12/21/12…lumps of coal

Bloomberg Quote of the Day: “Learning without thought is labor lost.” – Confucius

…isn’t that what college is supposed to do? Teach us to think…obviously unsuccessful.

Bloomberg Top Stories:

*Stocks Decline With U.S. Futures on Budget Doubt; Treasuries, Yen Advance

*U.K. Recovery Weaker Than Estimated While Budget Deficit Widens

*Citigroup Said to Give Hedge-Fund Managers 75% Stake in CCA Unit for FREE!

*GE to Acquire Avio Aviation-Parts Unit for $4.3 Billion to Secure Supplies

*ArcelorMittel to ALSO Take $4.3 Billion Writedown After Euro Crisis Saps Demand

*If You Bought Greek Bonds In January You Earned 80% for 2012 – not over yet!

*NYSE’s Two Centuries of Dominance Disappear in Sprecher’s 12-Year-Old ICE

*MasterCard Is Sued by Sainsburys, Deutsche Bahn on Cross-Border Card Fees – !!!

*Stock Cops Pursue Insider Trading Across U.S. With New Enforcement Tools

*Adoboli London Fraud From UBS Recklessness Punctures Thatcher Deregulation – the one that was also pursued by her ‘buddy’ Ronald Reagan. Trust can be a bad thing!

*Boehner Drops ‘Plan B’ as Lack of Support Throws Deal Effort Into Disarray – as TB pointed out yesterday his ‘plan’ wouldn’t have raised taxes on even top 1% – a bad joke!

*Monti Praised by Merkel Plots Political future as Taxed Italians Turn Away – like the French will with the 75% tax on top income earners…stop complaining rich Americans!

*Daily Slaughter With Guns Across U.S. Obscured by Newtown Massacre – this was horrible as an event…but in lower income areas killing is happening daily! Fix it!

Today is the last options expiry of 2012  and the failure of the one day ‘short covering rally, which was accompanied by TWO straight increases in the S&P VIX to above the 200 day moving average (rare for the VIX to rise sharply , 12.5% in two days when stocks are up!…to highest since 11/16 – specs are in control…AND Tuesday is last day for (T+3) settlement…which means hedge funds will have total control for the remainder of the year since due to their leverage they have to close year on completed trades, not actual trades to avoid distorting balance sheets. One reason? Rebalancing of index funds on last trading day of the year…hedgies will make them pay to do so!

Yesterday’s NYSE volume slipped again to 3.66B shares vs 3.81B shares from 4.13B shares in a session that merely offset Wednesday’s decline. This contrasts to an average of the prior six sessions of about 3.3B shares. REAL trades on the floor of the NYSE (which was sold due to decreasing volumes and loss of profits) also fell to a weak 683M shares vs 751M shares vs 820M, only the 2nd 800M+ share day in 23 sessions during which average was just 691M shares! Advance/declines were and breadth were moderately positive. All indices were up slightly led by Dow Transports +0.7%. Strange as the slightly stronger GDP was due to what had to be an ‘involuntary inventory build.

Note that it is not tech (Nasdaq rose 2.6 points with AAPL taking away 3.4!), but Transports that are carrying the load…but the real leader is NYSE Financials…see below…that are the biggest gainers…for how much longer?

The S&P VIX again rose, more than reversing two days of declines rising to 17.67 +.31 and more importantly a high of 17.96, highest since 11/16and above the 200 day m/a, vs 17.36 vs 15.57 vs 16.34 vs 17.00. Today could be a ‘shocker.’

Global equities weak for first time in four sessions, U.S. stock futures imploding but off session lows: DOW -180; SPX -21; NDQ -41.50

Bond market was little changed and is up slightly overnight: 10 yr note 1.76% vs 1.78%, 30 yr 2.94% vs 2.97% – back from 3.00%! TIPS coming back but risky as traders manipulate the market. The 30 yr TIP yield fell to 0.34% vs 0.38% (closed 0.40% on Tuesday) vs  lows of  ‘twenties’ a weak ago and a record 0.22% low. Bills slightly lower again. The 1 month yields 0.01%. Greece 11.52% +15 vs 11.34% – high on 5/31 was 29.88%, 18.13% on 11/1!!! An incredible move!!!

Gold was off hammered again yesterday losing $22 which combined with the $28 on Tuesday is off $47 in just three sessions, closingat $1645.90 -$21.80 for the lowest close since 8/22! It is way below the 40/50 day moving averages an now the 200 day – $1668! Overnight is is up $2.90 to $1648.8. Crude held Wednesday’s gain to $89.98 and added 15 cents to $90.13, highest since 12/3, with a session high of $90.54, but overnight it is $89.93 -$1.20.

