3/14/13……there’s fear, then there is insidious fear

From the Friars Club Encyclopedia of Jokes: “Diplomacy is the art of saying, “Nice doggie.” Until you can find a rock.” – Will Rogers…a very simple but wise man.

TB’s Quotes of the Day: “We have nothing to fear but fear itself.” – F.D.R. and…

“You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.” – Rahm Emanuel – but STOLEN by Paul Ryan and the Tea Party…and perfected!

Now, a song dedicated to our hardworking members of Congress (sic):

THE SIDESTEP

From: “The Best Little Whorehouse In Texas”

(Carol Hall) as performed by the late, great Charles Durning

 

Fellow Texans, I am proudly standing here to humbly see.

I assure you, and I mean it –  Now, who says I don’t speak out as plain as day?

And, fellow Texans, I’m for progress and the flag- long may it fly. 

I’m a poor boy, come to greatness. So, it follows that I cannot tell a lie.

 

Ooh I love to dance a little sidestep,

now they see me now they don’t – I’ve come and gone and,

ooh I love to sweep around the wide step,

cut a little swathe and lead the people on.

 

Now my good friends, it behooves me to be solemn and declare,

I’m for goodness and for profit and for living clean and saying daily prayer. 

And now, my good friends, you can sleep nights, I’ll continue to stand tall.

You can trust me, for I promise, I shall keep a watchful eye upon ya’ll…

 

Ooh I love to dance a little sidestep,

now they see me now they don’t – I’ve come and gone and,

ooh I love to sweep around the wide step,

cut a little swathe and lead the people on.

 

Now, Miss Mona, I don’t know her, though I’ve heard the name, oh yes. 

But, of course I’ve no close contact, so what she is doing I can only guess. 

And now, Miss Mona, she’s a blemish on the face of that good town. 

I am taking certain steps here, someone somewhere’s gonna have to close her down.

 

Ooh I love to dance a little sidestep,

now they see me now they don’t – I’ve come and gone and,

ooh I love to sweep around the wide step,

cut a little swathe and lead the people on.

 

Ooh I love to dance a little sidestep…

 

And, ooh I love to sweep around the wide step…

 

Cut a little swathe and lead the people on.

…it doesn’t get better or truer than that!!!

Bloomberg Quote of the Day: “Intelligence is the ability to adapt to change.” – Stephen Hawking

Bloomberg Top Stories:

*Stocks in Europe Approach Five-Year High as U.S. Futures Gain, Bonds Drop

*Dallas Fed Cap on Assets Would Force U.S. Banking Units to Shrink by Half – !!!

*Dimon’s ‘Harpooned’ Whale Bet Resurfaces as Senate Awaits Drew Testimony – oops!

*Ackman Loses Long-Term Partner Roth as Vornado Turns Back on J.C. Penney

*USB’s $26 Million Award for Investment Bank Head Orcel Dwarfs Pay of CEO

*BMW’s Profitability Slips on Spending to Keep Ahead of Volskwagen’s Audi – VW???

*Lego Builds New Danish Billionaires as Most-Valuable Toymaker Beats Mattel

*Merkel’s Reform Crown Slips as She Turns EU German Decade After Schroeder

*Pope Francis Leaves Vatican to Pray at Roman Basilica on Day After Vote

*Netanyahu Reaches Agreement on Forming New Coalition Government in Israel

*France Considering Delivering Arms to Syria Rebels Without Agreement From EU – !!!

*NRA Calls Policy Shots in Congress for Gunmakers That Help Pay Its Bills    

Amazing…at the closing bell, CNBC went silent…awaiting to see if the Dow would be up for a 9th day – not seen since 1999. It closed up just 5 points – on an inside session (lower high, higher low) and narrow trading range…with options expiration tomorrow! Tuesday’s close was just THREE points higher but with a new record high of 14479 – note that since the breakout on 3/5, all of the ranges have been very small…miniscule?  . Volume, however dipped slightly. NYSE Financials rose, led by brokers, but still managed only a weak 0.2% gains for the top banks. Despite that the VIX managed yet another decline to the second lowest level since March 21, 207!!! Gold’s rally died out and is weak overnight while Crude also failed to gain traction following the its highest intraday trade since 2/27/13.

