Bloomberg Quote of the Day: “Turns out if you never lie, someone will always be mad at you.” – Scott Westerfield – talk about timely

TB’s Late Quote of the Day (this has been sticking in TB’s craw since Romney’s speech…from the transcript:  “You deserved it because you worked harder than ever before during these years.  You deserved it because, when it cost more to fill up your car, you cut out moving lights, and put in longer hours.  Or when you lost that job that paid $22.50 an hour, benefits, you took two jobs at $9 an hour
You deserve it because your family depended on you.  And you did it because you are an American, and you don’t quit.  You did it because that was because it was because you had to do. The driving home late from that second job, or standing there and watching the gas pump hit $50 and still going.  When the realtor told you that to sell your house you’d have to take a big loss on your house.  In those moments, you knew that this
just was not right.  But what could you do except work harder,
do with less, try to stay optimistic, hug your kids a little
longer, maybe spend more time praying tomorrow would be a better
day.” (Discussed below)

U.S. Non-Farm payrolls rose by 96k in August, well below the estimated 130k. Revisions however cut a combined 41k jobs for June and July! (The Household Survey showed an increase of 119,000 jobs in August). Factory jobs fell by 15k while Construction rose by just 1,000. Not a good report!

The Unemployment Rate ‘declined’ to 8.1% (headline) to 8.3%. Here are the actual numbers for the past three months (recall how upset everyone got at last months increase!). 8.111% vs 8.254% (rounds to 8.3%) vs 8.217%. But the bad news is the participation rate which fell to 63.5% from 63.7%. This is the lowest since 1981- 368k left the workforce. Both Average Hourly Earnings and Hours Worked were unchanged! Average duration of unemployment rose to 39.2 weeks vs 38.8 weeks while the Median rose to 18.0 weeks from 16.7 weeks! Total Unemployment fell to 14.7% from 14.0% reflecting discouraged workers and more part-timers.   

Market Reaction: Bonds reversed most of their decline from yesterday, especially TIPS which were hard hit! Gold is up another $20.90 to $1726.50 after closing above $1700 yesterday (even as stocks rallied?). Dollar is weaker. Stock Futures are up? Even following the huge gain yesterday on low volume but well off their highs: DOW +19; SPX +3.50; NDQ -2.25!

Bloomberg Top Stories:

*Payrolls in U.S. Increased 96,000 in August; Jobless Rate falls to 8.1% – nor 205k!

Stock-Index Futures in U.S. Pare Gains as Job Growth Is Short of Estimates =130k!

*Intel Cuts Third-Quarter Revenue Outlook on Weaker-Than-Estimated Demand – !!!

*Bond Yields Back Draghi’s Conviction in Latest ECB Crisis Fix – EU FALLING!

*Monti Says ECB Bond-Purchase Plan Reduces Stigma as Rajoy Stalling On Aid

*JPMorgan Said to Face Escalating U.S. Senate Probe of CIO’s London Losses – !!!

*Ireland is Said Likely to Miss October Target to Ease Legacy Lending Rate

*Swap Traders Voice Opposition Over U.S. Regulator’s Call for Audio Records J

*Apple TV No iPhone as Talks Bog Down With Reluctant Media Companies – !!!

 *Dump-Greece Economist Sinn Rattles Merkel Government Laboring to Save Euro

*Obama Seeks Second Term on Harder Path That He Vows Leads to Better Place

…one of the great stories Paul Nadler told was about Harry Truman campaigning on a Navajo reservation in Arizona. He stood, surrounded by the tribe, and preached:

“If I am elected, I promise $1,000 to every Indian family. “ Oompah! Oompah!

“If I am elected, I promise a car to every Indian family.” – Oompah! Oompah!

It went on and on as he sensed their support. Stepping down from the lecturn he walked off with the chief, proud of how well his speech was received.

Suddenly, without warning, the chief shoved him and he almost fell down.

“What did you do that for, Chief?”, he asked, bewildered.

