8/30/12…well orchestrated

Bloomberg Quote of the Day: “The great tragedy of science – the slaying of a beautiful hypothesis by an ugly fact.” – Thomas H. Huxley

Bloomberg Top Stories:

*Stocks Decline With U.S. Futures on Growth Concerns as German Bonds Rise

*Draghi Takes on Bundesbank Orthodoxy in Defense of ECB’s Bond-Buying Plan

*Euro-Area Confidence Drops More Than Forecast to 3 Year Low – U.S. also fell!

*Bond Record in Jeopardy as JPMorgan Leads August Borrowers – biggest August ever!

*Groupon Stock May Have to Fall Further to Become a Deal – like Facebook! Yuck!

*’Prosperous’ Village Belies Irish Economic Recovery as Investors Chase Bonds

*Ryan Says Obama’s Moment Has Passed as He Joins Romney Republican Ticket

*Louisiana Residents Flee Tropical Storm Isaac as Flooding, Winds Cut Power

*World’s Oldest Message in Bottle Confirmed After 97-Year Sea Journey Ends – Wow!

*Romney Plan it End Deficit Without Taxes Hits poor as Well as Park Rangers

…but lacking in content. Well orchestrated in that everyone followed the same script to a tee…blast Obama, praise Romney. Even John McCain drank the Kool-Aid. John had been the honest one in the party…not jumping on the bandwagon to blast Obama when he didn’t deserve it and also on the birth certificate fiasco. But not last night…in fact if you didn’t share the party agenda there was no place for you there (sounds like the Democrats of yore!). Ann Romney was the exception, praising her man but no specifics on why he was a good family man. Still it was refreshing to hear something positive without making things up.

The general feeling is that all the uplifting may be for naught as there is a lot of anticipation and little enthusiasm for Romney tonight…don’t worry TB will be just as blunt with Obama. The uplifting though was through damning Obama as a failure in everything as well as causing all of our problems.

Note that the last president was not in attendance and no mention of his accomplishments. That is because if you connect the dots you see that HE not Obama was the culprit. Why?

First, following eight years under Clinton we had a bull market the entire time…and ended in a small surplus despite his personal foibles which were many. Then the economy hiccupped and OMG we have to do something…aha! The excuse for not one but TWO rounds of tax cuts with primary emphasis going on the wealthiest Americans.

Then, Bush never saw a spending bill he didn’t like…and with a GOP controlled Congress. Massive spending, earmarks, you name it. True he was a victim of 9/11 but what did he ask for, sacrifice? Service? No…get out an shop…that was all he asked! We went after Bin Laden in Afghanistan…a logical response…at least it made better sense than attacking Grenada following the bombing of the Marine barracks in Beirut…every president reacts to an attack…they have to! But then came the B.S. about WMD in Iraq…complete with 9×10 glossy’s that told nothing and when we had convinced the UN and made a fool of Powell, we never found them, or evidence of them. It was all hype by Saddam to keep Iran away from his emasculated country…and it worked. Now the balance of power is upset and after a couple of hundred billion we are sort of out of Iraq but buried in Afghanistan…which is where Romney says we should be! Then came Medicare Part D, the prescription drug plan for seniors that was to cost $550 billion ($100 billion of that came from prohibiting Medicare from negotiating for prescription drugs which the military and Medicaid do successfully (lest you forget, Billy Taussig was the chairman of the committee and then on leaving Congress went to the drug lobby for $2 million…talk about bought and paid for…as were some of his key staffers!). So they passed it without funding it…and do you recall the ‘donut’ hole? Such a deal. (Note that Obama also succumbed to the drug lobby also rendering his plan useless).

Next of course came the financial crisis where the groundwork was laid in a most bipartisan manner under Clinton thanks to Rubin, Summers, and Greenspan with the help of Phil Gramm (Gramm has the distinction of helping cause two problems…this one directly, the other through his wife Wendy who while head of the CFTC excluded derivatives from regulation and then left and emerged on the board of Enron – audit committee no less – one of the big beneficiaries of her action. Quid pro quo? Gramm of course went on to become Chairman of UBS Americas…sweet!). Also, don’t forget Chris Cox, the GOP representative from Orange County who became Chairman of the SEC and failed to follow William Donaldson’s formula for routine audits of the five biggest banks.