TB remains attached to ‘sell in May and go away’ – IF we make it that far…when else have you been able to buy puts so cheaply???

Total NYSE total volume slipped to 3.03B shares vs 3.22B vs 2.98B vs 3.64B vs 3.62B vs 3.67B vs 3.57B vs 3.38B vs 3.76B vs 3.53B vs 2/28’s 4.2B (highest of 2013 by about 400M shares). Real NYSE volume was not only lower but stunk up the place: 585M shares (lowest since 2/11’s 497M shares AND since 3/1 the range has been a weak 585M to743M shares. Ave 668M) vs 622M vs 599M vs 690M vs 708M vs 684M vs 683M vs 693M  – vs 2/28’s (monthend) 1.01B shares!!!(second only to 1/18’s 1.07B and third best to 12/21’s 12 mo. high of 1.88B shares). Note that 700M occurred just once last week while the average volume since 2/15 is a weak 740M shares!!! Ave vol. 12 mos. 744M, ytd 710M. There have been just eight 800+M shares in 2013. The run stopped yesterday at SIX consecutive record highs. This on a very thin-based rally which is unbelievably getting weaker! ALSO, the VIX which surged to 19.28 on 2/28 fell to an incredibly low 11.56 Monday – with a low of 11.50 – lowest since 3/2/07, then rose slightly to 12.29, and back to 11.83 -.44 with a low of 11.79!.

  1. new 52 week highs which have ranged from 121-709, before falling to just 121, were steady at 410 vs 413 vs 560 vs 630 vs 447 vs 539. New lows rose slightly again to 42 vs 36 vs 26 vs 24 vs 64 vs 73 vs 98. Puts remain incredibly cheap!
  2. Advance/Declines were slightly positive at +1.3x vs -1.4x vs +1.2x vs +2x vs +1.4% on NYSE and +1.3x vs -1.4x vs +1.1x vs +2.1x vs +1.6x on Nasdaq. Breadth was worse at +1.2x vs -1.3x vs +1.6x vs +2x vs +1.8x on NYSE and +1.1x vs 1.7x vs +2.1x vs +1.9x vs +1.9x on Nasdaq.
  3. The only impressive gain was Dow Transports which rose 1.6% while the two Nasdaq indices were mixed but essentially FLAT at +0.1%/-0.1% vs -0.4% vs +0.4%, with the NDQ 100 losing just 4 points – 6.5 of them from PCLN and four others losing more than 1 point.  55 advanced – all minor gains, 41 declined. The Russell 2000 small cap was back in view and has been the only impressive index rose 0.4% (same as Dow Utilities!) vs -0.2% vs FLAT vs a 0.9% gain vs 0.5% vs +0.3% vs +1.2% vs +0.2% – that is up 3.8% in 10 sessions! Don’t look down!
  4. NYSE Financials rose 0.2% vs -0.7% vs +0.6% for three days. NYSE Brokers +1.1%. BofA still most active and +1.4% to close at $12.06 vs -1.2% vs +0.7% vs +1.6% – the range is $11.11, on 12/17 to $12.42 on 2/13. Note: 11 cents is a 1% change!!!  No other financial most actives!
  5. Lastly volatility (S&P VIX) which had back to back lows not seen since 2006 – 12.13 then back to 18.99 (with an intraday high on 2/28 of 19.28, highest since 12/31) – highs on 12/30-31 were 22.72 and 22.19 respectively, highest since 6/15. It fell by .44 to 11.83 with a session low of 11.79, second only to Monday’s low of 11.50, not seen since 3/21/07 (11.21). Given all the world’s headlines and lack of income gains how can we be so complacent? Ah, in ’07 we were near the record high…you know…the one we just broke! For what reason???

