11/16/12…what hath we wrought?

Bloomberg Quote of the Day: “Work saves us from three great evils: boredom, vice and need.” – Voltaire. Too bad the wealthiest and luckiest amongst us don’t know that. TB and… “If you would thoroughly know anything, teach it to others.” – Tryon Edwards

Bloomberg Top Stories:

*Citigroup Seeing Currency-Market Signs of Fed Ending Stimulus Before 2015 – ?

*European Stocks Decline Before talks on U.S. Fiscal Cliff; Dollar Rallies

*Industrial Production in U.S. Probably Cooled as Sandy Curbed Utility Use

*Barclays Contingent Notes Fall as Ubiquity Spurs Short Selling Speculation

*U.K. GDP Seen Shrinking This Quarter as Triple-Dip Risk Increases – !!!

*Weidmann Says Greece May Need Second Debt Writedown After Economy Overhaul

*AT&T’s Sudden Shift Crushes Bonds in Rising Market – due to increased leverage!

*Investors Buying Machinery Stocks as Play on Economic Turnaround – Huh???

*Broker With 80% of Foreign Trades in Iraq Dodges Risks Not in Lehman Style

*Tel Aviv Sirens Sound as Gaza Militants Fire Rockets Amid Israel Bombings – bad!

*Republicans Can’t Declare Mandate as Democrats Won More ’12 Votes – oops

(No one has a mandate…not the House, not the President…no one. Obama concurs)

*Jordanians Call for King to Step Down After Government Cuts Fuel Subsidies – !!!

*What Obama Can Learn From FDR’s War Management by Steven Carter – Link

Don’t try to hang this market decline on Obama being re-elected. It was set up on election day knowing full well that in 24 hours they could take it down over fiscal cliff concerns. True, if Romney had won, the GOP would get all it wanted, but that is not how you unite a country. All stock indices were down from 0.2% to 0.8%(Dow Utilities again!). Total NYSE volume declined but to a still above average 3.9B vs 4.1B vs 3.44B vs 2.92B vs 3.57B vs 3.76B vs 4.32B shares. Floor volume slipped below 800M again to 779M shares vs 829M vs 677M shares vs 292M shares (the new 12 month low)vs 740M vs 758M shares vs 874M, highest since 10/19! Advance/declines and breadth were solidly again.

What kind of fools? Facebook is ending the ‘lockup’ of owners shares and yet the stock rallies …do they honestly think there is a shortage of supply? You have to believe!

The Pimco Global Stock Plus (PGP), fell another 10.8% for a total of 21.8% in two sessions for the lowest close since Oct. 2009! It invests in equity derivatives both U.S. and foreign and ‘actively managed’ low duration debt portfolios…apparently not active enough! It is a closed-end fund that until Dec. 2008 traded at a modest discount to the net asset value, but since has traded as high as an 88% premium – which is one stupid ‘investment’ – and for the two days the premium has plunged from about 55% to 23%!!! There are several Pimco funds trading this way, i.e. illogical! Since yesterday the dividend has risen to 14.3% vs 12.7%, due to the drop in price…what is that telling you?

Bond market traded flat despite continued weakness in equities which should tell you something. It is modestly higher overnight: 10 yr note 1.58%, 30 year 2.72%.  3 mo. Libor steady at 0.31% and the 6 mo. 0.52%.

Gold closed very weak, $1713.80 -$16.30, note the declines are double digit while up days are single, and is off nearly $5 overnight. Crude is trading slightly WEAKER after losing nearly a dollar yesterday closing at $85.45 -.87. No protection there.

– – –  . . .  – – –

…boys and girls, today is brought to you by the letters ‘I’ and ‘D’ you know, put them together and you have the first two letters of:

Id – according to Freud,the part of personality made up of unconscious energy that is focused on fulfilling urges and desires. TB prefers to think of The Wizard of Id!

Idiom – figure of speech, an expression whose meaning is not predictable from the usual meanings of its constituent elements, like ‘a career of public service’

Idea – something that seems brilliant at inception but becomes corrupted by politics

Idiot -someone who acts in a self-defeating or significantly counterproductive way (unless it is Ann Coulter who thinks of them as a ‘retard’ – or worse. Or someone who uses the expression ‘poopy head,’ eh, Grover?

