4/30/13…power to the CEO’s! 0h, they already have it.

From the Friar’s Club Encyclopedia of Jokes: “Adultery is the application of democracy to love.” – H.L. Menccken

Bloomberg Quote of the Day: “The Gods cannot help those who don’t seize opportunities.” – Confucius

Bloomberg Top Stories:

*UBS Joins Lloyds in Beating Analyst Estimates as Deutsche Bank Sells Stock

*European Bonds Rally as Euro Weakens on Rate-Cut Speculation; Corn Rises

*Inflation Rate in Europe Falling to Three-Year Low Adds to Rate-Cut Bets

*Billionaire Usmanov Bets on Apple’s Growth After 10-Fold Facebook Return

*Apple Will Sell Debt in Six-Part Offering Led by Goldman, Deutsche Bank

*Funds Fooled by Euro Rebound Suffer First Currency Losses in Six Months

*Portugal Evades Second Tap of Bailout Fund to Replenish Banks – hmmm

*CEO Pay 1795:1 Multiple of Worker Wage Skirts U.S. Law That SEC Delays

*Obama Pursues Debt Talks With Senate Republicans as Budget Accord Prelude

*Damascus Bomb Kills 10 a Day After Failed Assassination Attempt on Premier

*Sewage Surge From Sandy Seen as Enough to Flood Central Park 41 Feet Deep

It was an ‘UP’ day but did it make sense? You decide: as has been the case in many of the ‘one day wonders’, all of the indices rose by 0.6% (Utilities) to 0.9% (Nasdaq indices). That should raise some red flags, right? Oh, and yes, volume PLUNGED as has also been the norm on rallies. A/D’s and Breadth were both positive and new 52 week highs regained much of Friday’s plunge while new lows dropped sharply. Another day best to avoid and go out and enjoy the weather. This in a period of conflicting economic reports allowing the high frequency traders to run the market on a whim depending on the latest report du jour. I list the Transports first because they have not consistently confirmed the Dow’s moves and that is not a good thing.

So let’s see what else happened lately:

*Dow Transports +0.6% vs +0.1% vs +0.1% vs 0.6% vs +0.3%; Russell 2000 +0.8% vs -0.5% vs +0.7% vs +0.5% vs +1.1%; Dow Utilities +0.7%??? vs flat vs +0.1% vs +0.4% vs flat; S&P 500 +0.7% vs -0.2% vs +0.4% vs flat vs +0.5%. Nasdaq Composite +0.9%! vs -0.3% vs +0.6% vs flat, NDQ 100 +0.9%! vs -0.3% vs +0.5% vs flat, NYSE Financials +0.7% vs -0.1% vs +0.5% vs +0.7% vs +0.3%.

*Volume, A/D’s and Breadth were positive.

*NYSE Volume plunged again to way below average at 2.88B shares (weakest in 15 sessions!!!) vs 3.15B vs 3.86B vs 3.55B vs 2.97B. REAL NYSE Volume also plungedl to 599M shares (lowest since 4/8) vs 628M vs 746M vs 706M vs 620M following SIX 700M+ share days ranging from 975M (selloff) to 743M (rally). The average for the week was just 687M shares vs 859M vs 689M!!! the last options expiry came in at a solid but not great 914M shares. The 12-month average is just 746M shares. The range since 2/11 is 558M to 1.825B on 3/15’s options expiry and a near 12 month high, second only to 12/21’s 1.88B shares. Note that 3/15’s (options expiry) was the only day since 2/28 to register over 1B shares! There have been just fourteen 800+M shares in 2013 – just THREE up, 11 down and on trades of less than that 69 were up and just 18 down…there have been 19 mixed sessions…do you see why volume matters???

  1. new 52 week highs have ranged from 121-709, rising to 418 vs 267 vs  495 vs 400 vs 400 vs 237 vs 228 vs 106 vs 100. New lows plunged to 29 vs 40 vs 34 vs 48 vs 43 vs 96 vs 82 vs 159 vs 237 vs 120 vs 197.
  2. Advance/Declines were positive: +2.8x vs -1.4x vs  +1.8x vs +1.9x vs +4x vs +1.4x vs +2.6x vs -1.2x vs -3.5x vs +4.4x vs -7.1x on NYSE and +2.1x vs -1.6x vs +1.7x vs +1.3x vs +3.4x 0.7% vs +1.5% vs +0.3% vs +1.3% vs  -0.8% vs -1.8%! Breadth was similar: +3.4x vs -1.8x vs +2.2x vs +2.1x vs +3.9x vs +1.6x vs +2.3x vs -1.3x vs -10.5x!!! vs +6.4x vs -7.2x vs -2.2x on NYSE and +2.3x vsw -1.1x vs +1.8x vs +1.5x vs +3x vs +2.5x vs +2.3x vs -3x! vs -5.2x vs +6.2x vs -12.8x!!! vs -1.4x .  
  3. NYSE Financials rose by +0.7% vs -0.1% vs +0.5%. BofA only ‘most active’ financial -0.3% to close at $12.38 -.04 vs +0.2% vs +2% vs +3% vs +0.5%.
  4. Volatility (S&P VIX) rose slightly despite the rally to 13.71 +.10, and had a range of 13.36-.94 – still skittish – does this seem sensible to reinstitute those limit/stop orders again??? The range for the last two week was 12.06 (multi year low) to 18.20, and it is now just below the 40/50 day (13.71/13.81) and the 200 day at 15.40…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.43!!!