We can argue whether there was cause to bailout the banks and TB could take either side – at the time he favored it – in hindsight it raised moral hazard to a new high and punished the small banks while benefitting those too big to fail.  But the key point is that we have totally failed to rein in the banks thanks to their monumental lobbying efforts under the direction of Jamie Dimon (Sandy Weill who created the mess and was Dimon’s mentor at Citi has since issued a mea culpa…guess he is trying to not go to hell.)

So back to the convention…we have the national debt clock ticking which is largely because of the Bush administration – not Obama, we have unemployment which surged just before Obama office and while jobs have been growing, local governments continue to layoff workers…do you think that will get better under Romney? (Yesterday he said that he wants to help vets by offering all of them ‘in state’ tuition fees – but wait that would have to be paid for by the states! Forgot…he is a states rights man.

Then there is the exclusion…Ron Paul, despite having a not insignificant number of delegates held a rally on Sunday night where 10,000 showed up. He was excluded. Also by fiat it was decided that all of his delegates be for Romney. Minnesota had 40 or so of theirs pledged to Paul! TB would like to clear part of that up. Paul had an incredible machine on the ground here…and we have no presidential primary. By loading the caucuses with his supporters…mostly Tea Party…he and a slate of non-committee candidates got the nod. So to TB it was not representative of the state…still….

So it all ends tonight…yessir…capped off by Mitt’s speech…perhaps he will clue us in on how he is going to create jobs, slash the budget and not raise taxes for his class of people…that 13% rate he pays sure must be burdensome.

Have a great day…TB can hardly wait for the DNC to begin…equal time!

TB

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

Stocks were weak again yesterday while volume dipped again to 2.52B vs 2.6B vs 2.44B vs 2.56B vs 3B vs 3.05B vs 3.25B vs 2.76B vs  2.91B vs  3.1B. Compare and contrast to the recent rally days of 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 barely also slipped to 509M vs  516m vs 504M – lowest since 8/15! vs 515M vs 592M vs to 601M vs 641M vs 551M vs 564M vs 596M. Again compare to the rally days of 647M vs 754M vs 826M vs 1.03B! Since 6/29 just 7 sessions have surpassed 800M shares. The average since 8/1’s 1.03B is just 604M, and the highest since 8/3 is 754M shares. There is STILL NO retail! The average for 2012 is just 787M shares and since 6/29 just 680M shares, levels not seen since week ended 12/30/11! 68 of the last 102 sessions have been less than 800M shares (68%!). 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 – 860M 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 33 sessions less than 700M shares. 184 of the last 195 sessions have been less than the 12 mo ave (94%)!

Advance/Declines were slightly positive for a second time in eight sessions: +1.5x vs +1.3x vs -1.1x vs +1.9x vs -2.2x on NYSE and +1.5x vs +1.1x vs -1.1x vs +1.6x vs -2.1x on Nasdaq. Breadth was similar: +1.2x vs -1.2x vs -1.4x vs +2.3x vs -3.4x on NYSE and +1.4x vs -2.2x vs -1.1x vs +1.9x vs -2.5x on Nasdaq. New 52 week highs rose (?) to 188 vs 159 (7/3’s 504 is the high), while new lows dipped at 57 vs 60. The ratio is +3.8x vs +2.5x vs +3x vs +2.5x +1.7x. The S&P VIX rose again to 17.06 +.57!!! for first time since 8/2 and has risen for 7 of the last 8 days after posting a 13.45, the low for 2012.

