12/6/12 or 2/1/2…save the children

TB’s Quote of the Day: “Republicans are a lot smarter, older, wiser than two years ago.” – Grover Norquist yesterday…wait wasn’t it two years ago they won the House?


Bloomberg Top Stories:

 *Wall Street Job Reductions Seen Persisting as Citigroup Cuts 11,000 Jobs – !!!

*Stocks Rise on U.S. Budget Talks; Italy Bonds Drop as Monti Loses Support

*Apple Falls as Google Gains Tablet Share, Nokia Clinches China Phone Deal

*Three Bears Look Out for Signs of Goldilocks Economy as U.S. Outperforms – that would be David Rosenberg, a first!…but cautious; David Levy an economic forecaster, and Mohammed El-Erian of Pimco…none is willing to declare an all-clear.

*German Manufacturing Orders Surge in Sign of Resilience to Crisis

*Brent Favored Over West Texas Oil by U.S. for First Time as Prices Diverge – !

*Depression Deepens as Greek Middle Class Sees Crime Converge With Despair – that is what will happen if the GOP holds sway over the fiscal cliff they created!

*House Republican Defectors Weighing Deal on Tax Rate Increase Obama Wants – is this the death of the Tea Party? Finally some common sense on tax rates! Sheesh!

*Egyptian Presidential Guards Deployed Outside Palace After Deadly Clashes

*Obama Hearing Reagan Footsteps to Successful Second Term Told to Reach Out

*Monti Faces Government Crisis as Berlusconi Threatens to Withdraw Support – ???

Reuters broke a story last night on Deutsche Bank hiding $12 billion in losses. This morning details are out but still sketchy: three whistleblowers: a trader (who already collected $900M in a suit) and TWO RISK MANAGERS went to the SEC. The company denies all charges and says they booked all trades properly. Want to bet? Not TB! Nor do investors apparently as the stock was slammed in Germany…can’t wait to see what it does here!

APPLE – what a timely observation:

Yesterday, TB discussed AAPL and the impact on the major indices:

The big story on stocks this year is Apple…as it was in the second half of last year. One reason for Apple’s weakness, TB believes, is people booking capital gains which are huge in this tax year.

THEN, yesterday on the open APPL ‘gapped down’ – initially not too much, just $4 below Tuesday’s close, but then it tanked losing $38 to $538.80 where it closed…down 6.4%! As for the impact on the indices (S&P, Nasdaq Composite and 100), the worst damage was the 100 where it subtracted 31 points…compare to the Index close of a 30 point loss…Oracle also lost over two points and advance/declines were 47/52. That is what is wrong with our indices…didn’t bother to check the other two as they pale.

But why? Ahem, China Mobile selected Nokia over Apple as their provider! NOK is a dog…it closed Tuesday at $3.22 but was up 66 cents to $3.88 on the news (20.5%)!!! which is why you can get killed or make a quick buck on <$5 stocks!  TB sees two possible reasons: first, Nokia is lagging in smartphone technology, while Apple is at worst in a tie with Samsung for numero uno…thus, it is far easier for the government to hack and spy on the inmates; or two, Nokia is priced so cheap that perhaps they could buy them out. Both China Mobile (CHL) and Nokia (NOK) are foreign companies listed on the NYSE so the U.S. would have no say…only Finland and NOK is ailing! CHL rose 6.3% on the news…lower costs by choosing Nokia? You have any better ideas? Tell TB!

Total NYSE volume surged to 4.14B shares vs 3.24B, surpassing Friday’s 3.94B shares. The Dow 30, Transports and S&P 500 were all up led by Dow Utilities +1.4%, the others not so much. Both Nasdaq indices were off around 1% while the Russell 2000 fell 6.2%. REAL volume on the NYSE floor also rose, but couldn’t hit 800M shares which has happened just once in the last 12 sessions, to 759M from a weak 674M. Friday’s in comparison was 1.18B shares, highest since 9/21 – 11 of the last 12 sessions have been <800M. Advance/declines were mixed (Nasdaq negative likely due to AAPL), but slight changes while Breadth was modestly positive. The VIX dipped back to 16.46 vs 17.12 vs 16.64 vs 15.87! Tuesday was first time above 17 since 11/15 (12 mo. ave. 18.37).

Bond market closed slightly better and is up again overnight, a reprise of prior day: 10 yr note 1.58% +1/8, 30 yr 2.76% +5/16. The big story remains TIPS…with no sign of inflation in sight but risk of fiscal cliff reduced which caused the stock rally yesterday, the 30 yr TIP yields just 23bp’s over the inflation rate…vs 2.24% vs 2.77% – this is a record low. The long TIP yields MINUS 253bp’s to the long bond and -201 to 10 yr!

Gold was off $2 closingat $1693.80, 2nd straight close below $1700 and worst since 11/5! It had a 2nd lower high and lower low of $1686 and remains well below the 40/50 day moving averages,while Crude lost 59 cents closing at $88.50 just one penny above the 50 day m/a. Overnight Gold is $1692.70 -$1.10 trading in a narrow range. Crude is off just 6 cents and is back above the 40/50 day again!