European equities weak ex-Germany (?), Asia up, ex-Japan: UK -0.1% vs +0.2% vs -0.5% vs +0.1% vs +0.2%; France flat vs +1%??? vs -0.8% vs +0.2% vs +0.7%; Germany +0.8%??? vs +0.4% vs +0.4% vs +0.6% vs +0.5%; Japan -0.2% vs closed vs -0.3% vs +0.6% vs +2.3%!!!; Hang Seng +0.7% vs +0.2% vs +0.7% vs +1%! vs +1.7%!!!; Korea +1.2%! vs -0.2% vs -0.4% vs +0.8% vs +0.9%; India +0.6% vs +0.5% vs -0.6% vs +1.2%! vs closed vs +0.1%. U.S. stock futures little changed in a narrow trading range overnight: DOW -3; SPX -0.70; NDQ +1.25.

Bonds held most of their recent gains Monday and are up slightly overnight with 10’s through low end of trading range of late, but TIPS were weaker on CPI: 10 yr Treasury 1.65% +5/32 (recent range now 2.06% to 1.65%), and the 30 yr’s 3.26% to 2.86%, 2.86% +5/16. The long TIP is now 0.43% – after setting a new (record?) low of 0.36% on 4/5, before backing off to 0.52%! The recent high yield was 0.67% on 3/11! Libor update: 0.273% 3 mos., 0.425% vs 0.430!!! 6 mos. Foreign bond yields lower: Germany 1.20% -1; UK 1.66% -1; France 1.71% -3, Italy 3.87% -3; Spain 4.09% -4; Portugal 5.64% -10!!!; Greece 10.81% -11!!! Vs 10.92% vs 11.18% vs 11.13% vs 11.05% vs 11.08 vs 11.22% (recent range 10.58%-12.57%!).   

Gold closed higher at $1467.40 +$13.80 on an inside day following Friday’s new intraday high of $1484.80, highest since 4/12! Last Tuesday’s intraday low of $1321.50 – was lowest since Sept. ’10. The loss over the two weeks is now back to $33. A week ago Monday’s $149 loss to a 52 week low of $1361.10 was disastrous. Resistance remains way above at the 40 day/50 day: $1537-1548 – falling! Overnight it is $1471.20 +$3.80 on another inside session. Crude closed higher at $94.50 +$1-50, with a new high of $94.69 intraday, highest since 4/11. Crude is now above resistance at the converging 200 day ($91.82), 40 day ($92.51) and the 50 day ($92.69)!!! It has now erased all of the loss since 4/5 Overnight it is $94.14 -.36. Last Tuesday’s session low of $86.20 was lowest since 12/13/12! The range is now $85.61-$97.80 since June 29, 2012!!!!

 

Some random thoughts:

Regarding the insider ban vote in Congress, here is a link that gives the ‘reasons’ for it.  FCW insidertradingban. What it doesn’t say is why the ‘urgency’ or why if it was necessary for national security the reasons weren’t given. Also, how did they get ‘unanimous’ approval on a voice vote when many members weren’t even present? One has to wonder.

41 years ago I entered the financial services industry. At that time the average CEO compensation was about 10:1. This persisted until the 1980’s (you know the trickle down era) and rose to 100 times, 400x, 700x…now this. But what is worse is that as my friend and ‘reformed’ compensation analyst and professor, Graef Crystal argued; they are paid outlandish sums on ordinary performance. Meanwhile, we cheer as productivity in this country rises but only because employee compensation has been stagnant for years. Crystal opposes restrictions on CEO compensation as long as it is commensurate with results. As this article shows, even when they screw up as J.C. Penney’s Johnson did, they get an ‘atta boy’ kissoff. Is everything that happens in a company due to the CEO? Don’t solid employees add value? Apparently not. Instead, they pay the penalty for the blunders of these egotistical fools and their enabling boards who have forgotten what ‘stewardship’ means – that they are supposed to be looking after the shareholders interests, not the CEO’s, which in many cases are the same as theirs.

So? So, you, the shareholders are paying for their ineptitude, arrogance, and mistakes – who do you think paid all those Wall Street record fines (but at least they paled in comparison to the money made from their illicit actions). Meanwhile, they are in total control of our government and we simply don’t give a damn.

The question is: do you give a damn? It’s your money and you who bears the risk they take, not them.

TB

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