“You almost stepped into a pile of oompah!”

Well we have had two weeks of ‘oompah’ spread over us like a blanket. Most of the speeches were just that – designed to fire up the party faithful. The most out of character last night however was soft-spoken former Michigan Gov. Jennifer Granholm…what was that all about? She was ready for the evangelical tour. Out of character and bad!

All in all it was positive and with more of a positive direction than the ‘get Obama’ approach of the GOP but following your opposition is always best. Obama spoke as expected…face it he is a great speaker…which means nothing. His flaw is he likes being president and doesn’t like politicians or bullying much…they don’t have to like you, Barrack…they have to be afraid to cross you! Anyway, just more hyperbole, right?

Yesterday, a good friend sent a youtube presentation by Dick Morris and asked for TB’s opinion of it. It was four minutes long and TB had to listen to it twice and take notes on the math. It was an outrageous scare presentation that he says he has sent to all of his liberal friends who are now going to vote for Romney. TB learned though that Dick Morris – who has backed both conservatives and liberals in the past…follow the money – created the Super PAC for America, a conservative myth sputtering  (aren’t they all? Including liberal ones). Morris’ claims are based on a theoretical family earning exactly $250,000. He says they will pay $12,500 more in income taxes under Obama – false. That assumes that they pay the maximum marginal rate on their total income with no deductions or exemptions (he further goes on to say there will be no deductions for this group under Obama…Dick Morris is a very dangerous man!). This is from factcheck.org:

“Obama refers to his wish to allow the Bush tax cuts to expire for families with over $250,000 annual income, or for individuals with over $200,000. The top marginal income tax rate would return to 39.6 percent, where it was set by Clinton’s 1993 tax increase, up from 35 percent, where it has been since 2003.

But that’s not the whole story. Obama has signed some new taxes to help finance the Affordable Care Act, increasing the burden on those upper-income taxpayers. Starting Jan. 1 next year, they will pay an additional 0.9 percent of wages for Medicare payroll taxes.  And they will also be subject to a 3.8 percent tax on investment income from such things as stocks, bonds and sale of real estate. Those are taxes that didn’t exist when Clinton was president. If Obama succeeds in raising the top income tax rates to Clinton-era levels, total taxes on those making over $250,000 family income are thus likely to be higher than they were under Clinton. (They’ll still benefit from the Bush cuts on their income below $250,000, because Obama wouldn’t restore those lower-bracket rates to Clinton levels. So some upper-income taxpayers could still end up paying less federal tax than they paid under Clinton, depending.)”

Let TB ‘splain it to you: IF you made $275,000 only the amount OVER $250,000 ($200,000 for an individual) would be taxed at the higher rate and again that assumes NO deductions or exemptions! Furthermore, since the lower Bush rates would still apply much of that difference would still make an effective rate lower than under Clinton. The higher you go, the less the benefit…as it should be. The only reason TB can think of as to why the Dems don’t explain it is they don’t want to ‘appear’ to be helping those making over $250,000…and perception is everything these days. Note also if we go to sequestration, everyone will lose…thus even the GOP won’t let that happen.

Here is the link to factcheck.org’s full analysis of both Obama’s and Biden’s speeches last night. It is a sad commentary when the only two choices we have for president insist on spreading misinformation, and worse, disinformation to the voters. It is feeding on itself and will continue to do so as we close in on the election. Thankfully we have these factcheckers to catch them both…too bad they can’t just tell us the truth…but there is too much at stake financially for that. Obama Biden speeches

Another good friend sent an email that is making the rounds by Charley Reese, a reporter for the Orlando Sentinel for forty years. The only thing here is they ‘omit’ the fact that he retired and wrote it July 29th, 2001…as if it just happened. This is a minor transgression however. Here is an excerpt showing though how applicable is today. Charley Reese was a very angry man!

“Politicians are the only people in the world who create problems and then campaign against them.
Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?
Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?
You and I don’t propose a federal budget. The President does.
You and I don’t have the Constitutional authority to vote on appropriations. The House of Representatives does.