Global equity markets are strong…new Pope (joke!): UK +0.4% vs -0.8% vs +0.1% vs +0.2% vs +0.7%; France +0.8% vs -0.4% vs +0.1% vs -0.3% vs +1.2%; Germany +1.1%! vs -0.1% vs flat vs -0.2% vs +0.8%; Japan +1.2%! vs -0.6% vs -0.3% vs +0.5% vs +2.6%; Hang Seng +0.3% vs -1.5%! vs -0.9% vs FLAT vs +1.4%; Kospi +0.1% vs +0.3% vs -0.5% vs -0.1% vs +0.1%; India +1.1% vs -1% vs -0.4% vs -0.2% vs +1.4%. U.S. stock futures also higher and still stuck in a narrow range: DOW +21; SPX +4; NDQ +9.75. Markets opening higher with a new record high on the Dow…sort of.

Poor bonds just can’t catch a break…yesterday’s strong Retail Sales report doomed them and they are off again overnight: 10 yr Treasury range of from 2.06% to 1.85% last 17 sessions, now 2.06% -5/16, and the 30 yr’s 3.26% to 3.05%, now 3.25% -1/2. The long Tip is now 0.65% – one b.p. off the high high yield of 0.66%, now 0.65% -1/2. Libor update: 0.242% 3 mos., 0.445% 6 mos. Foreign bond yields slightly higher ex-Italy: Germany 1.48% +1; UK 1.98% +1; Italy 4.65% -1; Spain 4.83% +9!!!; Portugal 5.80% -1; Greece 10.53% +6.

Gold closed slightly weaker a day after the highest close since 2/27/13. It remains near support with the loss from the 1/17 high of $1699.90 at $118! It closed at $1588.40 -$3.30, down -$60 in 12 sessions but also above a week ago Thursday’s low of $1554.30 – not seen since May 2012! Overnight it is $1577.40 -$11.00!!! The total breakdown through the 40/50/200 day m/a’s, has major resistance $1632-1669, with first resistance at $1600, a double bottom from 8/14-15, also a psychological level. Last time it was below $1500 was Sept. 2011!!! Crude was almost unched yesterday, still trying to come off that new low of $89.33, lowest since 12/26, and way below the 40 day ($94.63), AND $94.34, the 50 day. It closed at $92.52 -.2 – an inside day!!! Overnight it is $92.28 -.24.

Some random thoughts:

Think TB is wrong about the bankers? This is the same ‘mistake’ they began making 50 years ago when they hired MBA’s and turned them loose. But it is worse because there are more of them and they learned using the same models. FIX THE BANKS…NOW!!!

Banks/risk models

It is criminal that a group of self-serving individuals bilked their shareholders and despite Sarbanes-Oxley and Dodd-Frank, continue to manipulate Congress in their favor while getting tax preferences and driving the GOP to not enact further revenue increases of any form…and let Main Street take the hit for them – and they will create another crisis in time. Since Continental Illinois in 1984 created ‘too big to fail’ (some call it ‘too big to save’ now), we have had three banking crises and a Savings and Loan crisis. Only in the S&L crisis were officials convicted and sent to prison – over 1,000 – versus zero!

 

As for what I think of Congress (and Obama’s posturing but can you blame him when he is concerned with his legacy and while he can appease some or most of the GOP, not enough to pass a budget that is acceptable to both parties). Meanwhile, Boehner continues to make snide comments while preaching diplomacy. Ryan doesn’t even go that far. Do we have to pick up the bill for those lunches and dinners??? You betcha!

Last night on PBS, presidential historian Stephen Beschloss said that the conflict between the President and the Congress is not unusual…what is unusual is that there is no major crisis…such as the Civil War or World War II which pitted segregationists/isolationists against uniters/hawks. That is the hypocrisy of this whole situation. Then there is the new term ‘primarying’ whereby the party destroys anyone who doesn’t vote the party line or even becomes friends with the opposition…how un-American! TB has talked to people like Sen. Bob Bennett of Utah – hardly a liberal – who was destroyed by his party in the primary…now he says he would have no interest in being in Congress.

