8/21/12…can we come back from the brink

Bloomberg Quote of the Day: “If people never did silly things, nothing intelligent would ever get done.” – Ludwig Wittgenstein

Bloomberg Top Stories:

*Merkel Lawmakers See Concessions in Terms of Greece’s Second Aid Package – ?

*Stocks Gain With Euro Before Crisis Talks; Commodities Set for Bull Market – !!!

*Commodities Head for Bull Market as U.S. Drought Sends Soybeans to Record – good?

*Facebook Director Thiel’s Stock Sales Top $1 Billion After Lock-Up Expires – nice!

*Catastrophe Bonds Beat Corporates by Most Since November – bet on global warming?

*Canadian Bank Loans Rise at Fastest Pace as Kinross Passes on Bonds

*Money-Fund War is Passion as Donahue Defends $356 Billion Family Business –he is CEO of Fidelity and Fido says…don’t regulate us more…really???

*Wall Street Leaderless Amid Battle Over Bank Rules With Dimon Diminished – that’s leaderless NOT RUDDERLESS…ask their well-paid lobbyists!

*Obama Says Any Chemical Weapon use by Syria Would Mark ‘Red Line’ for U.S.

…or do we have to let the banks screw us again…not all banks…just as Reagan’s bailout of Continental Illinois which created moral hazard and made the U.S. banks among the biggest in the world…the top 8 that is at the expense of smaller banks, we have done it again…and while continuing to line their pockets the same ‘bankers’ (sic) continue to control Congress. They will surely do it again only next time they will be TBTS (too big to save). It is this same group along with people like the Koch brothers who continue to thrive at the expense of the rest of America. This cannot and will not stand. Either it is fixed or our nation will cease to exist as we know it.

Besides Lawrence Lessig’s book (discussed yesterday), Republic Lost: How Money Corrupts Congress – and a Plan to Stop I, more books with a similar view are coming out. Robert Reich has one out entitled Beyond Outrage: What Has Gone Wrong With Our Economy and Our Democracy, and How to Fix It. Very similar to Lessig’s title don’t you think? But TB suspects it will be more partisan since Lessig was a Reagan supporter. The point is both parties are owned by Wall Street and a few wealthy Americans.

You have the GOP to thank with the prodding of the bank lobby for squandering opportunity to do something against Wall Street and the Dems are just as guilty.

Phil Angelides wrote a scathing commentary titled ‘The unrepentant and unreformed bankers’ in Saturday’s SF Chron. The former California state treasurer was chairman of the Financial Crisis Inquiry Commission, and is obviously disgusted at the lack of action against the bank perps and their senior management. Here is the link:


That same day they had another piece, ‘Bank scandals: Somebody must go to jail’ It is written by Joseph W. Cotchett, a trial lawyer who prosecuted Charles Keating. Among other points he asks:

how could they possibly not indict Jon Corzine over the MF-Global scandal? He is one of the boys…true a Dem but also a former Senator. Unless bankers go to jail for their sins and fines against corporations don’t just impress us by their size, they must bear relevance to the size of the fraud, which they do not. These are questions Cotchett asks as he ticks off the sins of eight big global banks (only two are British!). They are unrepentant


One must wonder what might have happened if Obama had not been affected by Goldman Sachs who was the biggest contributor to his campaign, and instead listened to his mentor Paul Volcker from the start. Of course, he was also influenced (as was Clinton) by the Wall Street insiders in his own cabinet…Geithner, Daly, and others.

Of course, Goldman also contributed heavily to John McCain’s campaign. The revolving door between the banks and rest of Wall Street must be slammed shut…can it?

Lastly, what if the GOP and Tea Party, rather than mocking Occupy Wall Street had redirected its efforts to reform rather than…well….bitching! It had no backbone, no common goal but the parties affected made sure it did fail with no visible reform. TB is proud to have been one of the first to openly criticize Wall Street and the banks and try to do something about it.  He only wishes he had been more successful in driving it home!

Have a wonderful world, but don’t forget the mess we have surrounded ourselves with!