You and I don’t write the tax code, Congress does.
(Not the president, period!)
You and I don’t set fiscal policy, Congress does.
You and I don’t control monetary policy, the Federal Reserve Bank does.
One hundred senators, 435 congressmen, one President, and nine Supreme Court justices equates to 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this country.
I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.
I excluded all the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman, or a President to do one cotton-picking thing. I don’t care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator’s responsibility to determine how he votes.
Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.
What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits. The President can only propose a budget. He cannot force the Congress to accept it.
The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating and approving appropriations and taxes. Who is the speaker of the House now? He is the leader of the majority party. He and fellow House members, not the President, can approve any budget they want. If the President vetoes it, they can pass it over his veto if they agree to.

Now you see why sequestration early next year will not happen…they would lose all their power and the special interest groups (sure we are all in one or more but these have the money to make things happen!).

So get out there and vote…after all your vote counts…yes sir, as the founding fathers decreed…on just TWO days every four years (in the 2000 election, even that didn’t matter). The rest of the time our beloved elected officials are beholding to the lobbyists to finance their campaigns…who would you pay attention to, Mr. Smith?

Have a great weekend…don’t you feel good knowing how Congress spent $100 million of your hard-earned money to defray costs of THEIR conventions? Hey, at least they agreed on something in a bipartisan manner…ugh!

Have a great day!


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

Bizarre!!!!  Stocks sold like they were in limited supply…but so did Facebook shares in the IPO. All indices were up(1.9% to 2.3%)…even Dow Utilities rose 1.3%??? Volume rose sharply to 3.94B shares vs 3.3B shares. The range since 7/29 is now 1.81B to 3.94B shares.  NYSE stocks executed without the aid of the ETN market while higher did not come anywhere close to 800M shares: 736M vs 676M shares. There have now been just TWO 700M+ days since 8/3, the highest since was 8/7 The high was 8/1’s 1.03B shares! Since 6/29 just 7 sessions have surpassed 800M shares. The average since 8/1’s 1.03B is just 606M, and the highest since 8/3 is 754M shares. There is STILL NO retail! The average for 2012 is just 783M shares and since 6/29 just 677M shares, levels not seen since week ended 12/30/11! 73 of the last 107 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 – 852M 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 been 36 sessions less than 700M shares. 189 of the last 200 sessions have been less than the 12 mo ave (94%)!

Advance/Declines were hugely POSITIVE and have been positive for just five times in 13 sessions: +3.8x vs -1.1x vs +1.5x vs +2.3x vs -2.5x on NYSE and +3.6x vs -1.3x vs +1.5x vs +1.7x vs -3x on Nasdaq. Breadth was even stronger but what about the volume? +14.1x!!! vs +1.1 x vs +1.1x vs +3.7x vs -4.3x on NYSE and +6.8x! vs -1.1x vs +1.1x vs +1.6x vs -6.5x on Nasdaq. New 52 week highs surged to 515 vs 295 (a new cycle high), while new lows fell to 47 vs 63. The ratio rose to +12x vs +4.7x! The S&P VIX fell sharply to 15.60. -2.14 or 12.1% two days after the highest level since 8/2 (17.98 intraday high of 18.96!), and had risen for 9 of the last 13 days after posting a 13.45, the low for 2012.

