10/16/12…21 days: #15 leadership

Bloomberg Quote of the Day: “Imagination is a poor substitute for experience.” Havelock Ellis

This week’s economic calendar is quite full. The highlights of the week will be September Retail Sales (Monday) and the September CPI (Tuesday). We will also get the October Empire State Manufacturing Survey and August Business Inventories (Monday), September Industrial Production (Tuesday), September Housing Starts (Wednesday), the October Philadelphia Fed Survey and September Leading Indicators (Thursday), and September Existing Home Sales (Friday). Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA

Bloomberg Top Stories:

*Pandit Abruptly Resigns as Citigroup CEO, Director; Corabt Named Successor – ???? One day after record earnings and beating estimates, stock rose 5.5% yesterday? Oh oh!!!

*Corbat Says He’ll Review Management, Make Changes as New Citigroup Chief

*Departure of Pandit ‘Very Positive’ for Citigroup, Ex-FDIC Head Bair Says – positive???

*Goldman Earnings Beat Estimates on Debt Trading as Dividend Increased

*Germany Open to Spain Seeking Precautionary Rescue Credit, Lawmakers Say

*U.S. Industrial Output Rises More Than Forecast in Sign of Stabilization – Hello Jack???

*Stocks Advance With Commodities, Euro on Spain Financial Bailout Optimism

*Goldman Sach’s Nine-Month Compensation Pool Grows 10% as Revenue Climbs

*Rajoy Bets Playing for Time Will Secure Easier Bailout as Banks Downgraded – big bet!

*Girlfriends of ex-Mizuho Banker Doubled Money on Insider Trading, FSA Says – LOL!!!

*Obama’s $5 Billion Delivers Slow Jolt to U.S. Electric-Car Demand – cost vs value

*Obama Under Pressure as Second Debate With Romney Comes Amid Early Voting

*Picasso, Monet Paintings Stolen From Rotterdam’s Kunsthal Museum Overnight

*Social Security Beneficiaries in U.S. to Get 1.7% Cost-of-Living Adjustment – hmmm?

*Both Campaigns Embrace Foolish Protectionism – Bloomberg Commentary and correct!

Readers note: each day from now until the election TB will focus on one aspect of the race. No playing of favorites, no picking who to vote for, hopefully just more information for you to decide.

…Lee Iacocca wrote a great book, in 2007, before the crisis and before the last electon…small in size but loaded with wisdom. He obviously wrote it in frustration. It was called, “Where Have All the Leaders Gone?” (you could easily put it to Where have all the flowers gone…and it would be just as sad or worse). He provided his ‘Nine C’s’ of leadership:

Curiosity: that means seeking advice and learning from beyond your close allies and advisors. It also means understanding people at a lower economic level than you. Both men fail at this!

Creative: go out on a limb. Obama’s biggest failure: creating the Simpson-Bowles Commission then when they presented their report he was not available…it went to Joe Biden. That was a total lack of leadership. As for Romney, his flip-flopping on health care, abortion, and telling us he has a jobs plan and a tax plan without any answers. His only creativity is in reversing his opinions and telling us he has a plan but without any details (note: Lawrence Lessig, a former colleague of Obama’s at Univ. of Chicago (yes he did teach law there!), said on the eve of the election he asked Obama’s strategist…not named but sounds like Axelrod…how they would change government. The answer was, “we haven’t a clue.” There was no plan…does Romney have one, and if so if he announced it would it cost him the presidency? Think about that.

Communicate: sounds easy, right? But communication means telling the truth and both men have failed miserably at this…even when they are informed they are wrong. Romney’s comment on the 47% of Americans taking welfare and paying no taxes was disgraceful…but did he take it back? Not until it became a campaign liability. Furthermore, when in the South, everyone was talking about it without realizing that most of them were part of that group. Communication is more than talking…it is honestly and openly providing your philosophy. We deserve that.

Character: you can point to things both of these men have done that show character but lying offsets them. The only reason THEY care about character is to get your vote. Why do they want it? To become members of one of the most elite groups in the world. Obama is already in but the party wants him in again just as the GOP wants Romney to win. To fix things? Sure if it helps them. But it is about one thing: power. Remember ‘absolute power corrupts – absolutely.’ We keep hearing about Romney’s giving up 30% of his income to charity… he has to give 10% to his church. Then we are told about all  those great things he did for people he didn’t know…all members of his church…no problem with that but how can he turn his back on people who lost jobs, home, retirement, due to an industry he was involved in and not want reforms?

Courage: to be willing to level with the people even if it hurts or makes you look bad. It is also the courage to sit down with your adversaries and work for compromise – for the common good. Neither man has the courage to call a lie a lie…neither! Even when shown that it is false both continue to spread it. Lies, damded lies and politics!

