10/24/12…12 days; let’s fix things

Go Giants!!! Amazing two wins coming back from 0-2 to win – the first one at home!


Bloomberg Quote of the Day: “People don’t choose their careers, they are engulfed by them.” – John Dos Passos


Bloomberg Top Stories:

*Draghi Defends His ECB Bond-Buying Plan With Warning About Deflation Risks

*Stocks in U.S. Rise as Commodities Snap Drop on Chinese Factory Output – snap???

*Euro-Area Recession Deepens as Manufacturing Drops With Services – Huh? Hello???

*Bernanke Seen Using QE to Attack Unemployment Until His Term Ends in 2014- won’t work!

*Apple iPad Mini Debut Leaves rivals room to Undercut Not-So-Small Pricetag

*Ford to Shut Belgian Plant in 2014 With 4,300 Jobs Lost as Market Shrinks – oops!

*Syria Agrees to Cease-Fire With Rebels for Eid Holiday, UN’s Brahimi Says – maybe!

*Koch-Backed Texan Faces Sierra Club-fueled Challenge for U.S. House Seat

*BBC Warns U.K. Government Against Meddling in Savile Sexual-Abuse Scandal – warns???

*Life-Saving DNA Test Languishes as Doctors’ Ignorance Boosts Cancer Risk

Stocks are turning ugly led by the Dow and S&P 500, which suffered the third biggest drop of the year…imagine if they hadn’t come back to even on Monday! There was no bounce yesterday. Gold and Crude continue to lose value at an accelerating pace. Bonds still weak but stable and gaining modestly.

Tomorrow we will address what is wrong with the markets and why investors are leaving it.

– – –  . . .  – – –

(without comment, here is the factchecking summary of the debate. Debate #3 factcheck)

…what didn’t we hear in the debates? Nothing about the financial sector? Nothing! That is obvious for Romney since that is where his strongest support comes from. As for Obama, it was the work of Goldman Sachs that got him elected then provided him some of his key advisors as they have done so many times before.

It is this sick group headed by some of the most egocentric individuals you can imagine who sat down and for the first time in their careers signed a letter with their competitors. Imagine, Goldman, JPMorgan, BofA agreeing on anything! They created the financial crisis and they have not been held accountable, other than mere handslaps. Don’t let the nation fall off the fiscal cliff, fix things…but don’t regulate us…please. Money talks!

That is why the big banks must be broken up. You cannot be a bank and operate a brokerage. For God’s sake people…what do you think the point of Glass-Steagall was? You know, the one that Sandy Weill tore down with the support of Clinton’s Treasury Secretary Bob Rubin, Alan Greenspan and Sen. Phil Gramm…arguably the worst offender.

Poor Brooksley Born paid the price for going up against this motley but well-respected crew. Her sin was wanting to regulate derivatives and have them trade on an organized exchange. What? That would take the profit out of it. Precisely, and without a motive to push the crap it wouldn’t be sold. TB recalls when credit default swaps originated. No interest from investors who would seemingly want protection…no…it came from speculators like hedge funds. Oh boy, did it grow too! Far beyond anyone’s expectations and to the point that it finally cost AIG it’s ‘AAA’ rating and ultimately led to bankruptcy. Wonderful! Meanwhile, we the people picked up the pieces. We even had them pay back Goldman who had already re-hedged because of their concern as to AIG’s solvency!

Then what did we do and what are we continuing to try to do? Blame it on the people…the people! Those who were subjected to usurious rates, fraudulent disclosure on their mortgages and other credit instruments, steered into subprime loans when they would have qualified for a conforming loan, had appraisers inflate the value ot their property because they feared the brokers wouldn’t use them again. This is the banking system we are trying to protect?

TB wants to make two things clear: first, all corporations aren’t bad. There is no incentive for the CEO of a small company to mislead investors, yet they paid the price for Enron and can’t use the same firm as auditor and consultant driving their auditing costs higher. The vast majority of CEO’s don’t have big bonus plans, golden parachutes, private jets and other perks. No, they are simply hardworking individuals listed with the predators of big business. That is what free market capitalism and America has become. Do we berate them? No, we praise them…call people who lost their jobs, benefits and even their homes as whiners. Those on food stamps and other welfare are characterized as leeches…leeches on those hardworking wealthy people who give to charity down to their dividend income and capital gains so as to minimize their taxes. No, there is nothing wrong with trying to pay less in taxes but to prefer to use your millions to influence an election?