– – –  . . .  – – –

…from their leaders! TB, the former Republican, has been accurate so far but he feels bad if he has hurt anyone’s feelings. But the evidence is right before your eyes. There is no leadership in the GOP…except…about two dozen Congressmen have said enough is enough…knowing full well that the only immediate fiscal cliff is the one they created to hamstring Obama. They have ignored pleas from Bob Dole and yesterday Trent Lott – what more do they need to see the party is in total disarray thanks to the Tea Party and Grover Norquist. Yesterday GOP Sen. Tom Coburn (the only member of the House to speak up against doing away with Glass-Steagall) urged his party to work out a deal ahead of the cliff. If they don’t give in…they should know that its hard to bluff when all you have is a pair of deuces! But they don’t…they think they have the power to get what they want and give nothing in return but empty promises. Public opinion is turning even more negative against them and if we go over the cliff it will be the GOP, not Obama that takes the hit…although he too will suffer…but he can take that gamble and will!

Today’s commentary will be short but to the point on what is wrong with the party, which is old but not grand, and neither will be the compromise…or a bargain:

  1. They see social security and Medicare as the problems…but don’t really know what they want…except to kill Obamacare…which as economists will tell you will not cost employers but employees…except the ones earning minimum wage already and certainly a company can afford that, despite the hatred of minimum wage laws by the GOP.
  2. They argue against raising marginal rates yet the bulk of their constituents are middle-class…ah, but money talks and when it is big money it talks bigger!
  3. They say they are for business but the evidence is it is BIG business not small.
  4. They deny global warming…as it is inconvenient, will cost businesses more (hence Romney’s push for fossil fuels over alternative energy), even as their small group of scientists in agreement are changing their view. Even as we have record temperatures globally, have just had s superstorm in the Northeast, and in the Philippines a supertyphoon…coincidence? Coral reefs dying off from too much carbon, and a chunk of ice in Greenland falling off that was bigger than the U.S.
  5. They continue to see right to life and anti-gay issues as the way to go despite the mood shift across the country…is that worth losing an election over? Especially when they show a total lack of concern for poverty among families with children.
  6. They continue to worship at the feet of Grover Norquist but the smarter ones have decided to call his bluff…he with no legitimacy, only ideology that is senseless.
  7. They are for states rights…want to eliminate subsidies and give them ‘block grants’ instead which other than the few Tea Party governors, the rest oppose knowing full well that they will not be adjusted for inflation…this at a time when many states are effectively bankrupt and only balancing budgets with gimmicks.

Disagree? Fine, but TB could add more…such as Romney’s plan to boost military spending while cutting everything else, despite the funds not even being requested! When was the last time you heard the military not asking for more than they need? You want to cut waste? There is a good place to start!

On TB’s to read list is:  The Generals: American Military Command from World War II to Today [Thomas E. Ricks]. He talks about the incompetency of senior military officers since the end of WWII…with a plus being Petraeus, and a big minus being Tommy Franks, who took Baghdad with no plan to protect it, and also blundered in Afghanistan!

Also, The Fine Print: How Big Companies Use “Plain English” to Rob You Blind, by David Cay Johnston. If you still believe in free market capitalism or as the Supreme Court that a corporation is an individual you won’t like this. On PBS, he talked about how your utility bills include small fees that add up and are mistitled. Ever wonder about that FCC fee on your phone bill? Has nothing to do with the FCC but everything to do with charges to comply with SEC rules…or Meter Fee…not for the meter but to have someone read it. How many of you, lawyers excepted, charge the client to prepare their bill? Is this a great country or what? …and the GOP is sworn to protect them, not you!

Another day, and one more closer to the grand bargain …or the cliff! Ciao bella!


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

Volume rose to a solid 4.14B shares from a weak 3.24B shares. NYSE shares executed without the aid of the ETN market rose sharply but failed to hit 800M at 759M shares vs  674M vs 658M vs 1.18B. There have been just 21 700M+ days since 8/3. The high ytd was 9/21’s 1.8B shares. Since 6/29 just 18 sessions have surpassed 800M shares, mostly down days. The average since 8/1’s 1.03B is just 675M. The average for 2012 is just 764M shares and since 6/29 just 696M shares– WEAK!!! 125 of the last 169 sessions have been less than 800M shares (74%!). Since 2/29 there have been just 27 ‘average’ days (mostly down!), and just 22 have been above 900M – 768M is the 12 month ave. and falling! Since 11/1/11 there have been just 18, 1B share days…14 in 2012! Since 2/6 there have been 75 sessions less than 700M shares. 241 of the last 264 sessions have been less than the 12 mo ave (91%)! This is not even a casino, much less a market!