Conviction: Does changing your opinion because of the political winds amount to conviction? Will you work to achieve your conviction at all costs even if it is wrong? Don’t lose sight of objectives. Even if you believe abortion is wrong do you have the right to impose that belief on everyone? Think when abortion was illegal, think prohibition…wake up, America!

Charisma: Obama is loaded with it. It got him elected the first time. But it became wearing to hear upbeat comments when we knew things were bad…level with us. That goes for you too, Mitt! Now that Romney is gaining he is backing off from attacks and becoming more likeable.

Competent: Does Romney’s experience as an investment banker mean he knows how to create jobs, balance the budget, or fix the gap in Congress? Does Obama have the ability to bridge the gap?

Common Sense: Both men lack this as did Bush and even Clinton according to Iacocca. You can’t do it in sound bites…you have to understand what you were dealing with. Bush’s having an MBA didn’t give him common sense and Clinton having an alcoholic father didn’t make him wiser.

His last C is that Crisis leaders are made, not born. No one knows how they will react in a situation. Are there really heroes? Did they just react and do something they wouldn’t have done if they had had time to think about it? We ARE in a crisis and we need a crisis leader! Now!

Here is the link to a good, short summary of the book…worth reading.  Iacocca’s Nine C’s

You only have two choices and to TB neither one has those nine c’s. You will have to drill down.

Why did Romney take so long to say he was ‘totally wrong’ about the 47%? Because it became a political liability. Why does he continue to blame the deficits on Obama? Why does Obama continue to insist that Romney’s tax cut will cost $ 5 trillion (over ten years), and cite the Tax Policy Institute. Instead, why not tell the truth: there is no way to know because Romney has failed to provide enough details, although a minimum of $1 trillion was concluded. Why not say that?  Why do both Romney and Ryan hammer at Obamacare with lies? There are enough flaws in it to point out. It is the entire medical system that needs reform. Why did not GOP leader acknowledge that Obama is a U.S. citizen? That the budget deficit wasn’t due to him?

Confused? (an 11th C?). You should be. We are in a crisis, the worst since the Great Depression and we are in denial…nobody is working together. Our best hope now is in four years, provided that the parties wake up and that is one doubtful hope. If Romney is elected, or Obama cannot control Congress, will you be able to say, four years from now that you are better off then you were four years ago…you will if you are already wealthy…maybe…unless a true leader emerges that unites the people and by then it may be too late to save our way of living as we now know it…pity.

TB

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

Impressed by the rally yesterday? TB isn’t. Where are the REAL buyers? Hmmmm.

Equity volume rose to 3.46B shares vs 3.16B shares, weak but still up from 2.31B on the partial holiday. Stocks were strong across the board! On 9/1 volume hit 4.56B shares, high of the year. NYSE stocks executed without the aid of the ETN market barely budged to a still very weak 619M from 608 and last week AVERAGED just 607M shares, thanks to last Monday’s 464M shares – the lowest since 11/25/11! 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 774M shares and since 6/29 just 690M shares– WEAK!!! 97 of the last 135 sessions have been less than 800M shares (72%!). 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 – 805M 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 56 sessions less than 700M shares. 216 of the last 230 sessions have been less than the 12 mo ave (94%)!

Advance/Declines were positive, but… +2x vs -1.7x vs +1.9x vs -1.6x vs -3.4x on NYSE and +1.8x vs -2x vs +1.5x vs -1.2x vs -3.6x on Nasdaq. Breadth was similar: +1.8x vs -3.7x vs +2.6x vs -2.5x vs -2.7x on NYSE and +2.8x vs -1.4x vs +1.3x vs -1.9x vs -6.8x! on Nasdaq. New 52 week highs climbed to 150 vs 122 (768 is cycle high), while new lows were stable at 75 vs 74. The ratio is now +2x +1.6x vs +3.9 vs -1.2x. The S&P VIX, which rose intraday to 16.79 on 10/10, tumbled to 15.27 from 16.14 vs 15.59 -.87. The 12-month low was 13.32 on 8/17 while the 1012 high is 27.73 on June 4.

