…Good Friday!!!

From the Friars Club Encyclopedia of Jokes: “I do benefits for all religions – I’d hate to blow the hereafter on a technicality.” – Bob Hope

Bloomberg Quote of the Day: “Beauty is power; a smile is its sword.” – Charles Reade, the Kardashians in a nutshell which reminds us beauty is only skin deep, right? TB

Bloomberg Top Stories:

*SAC Capital’s Steinberg Charged as U.S. Insider Probe Gets Closer to Cohen

*U.S. Consumer Sentiment Unexpectedly Rises on Stock Gains, Housing Rebound

*Reluctant Bulls Key for Birinyi as S&P 500 Record Rally Led by Pills, Soap

*Financial Products That Fed Crisis Return as U.S. Housing Market Heats Up

*Nikei 225 Extends Best Back-to-Back Quarters in Four Decades; Yuan Climbs

*Yen’s Slump Revitalizes Commmodities Trading From Gold to Rubber in Tokyo

*Argentina Has Last Chance to Sway U.S. Court in Suit Over Defaulted Bonds

*GS Yuasa Crisis Deepens After Mitsubishi Electric Car Battery Catches Fire

*Cyprus Nuclear Option Empties Local Shops After Bailout Accord Shut Banks

 *Kim Puts Rockets on Standby for U.S. Strike as Hagel Denounces North Korea

*U.S. EPA Proposes Rule Aimed at Cutting Amount of Sulfer in Gasoline by 2017

*New Your City Plans to Demand Paid Sick Days for Workers

 All U.S. markets closed today in observance of Good Friday – good!!!

 …after two consecutive down sessions stocks closed with all indices up, on solid volume. Quite a contrast to the ‘seesaw effect’ on the Dow and S&P ended Wedneday after TEN straight sessions with a double on the downside. There are just four takeaways:

*Volume ROSE to an average 3.27B shares from a weak 2.9B shares – most likely due to position squaring…index funds for one…for quarter end. Hmmm…sell in May and…

*Dow Utilities up and for the third straight session the best performer! UP 1.2% vs +0.3% vs +0.9% vs -0.1% vs +0.2%. Question if stocks are strong why are utilities?

*Dow Transports were only other index to gain 1%: +1.%, While Dow/S&P rose 0.4%

NYSE Volume was rose to 3.27B shares from a weak 2.9B shares (lowest since 2/11’s 267M) vs 3.16B vs 2.92B vs 3.32B vs 3.74B vs 3.15B vs 4.93B (2013 high), average of last 18 sessions is 3.3B shares – and slipping! Real NYSE volume surged to 876M shares, highest since 3/15 (options expiry!) vs 596M shares vs 558M shares -lowest since 2/11 – vs 655M vs 620M, vs 673M vs 731M vs 676M vs 1.825B (12-month high!!!). Despite the surge, the average for the week is just 674M! The range since 2/11 is 497 to 1.83B with an average of 742M shares. Last Friday’s 1.83B shares was second only to 12/21’s 12 mo. high of 1.88B shares. Note that 8/15’s (options expiry) was the only day since 2/28 to register over 1B shares with no other sessions reaching anywhere near 800M shares!!! Ave vol. 12 mos. 739M, ytd 720M. Thanks to yesterday, there are now TEN 800+M shares in 2013… record for the 21st century?

