9/18/12…corporation, shareholder, union, member

Bloomberg Quote of the Day: “Beware of no man more than yourself; we carry our worst enemies within us.” – G.K.Chesterton…ain’t that the truth…but with help!

Bloomberg Top Stories:

*Spain Floats Bailout Prospect as Pressure to Accept Rescue Package Builds (Spain is almost like Greece…youth unemployment topping 50%! Do you think they like it?)

*Stocks in Europe Decline Most in Two Weeks as Euro Weakens With Crude Oil

*Europe Banks Fail to Cut Assets as Draghi Loans Defer Deleverage Necessity – oops!

*FedEx First-Quarter Earnings per Share, Sales Exceed Analysts Estimates – but don’t forget their warning which reduced estimates…also this is for their first quarter, they must know something…rev growth y-o-y has slowed from 13.2% to 8.6% to 6.4%!

*Economy in Morgan Stanley Twilight Zone as Stocks Indicate Dawn of Growth – huh?

*Turkey Cuts Overnight Rate for First Time in Seven Months as Economy Slows – !!!

*Oil’s Three-Minute Slide in New York Vexes Vitol as Traders Remain Stumped – !!!

*German Investor Confidence Rises for First Time in Five Months

*Romney Stands by Comment on Government-Dependent ‘Victims’ at Fundraiser -47%?

*NATO Restricts Afghan Joint Operations After attacks on Troops by Insiders

*Pakistan Joins With Bangladesh Blocking YouTube Amid Islam Film Protests  

…as in Tinker, Tailor, Soldier, Spy. A great LeCarre thriller but very hard to follow. So we will content ourselves with following the money which actually flows the reverse of today’s title: shareholder funding corporation for SuperPac contributions, union member funding union for campaign contributions. But to TB’s knowledge nobody has observed that those big corporate contributions are not the CEO’s money…or the board, which in many cases is the same thing…right Jamie?

When TB was in Jackson Hole and talked with former Sen. Bob Bennett, he said that Citizens United was conceived because of Michael Moore’s Fahrenheit 451, the slam documentary (sic) against the Bush administration. .

As he put it, they could not compete with the well-funded Mr. Moore. He argued that the court decision was correct since unions are not limited in their activities. TB acquiesced but has since learned that Sen. Bennett is wrong.

First, TB was opposed to the court’s 5-4 decision since it allowed corporations to use unlimited funds to form SuperPac’s. In the minority dissent it was argued that if they were allowed to do so they must disclose the amount and source within 30 days. There are however, no such restrictions. So TB argues that since they now have the power to influence elections, and not thru informative ads but disinformation and misinformation, it is the shareholders right to know which SuperPac’s they contributed too (not to mention their customers, but it is the shareholders money, not the CEO’s!). Some activist fund like CalPers should address this point since it might not be in the interest of the shareholders but benefit the CEO….which is the more likely case anyway.

Second, it was pointed out in an excellent interview by Bill Moyers, sent to TB by a friend as have others that he has been doing such as the John Reed interview which is crucial to the understanding of how Sandy Weill defeated Glass-Steagall with the help of President Clinton and Treasury Secretary Rubin (who coincidentally became a highly paid Vice-Chairman after his term…without portfolio! A clear quid pro quo.). That came from another friend and since then TB has tried to catch as many as possible. Contrast Bill Moyers to Rush Limbaugh or for that matter anyone on the right. He asks intelligent deep questions…even more so than Charlie Rose. Here is a link to the discussion on Citizens United and the Supreme Court along with a shocking interview about Karl Rove…Rove and Grover Norquist are the two most powerful men in this country!

Did you know that $350 million has been raised in this election cycle by SuperPac’s? Mostly conservative…very conservative. Now think, Exxon Mobil could provide that much money and it would cost them just 7.3% of their earnings! Is that the kind of country we want? You had better think long and hard before answering that question. Moyers believes we are now living in a ‘plutocracy’ one which is not a democracy but more of a meritocracy based on wealth. Where does Mitt Romney stand on this?

First, he said before a group of Hispanics that he defines middle income as $250,000 or maybe down to $200,000…this is the perception of a man worth $750 million! $250k is actually the top FIVE percent…that is a pretty narrow ‘middle class definition.

Then he said in a private fundraiser that 47% of Americans see themselves as ‘victims’ and pay no taxes. He stands by that statement…you decide.

Here is the link to Bill Moyers the first clip is on Citizens United and the Supreme Court and the power the next president will have to either add balance or stack it to the conservative side. There is also the clip on Karl Rove…together they are about an hour long…don’t you think your country is important enough to spend one hour listening?

