3/18/13…hey, TB! Stop crying wolf…the market is alive…ALIVE!!!

From the Friars Club Encyclopedia of Jokes: “Don’t trust a computer you can’t throw out a window.” – Steve Wozniak

Bloomberg Quote of the Day: “Man’s greatness lies in his power of thought.” – Blaise Pascal…unless, that is you are a free-thinker within the GOP, then you are outed! TB

This week we will get February Housing Starts (Tuesday), February Existing Home Sales, March Philadelphia Fed Survey, and February Leading Indicators (Thursday). In addition, the Federal Reserve FOMC will be meeting on March 19th – 20th with an announcement on the 20th. Courtesy of Economic Advisory Service

Bloomberg Top Stories:

*Euro Drops to Year’s Low as Stocks Fall on Cyprus Levy! Bunds, Gold Rally

*Cypress Leeway Signaled by European Leaders Amid Backlash Over Deposit Tax

*Russia Stocks Sink Most in 6 Months on $31 Billion Cyprus Deposit Exposure

*Apple Seen Raising Dividend More Than 50% to $15 Billion After Stock Slump

*King Seeks to Stabilize Pound as Inflation Competes With QE

*Cypriot Natural-Gas Revenue Seen as Scant Compensation for Lost Deposits

*AstraZeneca Will Cut 1,60 Jobs, Have $1.4 Billion Costs in Revamp and R&D

*SAC Fund Manager Plotkin Said to Get Insider Tips From Convicted Analyst

*SAC Capital to Pay $416 Million in US. Insider Case Involving Affiliates

*JPMorgan Whale Trade Spotlight Shifts to SEC Investigation of Disclosures

*New Headgear Preventing NFL Concussion Seen Quashed by League-Riddell Deal

*Merkel’s Cyprus Gamble Explained as Germany’s Federal Elections Approach

*Republican Review of Election Loss Calls for Dozens of Changes in Strategy

*Republicans Foil What Most Americans Want With Congress Set by Gerrymander

Finally, the talking heads at CNBC (airheads?) had something to crow about as the Dow put in its 8th straight record high and has had record high closes 9 of the last 10 sessions – not seen since 1999. The S&P 500 closed at the session high and is now just 13 points below the 10/11/07 record high…never mind what your return would have been if you bought it (the index which due to manipulation of the members is one of the great myths of finance – can you imagine a finance class where you tell the prof – breathlessly that we are almost to the record high???). Volume, rose slightly to an ‘average’ 3.43B shares. While the REAL volume on the NYSE rose slightly to 676M shares it is still pitiful! Financials rose again but the brokers, which led on Wednesday were FLAT while the Banks gained 0.9% – interesting as they await the Fed’s decision on ‘upping’ their meager dividend. Meanwhile, the VIX managed yet another decline to a new low of 11.05, lowest since 2/23/07 then closed at another new low of 11.30 – think of it, with all the internal and external problems you can buy a ‘put’ cheaper than at any time in the last six years!!! Gold continued to struggle near $1600 and Cude is now at the highest price since Feb. 25th.

TB loves all those stupid stock statements like hemline theory, or cycles that will change on a certain date. The best was Friday – the St. Pat’s Day effect: a large percentage of the time the stock market goes into a steep decline immediately following a St. Pat’s that falls on a Sunday! Who has time to research these things…and why???

That said, the minor – emphasis minor – selloff experienced on Friday on an options expiration and ending the string of new highs at NINE (but only SIX records – with ‘inside days’ – lower highs and higher lows – on both Wednesday and Friday) indicates this beast is rolling over? The string of consecutive high closes ended on Thursday at 10, not seen since 1997 (S&P SIX ending last Monday while the Nasdaq indices which ‘broke out’ on March 4, have been slightly different but not worth writing home about as the Composite ‘seessawed’ but managed to eke out a 2.1% gain over those 8 sessions for a 2.1% gain, but the NDQ 100 has been going sideways ever since – in those same 8 sessions the gain was ZERO…including the breakout day when both indices ‘gapped up’ it was just 1.9% with a range in between of just 0.8%!!!. Hardly anything to crow about. On the other hand, the Russell 2000 small cap has risen by 5.8% and has an unbroken string of new highs since March 1, of 8, with high closes registered since 1/31 of 18 with just FOUR minor slips on the way for a gain of 5.6%! Now that is impressive. The only other index to provide competition over that period is Dow Transports, up 4.8% but with a lot of volatility in between. NYSE Financials are up 3.4% since March 1. Why? Banks?

