8/1/13…buddy can you spare a dime for a poor CEO?

From The Friars Club Encyclopedia of Jokes: “You don’t want another Enron? If a company can’t explain in one sentence what it does, it’s illegal.” – Lewis Black

Bloomberg Quotes of the Day: “A smile is happiness you’ll find right under your nose.”—Tom Wilson

Bloomberg Top Stories:

*Stocks Extend Gains With Metals on China Data; U.S. Futures, Dollar Rally

*Carney Pauses BOE Stimulus for a Second Month While Focusing on Guidance

*Central Bank Gender Embarrassment at Fed Increased Pressure to Name Yellen – !!!

*Summers Backed Yellen for Fed Before Rivals Now Prove More Alike Than Not – ???

*Fed Chairman Search Expanded by Obama With Third Candidate Kohn – egads!

*SAC Seen Avoiding Worst Case While U.S. Seeks $14 Billion Death Penalty

*Lloyds Ready to Resume Dividend as Osborne Weighs Cutting Government Stake

*SocGen Second-Quarter Profit More Than Doubles on ‘Investment Bank’ Income

*Stocks Beat Bonds, Dollar in July by Most Since 2011 as Commodities Jump

*ECB’s Draghi Pausing Policy Seen as Indicator of Nascent European Recovery

*Barrack Gold Takes $8.7 Billion Writedown After Price of Metal Declines – OUCH!

*Apple Against Samsung in Smartphone Legal Battle Turns on Who Copied Whom

*Pimco in Eminent Domain Bout Pitting Homeowner Against Missouri Hospitals

*Egypt Orders End to Pro-Mursi Protests Afteer Charging Brotherhood’s Badie

*Hillary Clinton Campaign-in-Waiting Inside Super-PAC Bigger Than Rivals’

*Kerry in Pakistan Seeking Better U.S. Relations Beyond Terrorism Disputes

TB has had to include six days of nothing in the stats that follow. A 143 point swing in the Dow from way up there, to close down slightly…overnight it is up 130 points…do you feel lucky, punk? Well do you? Because TB couldn’t tell you from one day to the next where it is going – in fact the same day!

Best performer was Dow Transports…again…+0.6% followed at up 0.3% by the two Nasdaq indices and the Russell 2000. Dow was down 0.1%, S&P was FLAT, and NYSE Financials were off 0.2%. Worst of the bunch was Dow Utilities down 0.7%! Not going to waste any more words on this as the NDQ 100 rose just 4.9 points by 1.5:1 with just two stocks gaining more than one point (CMCSA +1.6, SYMC +1.4), and two losing more than one point (AMGN -1.9, FB -1.2 vs +2.2 ). Gimme a break!

The VIX trading range had a lower high and lower low a day after hitting 14.14 with a session low of 12.94, finally settling in at 13.45 +.06. A/D’s were barely positive as was Breadth. New 52 week highs rose slightly while new lows nearly doubled to 111.

…here’s the book:

* Dow 30 -0.1% vs flat vs -0.2% vs +0.5% vs +0.1% vs -0.1%; Dow Transports +0.6% vs +0.3% vs -1.1%!!! vs +0.5% vs -0.1% vs –1%; Russell 2000 +0.3% vs +0.3% vs -0.8% vs -0.6% vs +1% vs -0.1%; Dow Utilities -0.7%! vs +0.3% vs +0.3% vs 0.6% vs +0.4% vs +0.2%; S&P 500 FLAT vs flat vs -0.4% vs +0.1% vs +0.3% vs -0.2%; Nasdaq Composite +0.3% vs +0.5% vs -0.4% vs +0.2% vs +0.7% vs -0.6%; NDQ 100 +0.2% vs +0.5% vs -0.2% vs +0.5% vs +0.7% vs -0.8%.

*NYSE Volume rose again to an average 3.81B shares vs 3.31B vs 2.82B vs 2.74B vs 3.31B vs 3.07B vs 2.42B (3rd weakest of 2013…1.96B is the lowest of 2013). REAL NYSE Volume also rose to a strong 904M shares vs 678M vs 579M vs 596M vs 677M vs 670M vs 608M (562M is lowest since 7/3). The 12-month average is 716M shares and declining! The average since 6/30 is now 680M shares, ranging from 482M to 906M, 482M being the 2013 low! There have been just SEVEN 1B+ share sessions! There have been 29 800M+ shares in 2013: 11 up, 17 down, and one mixed, but on trades of less than that 92 have been up and 34 down …there have been 29 mixed sessions.