– – –  . . .  – – –

…where to start on the lump of coal awards…the list could be very long but so far:

Congress and the GOP for creating the fiscal cliff…OK, forcing Obama (who has been a weak leader since his healthcare program passed but ignited the ire of the GOP and they have pounced on every proposal since…still he got re-elected!), into a ‘non-existent’ crisis due to the extremist faction wresting control from the adults. As the following link implies, what we need is growth and when incomes for workers are only rising 1% or so annually you aren’t going to get it…not with all the accumulated debt…and don’t forget the state and local governments whose revenues are falling: incomes to the states, property taxes to the local governments: krugman-that-terrible-trillion

Also the right wing of the GOP for not even backing Boehner’s ‘weak’ offer of raising taxes on incomes above $1 million…which wouldn’t even cover the top 1% and thus throw even more emphasis and pain on Main Street Americans to protect the wealthy. You cannot and will not grow the economy in that way and it is very risky!

Grover Norquist for extortion of our elected officials and his lobbying efforts on behalf of his beloved NRA of which he is a director…one to for Wayne LaPierre who, following Charleton Heston turned a gun safety organization into extremists.

The SEC for allowing speculative, high frequency trading to convert the best market in the world into a ‘rigged’ casino. What did we expect when we had Mary Schapiro heading it…former CEO of the Wall Street financed FINRA who got a $9 million good-bye kiss when she became SEC Chairman, and is now replaced by Elisse Walter, also formerly of FINRA whose desire is to regulate all investment advisors as well as financial advisors…to the detriment of the former in arbitration. They have also lost some of their best prosecutors over the past decade as they received no support from former Chairman Chris Cox, a former GOP Representative from Orange County, Ca. ‘nuf said.

But back to Congress who despite the biggest financial disaster in U.S. (global?) history failed to appropriate more funding for investigations…the big four banks have each paid more in fines this year than the entire budget for enforcement…and not one prosecution!

Here is an interesting and scary analysis of the bank situation: Bank scandals

The big four banks who have been protected ever since Reagan bailed out Continental Illinois at the expense of the smaller banks (note that today is the end of the increased $250,000 insurance on deposits implemented due to the crisis…will this help the TBTF banks even more? It could!), yet cheated us in every way possible…they pay big fines which fail to even offset the profits they made on those illicit activities! No one held accountable, in fact they continue to draw fat salaries and bonuses at shareholder expense. Today a Bloomberg story tells how the UK is rethinking Thatcher’s deregulation – the one copied by Reagan – because of all the Libor fixing, money laundering, and bribery that they have perpetrated. Wake up America…there is no such thing as free market capitalism…it is a myth that only applies to the small and mid-size ‘honest’ companies. Von Hayak’s The Road to Serfdom should have been The Road to Riches at the Expense of the Working Class. Milton Friedman was either wrong or dreamy-eyed about greed in major corporations…especially banking!

WalMart…on so many levels…its paying minimum wage, holding back benefits while enriching the family…a study showed that just a 1% price increase would bring employees salaries above the poverty level…after all Costco does it and has happy employees…some way to treat who you advertise as your best customers…do they owe their souls to the company store? Also while professing to stop selling assault weapons they have been pulled in some stores not in others while yesterday’s Huffington Post showed 12 things (for the 12 days of Christmas?) you can’t buy there…including Barbie!)

The utilities…look closely at your bills…there are all sorts of charges…most less than $1 for FCC fees, etc. They are not levied fees but items the utilities have added to boost their bottom line. For instance, that FCC fee is the cost of administering FCC regulations…passing it on to you when it is THEIR cost of doing business…shame on the state PUC’s for failing to stop this…it amounts to millions of additional income for each.

That’s enough for today…perhaps some more on Monday…there is plenty of coal to go around…even if it is a carcinogen.

Have a great weekend and get ready to have some fun over the next week or so!

TB

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

Volume fell again to 3.66B shares from 3.81B after hitting 4.13B, and is just slightly above the 3.3B share average of the prior six sessions. NYSE shares executed without the aid of the ETN market also fell to a weak 366M shares vs 751M shares from an above average 820M shares…the lack of participation continues. There have been just 24 700M+ days since 8/3. Tuesday was the only 800M+ share day in the last 13 sessions! – average 691M shares! The average since 8/1’s 1.03B is just 681M. The average since 9/21 (12 mo high: 1.81B) is just 687M with just one 1B share day and just nine sessions above 800M shares! 135 of the last 180 sessions have been less than 800M shares (75%!). Since 2/29 there have been just 28 ‘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 83 sessions less than 700M shares. 251 of the last 275 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. High freak trades replacing retail buyers. No wonder the NYSE was sold…not making much money!