Friday’s options expiry drove total NYSE volume to 4.93B shares (eclipsing the 4.2B 2013 high of 2/28) vs3.43B s 3.03B 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. Real NYSE volume also rose to 1.825B shares – a new 12-month high!!! vs a near average 676M but from a weak 585M shares (lowest since 2/11’s 497M shares). Since 3/1 the range has been a weak 585M to743M shares. Ave 668M). The second and third highest of this year were 1/18’s 1.07B shares (expiry) and 2/28’s (monthend) 1.01B shares, beaten only by  12/21’s 12 mo. high of 1.88B shares). Note that Friday was the only day since 2/28 to register over 1B shares with no other sessions reaching anywhere near 800M occurred just once last week while the average volume since 2/15 is a weak 749M shares!!! Ave vol. 12 mos. 743M, ytd 729M. There have been just NINE 800+M shares in 2013. But what did the VIX do? NOTHING…zero, zip, zilch! It closed at 11.30 unched, lowest since 2/23/07 with an intraday low of Thursday of 11.05 – lowest since 2/23/07. Complacent? You decide!

  1. new 52 week highs which have ranged from 121-709, before falling to just 121, slipped to 584 vs 652 vs 410 vs 413 vs 560 vs 630 vs 447 vs 539. New lows also rose slightly again to 64vs 50 vs 42 vs 36 vs 26 vs 24 vs 64 vs 73 vs 98.
  2. Advance/Declines were slightly negative at -1.1x vs +2x vs +1.3x vs -1.4x vs +1.2x on NYSE and -1.3x vs +2.1x vs +1.3x vs -1.4x vs +1.1x on Nasdaq. Breadth was similar at -1.1x vs +2.8x vs +1.2x vs -1.3x vs +1.6x on NYSE and -2x! vs +1.9x vs +1.1x vs 1.7x vs +2.1x on Nasdaq.
  3. The Dow’s 25 point loss -0.2%, as did the SPX. The only gainer was Dow Utilities with a 0.7% push for the highest close sine 8/1/12!!! Dow Transports fell by 0.1% vs +0.8% vs 1.6% while the two Nasdaq indices were off 0.3% vs up 0.3% from +0.1%/-0.1% vs -0.4% vs +0.4%. The Russell 2000 small cap was -0.1% vs +1% vs +0.4% – still up 4.7% in 12 sessions!
  4. NYSE Financials were FLAT vs +0.9% vs +0.2% vs -0.7% vs +0.6%. NYSE Brokers -0.2% vs flat vs +1.1%. BofA still most active – natch – up 3.8% vs +0.4% vs +1.4% vs -1.2% vs +0.7% vs +1.6% – the range is $11.11, on 12/17 to $12.57 on 3/15. Note: 11 cents is a 1% change!!!  JPM fell 1.9% – as it should!
  5. Lastly volatility (S&P VIX) was unchanged at 11.30 with a session low of 11.21. Thursday’s 11.05 has not been seen since 2/23/09. Think about it!

You cannot ignore facts…and the volume belies the truth: the global economic situation is a mess!

Global equity markets being thrashed: UK -0.7% vs -0.6% +0.4% vs -0.8% vs +0.1%; France -1.3%! vs -0.9% vs +0.8% vs -0.4% vs +0.1%; Germany -1.1% vs -0.3% vs +1.1% vs -0.1% vs flat; Japan -2.7%!!! vs +1.5% vs +1.2% vs -0.6% vs -0.3%; Hang Seng -2%!!! vs -0.4% vs -0.4% vs +0.3% vs -1.5%; Kospi -0.9% vs -0.8% vs +0.1% vs +0.3% vs -0.5%; India -0.7% vs -0.7% vs +1.1% vs -1% vs -0.4%. U.S. stock futures were weak and markets opened lower. Dow plunged on the open by 110 points and is now coming back: -54! SPX -12; NDQ -17.

Bonds were higher on Friday and the 10 year has broken the recent ranges overnight: 10 yr Treasury from 2.06% to 1.85% last 19 sessions, now 1.95% +3/8, and the 30 yr’s 3.26% to 3.05%, now 3.17% +7/8. The long Tip however barely budged to 0.62% +3/4 vs 0.64%, still near the high yield of 0.66%. Libor update: 0.242% 3 mos., 0.445% 6 mos. Foreign bond yields mixed with problem countries higher, especially Greece: Germany 1.40% -6; UK 1.89% -4; Italy 4.63% +5; Spain 4.95% +5; Portugal 5.93% +10!!!; Greece 11.06% vs 10.58% +54…on Cypress bailout…it never ends!