America is hurting. Worse, it cannot heal until we force the wealthiest to take responsibility and that could be a long way off. Eventually though a leader will surface and those who have benefit so far will pay a dear price for their greed. Sadly, depending on how strong the movement is though, once again it may well be the middle class that suffers. Be careful what you wish for!

Now you know the thrust of TB’s comments going forward. Leave the elections up to you!

Last night on PBS (they have more than Big Bird), TB watched an incredible documentary on the Cuban Missile Crisis (TB had just joined the Naval Reserve then so it has special meaning to him), it was JFK alone in that room with his advisors, and the military wanted him to attack immediately, led by Gen. LeMay (whose brother was a friend and neighbor of TB’s). He ignored their pleas…Kruschev became scared…as was JFK…and blinked, but more than that he did not announce that in exchange for them pulling missiles out of Cuba we would pull ours out of Turkey. There were at least two incidents that could have provoked either side to fire and if so the world would be a different place today. TB gained enormous respect for JFK, less for LeMay. Had he not been his own man the world would be a very different place today. Perhaps we should consider restraint as a desirable trait for president. Which of these men has it?

TB has to take exception with the pundits who claim there was little substantive difference between Romney and Obama…both were good. Other than the three bold misstatements by Romney (TB is being kind by not branding them worse as the factcheckers did) they both sounded fine. Except that Romney has changed his positions since the primary’s…does that mean he is pandering? Not likely, but a consideration. Obama turned aggressive on the challenges to him as well he should, and interrupted a few times. The three ill-advised comments were on the ‘apology tour,’ ‘leading from behind,’ and most importantly the size of the military.

Comparing the Navy of today with 1916 when the Navy still had some sailing ships is preposterous. We had no aircraft carriers, submarines, and more importantly no nuclear power. As for the Air Force, in 1947 we were entering the jet age and all those obsolete bombers and fighters were worthless…size does not matter. Also, since 2007 the Navy has been growing. TB has a friend who is a Captain assigned to a project to determine what kind and how many ships the Navy needs due to the changing global environment since the end of the Cold War. He would be stunned by Romney’s comments.

But it is not Romney who bothers TB. It is the GOP of which TB voted for for all of his life – until George W. Bush. It has become mean-spirited, alienating seniors who were its biggest supporters and attempting to deny them their most important right: the right to vote, in order to eliminate others who would vote for another party. They rail about socialism but want to control our lives with abortion issues. You can force a woman to have a child, you cannot force her to raise it properly, especially if she has no money. Is Romney more like Bush, the father, or Bush, the son?

The big complaint with Obama is his plan for the next four years. But what is a plan when you have no idea how you can implement it before the election? You have no idea how much support or opposition you will have in Congress. But the real issue is when a candidate claims he will do something that he has no control over: taxes, spending, etc. The one issue he has control over is policy is foreign policy. May the best man win…for our future.

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

Volume dipped again yesterday, following the surge from last Friday’s options expiry, as stocks dipped again to 3.13B shares vs 3.2B shares vs 3.87B shares vs 3.83B vs 3.64B shares on a very weak session especially the Dow and S&P 500. On 9/1 volume hit 4.56B shares, high of the year. NYSE stocks executed without the aid of the ETN market rose modestly to 671M vs 634M vs 941M shares (highest since 9/21). 9/15’s 464M shares was the lowest since 11/25/11! There have been just eight 700M+ days since 8/3. The high ytd was 9/21’s 1.8B shares – due to a quadruple witching and an S&P rebalancing. Since 6/29 just 13 sessions have surpassed 800M shares. The average since 8/1’s 1.03B is just 667M. The average for 2012 is just 772M shares and since 6/29 just 691M shares– WEAK!!! 102 of the last 141 sessions have been less than 800M shares (72%!). Since 2/29 there have been just 23 ‘average’ days (mostly down!), including 9/21’s high for 2012 of 1.8B (5B including ETNs) and just 20 have been above 900M – 798M is the 12 month average and slipping! Since 11/1/11 there have been just 17, 1B share days…13 in 2012! Since 2/6 there have been 61 sessions less than 700M shares. 221 of the last 236 sessions have been less than the 12 mo ave (94%)!

