11/13/12…let’s get going!

TB’s Quote of the Day: “The most effective deterrent to financial crime is criminal prosecution and jail time.” Ben Wogsland, Minnesota Attorney General’s office, how about that for a concept? Eh, Congress? Attorney General? President Obama. It doesn’t even matter if there isn’t enough evidence to convict, the humiliation would help deter.

 

Bloomberg Quote of the Day: “Forgive many things in others; nothing in yourself.”

– Ausonius

 

This week’s holiday-shortened economic calendar is still quite full with an emphasis on inflation and the manufacturing sector. However, the highlight of the week will be October Retail Sales (Wednesday). We will also get the October Treasury Budget (Tuesday), the October PPI and September Business Inventories (Wednesday), the October CPI, the November Empire State Manufacturing Survey, and the November Philadelphia Fed Survey (Thursday), and October Industrial Production (Friday). In addition to the economic data, the Federal Reserve will release the minutes to the October 23rd – 24th FOMC meeting (Wednesday).

Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA

 

Bloomberg Top Stories:

 

*European Leaders Spur Greek Financing Doubt After Delaying Budget Standards

*German Confidence Unexpectedly Slumps as Debt Crisis Dims Outlook – still there!

*Stocks Pare Drop on Report Germany Favors Bundling Greece Aid; Metals Fall

*Wall Street Damps Banker Pay Expectations After ‘Negative Bonuses’ in 2011

*Carry Trades Losing Most Since 2011 Amid HSBC Hazard Warning – not good!

*France Urges Progress on Bank Union Even as Debates on Supervision Revenue

*Home Depot Profit Rises 1.4% as Customer Traffic Increase Bolsters Revenue

*Microsoft Windows President Sinofsky to Leave as Larson-Green Takes Charge

*Google Joins Top Lobbying Spenders on FTC Antitrust Probe

*FBI Agents Search Home of Woman at Center of Petraeus Departure From CIA

*Syria Rebels Pledge Transition Government Once Internationally Recognized

*Panetta Says U.S. Reviewing Scope of Afghanistan Military Role After 2014  

 

If Friday was dull, Monday was duller. For the first time TB can recall, the Dow, S&P 500 and BOTH Nasdaq indices were FLAT (less than 0.05%) while Transports rose 0.8% and Utilties fell 0.9%, the sixth time in seven sessions for a net loss of 7.5%! Total NYSE volume slipped to 2.92B vs 3.57B vs 3.76B vs 4.32B shares. Floor volume imploded to 292M shares, a new 12 month low, vs 740M vs 758M shares vs 874M, highest since 10/19!

Bond market was closed but is up slightly overnight: 10 yr note 1.60%, 30 year 2.73%.  3 mo.Libor steady at 0.31% while the 6 mo. dropped to 0.52%!!!

Gold closed slightly weaker at $1728.60 -$2.30 and is up $1.45 overnight. Crude closed slightly lower a day following a positive ‘key reversal’ (higher high lower low, close above prior day’s high), following an ‘inside day’ a day after a low of $84.05, lowest since 7/11. The recent selloff was triggered by a negative key reversal.

– – –  . . .  – – –

…the CEO of a bank TB once worked for titled his biography: Let’s get going! He had loads of energy…not always a good thing. What we need to do is get the point across to both parties that that is what we want them to do…no more business as usual, how about putting in a five day workweek? How about speaking to their adversaries?

But what can we expect when for the most part we re-elected the culprits, although some like Mitch McConnell got a bye until two years from now…so he will now dig in his heels against any tax increases, while Harry Reid is safe for another six. What is it about us that we give a 90% disapproval rating to Congress yet re-elect or representatives? Even Michele Bachmann who most would agree is modeling herself after Joe McCarthy! Notice who got voted out though…Tea Party members seen as obstructionists. Now if they could just have the guts to tell Grover Norquist to take a hike! Fat chance!

As for Obama, TB thinks the following happened: people got tired of Romney talking down the economy despite a steady stream of good reports which he managed to glean the negative’s from. Then there was his ‘trust me’ economic plan, his ‘trust me’ tax plan, his ‘trust me’ healthcare plan (which in his acceptance speech he reiterated he would toss out Obamacare on his first day in office with nary a mention of something to replace it!

That is a lot of ‘trust me’s’ in a world of ‘fool me once, shame on you, fool me twice shame on me!’ As if that wasn’t enough the GOP who calls Obama divisive pushed Voter ID laws that were clearly discriminatory, and gay marriage opposition all of which fell to defeat…since Bush, the GOP has steadily been removing our rights and this along with with women’s rights, and latino bashing, pushed them under the proverbial bus.