  1. new 52 week highs which have ranged from 121-709, rose sharply to 613 vs 348 vs 422 vs 512 vs 356 (also on a big rally???) vs 531 vs 328 vs 282 vs 584 vs 652 vs 410 vs 413 vs 560 vs 630. New lows nearly halved to 36 vs 60 vs 44 vs 56 vs 33 vs 36 vs 43 vs 50; recent high 98. It was quarterend…get it???
  2. Advance/Declines were positive but only modestly so at +1.7x vs +1.1x vs +2.2x vs -1.4x vs +1.7x on NYSE and +1.3x vs -1.1x vs +1.4x vs -1.1x vs +1.5x on Nasdaq. Breadth was similar at +1.7x vs -1.1x vs +2.5x vs -2.2x vs +1.8x on NYSE and +1.6x vs +1.5x vs +1.7x vs -1.5x vs +1.3x on Nasdaq.
  3. The Dow rose 0.4% vs -0.2% vs +0.8% vs -0.4% vs +0.6%. Dow Transports rose a nice 1% but Dow Utilities took honors at +1.2%…not a positive development! Both Nasdaq indices rose by 0.4% and have not been a factor in the rally. The Russell 2000 FELL by 0.1% vs flat vs +0.6% vs flat vs +0.3% vs +1%.
  4. NYSE Financials rose 0.4% vs -0.4% vs +0.5% vs -0.6% vs +0.6%. Brokers had no traction and closed FLAT vs +0.1% vs +0.1% vs -1.2% vs flat vs +1.6% vs -0.7% vs -1.1% vs -0.2%. Both bank indices were lower by 0.1% vs -0.6%. BofA the most active: -0.4% and in danger of breaking $12 vs -0.4% vs -1% vs -1.3% vs -0.1% vs +0.6% vs +1% vs -0.1% vs +3.8% – the range is $11.11, on 12/17 to $12.78 last Thursday! It closed at $12.18, lowest since 3/14 Note: 12 cents is a 1% change!!!
  5. Lastly volatility (S&P VIX), declined modestly to 12.70 -45 or 3.4% after ‘gapping down on the open. Since ‘gapping up’ on 3/18 (from a multi-year low!!!), and surging to 15.40 in two days (on Cyprus!) it has declined and gone sideways but oscillating wildly and is now back below  40/50 day m/a’s (13.56/13.47) but not that the 200 day is way up at 15.86 which illustrates how complacent the markets remain…ytd the average has been 13.53 with a range of 19.28(2/25!) to 11.05 (3/14) – amazing for that short a time period. Feel lucky?

European equity markets closed as are most Asian markets: UK C vs +0.4 vs +0.6% vs -0.6% vs +0.1% vs +0.8%; France C vs +0.6% vs -1.5% vs +0.4% vs +0.2% vs -1.2%; Germany C vs +0.8% vs -1.3%! vs +0.1% vs +1.2%; Japan +0.5% vs -1.3%! vs +0.2% vs -0.6% vs +1.7% vs +1.3%; Hang Seng C vs -0.7% vs +0.7% vs +0.3% vs +0.6% vs -0.1%; Kospi +0.6% vs flat vs +0.5% vs +0.3% vs +1.5% vs -0.4% vs -1%; India C vs 0.7% vs C vs +0.1% vs -0.3% vs -0.5%. U.S. stock futures closed for Good Friday.

Bonds rallied were little changed Thursday due to an early close ahead of Good Friday: 10 yr Treasury 1.85% (range was 2.06% to 1.85%), and the 30 yr’s 3.26% to 3.05%, closed 3.10%. The long TIP, which had also rallied sharply to 0.57% closed at 0.60%; the high yield was 0.67%. Libor update: 0.243% 3 mos., 0.445% 6 mos. Foreign bond yields closed mixed with troubled Greece falling sharply again but from a very high level: Germany 1.29%; UK 1.77%; Italy 4.75%; Spain 5.04%; Portugal 6.24%; Greece 12.09% vs 12.30% vs 12.57%!!! vs 11.66% vs 11.37% vs 11.48% vs 11.21% vs 11.06% vs 10.58%.  

Gold closed lower higher and more importantly below $1600 for only the second tmie since 3/15! It remains well below resistance and way below the 1/17 high of $1699.90. It closed at $15595.700 -$11.50 on a narrow inside day, The recent intraday high was $1618.30, almost to the 40 day on 3/21 but that move fizzled!  2/21/13’s low was $1554.30 – not seen since May 2012! Last time it was below $1500 was Sept. 2011. $1600 is critical! The breakdown through the 40/50/200 day m/a’s puts major resistance $1613-1670 – falling steadily, res/sup at $1600, a double bottom from 8/14-15, also a psychological level. Crude was modestly higher, closing at $97.23 +.58, with another intraday high of $97.35, highest since 2/15! It now has a range of $91.60-$97.35 since 3/12! The recent low is $89.33, lowest since 12/26, set on March 4. It remains well above the 50 day ($94.56), and 40 day ($94.19)!