Advance/Declines were mixed, Nasdaq negative due to Apple (37M shares!): +1.1x vs -1.1x vs -1.5x vs +1.2x vs +2.5x on NYSE and -1.3x vs -1.1x vs -1.2x vs 1:1 vs +2.7x on Nasdaq. Breadth slightly positive: NYSE: +2.3x vs -1.1x vs -2x vs +1.3x vs +3x on NYSE and +1.1x vs -1.1x vs -1.9x vs +1.1x vs +2.5x on Nasdaq. New 52 week highs rose to a weak 130 vs 105 vs 226 vs 206 vs 154 (768 is cycle high, 28 low), while new lows rose to 78 vs 71 vs 51 vs 43 vs 38. The ratio is slightly positive: +1.9x vs +1.5x vs +4.5x vs +5x vs +4x. Recent high was +7x! The S&P VIX slipped to 16.46 vs 17.12 vs 16.64 vs 15.87! Tuesday was first time above 17 since 11/15. 17.54 is the 200 day m/a! The 12-month low was 13.32 on 8/17 while the 2012 high is 27.73 on June 4.

Here are the results of last 5 sessions: Dow +0.6% vs -0.1% vs -0.5% vs flat vs +0.3%;  Dow Transports +0.9% vs +0.3% vs -1.1% vs -0.5% vs +0.6%;Dow Utilities +1.4%! vs -0.6% vs -0.7% vs +0.9% vs +0.5%; S&P 500 +0.2% vs -0.2% vs -0.5% vs flat vs +0.4%; Nasdaq Composite -0.8%! vs -0.2% vs -0.3% vs -0.1% vs +0.7%; Nasdaq 100 -1.1%!!! vs -0.2% vs -0.2% vs -0.1% vs +0.6%; Russell 2000 -0.2% vs +0.2% vs -0.1% vs -0.2% vs +1.2%; NYSE Financials +0.9% vs flat vs -0.3% vs +0.1% vs +0.8% (KBW Banks +1.7%! vs -0.7% vs -0.8% vs -0.2% vs +0.3%; Nasdaq Banks +0.3% vs -0.5% vs flat for 2 days vs +0.7%; NYSE Brokers +0.9% vs -0.3% vs -0.5% vs +0.3% vs +0.4%.NYSE Financial Leaders: BAC +5.7% vs +1.1% vs -0.6% vs +0.3% vs +0.7%. C +6.3%!!! – guess they didn’t hear about the 11k job cuts. BAC closed $10.46! First close above $10 since 7/11/11!!! No other leaders.

Global equities up, except Hang Seng: FTSE +0.3% vs +0.3% vs -0.1% vs +0.2% vs +0.3%; CAC 40 +0.2% vs +0.3% vs +0.5% vs +0.8% vs +0.3%; DAX +1%! vs +0.3% vs flat vs +1% vs +0.4%;Nikkei +0.8% vs +0.4% vs -0.3% vs +0.1% vs +0.5%; Hang Seng -0.1% vs +2.2%!!! vs +0.2% vs -1.2% vs +0.5%; Korean KOSPI +0.1% vs +0.6% vs -0.3% vs +0.4% vs -0.1%;Indian Sensex +0.5% vs +0.2% vs +0.2% vs -0.1% vs +0.9%. U.S. stock little changed and cautious: DOW -2; SPX -1.30; NDQ -3.25.

U.S. treasury bonds closed higher yesterday and are up again overnight…for a second day: 10 yr 1.58% +1/16 – record low of 1.40%; 30 yr 2.76% +5/16. Long TIP 0.23% +7/16 – and another new record low!The 5 yr TIP yields –1.54%; 10 yr -.92%.T-Bills: 0.06% 1 month; 0.09% 3 months; 0.13% 6 months. Reverse Repo 0.31%. 3 mo. Libor 0.31%; 6 mo. 0.52%.  European problem sovereign 10 years, Germany-bench: 1.34% -1; Japan 0.69% -2; Italy 4.57% +13!; Spain 5.48% +12!!!; Greece 14.72% -8???…on 9/20: 19.75%; Portugal 7.37% +8; Ireland 4.47% +13!?! BIG CHANGES!!!


Gold closed off $2 at $1693.80, second straight close below $1700 and worst since 11/5! It had a second lower high and lower low of $1686 not seen since 11/16 and remains well below the 40/50 day moving averages,while Crude lost another 62 cents closing at $87.88 back below the 50 day m/a. Overnight Gold is $1692.70 +$1.40. Crude is off just 6 cents and is back below the 40/50 day again!



  1. Yarnman said


    Just a bit of “fact checking” regarding the size of the chunk of ice that broke away from Greenland in July, 2012 : the chunk was from the “tongue” of the Petermann Glacier, and it was the size of Manhatten. Now I know that the Wall Streeters agree with Steinberg’s iconic map of the USA, where everything in our country that is east of the Hudson River is centered on Wall Street, but that chunk of ice that broke off is not the size of the United States, just Manhatten.

    Here’s the link for BBC report and NASA photos: http://www.bbc.co.uk/news/world-europe-18896770

    Nevertheless, I agree with you that fossil fuels are having an effect on climate. Here In Maine we rue the fact that due to prevailing westerlies, we are the “tailpipe” of the Nation.


    • traderbill said

      Thanks Yarnman..I stand corrected…the report I heard on the Tube was as I stated…and could have been a New Yorker! Remember those old maps of the U.S. that showed everything west of Manhattan as very small…believe it was called ‘A New Yorkers View of the U.S.’

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