Ideology –   A political ideology largely concerns itself with how to allocate power and to what ends it should be used. Some parties follow a certain ideology very closely, while others may take broad inspiration from a group of related ideologies without specifically embracing any one of them. The popularity of an ideology is in part due to the influence of moral entrepreneurs, who sometimes act in their own interests. Hmmm

Ideologue –  conservative and liberal. Smug and self satisfied in their certitudes, Ideologue’s opinions are merely a loose collection of intellectual conceits, and he is genuinely astonished, bewildered and indignant that his views are not universally embraced as the Truth. He regards the opposing point of view as a form of cognitive dissonance whose only cure is relentless propagandizing and browbeating. The conservative iteration of Ideologue parades himself as a logical, clear thinker, while the liberal version trumpets his higher level of mental, spiritual and social awareness. (Is TB an ideologue, as he is truly concerned with people using power for the common good.)

All of these definitions came merely by googling…wasn’t that a fun exercise? Ideal! That is why TB asked (hoped?) that you would vote your conscience, not your ideology. That was what apparently happened in the election as this was never about Romney, especially after he chose Paul Ryan as his running mate (note that while Ryan was re-elected to Congress, both could not carry their home states. If you fail that, you lose…historically.)

Now to the ideologues of the week:

Ah, investigations into the Libyan embassy (sic) attack and l’affaire Petraeus, such fun for our holier-than-thou public officials. Good grief, Obama is the one of the few presidents who hasn’t had an affair. Gen. Eisenhower had one throughout the war, now we have not one but three generals in trouble and if it proves, as TB believes it will, that national security interests weren’t violated (aside from the risk of blackmail which TB believes Petraeus (funny how it always reminded TB of ‘betrayus’), would have not given in to. He is a man of honor…and all you ‘men,’ don’t be casting the first stone. Most of us are sinners in that regard! But isn’t it fun to put someone else on the hot seat, until of course it falls on your shoulders.

Ah, but our honorable Congress is in high dudgeon over not being told about Petraeus.. Even Sen. Feinstein and some other Dems…do they believe in the conspiracy theory?

Oh yes, they do and now they can rail over Libya and Petraeus…

TB hears daily from friends/readers about the seriousness of the Libyan attack. It was and it cost four lives but could it have been prevented? Not according to the CIA who was near the Embassy but their Marines arrived too late. Hard to prevent smoke inhalation!

Yet, Libya has been a friendly country to U.S. interests and remains so, except for the minority of militants which can be found anywhere…including this country! That is why TB objected to Romney’s ‘boots on the ground’ insistence during the Libyan revolution. It is far better to ‘lead from the rear’ and see how it all plays out when there is no strong element that can be defined as friend or foe. Witness Egypt…and that is precisely why Syria is so problematic.

But Congress will have its day in court…or more accurately, holding court and damning everyone who comes before them. If it is found that other than an affair, Patraeus did no wrong TB believes he should be asked to resume his duties. What better candidate based on his intelligence, experience and the fact that he has been caught and humiliated so it isn’t going to happen again! Got a better idea? Wonder if he would accept it?

As for Sen’s McCain, Graham, and Ayotte. Shame on them…especially McCain who was supposed to be a voice of reason yet sounded like an extremist firebrand. As for Graham, this is exactly what would be expected of his self-righteousness. Both of these men were visibly silent when Colin Powell was given disinformation to present to the United Nations which made us a laughing stock all so the neo-cons could pursue their plans in Iraq. Where were they? Where was the Congress on the lies? That is exactly what happened to Rice…she was briefed and delivered it. In this case, a foot soldier!

But Ayotte is a freshman…or sophomore now? …and she acted sophomorish! Blabbing incoherently about something she has no knowledge of…ah, but the soundbites!

TB had thought he was finished this until he heard the partisan bickering of the Senate Intelligence (sic) Committee. Absolute crap being spewed by the GOP. They aren’t trying to get to the bottom of this, they are looking for a scapegoat – Barrack Obama! Meanwhile Sen. McCain missed the first meeting and when asked by a CNN reporter why, he responded “who the hell are you to question me?” Later, a staffer called and said he missed it due to a ‘scheduling error.’ Really? Then why didn’t he just say that? TB believes that the GOP is going to have egg all over its face after this is over.

TB could not believe the lack of reflection on the part of the man who would be president:

“The president’s campaign, if you will, focused on giving targeted groups a big gift,” Romney said in a call to donors on Wednesday. “He made a big effort on small things.”