Advance/Declines were positive: +2.5x vs 1:1 vs +2.8x vs +2x vs -1.1x on NYSE and +1.6x vs 1:1 vs +2.6x vs +2.2x vs -1.1x on Nasdaq. Breadth was similar: +3x vs -1.7x vs +6.1x! vs +4.2x vs -1.1x on the NYSE and +1.2x vs -1.3x vs +3.3x vs +1.9x vs -1.1x on Nasdaq. New 52 week highs dipped to 259 vs 292 vs 292 vs 151 vs 95 vs 89 (768 is cycle high, 28 low), while new lows slipped to 41 vs 53 vs 55 vs 74 vs 79 vs 84. The ratio rose to +6.3x vs +5.5x vs +5.3x vs +2x vs +1.2x. Recent high was +7x! The S&P VIX continued its surge rising to 17.67 +.31 – a 13.5% gain and the session high of 17.96 was highest since 11/16, above the 200 day m/a of 17.89 vs 15.57 vs 16.34 vs 17.00 vs 16.56. Highly unusual on an ‘up’ day and indicative of today’s options expiry!

Here are the results of last 5 sessions: Dow +0.5% vs +0.9% vs +0.8% vs -0.3% vs -06%; Dow Transports +0.7% vs +1.6% vs +0.8% vs +0.1% vs +0.1%;Dow Utilities +0.4% vs +0.9% vs +1.4% vs -0.1% vs -0.4%; S&P 500 +0.6% vs +1.2% vs +1.2% vs -0.4% vs -0.6%; Nasdaq Composite +0.2% vs +1.5% vs +1.3% vs -0.7% vs -0.7%; Nasdaq 100 +0.2% vs +1.5% vs +1.4% vs -1% vs -0.8%; Russell 2000 +0.5% vs +1.5% vs +1.4% vs -0.1% vs -0.6%; NYSE Financials +1.2% vs +1.4% vs +1.4% vs -0.1% vs -0.4% (KBW Banks +1.1% vs +1.9% vs +2.8% vs -0.3% vs -0.6%; Nasdaq Banks +0.9% vs +1.4% vs +1.7% vs -0.4% vs -0.6%; NYSE Brokers +1% vs +2.4%! vs +2% vs +0.1% vs +0.3%.NYSE Financial Leaders: BAC +3% (but still $11.52) vs +3.3% vs +4% vs +0.4% vs -0.7%; GE +1.1% vs -1.1% vs +1.4%. No other leaders.

Global equities weak for first time in four sessions:  FTSE -0.7% vs +0.1% vs +0.5% vs +0.4% vs -0.5%; CAC 40 -0.5% vs +0.2% vs +0.4% vs flat vs -0.4%; DAX -0.7% vs +0.1% vs +0.2% vs +0.4% vs flat;Nikkei -1% vs -1.2% vs +2.4%!!! vs +1% vs +0.9%; Hang Seng -0.7% vs +0.2% vs +0.6% vs -0.1% vs -0.4%; Korean KOSPI -1% vs +0.3% vs +0.5% vs +0.5% vs -0.6%;Indian Sensex -1.1% vs -0.1% vs +0.6% vs +0.6% vs -0.3%. U.S. stock futures imploding but off session lows: DOW -180; SPX -21; NDQ -41.50.

U.S. treasury bonds were up slightly yesterday and are up slightly again overnight following Tuesday’s rout: 10 yr 1.75% vs 1.78% – record low of 1.40%; 30 yr 2.94% vs 2.97% back from 3.00%! Long TIP fell to 0.34% vs 0.38% from 0.40% – 0.22% record low!The 5 yr TIP yields –1.49%; 10 yr -.78%.T-Bills: 0.01% 1 month;0.05% 3 months; 0.10% 6 months. Reverse Repo 0.29%. 3 mo. Libor 0.31%; 6 mo. 0.51%! European problem sovereign 10 years, Germany-bench: 1.39% -3; Japan 0.75% -1; Italy 4.48% +7; Spain 5.23% +3; Greece 11.52% +15 vs 11.34% – high on 5/31 was 29.88%, 18.13% on 11/1!!! An incredible move!!! Portugal 6.80% +1; Ireland 4.37% -1.

Gold was off hammered again yesterday losing $22 which combined with the $28 on Tuesday is off $47 in just three sessions, closingat $1645.90 -$21.80 for the lowest close since 8/22! It is way below the 40/50 day moving averages an now the 200 day – $1668! Overnight is is up $2.90 to $1648.8. Crude held Wednesday’s gain to $89.98 and added 15 cents to $90.13, highest since 12/3, with a session high of $90.54, but overnight it is $89.93 -$1.20.

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