8/17/12..boom, gloom, and doom plus Mitt’s taxes

(new format: today marks a change. TB has always felt that his comments are secondary to the market summaries…you know the ones that give you more than one day so you can see what the market is really doing? Most of you never read them anyway but skip (if you are still there), down to the commentary. Sooo, to save you keystrokes or paper if you print it out, it is moving to the top – right after the top stories and quotes. Why now? Thanks to Mitt Romney it is time for us to all act like Americans and think about the future and what our tax code has done to make us pay little yet feel magnanimous. TB)

Bloomberg Quote of the Day: “One’s destination is never a place but rather a way of looking at things.” – Henry Miller

Bloomberg Top Stories:

*Stocks Rise as Spanish Bonds Extend Rally; Platinum Increases, Oil Slides – YAWN!!!

*London Financial-Industry Firings Pile UP as New York Seen Adding Workers

*China Regulator Said to Order Action by Banks as Developer Loans Sour – unlike U.S.!

*Euro-Area Exports Rise for Second Month on Shipments From Germany – oh boy!

*Spanish Two-Year Note Yield Might Drop to 2% as ECB Buys Bonds, HSBC Says

*United Sees $100,000-a-Plane Savings as GPS Beats FAA’s World War II Radar – !!!

*Best Buy Founder Said to Mull Bigger Debtload Than Average for LBO – good luck!

*NYC’s 15 Central Park West Fuels Super-Luxury Condo Boom After Weill Sale

*South African Death Toll 34 After Police Shoot at Striking Platinum Workers – !!!

*Romney Tax Plan Math Gets Easier When Tough-to-Kill Breaks Are Considered

*Arctic Ocean Ice Cover Heads for Record Low as Melting Exceeds Forecasts

…Marc Faber, editor of the Boom, Gloom and Doom Report, has now stated that he is 100% confident there will be a major recession next year! Is that because he is forecasting a GOP win of both houses and the oval office? Meanwhile, Mitt says proudly he paid “13-something percent” taxes in each of the last ten years. Huzzah! Or Chutzpah?

First, let TB state that there is nothing wrong with Mitt paying 13%…he did it legally! Then Ann, bless her heart, said that since before he ran for governor their assets have been in a blind trust. She said she will be interested in seeing what is really in it. Of course she knows she won’t but don’t think for one minute that those running the trust don’t have the Romney’s best interests at heart…offshore accounts, minimizing taxes, generation skipping…get the picture?

TB thinks Warren Buffett, who said he pays a smaller percentage then his secretary, pays a higher rate…not much but higher. TB would gladly pay an effective 13% – note effective not the 35% marginal rate that the wealthy love to quote. Shame on Obama for not truthfully saying that ‘all Americans will not pay more on the first $250,000 of income.’ Instead, he chose to say ‘only those making more than $250,000 will pay more.’ This is no small point…his way promotes class warfare, because it does not make good press to cut taxes up to a certain level.

Mitt on the other hand says that the wealthy are already paying too much in taxes and he will cut them for ALL Americans…just not so much for those who need the money to survive. He also said that his first official act will be to kill Obamacare. Note to Mitt: you can’t do that and while you are correct that a majority opposes the act, majorities favor many of the provisions…so why not get real and fix it instead of knocking it with no solution. This is how many of the wealthiest Americans think these days. Gosh with Obamacare he might be paying as much as 14% in taxes…what about his poor kids???

TB did not plan to write about the above this morning, rather, he was fascinated at a presentation on NPR by Lawrence Lessing, discussing his book, Republic Lost – How Money Corrupts Congress – and a plan to stop it. It is on campaign reform and not about overturning Citizens United but making it moot and by getting Congress to change the rules whereby campaigns would be funded by the government thus negating the effect of big corporations etc. He did not see this as an easy task, but in a non-partisan speech he…

*said that Obama won election by pledging change. He was going to change the budget process, yet when the author (TB is still trying to find his name and will report later), saw a high member of his team and asked him what three steps they would use to do this, the guy indicated they had no plan. Then, when the first budget was presented to him for approval it had 9,000 earmarks! Obama said he would veto it until lobbyists and his own party said if he did it he would not get anything passed in his first – and only – term! Not only was that his last attempt at change but after creating the Simpson-Bowles committee, he not only would not endorse their findings but was conveniently out of the country the day they delivered it…to Joe Biden! Talk about a lack of leadership!