*New 52 week highs have ranged from 33-864. They rose to 307 vs 257 vs 209 vs 262 vs 410 vs 569. New lows nearly doubled to 111 vs 69 vs 76 vs 87 vs 180 vs 60 – 27 is the low.  

  1. Advance/Declines were slightly positive: +1.1x vs +1.1x vs -2.2x vs -1.1x vs +1.3x vs +1.3x (recent range -17.5x to +4.4x) on NYSE and +1.2x vs +1.1x vs -2.2x vs -1.6x vs +2x vs -1.2x (recent -3.5x to +3x). Breadth was similar: +1.2x vs -1.1x vs +2.8x vs -1.1x vs +1.5x vs +1.4x (recent -18.6x!!! to +6.9x!!!) on NYSE and +1.1x vs +2.2x? vs -1.6x vs -1.4x vs +2.6x vs -1.7x (recent -12.8x to +6.2x)  
  2. NYSE Financials declined for a 4th day by 0.2% vs -0.3% vs -0.7% vs -0.3% vs +0.4%. BofA was most active at $14.74 +.22 after hitting $15.03 five days ago – highest since Jan. 14 and now major res: +1.5% vs flat vs -1.5%!!! vs -0.7% vs +0.8% vs -1.6%! Brokers +0.5% vs -0.1% vs -0.9% vs -0.8% vs +0.7% vs flat; KBW Banks +0.5% vs +0.1% vs -0.9% vs -0.7% vs -0.2% vs flat; Nasdaq Banks +0.1% vs flat vs -1%! vs -0.5% vs -0.3% vs +0.3%.  
  3. Volatility (S&P VIX) rose slightly to 13.45 +.06 with a range of 12.94-13.83 with Tuesday’s high being 14.14!!!  On 7/23 it declined to 12.07, lowest since April 12th! VIX peaked at 20.49, plunged to 18.90 on June options expiry then closed at 20.11 on 6/24 and has been down below 14 since! 6/24’s session high of 21.91 was highest since 12/31/12 (22.72)!!! The range since April ‘12 is 11.05 (multi-year low o n 3/14/13) to 21.9. It is well below the 40/50 day (15.65/15.34) and the 200 day (14.95)!!!…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks up – India weaker: UK +0.1% vs +0.7% vs +0.3% vs +0.3% vs -0.3% vs -0.8%; France +0.5% vs -0.4% vs +0.5% vs +0.3% vs +0.4% vs -0.8%; Germany +1.2% vs -0.4% vs +0.4% vs +0.3% vs +0.5% vs -0.9%; Japan +2.5%!!! vs -1.5%! vs +1.5%! vs -3.3%!!! vs -3%!!! vs -1.1%!;  Hang Seng +0.9% vs -0.3% vs +0.5% vs -0.5% vs +0.3%; Korea +0.4% vs -0.2% vs +0.9% vs -0.6% vs +0.1%; India -0.2% vs flat vs -1.3%!!! vs -0.8% vs -0.3% vs -1.4% vs -1%. U.S. equity futures strong but still in tight trading range: DOW +107; SPX +11.40; NDQ +20

Bonds closed firmer but are weak again overnight: 10 yr Treasury 2.59% -1/8 (recent range 2.74% to 1.63%!!!), and the 30 yr range of 2.82% to 3.71%, currently 3.66% -7/16. The long TIP is 1.31% -1/2. The (record?) low of 0.36% was set on 4/5. Recent high 1.53%! Libor update: 0.266% 3 mos, 0.397% 6 mos. Both remain near the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields sharply lower across the board: Germany 1.60% -7; UK 2.31% -5; France 2.16% -7, Italy 4.35% -5; Spain 4.61% -4; Portugal 6.25% -2; Greece 9.64% -18!!! vs 9.80% vs 9.79% vs 9.81% vs 9.81% -10 vs 9.91% vs 10.02% +19 vs 9.81% vs 9.95% +17 vs 9.86% vs -13 vs 9.93% vs 10.07% vs 10.02% -16!!! vs 10.27% -19!!! vs 10.33% -25!!! vs 10.69% vs 10.85% +28!!! vs 10.52% vs 10.54% +40!!! vs 10.85% -37!!! vs 11.22%. Recent range: 8.04% to 12.57%.  Japan 0.79% flat.