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

 A ‘mostly flat’ day with only Transorts in the red for a third session, -0.1%. Volume slipped again to 2.76B vs  2.91B vs  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 also slipped to 551M vs  564M shares vs 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. Look at this: two week average $597M, and the highest since 7/29 was 728M shares. There is STILL NO retail! The average for 2012 is just 798M shares and since 6/29 just 710M shares, levels not seen since week ended 12/30/11! 62 of the last 96 sessions have been less than 800M shares  (65%!). 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 – 876M 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 26 sessions less than 700M shares. 177 of the last 188 sessions have been less than the 12 mo ave (94%)!

Advance/Declines were slightly negative at -1.3x vs +1.6x vs +2.6x vs +1.7x vs -1.1x on NYSE and -1.4x vs +1.9x vs +2.3x vs +2.3x vs -1.6x on Nasdaq. Breadth was similar: -1.1x vs +1.6x vs +3.2x vs +1.7x vs -1.1x on NYSE and -1.6x vs +1.1x vs +2.2x vs +1.8x vs -1.6x on Nasdaq. New 52 week highs dropped to 237 vs 290 (7/3’s 504 is the high), while new lows were stable at 43 vs 49. The ratio slipped to 5.5x vs 5.9x vs +6.4x vs +2.4x vs +2.9x. The S&P VIX rose from13.45, a new low for 2012 (typo yesterday) to 14.02 +.57, so the low was due to options expiry call buying – a one off event.

Here are the results of last 5 sessions: Dow flat vs +0.2% vs +0.7% vs -0.1% vs flat; Transports -0.1% vs +0.5% vs +0.5% vs +1.2%! vs +0.4%;Dow Utilities flat vs -0.2% vs -0.3% vs -0.5% vs +0.1%; S&P 500 flat vs +0.2% vs +0.7% vs +0.1% vs flat; Nasdaq Composite flat vs +0.5% vs +1% vs +0.1% vs -0.2%; Nasdaq 100 UP 0.1% vs +0.4% vs +1.2% vs +0.5% vs flat; Russell 2000 UP 0.4% vs +0.8% vs +1.1% vs +0.3% vs -0.3%; NYSE Financials flat vs +0.5% vs +0.9% vs +0.2% vs flat (KBW Banks +0.3% vs +0.6% vs +0.5% vs +0.4% vs flat; Nasdaq Banks +0.1% vs +0.7% vs +0.5% vs +0.8% vs -0.3%). NYSE Financial Leaders: BAC +1.9% vs +0.9% vs +0.8% vs +0.9% vs +0.8%. Not leaders, but…C +3.3%? vs +0.7% vs +0.3% vs -0.1% vs flat; JPM +0.4% vs -0.3% vs +0.1% vs -0.1% vs +0.3%; WFC +0.1% vs -0.3% vs +0.5% vs flat for 2 days; USB +0.4% vs -0.3% vs +0.1% vs +0.5% vs -0.5%; GS +2% vs +0.1% vs +0.3% vs -0.1% vs -0.3%; MS +1.6% vs flat for two days vs +1.3% vs -0.9%; UBS DOWN 1.4% vs +1.5%! vs +1.6%! vs -0.3% vs -0.7%. Something smells fishy…very fishy!

European stocks up, Asia not so much: FTSE +0.3% vs -0.4% vs +0.1% vs -0.2% vs -0.4%; CAC 40 +0.5% vs -0.3% vs flat vs -0.2% vs -0.3%; DAX +0.4% vs flat vs +0.3% vs flat vs -0.5%;Nikkei -0.2% vs +0.1% vs +0.8% vs +1.8% vs -0.1%; Hang Seng flat vs -0.1% vs +0.8% vs -0.5% vs -1.2%; Korean KOSPI -0.2% vs flat vs -0.6% vs +0.1% vs closed;Indian Sensex UP 1.1%!?! vs +0.2% vs +0.2% vs -0.4% vs closed. U.S. stock futures slightly better: DOW +26; SPX +3; NDQ +7 – is AAPL the only driver?