Gold closed slightly higher again, and is roaring overnight: above $1600, for the first time since 2/28!!! It is still well below resistance and way below the 1/17 high of $1699.90. It closed at $1597.60 +$1.90, well above 2/21/13’s low of $1554.30 – not seen since May 2012! Overnight it is ROARING $1609.10.50 +$16.50! The total breakdown through the 40/50/200 day m/a’s, has major resistance $1627-1669, with support now at $1600, a double bottom from 8/14-15, also a psychological level. Last time it was below $1500 was Sept. 2011. Crude however is being slammed overnight but still well above the recent low of $89.33, lowest since 12/26, set on March 4…and way below the 40 day ($94.60), AND $94.37, the 50 day. It closed at $93.45 +.42. O/N it is $92.32 -$1.13!.

Some random thoughts:

What the people allow their government to do is the strongest sign of what kind of people they are. We are pathetic. The wealthy only care about making more money and paying less taxes and are in total control of the GOP with the aid of Grover Norquist. Hint: the government is not a corporation…thankfully because if it was Obama would be paid a billion dollars! That might influence him to be on ‘the other side.’

The GOP continues to fight raising the minimum wage saying companies will reduce their hiring. This is the same tired argument that raising taxes (when in fact they are merely partially reversing tax cuts put in place to ‘save us’ from the mini-recession of the early Bush year which was replaced by the biggest financial boom in this nations history. It then went ‘bust’ thanks to ‘too big to fail’ and the banks still hold sway over Congress. Are we stupid? It most certainly appears so. If Congress doesn’t bend on TBTF this time around however we most certainly will have another financial crisis, sooner rather than later. No one went to jail…only Angelo Mozillo was fined and that was a pittance of what he made by talking  up Countrywide while selling his own shares…just like Ken Lay did! The SEC doesn’t prosecute anymore they simply create headlines by collecting higher and higher record fines…which amount less than the culprits earned in the first place. There is no incentive for honesty, only prison time serves that purpose and we are incapable of doing that!

What is the difference between the states and the federal government? The states are ‘supposed’ to be fiscally responsible with balanced budgets each year – now accomplished by gimmickry such as making pension fund payments at the beginning of the next fiscal year which is the same as a corporation booking profits it hasn’t earned: it steals from the next year and when things go bad, they really go bad!

No, the federal government is supposed to incur deficits in bad economic times…aren’t they? What if FDR hadn’t put into being all those social projects…and doesn’t our weak infrastructure (from electricity to water supplies to highways) demand that we do? Not if Paul Ryan and his group of short-sighted individuals holds sway. If they enact sweeping budget cuts…most likely they can’t as Obama would veto them without enough votes to override…so the stalemate will continue…while Rome burns.

This is not America…the country where we care about all people, not jus those who can contribute huge amounts to political campaigns thus creating barriers to entry for new blood. Where you elect someone to do something about it and they are hamstrung from the outset by a party that says if you don’t tow the line we will throw you out in the next primary. Why don’t we just vote GOP or Dem and let the national party leaders fight it out and eliminate the costs of having a Congress at all? Because this is America whether they want to acknowledge it or not. That is not an entirely altruistic comment.

You have to be blind to miss the number of knowledgeable people who are deserting the GOP and its newfound principles. Many of you thought of TB as a radical when all he wanted was to see America return to its values instilled in us by the founding fathers.

In a country where the minority (minorities) have become the majority and those earning less than $62,000 a year now have control if they vote and that requires a knowledgeable and strong leader…in a country of over 300 million certainly one must exist. We thought it might be Obama but he was not. IF and when a true leader emerges, we had better hope that he (she) too cares more about the entire country than just those who elect her. Because if not, the ‘great experiment’ will be a failure and this great nation will no longer be fit to call itself the bastion of democracy.

Ah, but the GOP is making changes…none of which will return it to the party of Lincoln, Eisenhower, Reagan or even George H.W. Bush. They are cosmetic and actions speak louder than words. You can put lipstick on a pig but it’s still a pig. Take Sarah Palin…please!

Have a great day!

TB

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