Here are the results of last 5 sessions: Dow +0.7% vs flat vs +0.1% vs -1% vs -0.8%; Dow Transports +0.4$ vs +0.9% v -0.1% vs +0.1% vs -1.1%;Dow Utilities +0.6% vs -0.7% vs +0.1% vs -0.3% vs -0.2%; S&P 500 +0.8% vs -0.3% vs flat vs -0.6% vs -1%; Nasdaq Composite +0.7% vs -0.2% vs -0.1% vs -0.4% vs -1.5%; Nasdaq 100 +0.7% vs flat vs -0.3% vs -0.5% vs -1.6%; Russell 2000 +0.6% vs -0.8%! vs +0.4% vs -0.1% vs -0.5%; NYSE Financials +1.1% vs -0.9% vs +0.7% vs -0.1% vs -1% (KBW Banks +1.1% vs -2.5% vs +0.7% vs +0.1% vs -0.6%; Nasdaq Banks +0.4% vs -2.2% vs +0.5% vs +0.4% vs -0.9%; NYSE Brokers +1.1% vs -1.8% vs +1.3% vs -0.3% vs -0.9%). NYSE Financial Leaders: BAC +3.5%! vs -2.3% vs +1.4% vs flat vs -0.8% vs -0.8%; C +5.5%!!!  Hello? On Citi’s earnings? Why didn’t they rally on JPM/WFC? What about the lawsuits? Note the bold showing how the bounce was less than Friday’s decline! Wake up!

Global stocks higher for a second day: FTSE +0.9% vs +0.5% vs -0.4% vs +0.8% vs -0.3%; CAC 40 +1.3% vs +1.4% vs -0.4% vs +0.8% vs -0.2%; DAX +1.4% vs +0.8% vs -0.4% vs +0.9% vs -0.2%;Nikkei +1.4% vs +0.5% vs -0.2% vs -0.6% vs -2%; Hang Seng +0.3% vs +0.1% vs +0.7% vs +0.4% vs -4%!!!; Korean KOSPI +0.8% vs +0.4% vs flat vs -0.8% vs -1.6%;Indian Sensex DOWN 0.7%? vs +0.2% vs +0.9% vs -0.9%. U.S. stock futures higher: DOW +62; SPX +6.80; NDQ +12.25! NDQ has led big for the last two sessions!

U.S. treasury bonds were weak Monday and again this morning: 10 yr 1.70% -5/16 – record low of 1.40%; 30 yr 2.89% -7/8. Long TIP 0.40% vs 0.40% -5/8. 0.28% is record low!The 5 yr TIP yields -1.58% vs 1.55%. 10 yr -80% vs -.80%.Bills 0.09% 1 month; 0.09% 3 months; 0.15% 6 months. Reverse Repo 0.32%. 3 mo. Libor 0.31%;  6 mo. 0.58!!! Both are now dropping 1bp a day!?! European problem sovereign 10 years, Germany-benchmark 1.54% +7; Italy 4.90% -6; Spain 5.71% -6; Greece 17.19% -5…on 9/20: 19.75%!!!; Portugal 7.89% +3; Ireland 4.63% +4…COMPLACENT??? You bet!!!! This is scary…as the plunging Libor with no comment!!!

Gold traded very weak again and closed at $17374.60 -$22.10!!! Friday’s high was $1798.10,

highest since 2/29 and it has lost $55 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 $1737, the

40 day, $1713, 50 day, both continuing to rise rapidly. MAJOR SUP at $1666, the 200 day.

5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1742.60 +$5.00 – o/n low below the 40 day – $1747.30!!! Caution! Crude closed about even at $91.85 -.01, but only after bouncing from a session low of $89.79, lowest since 10/9. The $87.70 low of 10/3, was lowest since 8/3! It has traded below the 40/50/200 day since 9/19! RES at the 40 day (93.90), 50 day (93.94), they crossed again, and the 200 day (95.86) – all starting to decline due to the weakness!

The cheerleaders were hard at work yesterday on CNBC…go stocks…Dow still near the record highs…they couldn’t take it down even 5%…people aren’t buying because they think they will get a chance to get them cheaper. Several money managers chirping about why you need to own stocks…to keep the value of THEIR portfolios up, stupid! Are they going to talk them down???

Why isn’t anyone asking why gasoline prices are so high?…nearly $5 a gallon in California yet Crude is well below $100 and trading WEAK!!! Why aren’t we worried about the election and more importantly sequestration which will send the economy into a tailspin BEFORE the next tenant of the Oval Office can sit down? THINK…question everything!

As for QE3…mortgages and mortgage REITS taking a bath despite the Fed openly buying all the mortgages it can get its hands on…are the banks dumping into it? Hmmmm…judging from the lack of growth in their loan portfolios you bet they are. But that is creating another problem…great earnings but where do they go from here with all that cash? The Fed talking about charging interest on excess reserves. They need LEVERAGE to generate more earnings…look at their shrinking bonus pools! So they will somehow lever up which will lead to the next crisis. Oy vey!

Just heard about Pandit’s surprise resignation…WTF??? Researching!

 

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