Can you blame him? Hey, why don’t we abolish Congress and save millions of dollars? Just let the two national committees make the decisions in proportion to how we voted, if, that is, we would even bother to vote in those circumstances. But is what we’ve got now!

Wait…the entire country is going to hell in a handbasket…ask the Tea Party! Let’s go back to some facts about them:

  1. the idea is credited to CNBC’s Rick Santelli who in an outburst reminiscent of Network, screamed out on the floor of the CBOE “who here wants to pay for someone else’s mortgage?” No one was the answer…not surprising from a group who ‘bets’ their own home every working day! He then referenced the Tea Party and said he was going to hold one that weekend on Lake Michigan (nevermind, the REAL Tea Party was due to reducing the tax on tea which made smuggling less profitable!!! Get your facts straight!
  2. Then along came the evil Koch brothers, who together rank fourth among the richest Americans and own the second largest private company in the U.S. – right behind Cargill. They are also the biggest polluters and safety violators. THEY, not those $1 and $10 donations are what paid for that party and why we have so much angst in our government today…and worse, they are winning…nothing can get passed in Congress that raises (sic) taxes…even eliminating bad subsidies and deductions and the ‘carried interest’ provision that taxes hedge fund and private equity (Romney) owners at just 15% on what is really ordinary income! Why doesn’t the Tea Party object to this? Also, since when is rescinding just part of two temporary tax cuts (which were an over reaction to a tepid recession following a near decade of above trend growth)? Dunno, ask Grover Norquist who in most other countries would be incarcerated for his lobbying extortion.
  3. Ah, but to use the quotes today…honed by the extremists to scare the bejessus out of us all…they take us from crisis to crisis…all manufactured, and worse – they will make us all worse off in ten years time (not to mention hurting growth in the short-term). There is no crisis…at least one that could not be solved with a combination of revising the tax code (fat chance when the financial lobby which already shelters the bankers, protects the tax lawyers and accountants, while further enriching the wealthiest Americans and widening the wealth gap…note the opposition to raising the minimum wage on the basis that to do so would cost jobs…if we cut the minimum wage (using their logic), we could vastly increase the labor force…while doubling or more those living below the poverty level!
  4. Imagine if Ryan’s plan is enacted – which thankfully it won’t be – in 2024 we would be on a voucher system with the states taking over Medicare! The states? First this would allow the Fed’s to ‘freeze’ the payments! Doesn’t anyone realize that they are in more dire straits than the federal government? Illinois is now under pressure for a possible fraud in issuing pension obligation bonds over the last three years without disclosing that the fund is only 45% funded!!! Compare to Wisconsin, which is…well, sort of…but as an official of that fund told me in London several years ago: “even if fully funded we wouldn’t be in reality since that assumes an 8% return for perpetuity.” Do you think in the current environment that is possible? No way! The only way to fund a pension fund without risk is through a laddered portfolio of bonds…but that cannot be done now (although in 2000 it could have been and was done by John Ralf who did it on behalf of Boots Ltd. – and was mocked for it…until proven correct!)

Yes, Franklin the only thing we have to fear is fear…perpetrated by those who would use it to achieve their own objectives and those of their backers and the U.S. moves from a democracy to a plutocracy or a duopoly…which do you want? Ah, but wait…look at the loss of popularity of the GOP…and by those who have gone from a minority to a growing majority…by the day! This will not stand, to quote George. H.W. Bush!

Funny that Rahm Emanuel was mocked for his quote on a crisis…it has been hijacked by the GOP and used in the worst possible way.

Can we survive this? You bet we can…but the outcome is up to you, the voter.

You decide, but think before you do…it’s later than you think!

How appropriate that song from an entertaining movie is for today’s government.

…and lead the people on…

Have a great day!

TB

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