sovereign 10 years, Germany-benchmark 1.44% +4; Italy 5.82% -6; Spain 6.68% -11; Greece 23.58% -4; Portugal 9.56% -1; Ireland 5.83% -1.

Gold holding above $1600, but took a dive again closing at the low of 1612.60 -$10.20! 7/12’s intraday low of $1547.60 was lowest since June 1. The hit is $157 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. SUP at $1599, the 40 day and $1603, RES at  $1662, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1612.30 -.30. Crude lackluster yet again. It closed at $92.73 -.14. SUP at the 40 day (87.27), and the 50 day (86.58), both still rising! RES at the 200 day (96.66). First SUP is $89.17, the 11/1/11 low, SUP $92.52-54, the lows of 12/16.

Advance/declines AND breadth were weak! The best indicator remains VOLUME which plunged yet again to 2.48B shares barely missing the 7/3 low of 2.06B – on a half day, while NYSE trades executed on the floor fell to 484M vs 576M, second lowest of the year following 7/3’s 466M! The ratio of REAL trades to total NYSE volume  remains at just 20%! The Dow and S&P were little changed for a fifth session Attesting to the high freak trading is this: for an UNHEARD OF SIXTH straight session, both Nasdaq indices rose by 0.1%/0.2% vs +0.1% vs +0.2-0.3% vs -0.1-0.2% vs  +0.9% vs +0.7%! The Russell had been in this grouping but fell 0.3% and 0.2% Friday – breaking ranks which is usually a sign of bad things to come. Note that the VIX is within .06 of the low for the year…most likely caused by call buying on S&P weakness…this could foretell a rally before options expiry on Friday 8/17…but not a lasting one!

Financials continue to lose their momentum and even the small percentage gains make the miniscule price changes of less than 10 cents a share, well…meaningless!

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

…boomers will remember this great song by the Chambers Brothers that started with a clock ticking followed by ‘time…time’ in syncopation:

Time has come today
Young hearts can go that way
Can’t put it off another way
I don’t care what others say
They say we don’t listen anyway
Time has come today – hey

The rules have changed today – hey
I have no place to stay – hey
Thinking about the subway – hey
The love has flown away – hey
My tears have come and gone – hey
Oh my lord I have to roam – hey
I have no home – hey
I have no home – hey

Now the time has come – time
No place to run – time
I might get burned up by the sun – time
But I had my fun – time

I’ve been loved and put aside – time
I’ve been crushed by tumbling tide – time
And my soul has been psychedelicized – time – time

Now the time has come – time
There are things to realize – time
Time has come today – time
Time has come today – time
Time

Finally, both liberals and conservatives, socialists and fascists of this country have something to get excited about. The choice of Paul Ryan as Romney’s running mate brings us to loggerheads over just what change we want. Please read the quotes at the beginning of today’s column…they are important!

It is now very clear that the GOP path will be to draconian spending cuts without increasing taxes…Romney too made that clear when he said he will not allow any tax increases for the wealthiest taxpayers…this includes removing loopholes like the carried interest provision which taxes hedge fund operators just 15% on their millions.

It is also clear that if they prevail huge cuts will be made to social safety net provisions such as social security and medicare at a time when millions are out of work and many who had planned on their homes supplementing their retirement now find themselves in serious trouble…and many of those had helped their kids with college and paying off student loans…not reckless spending. More kids than ever are graduating and returning home to live with their parents…the unthinkable a few years back!

Romney and Ryan talk of sacrifice but do not expect any from the wealthiest – many of whom insist that they made it on their own…false! No one makes it on their own…it is the opportunity of upward mobility that they were provided. How many have that today?

They also talk of U.S. corporations being the most heavily taxed in the world. Tax rate perhaps? Effective tax rate – no way! GE hasn’t paid a penny of taxes in decades. Romney says let them repatriate the money, without taxes, to spend in our economy. Do you honestly believe that will happen? Heck, even Romney’s wealth is stored offshore.

The entire tax issue is misrepresented by both sides. Obama says he will only raise taxes on those earning more than $250,000. Yet the effective tax rate for the top 1% is just 19% while they control over 90% of the wealth! Also, Obama would be wise to avoid the class warfare label and tell it like it is: ALL incomes up to $250,000 would retain the rates of the Bush tax cuts…if you make $275,000 you would only pay more on the last $25,000.

Instead, he is making a statement and yes it is divisive. Neither candidate has the solutions and neither is willing to admit it. The object here is to win by whatever means necessary…and that means there is only one ultimate winner: Wall Street. They will get what they want from either candidate and take us to the brink once again…perhaps very soon…only this time even Helicopter Ben won’t be able to save us. He has put the last patch on the lifeboat…unless he wants to try deflation!

A Bloomberg article today points out that Paul Ryan was one of three GOP representatives and led a group of eight to derail Simpson-Bowles…that puts him in the group that tried to shut down the government over the debt ceiling, reach an impasse on budget negotiations and place us squarely we are today…that is change???

That is why TB sees absolutely no choice but to vote for Obama…the GOP will then have control of both houses (most likely) and be offset by a Dem president. But the most compelling argument for Obama is that he will be here for just four years. At that point we will have to have a real choice between candidates…or at least we had better!

The time has come today…for change! But not in the usual way…in the way we think! Sometimes the shortest distance between two points is not a straight line but a wavy one.

Have a great day!

TB

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