Romney said his campaign, in contrast, had been about “big issues for the whole country.” He said he faced problems as a candidate because he was “getting beat up” by the Obama campaign and that the debates allowed him to come back.

In the call, Romney didn’t acknowledge any major missteps, such as his “47 percent” remarks widely viewed as denigrating nearly half of Americans, his lack of support for the auto bailout, his call for illegal immigrants to “self-deport,” or his change in position on abortion, gun control and other issues. He also didn’t address the success or failure of the campaign’s strategy of focusing on the economy in the face of some improvement in employment and economic growth during the months leading up to Election Day.

This shows just how deep the GOP has to go to examine why it lost the election. This is not even a start, it is an ‘I’m sorry but…” Another late add: Bobby Jindal blasted Romney’s ‘no-fault’ explanation of the loss…ah, the man who would reach across the aisle.

Lastly, TB is upset that Nancy Pelosi will continue to be the House Minority Leader. She is the most divisive person in the party and as TB has reported hails from arguably the most liberal district in the country – where they think she is too conservative! Harry Reid, not so much, but then he started making statements as did Mitch McConnell, who once again phrased his comments that Obama needs to put forth cuts that the GOP can pass.

Perhaps if the two parties – this time the GOP gets the blame – didn’t have control over redistricting…and before you say the GOP got the advantage, Dems benefitted too, we would have new blood. No, this is all about protecting incumbents and both sides do it well…how else did Michele Bachmann get re-elected and only by a few hundred votes despite spending $12 million on her campaign! She is a pariah in her own party! TB recalls a few years ago in California where they tried to get an amendment to have judges do the redistricting. Both sides screamed foul! Do you want judges who weren’t elected deciding where you get to vote? Heck no! Instead we want some fat cat to decide where he gets to vote who got in because of having a district full of his supporters…the public be damned!

Can this marriage be saved? Apparently not, and if not, God bless the United States of America, because nobody else will. What a way to let the country go to rot.

Enjoy your weekend, it’s a jungle out there – beware of next week! Going to see Lincoln!


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

Volume slipped below 4B shares All indices were down 0.2% to 0.8% (Dow Utilities, which have been down 8 of the last 9 sessions, regardless of what the broad market does! NYSE volume 3.9B vs 4.1B vs 3.44B shares vs 2.53B 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 roared slipped below 800M to 779M shares vs 829M vs 677M shares vs 292M shares (12-month low!) vs 740M shares vs 758M vs 874M, highest since 10/19. There have been just 16 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 16 sessions have surpassed 800M shares, mostly down days. The average since 8/1’s 1.03B is just 674B. The average for 2012 is just 770M shares and since 6/29 just 697M shares– WEAK!!! 114 of the last 156 sessions have been less than 800M shares (73%!). Since 2/29 there have been just 25 ‘average’ days (mostly down!), including 9/21’s high for 2012 of 1.8B (5B including ETNs) and just 20 have been above 900M – 780M 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 67 sessions less than 700M shares. 230 of the last 251 sessions have been less than the 12 mo ave (92%)!