Ah, but wait…then how did Obama get re-elected? To TB and apparently a lot of others, Obama accomplished more than even he took credit for (see politifact on this), and despite  not outlining a plan…which would be futile with the GOP controlling the House, it may have appealed to voters just as having him for just four more years and then forcing both parties to ‘put up or shut up’ did. The Supreme Court oddly played little role but it is the one thing that either man could have claimed as his legacy….actually only Romney could as it would ‘pack; the court with conservatives and that would destroy balance.

Issues of Romney’s flawed fossil fuel energy plan, antagonism of labor including the management of the auto industry and the states where they operate had to figure big. What was he thinking telling Ohians and Michiganians that the auto bailout was a failure. He also said he would have let them reorganize and then post guarantees so the U.S. was in first seat…except, anyone in the financial services industry knows there was no money available for a bailout other than the federal government…so voila, more jobs would have been lost!

There was also contempt for earned income over favorable capital gains and dividend tax treatment for the wealthiest. The lie continues to be perpetuated that those making $250,000 a year will see their taxes raised – only on the marginal amount above that level! Sheesh! Are we that stupid??? But along comes a right wing think tank to say that under Obamacare 700,000 small business jobs will be cut. Bull roar! Think people!

Doesn’t anyone remember basic economics? It is the marginal value that counts. So if one was taxed at 30% and that tax was raised to 40% would they cut back? No! In fact, they would likely have to produce more to maintain the same level of income. Another, point: reversing a temporary tax cut (in fact TWO), which was a con job by the GOP who all along planned to make them permanent and effectively Romney would have pursued that dream, is not a tax hike…nor is removing superfluous subsidies. Got it, America?

Yet as with the budget the GOP sees only one side: cut spending…in every area they don’t approve of…and increase military spending even though not requested. Cut out the safety nets…food stamps (one only has to go to a local food shelf to find out how dire this is…people don’t choose to get food there, there is no choice), emergency unemployment insurance. So there goes demand. What happens to a company that drastically cuts its inventory because of declining sales? It goes out of business. Thus the acceptance of the fact that we are short of revenues (which by the way were a result of the financial crisis brought on by Wall Street), is tantamount to accepting failure.

If revenues rise, the ‘fiscal cliff’ goes away, so long as we make significant cuts and changes to social security and medicare which are two decades and one decade respectively away from default…hello? You work towards a solution not exacerbate the problem…don’t you?

Tomorrow, some changes that would help…but probably will never happen.

Have a great day! Winter is coming…19 degrees here last night~

TB

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

Volume plummeted on a day of few moves and FOUR major indices were FLAT! Only interesting move was Dow Transports which rose 0.8% while Dow Utilities have now been down 6 of last 7 sessions, regardless of whether broad market is up or down. NYSE volume 2.53B shares vs 3.57B vs 3.76B vs 4.32B. On 9/1 volume hit 4.56B shares, high of the year. NYSE stocks executed without the aid of the ETN market fell to a 12-month low of 292M shares vs 740M shares vs 758M vs 874M, highest since 10/19. This takes out 9/15’s 464M shares as the lowest since 11/25/11! There have been just 14 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 15 sessions have surpassed 800M shares, mostly down days. The average since 8/1’s 1.03B is just 673B. The average for 2012 is just 770M shares and since 6/29 just 697M shares– WEAK!!! 112 of the last 153 sessions have been less than 800M shares (73%!). Since 2/29 there have been just 24 ‘average’ days (mostly down!), including 9/21’s high for 2012 of 1.8B (5B including ETNs) and just 20 have been above 900M – 782M is the 12 month average. Since 11/1/11 there have been just 17, 1B share days…13 in 2012! Since 2/6 there have been 66 sessions less than 700M shares. 230 of the last 248 sessions have been less than the 12 mo ave (93%)!