*when Clinton was elected, the second biggest contributor to his campaign was Arnold Hiatt, founder of Stride Rite Shoes. At a dinner to thank the major contributors, he stood up and told Clinton that he needs to stop talking to the ‘fat cats’ at cocktail parties and get out and talk to the people about the real problems. The others attending were mortified. Then Clinton proceeded to dress him down and totally humiliate him for making that statement…Wikipedia has the story under Arnold Hiatt!

*as for political contributions…the top 9,000 contributors accounted for 95% of the total! In other words, just 9,000 people have the power to override the rest of us and win an election. Also, thanks to the U.S. Senate, the SuperPacs do not have to disclose their identity or the amount they gave. Seems to TB that as a shareholder I deserve to know where a CEO is spending the money, right?

Hopefully you will see that this is not a partisan comment. Our government is broken and sick…sick by a sick people who stand idly by and let the financial services (sic) industry benefit at our expense…it won’t get better under Romney, in fact probably worse. Obama won’t be much better but at least in four years BOTH parties will be forced to offer a choice…or not! As for Lessing, he started out as a conservative interning for Antonin Scalia, so he sees both sides of the picture. It’s your country, you decide.

Another week shot…have a terrific weekend!

TB

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

 A positive day except for utilities which suffered along with bonds. Volume was a bit better but remains weak at 3.1B vs 2.6B vs 2.9B vs 2.48B vs 2.78B vs 3.07B vs 3.21B vs 3.64B. 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! NYSE stocks executed without the aid of the ETN market rose but remain below 600M and so far this week have averaged just 536M shares: 596M vs 498M vs 567M vs 484M vs 566M vs 576M vs 637M vs 728M vs 647M vs 754M vs 826M vs 1.03B! Since 6/29 just 7 sessions have surpassed 800M shares. NYSE volume is running just 20% of total NYSE 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! 60 of the last 94 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 24 sessions less than 700M shares. 175 of the last 186 sessions have been less than the 12 mo ave (94%)!

Advance/Declines were positive at +2.6x vs +1.7x vs -1.1x vs -1.7x vs +1.2x on NYSE and +2.3x vs +2.3x vs -1.6x vs -1.3x vs -1.3x on Nasdaq. Breadth was similar: +3.2x vs +1.7x vs -1.1x vs -1.8x vs +1.6x on NYSE and +2.2x vs +1.8x vs -1.6x vs -1.2x vs 1:1 on Nasdaq. New 52 week highs rose sharply to 243 vs 161 (7/3’s 504 is the high), while new lows plunged to 38 vs 67. The ratio rose to +6.4x vs +2.4x vs +2.9x vs +2.6x vs +3.3x. The S&P VIX felll again to 14.29 -.34. On Monday it was 13.70 just .04 from the low of the year!