TB has always tried to be impartial…to give his opinion but take shots at both sides. But when pure money is buying elections…and through misdirecting voters, there is something wrong. This election, plus the possible three Supreme Court justices to be named…which for anyone other than an extreme conservative it will be very hard to get past the Senate. You did see that Romney’s judicial advisor is…Robert Bork! Good luck.

You decide but please do so with good thinking, not soundbites…it is our future that is at stake. Neither man is a leader…but ‘do no harm’ is a part of the Hippocratic Oath – not the Hippocratic one! Just be sure you are thinking about the future.

Have a great day!

TB

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

Stocks FELL after rallying for two days time with the Dow Transports taking the biggest hit, -1.5%!, followed by the heretofore rallying Russell 2000 -0.7%. Financials also were off 0.8%. Volume was significantly lower at 3.34B shares vs 5B vs 4.45B shares. The range since July 29th  is from a low of 1.81B (8/31) to B shares (9/14)!  NYSE stocks executed without the aid of the ETN market declined sharply also to the HEX: 666M shares vs 900M shares vs 902M – the highest since 7/27. So for just two days volume was above the 12 month average (845M) for the first time since 7/27. There have been just FOUR 700M+ days since 8/3. The high ytd was 8/1’s 1.03B shares! Since 6/29 just 9 sessions have surpassed 800M shares. The average since 8/1’s 1.03B is just 627M. The average for 2012 is just 781M shares and since 6/29 just 683M shares – WEAK!!! 78 of the last 114 sessions have been less than 800M shares (69%!). Since 2/29 there have been just 20 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B (5B including ETNs) and just 18 have been above 900M – 845M 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 41 sessions less than 700M shares. 195 of the last 207 sessions have been less than the 12 mo ave (94%)!

Advance/Declines were negative for the first time in four sessions and have now been so 10 times in 20 sessions: -2.3x vs +2.2x vs +3.7x +1.9x vs +2.1x on NYSE and -1.6x vs +1.9x vs +2.6x vs +1.5x vs +1.5x on Nasdaq. Breadth similar: -2.8x vs +3.3x vs +10.5x vs +1.6x vs +3.2x on NYSE and -1.9x vs +3.7x vs +3.2x vs +1.6x vs +1.4x on Nasdaq. New 52 week highs tumbled by two-thirds to 252 from 768 (a new cycle high), while new lows were steady at 32 vs 32 – <50 for 8 days. The ratio plunged to +7.9x vs +24x! The S&P VIX rose slightly for a second day to 14.59 vs 14.51. The highest level was 8/2 (17.98 intraday high of 18.96!), while low was 13.45, the low for 2012. Watch out for the ‘quadruple witching’ options expiry this Friday which after moves like we have just seen should be volatile. Also we are approaching quarterend!

Here are the results of last 5 sessions: Dow +-0.3% vs +0.4% vs +1.6%vs +0.1% vs +0.5%; Dow Transports -1.5%!!! vs +0.3% vs +0.5% vs +0.8% vs +0.7%;Dow Utilities -0.6% vs -0.7% vs +1.6%vs -0.4% vs -0.3%; S&P 500 -0.3% vs +0.4% vs +1.6% vs +0.2% vs +0.3%; Nasdaq Composite -0.2% vs +0.9% vs +1.3% vs +0.3% vs flat; Nasdaq 100 FLAT vs +0.8% vs +1.4% vs +0.2% vs -0.1%; Russell 2000 -0.7%! vs +1% vs +1.3% vs +0.4% vs +0.3%; NYSE Financials -0.8%! vs +1% vs +2.1%!!! vs +0.6% vs +1% vs -0.7% vs +1.2% vs +2.5% (KBW Banks +1.7%!!! vs +1.2% vs +2.8%!!! vs +0.7% vs +0.8%; Nasdaq Banks -1.1%!!! vs +1.2% vs +1.4% vs +0.4% vs +0.4%). NYSE Financial Leaders: BAC -2.6%! vs +1.5% vs +4.8% vs -0.7% vs +4.6% vs -2.5% vs +4.9%! vs +5%; C +1% vs +4.2% vs -4.2%! Both WFC and USB fell by 2% a day after +4%+ gains and new 12 month highs for a second day! Too far???

Global stocks weaker: FTSE -0.7% vs -0.3% vs +1.6% vs +0.1% vs flat; CAC 40 -1.1% vs -0.7% vs +2.1% vs -0.8% vs +0.4%; DAX -1% vs -0.3% vs +1.4% vs -0.3% vs +0.6%;Nikkei -0.4% vs closed vs +1.8% vs +0.4% vs +1.7%; Hang Seng -0.3% vs +0.1% vs +2.9% vs -0.1% vs +1.1%; Korean KOSPI +0.1% vs -0.3% vs +2.9% vs flat vs +1.6%;Indian Sensex -0.3% vs +0.4% vs +2.5% vs +0.1% vs +0.8%. U.S. stock futures weaker: DOW -25; SPX -2.70; NDQ -4. Options Friday!

