10/11/12…down to the wire

Bloomberg Quoted of the Day: “Life is a gamble at terrible odds – if it was  a bet you wouldn’t take it.” – Tom Stoppard

“Where do consequences lead? Depends on the escort.” – Stanislaw Lem

Bloomberg Top Stories:

*Initial Jobless Claims in U.S. Fall to a Four-Year Low as Quarter Starts

*Stocks Extend Advance(?) with Commodities as U.S. unemployment Claims Decline

*EU Said to Weigh Delaying Basel Bank Rules for Up to Year on Cost Concern – Cost?

*Spain Bonds Threatened With Forced Selling as Debt Rating Approaches Junk

*King Faces Dilemma on Stimulus as U.K. Inflation Forecasts Rise

*Blackstone is Accused With KKR, Bain in Lawsuit of Agreeing Not to Compete – !!!

*Collapse of EADS-BAE Merger Plan Dampens Bankers’ Prospects in Slow Year

*Corn Surges as USDA Sees Smaller Global Supply After Drought Curbs Output  – !!!

*California Leading U.S. Out of Housing Bust Its Lending Spawned – get real!

*Disputed Islands With 45 years of Oil Split China From Japan Again – sort that out!

*Food Sickens Million in U.S. as Industry-Paid Inspectors Attest It’s Safe – less reg???

*True-Believers in Biden-Ryan Debate Make Deeper Contrast than Obama-Romney

*Romney Narrows the Gap With Obama in Four Swing States

*Water Tests in Wyoming Town Are ‘Consistent’ With EPA Finding on Fracking – Oops!

…with less than a month to the elections, TB has decided to reflect and self-analyze his comments. TB received two emails yesterday which prompted this, both were in full or partial disagreement to his comments and both nicely said…something sorely lacking these days.

Rather than be upset at these, one from a friend and former colleague, and one from a long-time reader, TB welcomed them and wished that there could be more comments and discussions like this that are devoid of ideology and instead express concern for the future of America. From the beginning TB has not professed to know the answers but has sought the truth despite the professed truths we get from the news media that try to convince you to accept their beliefs. TB merely wants to offer another view, then have you decide…you have the power to do so…you just have to do research.

How many of you have done your own research? It isn’t difficult…Google the issue and you will find both sides easily. Factcheck emails you receive and ads – especially from the SuperPacs which TB feels are placing the future of our country in jeopardy. Honestly though: how many of you consider yourself enlightened yet have not even done this? How many of you have factchecked a mass email before forwarding it? Why didn’t you? Because it supported your own thinking…or justified it! Think how many you may have influenced by this. Instead, TB fact-checks them and then sends the result to all those on the mailing list. If it embarrasses the sender, tough break. But if it makes the sender think before hitting the ‘send’ key, it has done some good. TB has been caught a few times in trusting something sent by a friend…and when he has written of it he has issued a mea culpa. How many of you have?

TB keeps being told that MSNBC is as bad as FOX, just different bias. Yet, TB has watched both and notes one thing: the tone of the commentators. For the most part on MSNBC they don’t get personal…if so it is in a satirical way. On ‘fair and honest’ FOX it is condemnation. An example: the other day TB walked into the room with the TV on. It was Melissa Francis on FOX News. She had two sets of guests…one from each party and asked them questions on regulation and health care. In both cases, the screen was split with her on half and the other two in boxes on the other side. She listened attentively to the GOP spokesperson, smirked at the dem, and made sarcastic remarks to the dem. In one case she interjected her comments and he defended against them to which she said, “you rose to the bait and wasted your time.” Is this fair and honest reporting? You decide.

The point is that you are supposed to be an educated and knowledgeable voter. TB’s readers are above average, and yet how many of you accept what you hear from either of these groups merely because it supports your beliefs? Surveys show that we listen to those who support our views and ignore the other side. Gosh, aren’t you glad your way is right and that anyone who rejects it is a liar? Think about it.

Now for the two letters. The first took issue with TB’s remarks on Jack Welch’s conspiracy theory on unemployment, one reader wrote that Goalsby accused the Bush administration of manipulating the numbers. TB was not aware of this nor has he verified it. Instead, he condemns both for doing so as it casts doubt on the methodology of the data. TB quoted Diane Swonk, and has never heard a respected economist question manipulation as they know how it is developed and that no appointees are in control. The question did not address Welch’s self-professed manipulation of GE’s earnings while he was CEO and how he now admits it was wrong.

