1/16/13…let’s work together

From the Friars Club Encyclopedia of Jokes: “A conference is a gathering of important people who singly can do nothing but together can decide that nothing can be done.”

–        Fred Allen and…

“Business meetings are important-because they’re one way of demonstrating how manyh people the company can do without.” – while the worst control the results. TB

Bloomberg Quote of the Day: “For every minute you are angry you lose sixty seconds of happiness.”  – Ralph Waldo Emerson

Bloomberg Top Stories:

*U.S. Industrial Production Rose 0.3% in December, Fed Says – matches estimates!

*Goldman Sachs Profit Increases More Than Estimated on Own Investment Gains – hmmm, does that mean their clients were on the other side? The losing side?

*JPMorgan Profit Beats Estimates With 53% Increase as Mortgage Fees Climb – swell!

*Dimon’s Pay Cut in Half as JPMorgan Holds CEO Responsible for Whale Losses – yes!

*Stocks Drop With U.S. Futures on World Bank Global Forecast; Yen Rallies

*Recession Replaces Crisis as Euro Strength Defying Doubters Sparks Concern

*Goldman Pay Pool Grows First Time in Three Years as Employee Base Shrinks – !!!

*International Buying of U.S. Financial Assets Rises Amid Global Slowdown

*Europe’s Relief From Debt Woes Belies Jop Pain , Norway’s Stotenberg Says

*Gross’s Peso Bond Bet Lures Japanese Housewives Fleeing Yen – big investors!

*Dreamliner Fleets Grounded in Japan on emergency in Further Boeing Setback

*London Helicopter Crash Leaves Two People Dead After Collision With Crane   

Yet another mixed day with both Nasdaq indices dragged down by Apple again which burst through critical support at $500 for the first time since 2/16/12 falling by another 3.2% for a total of 6.8% in just two sessions. It was most apparent in the NDQ 100 which for a second straight session lost 13 points…all of it apple. Again with 51 up/48 down it would have been positive…AMGN/ORCL also cost it 1 index point each while MSFT added 2.3 and Dell 1 point…no other significant moves. It alos pulled the SPX to just a 0.1% gain following a 0.2% decline.NYSE Financials rose 0.5% with Brokers +0.5% vs -0.3%; KBW Banks +0.7% vs -0.4%, Nasdaq banks +0.2% vs +0.3% – BofA was most active stock – natch – rising 0.7% vs -1.4% and a 1.3% loss and thus negating Thursday’s 3.1% gain. Total NYSE volume rose slightly to a weak 3.13B shares vs 2.96B – recent range 2.96B-4.2B. Trades executed on the floor of the NYSE barely budged to a very weak 598M shares vs 590M shares – lowest since 12/28. Recent range 590M-859M. Advance/declines and Breadth were little changed again and slightly positive. New 52 week highs hit 713 a week ago and after bottoming at 308 Friday came back from 382 to just 304 yesterday. Recent range 304-713. New lows finally rose to 21 vs 11 – a new low. After closing at 22.70 on 12/28, the S&P VIX volatility measurement continues to register complacency but Friday is the first options expiry of the year and that could change…fast! It remains near the 12-month low (13.32 on 8/17) rising to 13.56 +.03.

Global stocks very weak led by Japan -2.6%! No indexes were up! U.S. stock futures weaker for a second day and again near bottom of o/n trading range: DOW -52; SPX -2.70; NDQ +2.50.

The bond market continues its revival from the depths but is still weak. It is up again negating small losses yesterday. The 10 yr note is 1.81% vs 1.81%, and the 30 yr 3.00% vs 3.00% –  at the old 3% high set on 12/18! Long TIPS steady at 0.41% – but way off the 0.22% record low set on 12/6! Reverse Repo rate at 0.20% -.02, back to normal. Libor 0.303%, 3 months, and 0.488% vs 4.90% six months. Foreign bond rates are lower across the board from 1-3 basis points, except Spain 5.005 +2 and Portugal 6.25% +11.

Gold continues to baffle and closed slightly higher for a second day at $1683.90 + $14.50, finally back above the 200 day m/a ($1667) with huge resistance at $1700, the 40/50 day just below! The $1636 low on 12/21 – lowest since 8/21 is key support. It is down overnight to a still weak $1677.90 -$6.00. Crude was lower but little changed for a seventh day after breaking above $92 on 1/2, closing at $93.28 -.86, following the highest close since 8/30 but gets a no confidence vote even though it is still well above the 40/50 day, and the 200 day: $91.29! Overnight it is $93.24 -.04.


