12/18/12…the not-so-grand society

Bloomberg Quote of the Day: “Knowledge of what is possible is the beginning of happiness.” – Georges Santayana

Bloomberg Top Stories:

*Obama Tax Concessions Signal Potential Bipartisan Budget Deal With Boehner – raising threshold from $250k to $400k – which actually means over $450k!

*Stocks Advance With Commodities on Signs of Progress in U.S. Budget Talks – wait for the debt ceiling to gum things up! Also beware of options expiry and hedge fund y/e!

*Markets Reveal No Anxiety Anticipating Global Security Breakdown for 2013 – ???

*Samsung Ends Some Europe Patent Suits Against Apple After U.S. Court Win

*Cerberus to Sell Stake in Gunmaker Freedom After Connecticut School Deaths – a big maker of automatic weapons…more pressure to follow? Just before shooting the Michigan legislature passed a law to allow concealed weapons in schools and day care!

*Spain Bad Loans Ratio Rises to Record as Economic Slump Enters Fifth Year! – Heed!

*Airbus Ousts Boeing at Pegasus With Jet Order Valued at Up to $12 Billion

*Americans Don’t Know They Gave $154 Million to College Football in Seattle – to fix local stadium project of $250 million – after the state balked…it’s your money! Sheesh!

*Lawmakers Vow Tougher U.S. Gun Laws as Obama Backs Ban on Assault Weapons

*’We’re Not Close To a Deal,’ Senator Corker Says on Budget Compromise Talk – once again the Tea Party strikes…watch out for the debt ceiling…held hostage yet again!

IMPORTANT: Friday is options expiry, TUESDAY is cut-off for hedge funds yearend (T+3)…after that  anything can…and most likely, will happen. You’ve been warned.

Yesterday’s NYSE volume was up slightly in a boring market that ended higher with steady climb and finishing just off the session highs…the bad news is just 3.44B shares traded vs 3.2B vs 3.34B vs 3.7B vs 3.64B but up from the 3.0B low. REAL trades on the floor rose modestly but barely broached 700M – 702M shares vs 667 vs 654M vs 695M vs 693M vs 593M. Advance/declines and breadth were both positive. Look at this. The best performers were Dow Utilities (!), the S&P 500, both Nasdaq indices (which have been the worst lately), Russell 2000, and NYSE Financials….hmmm…all were up between 1.2-1.4%…smacks of options expiry. Apple not only gained 1.8% but was NDQ 100’s biggest gainer adding 8.4 index points of the total 36.17. GOOG, QCOM, MSFT, AMZN, CMCSA all added at least 2 points for a total of about 22 points of the gain.

Yesterday as Financials soared CNBC was all a-twitter about the banks…praising BofA for being up 111% in the past year…never mind is is off 71% over the past five years – 22% annualized! Citi which rose 4.1% yesterday is up 50% over the past year but off 86% over the last five years or 33% annualized! Sounds like a buy to TB…especially with dividend growth over that period at -72% and current dividend just 0.1% while BofA’s is -56% with an indicated dividend of 0.36%. Repeating: the ONLY reason to buy a bank stock is for the dividend…AVOID! Hey what about those big fines?

Bond market was beaten up badly and fading again overnight: 10 yr note 1.79% vs 1.72%, 30 yr 2.96% vs 2.88%. TIPS remain vulnerable! The 30 yr TIP yield is 0.37% vs 0.30% vs 0.32% vs 0.29% vs 0.26% vs 0.23% vs 0.22% – the record low. Bills strong! The 1 month yields 0.00%! 3 mo 0.03% – ouch!

Gold was up slightly yesterday closingat $1698.20 +$1.20. It remains well below the 40/50 day moving averages,and is up $1.30 overnight to $1699.50. – high $1704! Crude continued to bore gaining just 47 cents closing at $87.20. It is now between the 40/50 day m/a’s. Overnight it is up 52 cents at $87.72 – just above the 50 day!

– – –  . . .  – – –

…throughout history, the power centers of the world have collapsed under their own weight…Venice and Rome come to mind where oligarchies developed with families controlling the government. Along with this has come depravity and loss of interest in the welfare of others. That is what TB (by no means a moralist), meant yesterday when he referred to our depravity. Is this the end of de Tocqueville’s  ‘great experiment in democracy’ – or just a bump in the road? Only time will tell but it definitely isn’t on our side. It is working against us while we ignore reality or focus on just one aspect.

While not the cause, but certainly an accelerant, the Tea Party brought out the worst in us. Strangely the catalyst for that was the abuses heaped upon us by the financial sector which can only be ascribed as greed…greed at the expense of the country, the corporations they worked for, and Main Street…but rather than punish, blame was cast on the ‘47% who pay no taxes’ that the Mittster blundered on. It is incomprehensible that a crisis of this magnitude…exported by us to Europe…could fall on the shoulders of the common man…all the while crying about the future for our children and grandchildren.