Here are the results of last 5 sessions: Dow +0.7% vs -0.1% vs flat vs -0.3% vs +0.3%; Transports +0.5% vs +1.2%! vs +0.4% vs flat vs +0.3%;Dow Utilities -0.3% vs -0.5% vs +0.1% vs -0.4% vs +0.3%; S&P 500 +0.7% vs +0.1% vs flat vs -0.1% vs +0.2%; Nasdaq Composite +1% vs +0.1% vs -0.2% vs +0.1% vs +0.3%; Nasdaq 100 +1.2% vs +0.5% vs flat vs +0.1% vs +0.2%; Russell 2000 +1.1% vs +0.3% vs -0.3% vs -0.3% vs -0.2%; NYSE Financials +0.9% vs +0.2% vs flat vs -0.1% vs +0.2% (KBW Banks +0.5% vs +0.4% vs flat vs -0.1% vs +0.1%; Nasdaq Banks +0.5% vs +0.8% vs -0.3% vs +0.1% vs -0.4%). NYSE Financial Leaders: BAC +0.8% vs +0.9% vs +0.8% vs -0.3% vs +0.3%; GE +0.45 vs flat vs -0.2% vs -0.5%. Not leaders, but…C +0.3% vs -0.1% vs flat vs -0.4% vs +0.1%; JPM +0.1% vs -0.1% vs +0.3% vs +0.6% vs +0.1%; WFC +0.5% vs flat for 2 days vs +0.4% vs flat; USB +0.1% vs +0.5% vs -0.5% vs +0.1% vs +0.3%; GS +0.3% vs -0.1% vs -0.3% vs +0.6% vs -0.6%; MS flat vs +1.3% vs -0.9% vs -0.4% vs -0.7%; UBS +1.6%! vs -0.3% vs -0.7% vs -0.7% vs +0.5%.

Global stocks slightly higher after two days of weakness, except Korea: FTSE +0.1% vs -0.2% vs -0.4% vs +0.3% vs -0.3%; CAC 40 flat vs -0.2% vs -0.3% vs +0.2% vs -0.9%; DAX +0.3% vs flat vs -0.5% vs +0.8% vs -0.8%;Nikkei +0.8% vs +1.8% vs -0.1% vs +0.6% vs -1%; Hang Seng +0.8% vs -0.5% vs -1.2% vs +1.1% vs -0.3%; Korean KOSPI DOWN 0.6% vs +0.1% vs closed vs +1.3% vs +0.3%;Indian Sensex +0.2% vs -0.4% vs closed vs +0.5% vs flat. U.S. stock futures little changed and slightly weaker, except Nasdaq: DOW -6; SPX -1.40; NDQ +3.75.

Bonds were smashed four a fourth straight session but up slightly overnight: 10 yr 1.82% +3/16 – record low of 1.40%; 30 yr 2.93% +7/16. Long TIP 0.61% +9/16. 0.28% is record low!The 5 yr TIP yields -1.12%; 10 yr -0.45%Bills 0.09% 1 month; 0.08% 3 months; 0.14% 6 months. Reverse Repo 0.24%. 3 mo. Libor 0.43%, and 6 mo. 0.72% – both trading below 0.45% and 0.73%. European problem sovereign 10 years, Germany-benchmark 1.51% -1; Italy 5.79% +2; Spain 6.40% -8; Greece 23.62% -12; Portugal 9.44% -2; Ireland 5.84% -2. Talk about irrational exuberance. Stocks will pay for this!

Gold still holding above $1600, and closed 1619.20 +$12.60! 7/12’s intraday low of $1547.60 was lowest since June 1. The hit is $153 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 $1598, the 40 day and $1602, RES at  $1661, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1617.50 -$1.70. Crude put on a charge yesterday closing at $95.60 +$1.27. It has not traded above $96 since 5/11 – will it this time? SUP at the 40 day (87.86), and the 50 day (86.98), both still rising! RES at the 200 day (96.68). First SUP is $89.17, the 11/1/11 low, SUP $92.52-54, the lows of 12/16. Now $95.53 -.07.

Retail remains on vacation. Same comments from past week or so apply: Volume finally hit 3.1B shares but REAL shares just 596M – we have not even seen 800M shares in the last seven sessions!

Finally a rally but look once again. Besides being on weak volume, although higher, BOTH Dow and S&P rose 0.7%. Both Nasdaq indices and the Russell 2000 rose 1% to 1.2%…if you can’t smell high frequency trading you have no place in this market. None!

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! BofA rallied again yesterday yet still has not reached $8…also it continues to be the second or third most active…high freaks are having fun – with YOUR money! …are you?

Meant to comment on bonds yesterday…they have been tanking for four straight sessions. But the stealth decline is in TIPS…so much for inflation protection. The spreads to the basis are shrinking rapidly and they are the worst performer…caution advised!

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