9/11/12…where were you?

Bloomberg Quote of the Day: “Show me a hero and I will show you a tragedy.”              – F. Scott Fitzgerald…there were a lot of tragic heroes at the WTC…pity them.

Bloomberg Top Stories:

*Moody’s Sees Cutting U.S. Without Deal to Lower Debt/GDP Ratio – Hello!!!

*Deutsche Bank to Review Pay, Defer Bonuses in Drive to Raise Profitability

*Big Banks Hide Market Risk Transforming Collateral for Derivatives Traders – Still!!!

*U.S. Stock Futures Gain Amid Optimism Over Europe’s Debt Crisis – optimism???

*AIG Stock Sale Repays Bailout as U.S. Government Has $17.4 Billion Profit

*U.S. Trade Gap Widened First Time in Four Months in July as Exports Fall – !!!

*McDonald’s August Revenue Trails Analysts’ Estimates as U.S. Growth Slows – !!!

*Bernanke Proving Like No Other Fed Chairman Attacking Unemployment in U.S.

*Striking Chicago Teachers Put Obama Between School Change, Union Backers

*Army Fails Be All That You Can Be for U.S. Medics Unable to Get Civilian Jobs – thank you for your service…NOT!!! We have failed them…all of them! TB

*Obama Campaigners Spar With Romney Over Omissions in Convention Addresses

…on this 11th anniversary of the attack on America, TB reflects as he always does on this day. He will never forget where he was or what he witnessed. Arriving at work in San Francisco at 5:30am and settling in at his computer and Bloomberg terminal it was an ordinary day. Like New York the weather was beautiful…it was going to be a great day.

Then the equity trader said she had just gotten a call from Cantor Fitzgerald in Los Angeles. They had told her that a passenger jet had flown into the WTC. TB said that was impossible since no commercial aircraft fly over Manhattan…he was wrong. So it seemed that it was a private jet…why that would happen in clear weather or why he was there made no sense. The guys at Cantor were in full communication with their colleagues in New York who were more caught up in the excitement than concern that they were in grave danger. Soon Bloomberg TV came up with the film and TB and the others arriving were glued to the monitor. It was ethereal…totally unreal!

TB began to think as a trader…should he be buying or selling treasuries…on his computer screen he had a TradeWeb page up and a lot of trading in bonds was going on. In the end he decided to do nothing…especially when the second plane struck. TB had forgotten that TradeWeb’s offices were in tower one. So as he looked back from one screen to the other, suddenly the trading screen faded to black. Now his thoughts shifted to the salesperson he knew that worked there and wondering what had happened to all of them…as the second tower had collapsed.

More than two weeks later he heard from her…she had suffered PTS and was finally able to call and explain: they had been instructed to leave the computers on auto and exit the building. After going down the stairs, the all made it…and after walking a few blocks saw their building collapse. What had been worse for her was she lived across the river in New Jersey. The view from her apartment had been of the WTC. She could not bear to look out the window and ended up moving out of her apartment. After that call, TB never heard from her again but at least they had all been saved.

TB has thought often about that day…and the subsequent events:

*Bush’s speech at ground zero…he didn’t ask for us to do anything…except to not let the terrorists win…don’t avoid the malls. It was sooooo uplifting! But still many joined the military and served with distinction. Many of them were injured seriously, some died, but all were worse off – financially – then had they stayed on their original course. The government gave little thanks…but a lot of praise from congressmen (with only a few having their kids join…Biden’s son was an exception). To TB it was the National Guard and reservists who suffered the most…pulled from their jobs for six months then sent back – again and again…while many companies failed to give them the promotions and pay increases that federal law promised. Arguably the worst, was our own VA! It failed miserably to follow the law. Thank you for your service…such hollow words.

*Going to Afghanistan to get Bin Laden and Al Qaeda. Then something weird happened. After bombing Tora Bora nearly into oblivion, fouling a chance to get him once by letting the Mujahadin warn him – they were actually double-agents – for the money…we forgot our mission…rule number one of warfare…and diverted troops to Iraq…to get Saddam Hussein…we even ‘made up’ lies about WMD to support this venture…adventure?

True, Saddam was a bad guy…but he also was instrumental in keeping Iran at bay and through his blustering and prior actions, it worked. We then not only upset the balance of power in the Middle East but alienated those who supported us when Colin Powell spoke so knowingly before the UN. We didn’t even protect the Central Bank or the Museum of Antiquities when we invaded Baghad…but we did protect the Oil Ministry…why? It contained the oil contracts…mission accomplished!