Bonds were little changed again and have been weak for six days: 10 yr 1.84% -9/32 – record low of 1.40%; 30 yr 2.95% -9/32. Long TIP 0.63% -9/16. 0.28% is record low!The 5 yr TIP yields -1.09% and continues to come in!; 10 yr -0.43%Bills 0.09% 1 month; 0.10% 3 months; 0.14% 6 months. Reverse Repo 0.22%. 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 1.56% +5; Italy 5.66% -8!; Spain 6.25% -7!; Greece 23.40% -8!; Portugal 8.97% -25!!!; Ireland 5.82% flat. Irrational!!!

Gold still holding above $1600, but with minor gains…where’s the real breakout? It closed higher at 1623.00 +$3.40. 7/12’s intraday low of $1547.60 was lowest since June 1. The hit is $150 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 $1604, the 50 day and $1602, the 40 day. RES at  $1659, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1626.40 +$3.40. Crude close a tad lower at $95.97 -.04? Couldn’t hold even $96 which was first time since 5/11. SUP at the 40 day (89.16), and the 50 day (87.73), CAUTION as both are rising sharply! RES at the 200 day (96.73). REAL SUP is $89.17, the 11/1/11 low, and $92.52-54, the lows of 12/16. Now $96.55 +.58 – hmmm.

Where is the retail? Sick of the shananagans? Same comments from past TWO weeks apply: Volume slipping again to 2.76B vs 2.91B, while REAL shares were just 551M vs 676M – we have not even seen 800M shares in the last nine sessions!

How many times can you recall a session where not one but FIVE sessions were FLAT? Unchanged, zip, zilch? Dow, Dow Utilities, S&P 500, Nasdaq Comp and NYSE Financials all unchanged. Transports were off just 0.1% while the Russell 2000 was the winner at +0.4% its fourth straight gain after being the goat! For the 9 months ended 6/30 it is up 25.3%, but for the 12 months -2.1%. YTD it is up 11.1% but to 8/1 just 4.9%!

But what TB really wants to point out is the NDQ 100, which was noticeably absent in the above paragraph. Yesterday it was up 0.1% BUT that was due to AAPL which rose $17 or 14 index points (the next highest gainer was CELG adding just 0.7 index points AND only 21 stocks were up, 76 down)! Ex-AAPL? -10 or -0.4%. The performance of the 100 parallels Apple! YTD it is up 23.2%, AAPL +65%. Both peaked in April when APPL hit its record high and again yesterday when it took it out and became the highest market cap stock of all time surpassing Microsoft! Déjà vu all over again? Remember that last year the same happened to the S&P 500…this year the S&P is up 14.4% pulled heavily up by Apple like some Atlas. So if you are an equity bull, watch your mouth!

Financials are becoming bifurcated with banks losing momentum while the faux banks take over on miniscule price changes of less than 10 cents a share, well…meaningless! BofA rose 1.9% yesterday and has been up 0.8-0.9% in EACH of the last four sessions finally crossing $8…to close at $8.15 – first time above $8 since 7/5!

Bonds continue to be weak thanks to the ECB who is lessening the demand for UST. All the problem countries have plunged as buyers ‘plunge’ back into them…or it is just the EU buying to support the weak sisters? Huge drops in yields…hmmm like when the Fed was buying up our bonds…oops, they still are! TIPS spreads continue to implode…so much for inflation protection. These were comments from yesterday and still apply!

What happens when 10 year treasury broaches 2% – equity risk premium? Be careful what you wish for equity geeks!



  1. Robin Wilson said

    Are bonds at their bottom. Is it time for TMV?

    • traderbill said

      Robin, I don’t believe we will see 2% on the 10 yr note for a long time. It is hard for me to want to invest in bonds of any sort given the low yields. I prefer mortgage REITS, good quality preferreds and stocks with solid dividend growth and financial strength, like ATT. NO banks at this time…not until dividends reach 5%…only two I would buy are USB and WFC – in that order.

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