Here are the results of last 5 sessions: Dow +1.9% vs +0.1% vs -0.4% vs +0.7% vs -0.8%; Transports +1.9% vs -1.1% vs flat vs +0.3% vs -1.1%;Dow Utilities +1.3%? vs -0.5% vs +0.1% vs -0.1% vs -0.5%; S&P 500 +2.0% vs -0.1% vs -0.1% vs +0.5% vs -0.8%; Nasdaq Composite +2.25 vs -0.2% vs +0.3% vs +0.6% vs -1.1%; Nasdaq 100 +2.3% vs -0.2% vs flat vs +0.7% vs -1.1%; Russell 2000 +2.0% vs -0.1% vs +1.2% vs +0.4% vs -1.1%; NYSE Financials +2.5% vs -0.1% vs flat vs +0.8% vs -0.8% (KBW Banks +2.9% vs -0.2% vs +0.1% vs +0.3% vs -0.7%; Nasdaq Banks +1.6% vs -0.3% vs +0.7% vs +0.1% vs -0.9%). NYSE Financial Leaders: BAC +5%!!! vs -0.4% vs +0.1% vs +1% vs -1.1%; C +4.5% vs +0.2% vs flat. Faux banks rose sharply again…why? Since 8/30 GS is up 8.3%; MS +11.7%…why???

Global stocks strong, despite U.S. payrolls:  FTSE +0.3% vs +0.7% vs -0.5% vs -0.9% vs +0.6%; CAC 40 +1% vs +1.3% vs -0.3% vs -0.6% vs +1.4%; DAX +0.8% vs +1.5% vs +0.3% vs -0.5% vs +1.4%;Nikkei +2.2%! vs flat vs -1.1% vs -0.1% vs -1.6%; Hang Seng +3.1% vs +0.3% vs -1.5% vs -0.7% vs -0.4%; Korean KOSPI +2.6% vs +0.4% vs -1.7% vs -0.3% vs -0.1%;Indian Sensex +2% vs +0.2% vs -0.7% vs +0.3% vs flat. U.S. stock futures up but well off highs and slipping: DOW +19; SPX +3.50; NDQ -2.25!

Bonds were blasted yesterday – especially TIPS but regaining it all and more following payrolls: 10 yr 1.61% +11/16 – record low of 1.40%; 30 yr 2.75% +1 point. Long TIP 0.39% vs 0.41%. 0.28% is record low!The 5 yr TIP yields -1.45% vs 1.40% however!10 yr -.73% vs -.67!Bills 0.09% 1 month; 0.10% 3 months; 0.13% 6 months. Reverse Repo 0.29%. 3 mo. Libor 0.41%! and 6 mo. 0.69% vs 0.70%!!! European problem sovereign 10 years, Germany-benchmark 1.54% -2; Italy 5.11%!!! -12; Spain 5.67% -29!!!; Greece 21.01% -18???; Portugal 7.86% -50!!!; Ireland 5.48% -21!!! Rumors fly and the changes on theses countries are incredible!

Gold rose sharply again and closed above $1700 for the first time since March 13th! $1705.60 +$11.60! 7/12’s intraday low of $1547.60 was lowest since June 1. The hit stands at just $68 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 $1629, the 40 day, $1622, the 50 day, both rising again. MAJOR SUP at $1654, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1731.70 +$25.10!!! session high too! Crude barely budged again and remains weak despite another attempt to rally high with a high of $97.71 before giving up and closed at $95.53 +0.17?, nine days after an intraday high of $98.29 on a negative ‘key reversal’ killed the rally! Last Thursday’s close was $93.35, lowest since 8/16! SUP at the 40 day (92.73), and the 50 day (91.14), both rising sharply again. RES at the 200 day (96.61). Currently $95.66 +.13. Going nowhere! Down next?   

Back to back weirdness…explain a rally of that magnitude before a critical payrolls report? High freaks at work as indicated by the similarity of moves of indices and the relatively low volume although higher!

Gold is on a tear and boosted again overnight to a high of $1731.70! Crude has now made three consecutive attempts to rally and failed miserably. Silver is also up: $33.54 overnight, highest since April 3rd.  !

Financials were strong across the board. BofA rose 5% while Citi rose 4.5%. These are huge percentage moves but not in actual price – easy to manipulate! It has not been able to hold $8 since falling below it last week. Since 8/30, Goldman is up 8.3% and since 8/23, Morgan Stanley is up 11.7%??? Makes no sense to TB.

Let’s see if there is a correction due to the weak payrolls report…nothing to see here.


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