9/18/12…the blame game

Bloomberg Quote of the Day: “Giving up is the ultimate tragedy.” Robert J. Donovan

Bloomberg Top Stories:

*Deposit Flight From European Banks Seen Eroding Benefit of Common Currency

*Stocks Gain as Yen Weakens on Bank of Japan Stimulus; Spanish Bonds Rise

*Bank of Japan Unexpectedly Joins Fed in Easing as Growth Falters 

(hmmm Euro and Yen weak…money flowing to the BIG TBTF U.S. Banks – ask yourself if that is a good reason for U.S. stocks to rise? Note growth is slowing too!!!)

*Skepticism Returns Over Europe’s Crisis Measures After Draghi Commitment

*General Mills First-Quarter Earnings Top Estimates as Forecast Is Affirmed

*Romney Reframes Donor Comments as He Tries to Turn Debate Back to Economy

*Merkel Is Unbeatable by SPD Challengers in Poll as Crisis Policy Pays Off

*Silence on U.S. Housing Doldrums Makes, Obama, Romney Platforms Sound Alike

…what has happened to America when two people running for the highest office in the country can’t tell you what they will do differently but will tell you what is wrong with the other guy? This is aided and abetted by the SuperPac’s, far and away more strongly backed conservative…near radical elements and their sponsors are enriching themselves such as Karl Rove.

TB attended his Rotary meeting today and while saying the Four Way Oath (Is it the truth? Is it fair to all concerned? Will it build goodwill and better friendships? Will it be beneficial to all concerned?), he thought what a mockery of this oath American politics has become. When it came time for comments from members, TB stood up and said, “why do we raise money for the food bank and other charities if they are just lazy and there because they want to be? Are the wealthy the only ones who matter because they believe they made it on their own? If so, it is time for us to rethink what being an American really is all about.” There was total silence after so no way of knowing how it was taken, except that upon leaving a former president said TB was not out of line with the comment and it reflected some of his concerns.”

What TB left out and is now providing to you is a column by conservative (sic) David Brooks in the New York Times, that bastion of liberalism, see David Brooks-Romney . Of course, by this column many will dub him a liberal…perhaps even a bleeding heart liberal as we are in an age where everything has shifted so far to the right that the old labels no longer apply. Here is the link to the column which is written fairly, Mann and Ornstein.

Thomas Mann and Norman Ornstein began writing non-partisan columns for the Post several years ago but things have run so far to the extremist right that they have strong opinions. TB listened to them on NPR a few days ago and they explained what caused the shift: the Tea Party (incidentally yesterday on CNBC, Rick Santelli who talks bonds from the floor of the CBOT and created the tea party idea by saying, “how many of you want to pay for someone else’s mortgage?” Everyone on the floor chimed in. Yesterday he was even more rabid on the government bailouts…we will never know if we did the right thing but could they take the risk?). They spoke of a tea party congressman who was defeated in the primary this time because he wasn’t conservative enough. They had talked with this man when he said, “I only recently learned what a socialist Herbert Hoover was!”  Think about that and ask how we can have a democracy.

Mr. Romney is now trying to gracefully say that his comment about 47% of Americans trying to paint themselves as ‘victims’ was out of context and not what he meant. He had better because that group includes war victims, people on social security not earning enough to pay taxes after the exclusion, and a host of others that form his constituency.

Add to this his comment that the middle class goes down to $200,000-$250,000 and you see how out of touch he is as that is about in the top 5-8% of taxpayers! At the convention we heard from his friends how he doesn’t care how much money you have he is your friend. Then how come he has no idea what ‘middle class’ means? Is he that out of touch? Oh and like Dick Cheney and so many others who never served (sorry doing a Morman mission in France doesn’t help your understanding of what war means…even if you were nearly killed in an auto accident while doing it.), who are always itching to get us into something else…and like the two wars we are currently in fail to pay for them!

Just an opinion but TB is deathly afraid of what will happen with a GOP controlled House and a president who will sign everything they pass into law. If you doubt this, recall how Obama suggested vetoing the first budget presented to him due to over 9,000 earmarks. He was told that if he did so he would never get anything through Congress! So he focused on his healthcare bill…not much different from a GOP plan under Gingrich or the one by Romney, but he used all his capital on that and then lost control of the House afterwards. The rest is history, but the lies continue.

At a gathering of Hispanic’s, Romney said that Obama would spend us into oblivion. Apparently Mitt doesn’t know, like a lot Americans probably do that it is the Congress which decides how money will be spent and if taxes are to be raised or cut. Pity.