The second kindly and objectively took issue with TB’s argument for Obama over Romney. Also, that TB didn’t confront Obama’s failures and claims. That is a valid comment. The reason is this: everyone knows Obama’s shortcomings…in fact they even know the ones he has been blamed for that didn’t occur on his watch or at least before he had the power to do anything about them. One was the jump in unemployment after he took office…which was reported in February but had developed as a result of the crisis. Another was the claim that the increased budget deficit was entirely due to him despite proof to the contrary, the surge in the national debt – likewise, and claims about Obamacare from Romney and the GOP who had a very similar plan yet never implemented it. No point in discussing this because you have all made up your minds, hopefully, honestly and with investigation.

To summarize, if the challenger makes accusations and promises it is his burden to prove them – with facts, not innuendos. It is our responsibility to try to learn the truth.

Lastly, on TB’s comments about electing Romney vs. Obama. That was not a prophecy but a prediction…one I hold deeply…that slashing the budget while failing to increase revenues will push us back into recession…not a difficult feat. Furthermore, with short-term interest rates at zero and QE3 (the only tool remaining at their disposal), the Fed is helpless…unless they want to use negative interest rates which would induce deflation! An even worse alternative. It is not Romney per se that TB is concerned about so much as a lack of checks and balances (which will be further reduced with Supreme Court appointees who are far-right minded yet profess to be ‘strict constructionists.’ Also, if Obama is elected both parties will be forced to offer up someone who at least shows the ability to lead in four years…sadly, TB and others thought Obama was that man…but is Romney? His constantly changing stances and derogatory comments cast doubt on that. Are those changes of opinion real? …or are they merely pandering to Grover Norquist, the Tea Party, and the Christian Right? Think about it.

Grover Norquist? Who was responsible for the debt crisis of 2011 which caused S&P to take away our cherished AAA rating? First, the debt ceiling which they were arguing over is only an authorization to pay for what prior Congresses already voted for. Second, the tea party balked at this. Third, Boehner and Obama reach an agreement to solve the issue. Fourth and last: Grove Norquist twisted the arms of every GOP member who had signed his pledge of no tax increases – ever! He also stated that eliminating a subsidy or preference item was a tax increase! Not to mention his wanting to shrink the government until it would fit in a bathtub. Some of the framers of the Constitution believed this but later saw they were wrong. Had they not we would have ceased to exists hundreds of years ago. So thanks to Grover support for the Boehner plan diminished and that is how the crisis evolved. How can someone who wasn’t even elected have that much power? Worse, he would do it again and will if he can…that is the risk of the GOP controlling both Congress and the Oval Office…can we afford that? Grover is evil and must go!

There you have it…you decide…perhaps TB is dead wrong…likely you have already made up your mind…only time will tell…it always does. Thank you for reading.

Hope you have a wonderful day,

TB

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

Equity volume was steady at 3.2B shares vs 3.19B shares, up from 2.31B on the partial holiday. We have now had back to back down days. On 9/1 it hit 4.56B shares, high of the year. NYSE stocks executed without the aid of the ETN market however fell to 591M shares from 613M shares vs 464M shares – the lowest since 11/25/11! Yesterday was the lowest since 8/30 and the third lowest of the year!!! There have been just seven 700M+ days since 8/3. The high ytd was 9/21’s 1.8B shares – due to options expiry and an S&P rebalancing. Since 6/29 just 11 sessions have surpassed 800M shares. The average since 8/1’s 1.03B is just 654M. The average for 2012 is just 773M shares and since 6/29 just 691M shares – WEAK!!! 94 of the last 132 sessions have been less than 800M shares (71%!). Since 2/29 there have been just 22 ‘average’ days (mostly down!), including 9/21’s high for 2012 of 1.8B (5B including ETNs) and just 19 have been above 900M – 807M is the 12 month average and slipping! Since 11/1 there have been just 17, 1B share days…13 in 2012! Since 2/6 there have been 53 sessions less than 700M shares. 213 of the last 227 sessions have been less than the 12 mo ave (94%)!

Advance/Declines were very negative for a third session: -1.6x vs -3.4x vs -1.5x vs +1.3x vs +2.7x on NYSE and -1.2x vs -3.6x vs -1.2x vs +2x vs -1.1x on Nasdaq. Breadth was similar: -2.5x vs -2.7x vs 1:1 vs +4.1x vs +1.2x on NYSE and -1.9x vs -6.8x! vs -1.7x vs +1.8x vs +1.6x on Nasdaq. New 52 week highs plummeted for a third session to 83 vs 149 vs 203 vs 486 (768 is cycle high), while new lows rose to 99 vs 83 vs 63 vs 46. The ratio turned NEGATIVE for the first time in weeks to -1.2x vs +1.8x vs +3.2x. The S&P VIX declined very slightly to 16.29 -.08 after falling to 13.67 intraday on 10/5. Caution!