First, they – a minority – froze the Congress…scared the daylights out of the GOP leadership (sic) and continue to do so. They created a ‘debt ceiling’ crisis forcing the President to come up with the ‘fiscal cliff’ – another misnomer – and then a coalition to fix the budget deficit (Simpson-Bowles), which had a minimum of ten years before problems mounted yet wanted everything tomorrow…THEN the GOP pulled a fast one: after screaming for this, every member of the commission voted against the findings – but then modeled a ‘Ryan Plan’ off of it which became the cornerstone of the flawed Romney/Ryan team strategy. But they only lost the election but remain confident of winning the war…at what cost to the majority of Americans? Who cares! They are sheep and we only care about the non-sheep. Let them eat cake…could be hard to swallow.

Four years ago next month they began a campaign led by Sen. Mitch McConnell to hold Obama to one term…at whatever cost. The citizens be damned. They tried to destroy every action he took, possibly to the point where he stopped proposing them (he does not see himself as a politician and tries to remain above the fray…an impossibility), but now it his legacy that is on the line and he had better get tough…quickly while he still has his renewed political capital…this time he used up most of it on Obamacare – a good and needed thing that was fought by all who had something to lose…afterall, isn’t that the American way?

But a funny thing happened on the way to the Forum…well not really funny but a wake-up call: Superstorm Sandy! It called attention to the flawed logic of Team Romney of eliminating FEMA in favor of ‘faith-based’ and local government aid. Add to this Ryan’s ‘block grants’ which would insure that the states get less and less – adjusted for inflation – and vouchers for education which would amount to the same thing…all the while increasing military spending even beyond the greed of the Industrial-Military complex.

Cake? There is no cake…only crumbs in a crumbling society.

Oh, and let’s not forget the love of the NRA and guns…any gun…everyone should be ready to protect themselves and their country from an intruder…at least two TV series deal with this…are they trying to make us believe this is an actual threat? But not just guns…we want automatic weapons…with technology semi-automatic with a big clip is just as effective and that is much more powerful than the Thompson Sub-Machine gun which only a collector can own…so we are doomed to more and more violence.

They cite Thomas Jefferson and the Second Amendment ignoring the fact that the country saw no need for a standing army…or Navy (read Six Frigates). They felt local militias (a name that has been stretched way out of proportion of late), would suffice. Meanwhile the Supreme Court will attempt to rule but based on their interpretation of what the founding fathers meant, they will come up with a conclusion despite the fact that there was no weapon at the time capable of firing more than one shot without reloading!

The Newtown shooter’s mother owned all the guns used in the tragedy…all duly registered…to a woman who feared where the country and economy was headed. Instead she should have feared her own son who ironically killed her with one of her own weapons before starting his shooting spree. Powerful message that!

Then the media pounced…and all eyes were and remain on Newtown…there were two lockdowns in Connecticut schools yesterday over suspicious individuals…both false alarms…expect more and expect more to come. Conservative Bill Bennett is advocating that at least one gun be in every school…despite the fact that it would have probably meant one more dead teacher! (Like in Libya where the senseless debate continues about defending the compound…and which also would have only led to more dead marines and more opposition to our presence (the CIA had several illegal teams there).

Sen. Feinstein is again introducing her assault weapon ban which she got passed in 1994 but which ‘sunsetted’ in 2004…just three years before the latest wave of shootings began.

Why aren’t we boycotting the manufacturers…pressuring them…sorry, they are big corporations with a lot of money and hence power and little or no conscience: guns don’t kill people…people kill people…yes, but they can kill so many more so much faster with your products…available at a dealer near you now. TB has a lot of friends who are hunters…they are no longer pro-NRA and see no value to semi or full automatic weapons. Imagine being invited on hunting trip and bringing your weapon with a 100 bullet clip?

Have a great day!


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

Volume rose to a still weak 3.44B shares vs 3.2B vs 3.34B vs 3.7B vs vs 3.64B from a recent low of 3.0B shares. NYSE shares executed without the aid of the ETN market also rose but to a weak at 702M shares vs 667M vs 654M vs 695M vs vs 693M vs 593M vs 600M vs 616M vs 759M. There have been just 22 700M+ days since 8/3. We have not had an 800M share day in the past TWO weeks – average 663M shares! The average since 8/1’s 1.03B is just 680M. The average since 9/21 (12 mo high: 1.81B) is just 686M with just one 1B share day and just EIGHT sessions above 800M shares! 133 of the last 177 sessions have been less than 800M shares (75%!). Since 2/29 there have been just 27 ‘average’ days (mostly down!), and just 22 have been above 900M – 757M is the 12 month ave and falling! Since 2/6 there have been 82 sessions less than 700M shares. 249 of the last 272 sessions have been less than the 12 mo ave (92%)! Since the crisis, this is the lowest average annual volume (range 588M-1.04B). Volume in the 90’s, during the boom: 315M shares. Chalk it up to high frequency trading…welcome to the casino of stacked decks!