It was the ‘don’t tax’ and spend GOP under Bush 43 that created the deficit. Not only did the Dems push homes for all Americans, so did Bush and the GOP. Cut Medicare? No, he created Medicare Part D with no funding and no central buying of prescription drugs allowed (which Obama sadly caved on also). But how can Romney and other GOP leaders say that when the financial collapse came in 2008, the spending and bailouts (not to mention the closing of a GM plant) were due to Obama? One can rightfully criticize his under emphasis on jobs…but would it have mattered? As the GOP will tell you, it is the private sector who creates jobs…and if you think $27,000 average for a college grad with $100k of student loans is good then you must love Romney’s ‘lose a $22,000 job (with benefits) and take two $9,000 jobs (without benefits).’ Then call yourself a victim and get food stamps because you are earning below the poverty level…oh and don’t be un-American and walk away from that mortgage, even if it bankrupts you…that is reserved for corporations.

Speaking of which, there is one thing that could be, and should be done to find out who is contributing to the SuperPac’s created by the Citizens United ruling. The SEC should require corporations to disclose to their shareholders…within 30 days…amount of contributions to SuperPac’s and which ones. It is, after all shareholder money, not the CEO’s or his board of cronies. Will the SEC do it? Probably not…what have they done so far? Nothing to protect investors and little to prevent if from happening again.

Yet the GOP decried Occupy Wall Street before they even knew what it was. It was a cry for help, misguided (if you can even call it guided), but the only effort to do something. Too bad TB’s idea of Reform Corporate America and Congress wasn’t used instead.

No, just as Romney calls all those who lost their homes and jobs crybabies, Henry Paulson told the Wall Street perps to use our bailout funds to pay bigger bonuses. Not only did they accede, they used our money to pay lobbyists to deregulate further. The GOP points to Dodd-Frank as sufficient and claims it regulates derivates…it does not and the banks, led by Jamie Dimon continue to try to weaken or even repeal the act. This despite Dimon’s disaster in derivative trading of which he was more aware than anything else and multiple divisions of JPMorgan being charged and found guilty of defrauding states and subdivisions as well as parties to contracts.

TB wants to state that probably 98% of the people working for financial services companies (now that mortgage lenders have been wrung out) are honest. Furthermore it is only the biggest firms – you know, the ones we bailed out – who were responsible. Yet Jamie Dimon, Vikram Pandit, James Gorman, and Lloyd Blankfein continue to lead their companies and reap huge bonuses while the shareholders merely hope to recover their losses and lost returns as the stock price rises. Why does the GOP think this is a good idea? Why does the Tea Party lash out at the ‘victims’ while Mitt says that those who lost their homes and jobs are making themselves out as victims?

The answer to the above questions can tell us what to expect…especially with a few more like-minded Supreme Court justices added to the bench. That is why Karl Rove is fighting so hard for restrictive voter ID laws (which on the surface seem just but reduce the opposition without showing any meaningful instance of voter fraud.

TB will be gone for two weeks and hopefully have cooled off by the time he returns. Hopefully, but not likely. Hope all goes well for all of you.

TB

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

Stocks were flat to down modestly invalidating the rally (?) or is it just gaming for options expiration on Friday? Once again, the Dow Transports were the weakest -1.15 – -2.6% in two sessions…thank you FedEx which gapped down and fell 3.1% closing at the low. Once again the heretofore rallying Russell 2000 was off 0.6% -1.3% in two sessions. Financials were off again too by 0.6% or 1.4% in two days. Volume was little changed at 3.36B shares vs 3.33B 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 also declined slightly to 633M shares from the HEX 666M 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!!! 79 of the last 115 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 42 sessions less than 700M shares. 196 of the last 208 sessions have been less than the 12 mo ave (94%)!

Advance/Declines were slightly negative for a second day and have now been so 11 times in 21 sessions: -1.3x vs -2.3x vs +2.2x vs +3.7x +1.9x on NYSE and -1:1 vs -1.6x vs +1.9x vs +2.6x vs +1.5x on Nasdaq. Breadth was similar: -2.1x vs -2.8x vs +3.3x vs +10.5x vs +1.6x on NYSE and 1:1 vs -1.9x vs +3.7x vs +3.2x vs +1.6x on Nasdaq. New 52 week highs slid lower to 214 from 252 from 768 (a new cycle high), as did new lows 24 vs 32 – <50 for 9 days. The ratio rose to +8.9x vs +7.9x vs +24x! The S&P VIX declined slightly, after rising for two days, to 14.18 -.41. 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 +0.1% vs -0.3%vs +0.4% vs +1.6%vs +0.1%; Dow Transports -1.1%! vs -1.5%!!! vs +0.3% vs +0.5% vs +0.8%;Dow Utilities -0.3% vs -0.6% vs -0.7% vs +1.6%vs -0.4%; S&P 500 -0.1% vs -0.3% vs +0.4% vs +1.6% vs +0.2%; Nasdaq Composite flat vs -0.2% vs +0.9% vs +1.3% vs +0.3%; Nasdaq 100 flat for a second day? vs +0.8% vs +1.4% vs +0.2%; Russell 2000 -0.2% vs -0.7%! vs +1% vs +1.3% vs +0.4%; NYSE Financials -0.6% vs -0.8%! vs +1% vs +2.1%!!! vs +0.6% vs +1% vs -0.7% vs +1.2% vs +2.5% (KBW Banks -0.5% vs +1.7%!!! vs +1.2% vs +2.8%!!! vs +0.7%; Nasdaq Banks +0.1% vs -1.1%!!! vs +1.2% vs +1.4% vs +0.4%). NYSE Financial Leaders: BAC -0.8% vs -2.6%! vs +1.5% vs +4.8% vs -0.7% vs +4.6% vs -2.5% vs +4.9%! vs +5%; GE +0.9%. C +1% vs +4.2% vs -4.2%! Broker dealers were the weakest again.