Advance/Declines were slightly negative: -1.1x vs -1.1x vs -2.7x vs -4.3x!!! vs +2.5x on NYSE and -1.2x vs 1:1 vs -2.8x vs -5.7x!!! vs +1.9x on Nasdaq. Breadth was similar: NYSE: -1.3x vs +1.1x vs -3.4x! vs -9.8x!!! vs +4x! on NYSE and -1.1x vs -1.1x vs -3.8x! vs -7.6x!!! vs +1.6x on Nasdaq. New 52 week highs rose slightly to 116 vs 99 vs 115 vs 108 vs 216; (768 is cycle high), while new lows fell back to 201 vs 244 vs 215 vs 196 vs 69 vs 97, recent low was 48. The ratio is negative for a fourth straight day: -1.7x vs -2.5x vs -1.9x vs -1.8x vs +3x, recent high was +7x! The S&P VIX dropped sharply (?) to 16.68 vs 18.61 -1.91??? 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 FLAT vs FLAT vs -0.9% vs -2.4% vs +1%; Dow Transports UP 0.8% vs -0.7% vs -1% vs -1.9% vs +1.6%;Dow Utilities -0.9% vs -0.7% vs -0.2% vs -2.2% vs flat vs -1.6%; S&P 500 FLAT vs +0.2% vs -1.2% vs -2.4% vs +0.8%; Nasdaq Composite FLAT vs +0.3% vs -1.4% vs -2.5% vs +0.4%; Nasdaq 100 FLAT vs +0.5% vs -1.5% vs -2.6% vs +0.3%; Russell 2000 -0.2% vs +0.2% vs -1.4% vs -2.6% vs +0.7%; NYSE Financials +0.2% vs +0.1% vs -0.9% vs -2.7% vs +1% (KBW Banks +0.2% vs +0.1% vs -0.6% vs -4.6% vs +1.5%; Nasdaq Banks +0.2% vs +0.2% vs -1.1% vs -3.5% vs +1.3%; NYSE Brokers +1.2%!?! vs -0.6% vs -0.9% vs -4.3% vs +0.8%.NYSE Financial Leaders: BAC -0.4% vs +0.4% vs +2.6%? vs -6.3%!!! vs +2% vs -1%, no other leaders.; last six days: BAC -4.7%; C -3.2% – new high on 11/6 of $38.47, -5.3% since; JPM -4.3%; WFC -4%; USB -4.1%; GS -4.9%; MS -5.7%; UBS +0.1% – new rally high 11/6 $15.73, -4.1% since. Please trust TB that the dividends in financials are not commensurate with the risk! Got it?

Global equities weak: FTSE -0.6% vs +0.3% vs -0.4% vs +0.2% vs +0.3%; CAC 40 -0.6% vs -0.2% vs -0.2% vs +0.7% vs +0.5%; DAX -0.8% vs +0.3% vs -0.9% vs +0.4% vs +0.4%;Nikkei +0.2% vs -0.9%! vs -0.9%! vs -1.5%! vs flat; Hang Seng -1.1%! vs +0.2% vs -0.9% vs -2.4%!!! vs +0.7%; Korean KOSPI -0.6% vs -0.2% vs -0.5% vs -1.2%! vs +0.5%;Indian Sensex -0.3% vs -0.1% vs -0.9% vs -0.3% vs +0.5%. U.S. stock futures weak but off session lows: DOW -57; SPX -6.90; NDQ -17, -21 at low.

U.S. treasury bonds closed Monday but modestly higher overnight: 10 yr 1.59% vs 1.61% – record low of 1.40%; 30 yr 2.73% vs 2.74%. Long TIP 0.25% vs 0.26%, a new record low!The 5 yr TIP yields -1.49% vs -1.48%; 10 yr -.88% vs 0.87%.T-Bills: 0.11% 1 month; 0.09% 3 months; 0.14% 6 months. Reverse Repo 0.28%. 3 mo. Libor 0.31%; 6 mo. 0.52% vs 0.53%!!! On 9/18 they were 0.38% and 0.67% respectively. European problem sovereign 10 years, Germany-bench: 1.33% -1; Japan 0.72% -1; Italy 5.04% +2; Spain 5.93% +6; Greece 17.31% vs 17.57% -21?…on 9/20: 19.75%!!!; Portugal 8.58% -1;Ireland 4.63% -1.

Gold’s intraday high on Friday of $1739.40 was highest since 10/19. It closed at $1728.60 -$2.30. At the high it was near the 50 day moving average which was last visited on August 15th! It closed at $1796 on 10/4, highest since 2/29 and it has lost $67 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 $1743, the 50 day, $1744, the 40 day, about to cross.MAJOR SUP at $1671, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1725.00 -$5.90. Crude closed little changed at $85.57 -.50 a day following a ‘key reversal’ (higher high, lower low, close above prior day’s high), the last time this happened it was a negative one which brought us all the way back down to an intraday low of $84.05, lowest since 7/11 and way below the 40/50/200 day where it has resided since 9/19! RES at the 40 day (89.42), 50 day (90.88), and the 200 day (94.59), all falling! Overnight it is $85.03 -.54. Minor support at $83.65, then $77.28, the 2012 low!!!

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