Advance/Declines were posittive: +2x vs -1.1x vs -2.3x vs -1.1x vs +2.1x on NYSE and +2.2x vs -1.1x vs -1.7x vs -1.5x vs +2.5x on Nasdaq. Breadth was also positive especially NYSE: +4.2x! vs -1.1x vs -2.3x vs +1.4x vs +2.2x and +1.9x vs -1.1x vs -1.4x vs -1.2x vs +3.6x on Nasdaq. New 52 week highs rose to 151 vs 95 vs 89 vs 209 vs 218 vs 144 (768 is cycle high, 28 low), while new lows slipped to 74 vs 79 vs 84 vs 55 vs 55 vs 71. The ratio is: +2x vs +1.2x vs +1.1x vs +3.9x vs +4x. Recent high was +7x! The S&P VIX fell back to 16.34 vs 17.00 (highest since 11/15!) vs 16.56 vs 15.95 vs 15.57. 12 mo. ave. is 17.95.

Here are the results of last 5 sessions: Dow +0.8% vs -0.3% vs -06% vs flat vs +0.1%; Dow Transports +0.8% vs +0.1% vs +0.1% vs -0.3% vs +0.1%;Dow Utilities +1.4%! vs -0.1% vs -0.4% vs -0.1% vs +0.1%; S&P 500 +1.2% vs -0.4% vs -0.6% vs flat vs +0.7%; Nasdaq Composite +1.3% vs -0.7% vs -0.7% vs -0.3% vs +1.5%; Nasdaq 100 +1.4% vs -1% vs -0.8% vs -0.3% vs +1.6%; Russell 2000 +1.4% vs -0.1% vs -0.6% vs -0.7% vs +1.6%; NYSE Financials +1.4% vs -0.1% vs -0.4% vs +0.4% vs +0.3% (KBW Banks +2.8%!?! vs -0.3% vs -0.6% vs +0.4% vs +0.4% vs -0.1%; Nasdaq Banks +1.7%! vs -0.4% vs -0.6% vs -0.5% vs +1%; NYSE Brokers +2% vs +0.1% vs +0.3% vs +0.4% vs -0.2% vs -1.1%.NYSE Financial Leaders: BAC +4%!!! to $11 vs +0.4% vs -0.7% vs +1%; C +4.1%!!! GE +1.4%. Does this make sense to you? Not to TB.

Global equities strong, France and Hang Seng flat : FTSE +0.4% vs -0.5% vs -0.1% vs -0.2% vs +0.3%; CAC 40 flat vs -0.4% vs flat vs -0.1% vs -0.1%; DAX +0.4% vs flat vs +0.3% vs -0.3% vs +0.3%;Nikkei +1%! vs +0.9%! vs -0.1% vs +1.7% vs +0.6%; Hang Seng -0.1% vs -0.4% vs +0.7% vs -0.3% vs +0.8%; Korean KOSPI +0.5% vs -0.6% vs -0.4% vs +4.4% vs +0.6%;Indian Sensex +0.6% vs -0.3% vs +0.5% vs -0.7% vs -0.2%. U.S. stock futures up near session highs: DOW +44; SPX +6.30; NDQ +18.75!

U.S. treasury bonds pummeled yesterday and off slightly overnight: 10 yr 1.79% -1/8 – record low of 1.40%; 30 yr 2.96% -5/16. Long TIP 0.37% -3/8 – 0.22% record low!The 5 yr TIP yields –1.46%; 10 yr -.75%.T-Bills strong again: 0.00% 1 month; 0.03% 3 months; 0.10% 6 months. Reverse Repo 0.29%. 3 mo. Libor 0.309%; 6 mo. 0.509%!!!  European problem sovereign 10 years, Germany-bench: 1.39% +2; Japan 0.75% +2; Italy 4.46% -9; Spain 5.32% -7; Greece 12.54% -12 vs 12.73% vs 12.70% vs 12.64% vs 12.29% vs 12.88% vs 13.35% vs 13.92% vs 14.72% …on 9/20: 19.75%!!!; Portugal 6.93% +3; Ireland 4.49% -6.


Gold was up slightly yesterday closingat $1698.20 +$1.20. It remains well below the 40/50 day moving averages,and is up $1.30 overnight to $1699.50. – high $1704! Crude continued to bore gaining just 47 cents closing at $87.20. It is now between the 40/50 day m/a’s. Overnight it is up 52 cents at $87.72 – just above the 50 day!


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