European stocks mixed and little changed, Japan/Hong Kong strong on BOJ stimulus: FTSE +0.1% vs -0.7% vs -0.3% vs +1.6% vs +0.1%; CAC 40 -0.2% vs -1.1% vs -0.7% vs +2.1% vs -0.8%; DAX -0.1% vs -1% vs -0.3% vs +1.4% vs -0.3%;Nikkei +1.2% vs -0.4% vs closed vs +1.8% vs +0.4% vs +1.7%; Hang Seng +1.2% vs -0.3% vs +0.1% vs +2.9% vs -0.1%; Korean KOSPI +0.2% vs +0.1% vs -0.3% vs +2.9% vs flat;Indian Sensex -0.3%-0.3% vs +0.4% vs +2.5% vs +0.1% vs +0.8%. U.S. stock futures slightly higher: DOW +15; SPX +1.20; NDQ +5.25. Options Friday!

U.S. treasury bonds continuing to regain their losses since the FOMC statement: 10 yr 1.79% +3/16 – record low of 1.40%; 30 yr 2.98% +1/2. Long TIP 0.39% vs 0.40% +1 pt. 0.28% is record low!The 5 yr TIP yields -1.61% vs -1.67% +1/8. 10 yr -.77%.Bills 0.07% vs 0.04% 1 month; 0.10% 3 months; 0.13% 6 months. Reverse Repo 0.30% vs 0.37%. 3 mo. Libor 0.38%!!!  6 mo. 0.66% vs 0.67!! BOTH DROPPING!!! European problem sovereign 10 years, Germany-benchmark 1.61% -2; Italy 4.99% -4; Spain 5.73% -11!; Greece 19.75% -17!; Portugal 8.31% -2;Ireland 5.00% -3. These remain highly volatile with incredible price swings!

Gold was little changed closing at $1771.20 +.60 with its second straight lower high and lower low. On9/16 it had 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. Last Thursday created a powerful ‘key reversal’ (higher high, lower low, high above prior session high) It is now up $110 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 $1664, the 40 day, $1648, 50 day, both rising rapidly now. MAJOR SUP at $1655, the 200 day. These are tight supports and rising. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1776.00 +$4.80. Crude closed sharply lower for a second day at $95.29 -$1.33 two day after hitting $100.42 – highest since 5/4. The two day loss is a big $3.71! It fell through the 200 day and the 40/50 day are easily reachable. Due to Monday’s wide range however, it was an ‘inside’ day! 8/30’s close was $93.35, lowest since 8/16! RES at the 200 day (96.54), while SUP is at the 40 day (94.25), and the 50 day (93.15), both still rising sharply! Currently $94.88 -.14 – nearing the 40 day!

With Friday being the quadruple witching options expiry and having just gone through some sharp moves it is anyone’s guess what will happen by Friday’s close…and with the elections nearing quarterend or after! Caution advised!

Once again Dow Transports were the biggest loser, -1.1% vs -1.1% vs -1.5%…if you are a Dow Theorist you are placing limit orders by now. While all members were down FedEx cost the index 16 of the 57 points lost! It was ugly! FedEx had beat the lowered estimates but fooled no one as it ‘gapped down’ on the open for a second day…this time sharply and right thru the 200 day m/a, closing just above the session low  and closeby beating lowered estimates. It gapped down on the open and closed at the session low, -3.0% – that’s 3.7% in two sessions! Why did the market ignore the warning from FedEx last week? Why did it ignore the warning of Intel? Intel plunged on that statement to the lowest level since 12/20/11! It is now off 20.2% from the May 2 high! 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 cannot follow it just on a daily basis!

Rather than flat the Nasdaq 100 would have fallen nearly 5 points had Google and Apple not had big gains…not a strong market showing.

Financial stocks were lower for a second day still trying to sort things out since their run-up. NYSE Financials fell by 0.6% vs 0.8%. ARCA broker/dealers were the worst again -0.7% vs -1.7%. 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!

Gold is treading water for a third day after capping the runup with that new rally high on an inside day. Crude had a second lower high and lower lows blasting thru the 200 day.  . It is now off $3.71 in two sessions just two days after hitting a high of $100.42, highest since 5/4/12!

TB will be out of town until October 5th…with sporadic comments when possible.

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