8/22/12…what kind of fools are we?

Bloomberg Quote of the Day: “We can have facts without thinking but we cannot have thinking without facts.” – John Dewey…ah but they don’t WANT us to think, John! TB

Bloomberg Top Stories:

*Game of Last Man Standing Means That European Investment Banks Resist Shrinking

*Stocks Drop as Treasuries Gain on Japan Trade, Greek Appeal; Gold Advances –oops!

*RBS Said to Be Probed by U.S. Regulators on Possible Iran Sanctions Breach – banks!

*Confidence Returning Globally as Revealed in Country Risk – as stocks end rally?

*Citigroup to Expand European Credit Trading Team by 5% as Rivals Cut Back

*Dell Falls After Cutting Profit Forecast as Personal Computer Sales Drop

*Apple-Samsung Jurors Have 600 Questions to Answer Before Reaching Verdict – gads!

*Upscale Chicago Retailer Mark Shale Files Chapter 22 for Sale- as in: bankruptcy!

Top Chinese Bankers’ Reward for Record Profits Is Fraction of Dmon’s Pay – is this a great country or what…stupid communists…what do they know? Eh, Jamie? Not much!

*Obama Leads Romney by 4 Points in Poll Showing Voter Disdain for Congress

*Russia Becomes 156th Member of World Trade Organization as Commerce Eases – that’s sending them a message on their human rights, isn’t it folks!

*Ryan’s Opposition to Abortion Consistent With Akin Votes for No Exceptions – sick!

*China Tightens Rules for Visas in Move That Could Slow Growth of Tourism – ???

…after damning our Congress and the parties for more than a year, TB has found redemption. First the book by Lawrence Lessig (moderate and former Reagan Republican), then one by Robert Reich (liberal and Dem), and last night on PBS another one by Mickey Edwards, a former GOP congressman from Oklahoma (conservative but not reactionary). All three books and TB is sure there are now even more, have similar titles and themes: our political system is out of control. It is not what the founding fathers envisioned, it is not a free market, it is not a democracy. If anything, it has become an oligarchy. If that is what you want, then preserve the status quo.

Lessing blames it not on corrupt elected officials, but enticements. Certainly there are a few but for the most part they came there to do something (TB would argue however that the concept of a retirement for them helped destroy that argument). That purpose has been neutered. He also says that the rise in campaign contributions since Lyndon Johnson championed civil rights. That caused the Blue Dog Democrats to break from the party and for the first time since FDR give the GOP a chance to control both houses of Congress which they did for the majority of time since then.

But to raise money the 80% or so committed to the two parties are not relevant. Rather, they have been forced to appeal to the fringe…wealthy individuals of both parties who have their own agenda which may or may not be in conflict with the party’s goals.

Thus our elections are being decided by 4% of the electorate, and on distorted facts, half-truths and lies. This is what America has become. You think your vote counts? Think again.

Edwards tells of being elected by farmers yet not having a full understanding of their needs. He arrived in D.C. and was told by party leaders to tow the line if he wanted to be on any committees. In other words, don’t make waves and never…never…agree with the other party.

TB once heard that from the day he takes office a congressman has to raise $5,000 a day to support his campaign for re-election. That figure must be considerably higher now.

A congressional candidate from Minnesota says that he wants to get Congress to meet Monday thru Friday…now they introduce bills on Tuesday and vote on Wednesday evening…they never get to know the members of the other party and thus there is no compromise.

If you are happy with this and think electing Romney or Obama will change it think again. But in four years there might be another white knight to save us…like we thought Obama might be. Is it too late? TB thought Obama was the last chance. Could be that assessment was correct. Pity us, pity America.

Have a terrific day!

TB

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

 After tottering after a short-lived rally, stocks were down and volume increased although remaining weak at 3.25B shares. Remember it is bad to see weaknerss on higher volume. Compare 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 rose to 641M vs 551M vs 564M 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: average since 8/1’s 1.03B is just $597M, and the highest since 7/29 was 728M shares. There is STILL NO retail! The average for 2012 is just 796M shares and since 6/29 just 703M shares, levels not seen since week ended 12/30/11! 63 of the last 97 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 – 874M is the 12 month average and dropping! Since 11/1 there have been just 16, 1B share days…12 in 2012! Since 2/6 there have now been 27 sessions less than 700M shares. 178 of the last 189 sessions have been less than the 12 mo ave (94%)!

Advance/Declines were slightly negative again at -1.3x vs -1.3x vs +1.6x vs +2.6x vs +1.7x on NYSE and -1.3x vs -1.4x vs +1.9x vs +2.3x vs +2.3x on Nasdaq. Breadth was similar: -1.1x vs -1.1x vs +1.6x vs +3.2x vs +1.7x on NYSE and -1.2x vs -1.6x vs +1.1x vs +2.2x vs +1.8x on Nasdaq. New 52 week highs rose (?) to 284 vs 237 (7/3’s 504 is the high), while new lows declined to 32 vs 43. The ratio jumped to 8.9x? vs 5.5x – on a down day? The S&P VIX rose again to 15.02 +1.00 two days after posting a 13.45, the low for 2012. Caution advised!