 

Some random thoughts on Good Friday:

What does our government say about us? What has this nation become? Governments only concern is for the wealthiest one percent who provide the support to those in Congress who do their bidding. While I am not a lover of social welfare, ever since Reaganomics was applied everyone from the middle class (even from the top 5% down!) has barely equaled or lost pace with inflation as the wealth gap widened. This is not sustainable…neither is the notion that the budget should be ‘balanced’ on the backs of Main Street who suffered the most in the financial crisis induced recession…note that this is far different than an economic recession and one that neither monetary nor economic policy can solve. The average time to recover from a financial crisis is from six to twelve years yet you wouldn’t know it from the stock market.

True, earnings are rising sharply but ask yourself if those increases are sustainable with the vast majority worse off than in 2008. Taking into consideration part time and discouraged workers, real unemployment remains stuck at 15% and that doesn’t tell the entire story.

Each day now, 10,000 baby boomers reach age 65, and most of those are not prepared for the costs of doing so with the average savings at just $27,000. Many had counted on the equity in their home providing them with cash but that was obliterated over the past five years. Of the 1.5 million workers unemployed for more than a year…and still looking, half are 45 years or older. What are their chances? Become a greeter at WalMart?

Employers who needed a person with a high school diploma are now requiring an A.A. degree and even getting some college graduates.  Meanwhile, for profit colleges churn out skilled workers in areas that have rampant unemployment…electricians, etc. Their only interest is their bottom line and they ‘enhance’ that by recruiting students by telling them they can take out student loans. The dropout rate is high and the default rate on the loans is twice those of state schools. We the people pay for that and they are saddled with the debt on their taxes – some for the rest of their lives. The banks that made the loans have no sympathy and don’t work with the borrowers as there is no incentive to: they were paid interest by the government and IF the borrower defaults they collect 100% from the government after earning interest while they were in school. That leaves the cost to us and the IRS as collection agent. Does this look like a formula for growth to you?

Meanwhile the extremists in government follow the preachings of lobbyist Grover Norquist and see even a reversal of the ‘temporary’ Bush tax cuts as a tax increase. If you follow that logic, heaven help us. They also have no faith in our ability to ‘grow’ our way out yet refuse to make cuts in defense or subsidies like sugar which makes us pay double the price the rest of the world pays, hurts developing nations as they can’t export to us, and enriches wealthy individuals who donate generously to the political parties.

We are in the worst form of ‘liquidity trap’ one that even Lord Keynes could not have envisioned while the Bernanke Fed tries to keep us afloat against an impotent Congress.

I am no ‘bleeding heart liberal’ but I do believe in fairness and to chastise those who have paid into social security all their lives for the problems of a Congress (mainly GOP under George W. Bush but aided and abetted by the Dems) when the program is still fully funded (if they pay back the IOU’s which are earning ZERO now), until 2034, and Medicare which could be fixed with reforms such as prolonging life for people with no chance of improvement of quality, and negotiating the price of prescription drugs as Medicaid does (saving 30%), and is still funded until 2024, is cruel and inhumane.

There is a reason the federal government is allowed to run deficits…but as Keynes preached…they should also run surpluses in good times…we did that in the Clinton years only to be destroyed by Bush. The deficit is not worsening…it is improving as those bailed out repay their loans and the government sells stock in those institutions. Add to that the sequestration – the most evil instrument ever put on the backs of Americans and one we will pay for over decades – and you have not a spending problem but a revenue growth problem. Is that what you want? Do you also want to be even middle class when the low income minority which has become an majority continues to increase and IF they find a leader places everyone in jeopardy…remember how they flocked to Obama before the 2008 elections? …and he wasn’t seeking retribution.

There is no official responsibility for service to our country. Ending the draft accomplished that and after the way we are treating our post Viet Nam vets do you think more or less will enlist in the military? Again, how many children of the wealthy enlist?

The GOP is fighting increasing the minimum wage even though 19 states have one higher than the federal government…they say it will cost jobs. They say this with a straight face while management earns more yet the average worker, inflation adjusted, makes about the same as in 1993. Imagine if we rolled back CEO compensation to 1993! Like our students they excel in self confidence not ability. They are the best that money can buy!

Have a wonderful Easter weekend!!!

TB

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