Ah, mission accomplished…uttered as a hero as Bush flew onto a returning carrier, but the job was not only done…it wasn’t even half-completed! We have subjected Iraq to a decade of infighting in which while they have their ‘freedom’ they are worse off than before. Then we sent the troops back to Afghanistan…for what? To support a man who could not and cannot be trusted, at the cost of American lives and limbs.

Romney says that we need to show more leadership to the world…and he is just the man to do it…amazing how those who have not seen war know what to do, isn’t it? He also wants to cut all programs…except military spending which he proposes to increase! It is laughable (sic) to believe there is no waste in our military…it is brought on by the interaction between military officials and defense contractors. TB gives him an ‘F’ on his understanding of either problem.

No, the lesson of 9/11 is that we learned no lesson from it. Due to the huge financial impact on NYC we pumped billions into it…and benefits for those killed or injured – for merely being in the wrong place at the wrong time. We did nothing for the victims of the Oklahoma City bombing…or anyone else. The payments were made based on income – not need…with families of wealthy Wall Streeters getting the lions share. Then by having a short time frame for claims…not long enough for diseases caused by their proximity to the area…we denied benefits to rescue workers…a friend’s brother got Leukemia just after the deadline. He was a firefighter and tri-athelete…he died shortly after.

Hopefully you too will think about 9/11 today and try to make yourself a better person. We all need to…and stop thinking only the most fortunate of us are deserving.

Have a reflective day!

TB

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

Stocks continue to oscillate wildly on every move in the EU – pretending that Greece can be repaired…it cannot! What happens when it fails? We will learn, it is only a matter of time. Volume declined again to 3.21B vs 3.7B shares two days aftera ‘rally high’ (?) 3.94B shares. The range since July 29th is 1.81B (8/31) to 3.94B shares (9/6)!  NYSE stocks executed without the aid of the ETN market fell sharply to a very weak 616M shares vs 736M to 672M shares. There have been just TWO 700M+ days since 8/3, the highest since was 8/7 The high ytd 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 782M shares and since 6/29 just 677M shares, levels not seen since week ended 12/30/11! 75 of the last 109 sessions have been less than 800M shares (69%!). 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 – 848M is the 12 month average and slipping! Since 11/1 there have been just 16, 1B share days…12 in 2012! Since 2/6 there have been 38 sessions less than 700M shares. 191 of the last 202 sessions have been less than the 12 mo ave (95%)!

Advance/Declines were negative after just two positive ones and have been positive just six times in 15 sessions: -1.5x vs +2.1x vs +3.8x vs -1.1x vs +1.5x on NYSE and -1.4x vs +1.4x vs +3.6x vs -1.3x vs +1.5x on Nasdaq. Breadth was worse: -2x vs +3.1x vs +14.1x vs +1.1 x vs +1.1x on NYSE and -2.6x vs -1.1x vs +6.8x vs -1.1x vs +1.1x on Nasdaq. New 52 week highs plunged to 344 vs 478 vs 515 (a new cycle high), while new lows were steady at 45 vs 45. The ratio is +7.6x vs +10.6x vs +12x vs +4.7x! The S&P VIX ROSEl sharply after falling for two days to 16.28 vs 14.38 +1.90, or 13.2% vs a 19.9% decline over the prior three sessions from the highest level since 8/2 (17.98 intraday high of 18.96!), and has now  risen for 10 of the last 14 days after posting a 13.45, the low for 2012.

Here are the results of last 5 sessions: Dow -0.4% vs +0.1 %vs +1.9% vs +0.1% vs -0.4% vs +0.7%; Dow Transports UP 0.5% vs +0.6%(?) vs +1.9% vs -1.1% vs flat;Dow Utilities -0.1% vs -0.1% vs +1.3%? vs -0.5% vs +0.1%; S&P 500 -0.6%! vs +0.4% vs +2.0% vs -0.1% vs -0.1%; Nasdaq Composite -1.0% vs flat vs +2.2% vs -0.2% vs +0.3% vs +0.6%; Nasdaq 100 -1.3%!!! vs -0.2% vs +2.3% vs -0.2% vs flat; Russell 2000 -0.3% vs +0.5% vs +2.0% vs -0.1% vs +1.2%; NYSE Financials -0.7% vs +1.2% vs +2.5% vs -0.1% vs flat (KBW Banks -0.8% vs +1.6% vs +2.9% vs -0.2% vs +0.1%; Nasdaq Banks -0.6% vs +0.6% vs +1.6% vs -0.3% vs +0.7% vs +0.1%). NYSE Financial Leaders: BAC -2.5%! vs +4.9%! vs +5% vs -0.4% vs +0.1%; AIG -2%!; Both real and faux banks suffered badly from -.07% (C) to -2.8% (MS). WFC -1.2%!