Here are the results of last 5 sessions: Dow flat vs -0.2% vs -0.3% vs +0.8% vs -0.9%; Transports -0.2% vs -0.2% vs -0.9% vs +0.1% vs -1%;Dow Utilities -0.5%! vs -0.2% vs +0.2% vs +0.5% vs -1%; S&P 500 +0.1% vs -0.1% vs -0.1% vs +0.7% vs -0.8%; Nasdaq Composite +0.1% vs +0.1% vs +0.1% vs +0.5% vs -0.7%; Nasdaq 100 +0.1% vs flat vs +0.2% vs +0.6% vs -0.8%; Russell 2000 +0.4%! vs +0.5% vs +0.2% vs +0.4% vs -0.8%; NYSE Financials +0.1% vs flat for 2 days vs +0.3% vs -0.8% (KBW Banks +0.6%? vs -0.2% vs flat vs +0.6% vs -1.1%; Nasdaq Banks +0.8%? vs -0.5% vs +0.5% vs +0.6% vs -1.1%). NYSE Financial Leaders: BAC +0.5% vs -1% vs -1.1% vs +0.1% vs -0.9%; C +1.9%? vs -0.5% vs +0.8% vs -3% vs -0.8%. Not leaders, but…JPM +0.5% vs +0.1% vs -0.2% vs -1.6% vs -0.6%; WFC -0.1% vs -0.1% vs +0.4% vs -0.8% vs -0.6%; USB +0.6% vs +0.5% vs -2.2% vs -0.4% vs -0.6%; GS +0.5% vs +0.2% vs +0.8% vs -0.6% vs -0.4%; MS +1.4% vs -0.2% vs +0.4% vs -2.4% vs -0.2%; UBS +0.4% vs +0.4% vs -0.9% vs -1.7% vs +2.9%. BAC made it back to $8.00! but high was $8.10…get it?

Global stocks weak sans India: FTSE -0.2% vs -0.5% vs flat vs -0.3% vs +0.2%; CAC 40 -0.5% vs -0.6% vs +0.5% vs -0.5% vs -0.5%; DAX -0.7% vs -0.5% vs +0.7% vs -0.4% vs -0.4%;Nikkei -1% vs +0.4% vs -0.6% vs +0.2% vs -1.2%; Hang Seng -1.2% vs -0.1% vs +0.1% vs -1.3% vs +1.2%; Korean KOSPI -1.2% vs +0.6% vs -0.1% vs -0.1% vs -1.2%;Indian Sensex +0.3% vs +0.1% vs -0.3% vs -0.6% vs -0.4%. U.S. stock futures weak but off lows: DOW -40; SPX -5.50; NDQ -10.75.

Bonds slightly better: 10 yr 1.64% +1/8 – record low of 1.40%; 30 yr 2.75% +3/8. Long TIP 0.40% +9/16. 0.28% is record low!The 5 yr TIP yields -1.33%. 10 yr -.68%.Bills 0.12% 1 month; 0.10% 3 months; 0.14% 6 months. Reverse Repo 0.20%. 3 mo. Libor 0.42%, and 6 mo. 0.71%! European problem sovereign 10 years, Germany-benchmark 1.33% -5; Italy 5.77% +3; Spain 6.52% +12; Greece 23.14% +1; Portugal 9.10% -1;Ireland 5.79% +2.

Gold slightly weaker for a second day, casting doubt on the sustainability of the rally. It closed at 1663.00 -$6.70 after an intraday low of $1654.40, at the 200 day! 7/12’s intraday low of $1547.60 was lowest since June 1. The hit stands at $111 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 9/6/11. SUP at $1614, the 40 day, $1610, the 50 day. MAJOR SUP at $1655, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1659.90 -$3.10 – weak? Crude closed at $95.49 -.84, four days after an intraday high of $98.29 on a negative ‘key reversal’ killed the rally! SUP at the 40 day (91.44), and the 50 day (89.25). RES/SUP at the 200 day (96.72). Currently $95.44 -.05.   

The summer doldrums continue and there would be no market were it not for the high freak traders…it reacts to their every whim – same comment as yesterday.

As has become the pattern, all indices (except Utilities, -0.5%!, and Russell 2000 +0.4%!) moved in a range of -0.2% to +0.1%. That is not normal but it is now the norm!

Financials were +0.1%. Only interesting factoids were BofA +0.5% closing at $8.00 with an intraday high of $8.10 Meanwhile Citi surged 1.9% to $29.91 and was fourth most active…that is up just 57 cents though so don’t quit your day job if you own it.

The VIX rose again yesterday to 17.06 +.57 – that is an 11.2% gain in two days and highest since 8/2! Hint: you don’t want this to happen. Wonder what Sept. will be like?

Gold slipped another $6.70 yesterday with a low right on the 200 day which is major support. Crude meanwhile fell, closing at $95.49 .84 and negating Tuesdays gain.. Monday’s intraday low was $94.41! It remains below the 200 day ($96.72).

Consumer sentiment here dropped and was lower than expected in Europe…is that good for stocks? Not in TB’s book…but then he is not a flash trader…they love it…tight ranges mean they can go in and out all day with little risk!

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