Here are the results of last 5 sessions: Dow -0.5% vs flat vs +0.2% vs +0.7% vs -0.1%; Transports +0.1% vs -0.1% vs +0.5% vs +0.5% vs +1.2%;Dow Utilities -0.6% vs flat vs -0.2% vs -0.3% vs -0.5%; S&P 500 -0.4% vs flat vs +0.2% vs +0.7% vs +0.1%; Nasdaq Composite -0.3% vs flat vs +0.5% vs +1% vs +0.1%; Nasdaq 100 -0.4% vs +0.1% vs +0.4% vs +1.2% vs +0.5%; Russell 2000 -0.1% vs +0.4% vs +0.8% vs +1.1% vs +0.3%; NYSE Financials UP 0.3%? vs flat vs +0.5% vs +0.9% vs +0.2% (KBW Banks +0.2% vs +0.3% vs +0.6% vs +0.5% vs +0.4%; Nasdaq Banks -0.1% vs +0.1% vs +0.7% vs +0.5% vs +0.8%). NYSE Financial Leaders: BAC +2.3%??? vs +1.9% vs +0.9% vs +0.8% vs +0.9%; C +3.2%??? vs +3.3%? vs +0.7% vs +0.3% vs -0.1%; JPM +2.7%??? vs +0.4% vs -0.3% vs +0.1% vs -0.1% Not leaders, but…WFC +0.9% vs +0.1% vs -0.3% vs +0.5% vs flat; USB DOWN 0.6% vs +0.4% vs -0.3% vs +0.1% vs +0.5%; GS flat vs +2% vs +0.1% vs +0.3% vs -0.1%; MS +0.4% vs +1.6% vs flat for two days vs +1.3%; UBS UP 2.7%??? vs DOWN 1.4% vs +1.5% vs +1.6% vs -0.3%. Banks again in control??? UBS?

Global stocks WEAK: FTSE -1.2% vs +0.3% vs -0.4% vs +0.1% vs -0.2%; CAC 40 -1% vs +0.5% vs -0.3% vs flat vs -0.2%; DAX -1% vs +0.4% vs flat vs +0.3% vs flat;Nikkei -0.3% vs -0.2% vs +0.1% vs +0.8% vs +1.8%; Hang Seng -1.1%! vs flat vs -0.1% vs +0.8% vs -0.5%; Korean KOSPI -0.4% vs -0.2% vs flat vs -0.6% vs +0.1%;Indian Sensex -0.2% vs +1.1% vs +0.2% vs +0.2% vs -0.4%. U.S. stock futures also weaker but off lows: DOW -30; SPX -4.20; NDQ -7.75.

Bonds were little changed again but are rallying overnight: 10 yr 1.77% vs 1.84% – record low of 1.40%; 30 yr 2.86% vs 2.95%. Long TIP 0.56% vs 0.63%. 0.28% is record low!The 5 yr TIP yields -1.14% first gain over basis in days! 10 yr -0.50 vs -0.43%Bills 0.10% 1 month; 0.10% 3 months; 0.14% 6 months. Reverse Repo 0.20%! 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 1.49% -6; Italy 5.62% -2; Spain 6.16% +1; Greece 23.29% +2; Portugal 8.75% -14???; Ireland 5.80% flat.

Gold still holding above $1600, and surged on equity weakeness? It closed at 1642.90 +$19.90! 7/12’s intraday low of $1547.60 was lowest since June 1. The hit is $130 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 $1604, the 40 day. RES at $1659, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1640.30 $2.60. Crude closed at $96.84 +.58, with an intraday high of $97.25! SUP at the 40 day (89.60), and the 50 day (88.00) – both rising fast so could get very interesting quickly! RES/SUP at the 200 day (96.74). Currently $96.73 -.11.

Volume stunk again but did rise which is not what one wants on a down day. All indices were down and by close amounts indicative of high freak trading. Only Transports +0.1% and NYSE Financials +0.3% didn’t succumb. BofA led financials and closed at $8.34 +.19 as banks took over the lead from the faux banks again. UBS however was up 2.7%. Remember though these changes are pennies. AAPL was 7.34 of the 12 point loss on the NDQ 100. What Apple giveth, Apple taketh away…in spades!

While the VIX which hit a low for 2012 on Monday (meaning call buying vs puts and probably due to Friday’s options expiry), is back up to 15.02. One puzzlement: if all indices were down, how come the number of new 52 week highs rose to 284 from 237? That was due to the early morning rally as Apple surged to yet another record high. The Dow was up 127 points a little over one hour after the open. It then plunged 144 points before closing off 68 points. Meanwhile Apple hit its record high of $674.88 less than 15 minutes after the open when it ‘gapped up’ $5 but soon reversed, closing the gap and falling by nearly $25 before settling off $9 at $656. That is not what you want to see!

Are bonds beginning to make a rebound? Could be…the world is an unhappy place, right? You bet it is and yet we keep clinging to every morsel of good news, only to have it pulled back like Lucy does with Charlie Brown’s football…again? …again?

Could be a very bad day for stocks!

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