Global stocks weaker, except India:  FTSE -0.35 vs flat vs +0.3% vs +0.7% vs -0.5%; CAC 40 -0.4% vs -0.4% vs +1% vs +1.3% vs -0.3%; DAX +0.1% vs -0.1% vs +0.8% vs +1.5% vs +0.3%;Nikkei -0.7% vs flat vs +2.2% vs flat vs -1.1%; Hang Seng +0.2% vs +0.1% vs +3.1% vs +0.3% vs -1.5%; Korean KOSPI -0.2% vs -0.3% vs +2.6% vs +0.4% vs -1.7%;Indian Sensex +0.5% vs +0.1% vs +2% vs +0.2% vs -0.7% vs +0.3%. U.S. stock futures weaker in mid-range: DOW -22; SPX -3.20; NDQ -5.

Bonds are off overnight following a modest rally – long TIPS better than bonds? 10 yr 1.67% -1/8 – record low of 1.40%; 30 yr 2.82% -1/4. Long TIP 0.41% vs 0.44%. 0.28% is record low!The 5 yr TIP yields -1.46% vs -1.43%.10 yr -.70% flat.Bills 0.08% 1 month; 0.10% 3 months; 0.13% 6 months. Reverse Repo 0.30%. 3 mo. Libor 0.40%!!! and 6 mo. 0.69%!!! still slipping too! European problem sovereign 10 years, Germany-benchmark 1.53% -2; Italy 5.11% -5; Spain 5.66% +2; Greece 21.17% -6; Portugal 8.01% -3; Ireland 5.46%-2. This is speculative trading – pure and simple!

Gold consolidated slightly after that huge rally driven by hedge fund buying but closed well above $1700, not seen since March 13th! $1736.00 -$3.50 in an inside session! It is up $79.90 since 8/30!!! 7/12’s intraday low of $1547.60 was lowest since June 1. The hit now stands at just $37 since 2/28!!! 2/28’s $1792.70 the intraday high not seen since 11/16! The record high is $1923.70, a buying climax on 9/6/11. SUP at $1633, the 40 day, $1626, both steady again. MAJOR SUP at $1654, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1733.90 +$2.10. Crude continues to tread water – at best. It closed at $96.54 +0.12, 11 days after an intraday high of $98.29 on a negative ‘key reversal’ killed the rally! 8/30’s close was $93.35, lowest since 8/16! SUP at the 40 day (92.98), and the 50 day (91.52), both rising sharply again! RES at the 200 day (96.61). Currently $96.53 -.01. 200 day is proving to be formidable. Going nowhere! BOTH Gold and Crude had inside sessions (lower high, higher low than prior day)

It was an ugly day and we have been nonplussed since Thursday’s huge rally…on what? Certainly not retail which is still non-existent. The weakest sectors have been tech (aside from Utilities and the volatile Transports , both with yields of less than 2% ytd). The worst performer was the Nasdaq 100 -1.3%! (off 36.8 points with Apple the big loser providing 14.6 of them!). The surprise has been the Russell 2000 small cap which was off just 0.3%. Compare to the S&P 500 -0.6% and the Dow -0.4%

Yesterday, TB asked what Robert Schiller would say about this rally? Coincidentally he was on NPR in an interview on the housing market which he feels is up only due to seasonal factors – i.e. don’t see this as a trend! He also noted that northern Europe is experiencing a bubble-type boom. Why? Because they feel they are ‘different.’ Norway is the leader and this optimism is built on the fact that they are not members of the Euro and thus impervious to the problems…he scoffed at that hypothesis. Schiller is one of the most brilliant people of our time…quiet, unassuming, yet confident in his conclusions. He was ridiculed by Wall Street on stocks…how many of those firms remain? Then by the NAR and their idiot-savant economist David Lareah who never saw any chance that housing prices could decline…ever. He was assisted by the mortgage guru’s from Bear Stearns and other Wall Street firms and while they made him look like the idiot, it was he, who smiled as they berated him (he had been there before), but who had the last laugh? In a way they did because despite their flawed logic, they found enough suckers to keep buying their products into oblivion. Their firms…owned by the public, didn’t fare so well. This is the America we live in…where we owe everything to the private sector.

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