Here are the results of last 5 sessions: Dow -1% vs -0.8% vs +0.1%vs -0.3%vs +0.4%; Dow Transports +0.1% vs -1.1% vs -1.1% vs -1.5% vs +0.3%;Dow Utilities -0.3% vs -0.2% vs -0.3% vs -0.6%vs -0.7%; S&P 500 -0.6% vs -1% vs -0.1% vs -0.3%vs +0.4%; Nasdaq Composite -0.4% vs -1.5% vs flat vs -0.2%vs +0.9%; Nasdaq 100 -0.5% vs -1.6% vs flat for two sessionsvs +0.8%; Russell 2000 -0.1%? vs -0.5% vs -1.3% vs -0.2% vs -0.7%; NYSE Financials -0.1% vs -1% vs -0.6% vs -0.8% vs +1% (KBW Banks +0.1% vs -0.6% vs -0.5% vs +1.7%vs +1.2%; Nasdaq Banks +0.4% vs -0.9% vs +0.1% vs -1.1%vs +1.2%). NYSE Financial Leaders: BAC FLAT! vs -0.8% vs -0.8% vs -2.6%vs +1.5% vs +4.8%. See below for more detail on financial stocks.

European stocks higher – Asia mixed and weak: FTSE +0.8% vs -0.3% vs -0.4%; CAC 40 +0.8% vs -0.2% vs +0.1%; DAX +0.9% vs -0.2% vs -0.3%;Nikkei -0.6% vs -2%!!! vs -1.1%; Hang Seng +0.4% vs -4%!!! vs +0.5%; Korean KOSPI -0.8% vs -1.6% vs -0.1%;Indian Sensex +0.9% vs -0.9% vs +0.5%. U.S. stock futures stronger: DOW +52; SPX +7.60; NDQ +17.70.

U.S. treasury bonds weaker o/n but bounced Weds: 10 yr 1.72% -7/16 – record low of 1.40%; 30 yr 2.92% -13/16. Long TIP 0.39% vs 0.40% -9/16! 0.28% is record low!The 5 yr TIP yields -1.61% vs 1.63%. 10 yr -81% vs -.80%.Bills 0.12% 1 month; 0.09% 3 months; 0.14% 6 months. Reverse Repo 0.31% vs 0.29%. 3 mo. Libor 0.34%;  6 mo. 0.60!!! Both still falling! European problem sovereign 10 years, Germany-benchmark 1.49% +1; Italy 5.06% -3; Spain 5.84% +8; Greece 18.07% +8…on 9/20: 19.75%!!!; Portugal 7.89% +1; Ireland 4.75% -2.  

Gold traded in a narrow range and closed at $1765.10 +.10. Friday’s high was $1798.10, highest since 2/29 and it has lost $23 since. 7/12’s intraday low of $1547.60 was lowest since June 1. The record high is $1923.70, a buying climax on 9/6/11. SUP at $1728, the 40 day, $1704, 50 day, both continuing to rise rapidly. MAJOR SUP at $1664, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1768.50 +$3.40. Crude was also little changed – and weak. It closed at $92.26 -.05. The $87.70 low of 10/3, lowest since 8/3! It has traded below the 40/50/200 day since 9/22! RES at the 50 day (93.84), the 40 day (94.19), and the 200 day (95.97) – starting to slip. Currently $92.35 +$1.10.

Apple fell to the lowest level since 8/15 ($623.55) before rallying and closing up $5.06 at $640.91. TB mentions this because the Nasdaq 100 was off 13.38 points but only due to AAPL’s 4.22 index points or the loss would have been 17.6 or -0.7% vs -0.5%. 80% of the members were down led by AMZN, CSCO, and MSFT all subtracting 2+ points!

This remains a very treacherous environment and retail is obviously fed up with the games. Former SEC Chairman Arthur Levitt addressed the subject of loss of confidence in our markets and said they need more regulation and the SEC more understanding of new products and their impact…this from a strong SEC head who advocated less regulation…he is obviously disgusted.

Let’s see how financials have fared since 9/19, just before TB left: BAC -0.9%; C +2.8%; JPM +1%; WFC -0.1% – despite lawsuit?; USB +0.8%; GS +0.9%; MS -1%; UBS -4%. Compare: S&P 500 -2%; NDQ 100 -4.7% (high was 9/19!); Russell 2000 -3.4%. Also Dow 30 -1.7%; Dow Transports -1.9%; Dow Utilities +2.1%

TB is concerned about the lack of improvement in Utilities and Mortgage REITS. Has the Fed created a problem it didn’t foresee? Could their buying of mortgages and selling of treasuries actually cause mortgage rates to rise? Then there is the question of the poor performance of Transports…and the decline in inventories…with the holidays fast approaching shouldn’t these be leading indicators of GDP growth? You decide.

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