…until and unless Congress and the President decide to look at the budget in total instead of piecemeal the markets will have no confidence and that applies especially to small investors who don’t know what to do.

Since the President is either winging it to intimidate the GOP right or Congress stops worrying only about deficits (even a fool knows that the same results can be obtained by a combination of increased revenues – a solid recovery would do that, and budget cuts from military – which is somewhat occurring automatically as we withdraw from Afghanistan but is still incredibly bloated like the Navy who continues to build nuclear aircraft carriers it doesn’t need, while the President refuses to acknowledge necessary entitlement reform which includes Medicare purchasing prescription drugs directly (expressly prohibited by the act creating Medicare Part D and leading to its demise along with heroic efforts for elderly), and reforming Social Security in terms of who besides the workers receives payments…like retirees with minor children even if they don’t need the assistance. Raising the retirement age is fine so long as we figure out what to do about people who would have qualified but if they lose their jobs they will most likely not get another and thus will need those benefits. There are no easy answers but slinging rocks at one another won’t solve our problems in the least…in fact it exacerbates them!

James Kwak of the Baseline Scenario posted the following article on CEO compensation to counter a WSJ article that CEO’s are worth their pay…hardly (TB refers to the large corporations who successfully reward themselves at the expense of shareholders thanks to contracts based on ‘relative’ performance…as measured by stock price:

I finally bit the bullet and read “In Defense of the CEO,” Ray Fisman and Tim Sullivan’s article on the cover of the “Review” section of Saturday’s WSJ. The inside continuation page is headlined “When CEOs Are Worth a Fortune.” In fact, I read it twice. But nowhere could I find any evidence or even an argument that any CEOs are worth a fortune—just a lot of implying, assuming, and asserting that they are.

Fisman and Sullivan discuss what CEOs do: they go to meetings, which is no surprise. They cite one study saying that CEOs who spend more time meeting with employees run companies that are more profitable than CEOs who spend more time meeting with external parties. But they don’t discuss which way the causality runs, or whether the latter companies would do better with the former CEOs. They make the conceptual argument that “a slight edge in ability can translate into enormous payoffs,” which might justify high CEO pay—if only they provided any evidence that ex ante higher pay packages actually correlate with ex post higher shareholder returns. And they repeat the stock argument that golden parachutes give CEOs an incentive to sell out at high prices rather than dig in and fight off takeovers—but the only study they cite argues that golden parachutes are associated with lower company valuations.

Mainly what they do is name-drop CEOs of successful companies (or at least with successful tenures)—Amazon, Apple, Zappos, EasyJet, Ford—without bothering to argue that those CEOs were responsible for their companies’ success. In a couple of cases it’s hard to argue with the importance of the CEO, but simply repeating Steve Jobs’s name over and over is not going to convince anyone that the average CEO is Steve Jobs.  Three of their five examples, by the way, founded their companies, which makes them far different from the typical hired mercenary with an obscene employment agreement.

This is the best the WSJ can find as an argument for paying oodles of money to CEOs?

Again, TB stresses that this is not all CEO’s but those of the major corporations who bloat their pay while depriving their employees of higher wages…wages which in turn generate higher tax revenues and increased spending…duh!!!

Last night, TB heard a disgusting interview with David Keene of the NRA…still thinking a gun in every classroom is the answer and having full time guards in schools. Boredom is the curse of police….how many days, weeks, months, might an officer be at school without any event happening that he/she gets involved? Most cities now have officers routinely patrol schools at irregular times. At Columbine there was a guard…what did that prove?

The NRA has no use for intelligent thinking only constantly repeating ‘it won’t work’ on anything that restricts gun ownership, EXCEPT on mental health which the Congress would not appropriate money for anyway. But they don’t call it mental health they call them ‘whacko’s’ and lunatics…very intelligent thinking. Meanwhile they want full investigation of the potential culprits but still allow guns to be purchased at gun shows. On one thing though they are right: we need to prosecute any illegal possession or use of a firearm to the fullest extent of the law…perhaps if they pulled officers off marijuana arrests which are clogging up our federal prisons they would be able to house these criminals…just a thought.

This morning the NRA is blasting the fact that Obama’s children have armed guards at school and extend this to ‘if they are protected, why aren’t all children protected.’ For God’s sake, do they want the President’s children abducted…merely because they ARE his children? One more case of the NRA acting juvenile…sad for what once was a good organization.

Lastly, TB reiterates that the Shooting Society of America is located in Newtown, CN. No word from them…they have three shooting ranges there which no doubt the mother and her son trained at…so much for good gun owners and bad ones.

That’s enough for today…hope it is a good one for all,


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


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