Advance/Declines were negative for a 4th session: -2.7x vs -1.1x vs -3.4x vs -1.1x vs +2.2x on NYSE and -1.8x vs -1.1x vs -4.2x! vs -2.1x vs +1.6x on Nasdaq. Breadth was worse: -7.5x! vs -1.1x vs -8.3x! vs -1.3x vs +2.7x on NYSE and -1.7x vs +1.2x vs -5.5x! vs -1.8x vs -1.1x on Nasdaq. New 52 week highs plunged for a 4th day to 67 vs 97 vs 177 vs 330 vs 363 (768 is cycle high). New lows surged to 143 vs 95 vs 121! vs 54 vs 48. The ratio is NEGATIVE again: -2.1x! vs  -1:1 vs +1.5x vs +6x vs +7x. The S&P VIX, jumped to 18.83 vs 16.62 +2.21, a 13.3% gain! 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 -1.8% vs flat vs -1.5% vs -0.1% vs flat; Dow Transports UP 0.9%? vs -0.4% vs -1.4% vs +0.2% vs +0.6%;Dow Utilities -0.9% vs -0.4% vs -0.7% vs +0.3% vs +1.1%!; S&P 500 -1.4% vs flat vs -1.7% vs -0.2% vs +0.4%; Nasdaq Composite -0.9% vs +0.6% vs -2.2% vs -1% vs +0.1%; Nasdaq 100 -1.1% vs +0.4% vs -2.4% vs -1.1% vs -0.1%; Russell 2000 -0.5% vs -0.1% vs -1.9% vs -0.6% vs +0.9%; NYSE Financials -1.7%! vs +0.3% vs -1.4% vs flat vs +1.2% (KBW Banks -1.3% vs flat vs -0.7% vs -0.5% vs +1.6%; Nasdaq Banks -0.5% vs +0.4% vs -0.6% vs -0.7% vs +1.1%; NYSE Brokers -1.3% vs flat vs -2.8%!!! vs -1.1%! vs +2.5%. NYSE Financial Leaders: BAC -1.9% vs +1.2% vs -0.3% vs +0.3% vs -0.2% vs +0.2% vs +3.5%! vs -2.3%; Regions Bank RF -7.6%!!!; GE -1.9% vs -1.5%

European stocks stronger after four weak sessions; Asia weak except Hong Kong closed; FTSE +0.4% vs -1.2%! vs -0.1% v -0.1% vs -0.2%; CAC 40 +0.6% vs -1.7%! vs -0.1% vs -0.5% vs -0.3%; DAX +0.5% vs -1.6%! vs -0.3% vs -0.5% vs +0.3%;Nikkei -0.7% vs +0.1% vs +0.1% vs +0.2% vs +2%!; Hang Seng +0.3% vs closed vs +0.7% vs +0.2% vs +0.5%; Korean KOSPI -0.7% vs -0.8% vs -0.1% vs -0.8% vs +0.2%;Indian Sensex -0.4% vs -0.4% vs +0.6% vs -0.6% vs +1%. U.S. stock futures up: DOW +51; SPX +7.70; NDQ +16.

U.S. treasury bonds still bouncing and had a solid session yesterday, but off o/n: 10 yr 1.79% -5/16 – record low of 1.40%; 30 yr 2.94% vs 2.92% -11/16. Long TIP 0.40% vs +.38% -7/16. 0.28% is record low!The 5 yr TIP yields -1.42% vs -1.43%; 10 yr -72% vs -.75%.Bills 0.12% 1 month; 0.10% 3 months; 0.15% 6 months. Reverse Repo 0.26% vs 0.22%! 3 mo. Libor 0.31%; 6 mo. 0.55!!! On 9/18 they were 0.38% and 0.67% respectively…with no policy change??? European problem sovereign 10 years, Germany-benchmark 1.58/% +1; Italy 4.85% -1; Spain 5.57% -1; Greece 16.74% +3…on 9/20: 19.75%!!!; Portugal 7.62% +4; Ireland 4.61% +2

Gold could not overcome the overnight losses and a new low since 9/7 of $1704! It is well below BOTH the 40 day AND 50 day moving averages for the first time since August 15th! It closed at $1709.40 -$14.90. It closed at $1798.10 on 10/13, highest since 2/29 and it has lost $106 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. RES at $1725, the 50 day, $1746, the 40 day – both climbing! MAJOR SUP at $1669, the 200 day. CAUTION!!! 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1711.70 +$2.30. Yesterday’s low was $1704.60! Crude closed sharply lower for a FOURTH session following Friday’s negative key reversal after trading weak for two weeks at $86.67 -$2.05! The session low of $85.49 eclipsed the $87.70 low of 10/3, and is lowest since 8/3! It has traded below the 40/50/200 day since 9/19! RES at the 40 day (93.09), 50 day (93.62), and the 200 day (95.56). Overnight it is $86.48 -.18.

(Commentary has been moved to page one after Top Stories)


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