Long U.S. treasury bonds gaining overnight after several weak sessions: 10 yr 1.81% +9/32 – record low of 1.40%; 30 yr 3.01% +13/32. Long TIP 0.40 vs 0.39% +11/16. 0.28% is record low!The 5 yr TIP yields -1.67% vs -1.73%. 10 yr -.78%.Bills 0.04% 1 month!!!; 0.10% 3 months; 0.13% 6 months. Reverse Repo 0.37% vs 0.32%. 3 mo. Libor 0.38%!!! and 6 mo. 0.67%! DROPPING!!! European problem sovereign 10 years, Germany-benchmark 1.65% -2; Italy 5.04% -4; Spain 5.86% -5; Greece 20.22% -5; Portugal 8.14% +9; Ireland 5.11% +5. These are highly volatile with incredible price swings!

One day after a rally high of $1780.20 – highest since 2/29 when it plunged $101.70 in one day – Gold closed at $1770.60 -$2.10. Thursday created a powerful ‘key reversal’ (higher high, lower low, high above prior session high) It is now up $109 since 8/30!!! 7/12’s intraday low of $1547.60 was lowest since June 1. 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 $1659, the 40 day, $1644, 50 day, both rising rapidly now. MAJOR SUP at $1655, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1760.20 -$10.40. Crude closed sharply lower at $96.62-$2.38 a day after hitting $100.42 – highest since 5/4 but is well above the 200 day. 8/30’s close was $93.35, lowest since 8/16! SUP at the 200 day (96.57), then at the 40 day (94.10), and the 50 day (92.93), both rising sharply! It is now $96.24 -.38. Both gold and crude had lower highs and lower lows!

Worth repeating: Stocks have now overcome the entire fall from 2007. Over the past 12 months the Dow is up 29.7% (but that is from a horrible third quarter). S&P 500 is up 23.2%. Year to date it slips to +13.5% and 18.4% respectively. Still good. Now for the three years: +14.5% and 13.5% (all annualized), very good, right? But what about 5 years? +2.5% and 1.4%!!! TB is just saying…oh and since the 2000 crash? Just +3.9% and +1.4%!!! Is that the superiority of stocks…does it pay for treatment for your ulcers? Also, think of the changes in the indices over that period of time (out with the losers, in with the winners). They have so many ways to beat you…and the only way they make money is to get you to BUY…not sell! Think about it!

 

Note that of the major indices Dow Transports were the biggest loser -1.5%…in fact, it was THE biggest loser of all indices! Why did the market ignore the warning from FedEx last week? Why did it ignore the warning of Intel? Instead placing its bets on Bernanke: the Fed can only do so much and the effects of each QE will be less. It is important not to look just at the daily changes but at those over the past five sessions which TB conveniently posts in the stock section above. You need to follow it that way not on a daily basis!

 

The Russell 2000 has been the dog but recently had been the best performer. Yesterday however it fell by 0.7%, vs -0.2% on the Nasdaq Composite and FLAT on the 100. Oh, a note about that ‘flat’ – the index was up 1.21 index points…Apple added 7! Gilead was the only other major gainer with 2.5 points, ex those two it would have been off 0.3%. Also nearly 3:1 declined. Some rally! Others have commented that the rally was a ‘catch-up rally for those who have lagged…the preponderance of new highs, 768 on Friday, a cycle high, and just 252 yesterday adds credence to that theory.

 

As for financial stocks which have been in vogue. But a funny thing happened yesterday – funny strange, not funny ha-ha, NYSE Financials fell by 0.8% but for the first time it was the sub indices that got hurt the most: KBW banks -1.7%! Nasdaq banks -1.1% and the worst: ARCC broker/dealers -1.7% – worst of all indices big or small. THINK!!! They rallied in anticipation of QE3…but what will it really do for them? It will allow them to dump more mortgages while retaining the servicing! Oh, and if Romney is elected the banks will be in total control of student loans meaning more defaults so they get paid their 100 cents on the dollar by YOU the taxpayers. Oops…the GOP Congress will have to pass that.

 

Gold consolidated for a second day while Crude was trashed. Both had lower highs and lower lows. Hmmmm. Crude plunged nearly $4 in THREE minutes on the NY Merc with a range of nearly $5 on the session. It closed off $2.38 at $96.62 just one day after hitting $100.42 intraday, highest since 5/4/12! Nobody has been able to explain it.

 

That is enough to ponder but stop focusing on daily returns! TB’s just sayin’…

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