Advance/Declines were negative for a SIXTH straight session: -2.1x vs -8.8x!!! vs -1.1x vs -1.1x vs -1.1x vs -2.7x vs -4.3x!!! on NYSE and -1.6x vs -3.9x! vs -2.1x! vs -1.2x vs 1:1 vs -2.8x vs -5.7x!!! on Nasdaq. Breadth was similar: NYSE: -1.3x vs -11.2x!!! vs -2.4x vs -1.3x vs +1.1x vs -3.4x! vs -9.8x!!! on NYSE and -1.4x vs -2.3x! vs -2.2x! vs -1.1x vs -1.1x vs -3.8x! vs -7.6x!!! on Nasdaq. New 52 week highs were halved again to a WEAK 28 vs 47 vs 66 vs 116 vs 99 vs 115 vs 108 vs 216; (768 is cycle high), while new lows surged again to 502! vs 394! vs 286 vs 201 vs 244 vs 215 vs 196 vs 69 vs 97, do you see a trend? The ratio is negative for a seventh straight day: -17.9x!!! vs -8.4x! vs -4.3x vs -1.7x vs -2.5x vs -1.9x, recent high was +7x! The S&P VIX rose again following a 7.6% on a ‘key reversal’ to 17.99 vs 17.92 vs 16.65 +.09. 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 7 sessions: Dow -0.2% vs -1.5%! vs -0.5% vs FLAT vs FLAT vs -0.9% vs -2.4%; Dow Transports  -0.2% vs -2.6%!!! vs -0.1% vs +0.8% vs -0.7% vs -1% vs -1.9%;Dow Utilities -0.8% vs -1% vs +0.4% vs -0.9% vs -0.7% vs -0.2% vs -2.2%; S&P 500 -0.2% vs -1.4%! vs -0.4% vs FLAT vs +0.2% vs -1.2% vs -2.4%; Nasdaq Composite -0.4% vs -1.3% vs -0.7% vs FLAT vs +0.3% vs -1.4% vs -2.5%; Nasdaq 100 -0.3% vs -1.2% vs -0.8% vs FLAT vs +0.5% vs -1.5% vs -2.6%; Russell 2000 -0.5% vs -2%! vs -0.6% vs -0.2% vs +0.2% vs -1.4% vs -2.6%; NYSE Financials +0.4% vs -1.7%! vs -0.6% vs +0.2% vs +0.1% vs -0.9% vs -2.7% (KBW Banks +0.4% vs -2.1%! vs -1.1% vs +0.2% vs +0.1% vs -0.6% vs -4.6%; Nasdaq Banks -0.1% vs -1.6% vs -1.1% vs +0.2% vs +0.2% vs -1.1% vs -3.5%; NYSE Brokers +0.6% vs -2.5%!!! vs -1.6%! vs +1.2%!?! vs -0.6% vs -0.9% vs -4.3%.NYSE Financial Leaders: BAC +1.1% vs -3.5%! vs -0.6% vs -0.4% vs +0.4% vs +2.6%? vs -6.3%!!! vs +2% vs -1%, C +0.5% vs -3.2%; GE flat vs -3.2%. BAC close at $9.09, one day after it touched $8.95! Last 8 days -7.6%!

European equities weak – down six straight sessions, Asia mixed: FTSE -0.6% vs-0.5% vs -0.5% vs -0.6% vs +0.3% vs -0.4%; CAC 40 -0.3% vs -0.8% vs -0.3% vs -0.6% vs -0.2% vs -0.2%; DAX -0.5% vs -1.1%! vs -0.3% vs -0.8% vs +0.3% vs -0.9%;Nikkei +2.2%!!! vs +1.9%! vs +0.1% vs +0.2% vs -0.9% vs -0.9% vs -1.5%!; Hang Seng +0.2% vs -1.6%! vs +1.2%? vs -1.1%! vs +0.2% vs -0.9% vs -2.4%!!!; Korean KOSPI -0.5% vs -1.2%! vs +0.2% vs -0.6% vs -0.2% vs -0.5% vs -1.2%!;Indian Sensex -0.9% vs -0.8% vs closed vs -0.3% vs -0.1% vs -0.9% vs -0.3%. U.S. stock futures slightly weaker but off lows: DOW -28 vs -47; SPX -2.60 vs -$4; NDQ -4.25 vs -8.25. Wait and see.

U.S. treasury bonds were quiet and dull yesterday and again couldn’t capitalize on the stock swoon. They are up slightly overnight: 10 yr 1.58% +1/8 – record low of 1.40%; 30 yr 2.72% +5/16. Long TIP 0.28% +1/2 – 0.25% is the record low!The 5 yr TIP yields -1.45%; 10 yr -.83%.T-Bills: 0.12% 1 month; 0.08% 3 months; 0.13% 6 months. Reverse Repo 0.32%. 3 mo. Libor 0.31%; 6 mo. 0.52%! On 9/18 they were 0.38% and 0.67% respectively. European problem sovereign 10 years, Germany-bench: 1.34% +1; Japan 0.72% -1; Italy 4.88% -1; Spain 5.86% -1; Greece 17.03% -17!!! …on 9/20: 19.75%!!!; Portugal 8.57% -9!; Ireland 4.54% -5.

Gold’s intraday high on Friday of $1739.40 was highest since 10/19. It closed off again yesterday at $1713.70 -$16.30! 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 $66 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 $1741, the 40 day, $1744, the 40 day, CROSSED!MAJOR SUP at $1670, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1710.10 -$3.70. Crude also closed lower at $85.45 -.87, still not much change three days following the ‘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 (88.87), 50 day (90.30), and the 200 day (94.41), all still falling! Overnight it is $85.74 +.29. Minor support at $83.65, then $77.28, the 2012 low!!!


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