Gold closed higher as it see-saws but remains well above the critical $1300 closing at $1313.00 +$7.20. 7/23’s session high was $1349.20 – highest since 6/20! 6/27’s intraday low was $1179.40 – lowest since at least 2011 and now critical support. $1300 remains psychological support, and it remains between the 40 day $1310 and the 50 day $1327 – both still falling. lt is way below, the 200 day – $1552!!! Overnight it is higher again at $1324.00 +$11.00. Crude closed strong at $105.03 +$1.95 – following Tuesday’s session low of $102.67 – its 7th straight lower low!!! It remains above the 40/50 day m/a’s (100.82/99.44), both starting to rise. The 200 day ($93.64) is distant support. First SUP is again $104.21 -36 – a triple bottom from 7/10-7/12….it traded below it for five straight sessions before rallying Weds. 4/18’s low of $85.61 was lowest since 12/11! It is strong again overnight at $106.79 +$1.76 – with a session high of $107.10! The range is $85.61-$109.32 since March 1, 2012.

Some random thoughts:

When it comes to financial matters the Dems don’t do so well – in selecting advisors, etc. With the GOP you know who they are going to choose: a pro-establishment, soft on regulation kind of guy…but the Dems? It’s always up for grabs.

Clinton was bluffed by Sandy Weill and his own Treasury Secretary Robert Rubin with the blessing of Asst. Secretary …Lawrence Summers, and the affable Alan Greenspan, a strong believer in free-market capitalism…a strange stance for a REGULATOR!!!

Obama learned nothing as he brought in Geithner, Daly, and Summers…all soft on banks guys and with the exception of Daly involved in one way or another with the crisis (Daly worked at JPM though!). Finally he got it right in name-dropping former SF Fed Chariman Janet Yellen as Bernanke’s replacement – after he interfered saying Bernanke had served too long…shouldn’t the only person who tried…really tried…to stop the crisis have been allowed to announce his own retirement.

Now Yellen should have been a shoo-in from a President who has appointed so many minorities/women (note that the women were all highly qualified and served well). But then a funny thing happened on the way to the U.S. Senate…suddenly Summers name popped up…a man who can’t get along with anyone and whose primary claim to fame is being the nephew of not one but TWO Nobel Laureates: Kenneth Arrow and Robert Samuelson! Note that Summers remains ‘in bed’ with the bankers …do you honestly believe that is a good thing with the likes of Jamie Dimon and faux banker Lloyd Blankfein prowling around for a quick buck? (Note that decades ago when TB worked for Western Bancorporation – First Interstate Bancorp – and now absorbed into Wells Fargo, JPM was THE bank to beat…always number one in profit per employee and per hundred dollars of deposits…what’s a deposit you might ask? It is an arcane measurement of bank size and strength that is worth no more than capital to analysts and insiders…but should be of interest to regulators AND taxpayers!!!

In an article titled ‘Lots of Options’ the Minneapolis Star Tribune analyzed the pay and total compensation of the 100 largest Minnesota corporations (can’t be too different from the combined, right?).

Those 100 CEO’s exercised options worth $151 million vs $60 million a year ago. They did well, so well in fact that options equaled 37% of their pay (note that a recent article pointed to CEO’s being granted options – primarily in the first TWO months of the year, then if the stock declined (could it possibly be due to bad management?), they exercised those and later reaped the rewards as the stock rose in value. The recommendation was that the awards be made in the LAST two months of the year to better reflect current year performance. (In fairness, it was the Dems who limited deductable CEO compensation to $1 million back in 1979 (?), so that overtime more of that was paid in options.

The highest paid was Ameriprise Financial CEO James Cracchiolo with total compensation of $46.3 million and that was down 6% from the prior year! For the record only the top 55 of those CEO’s had total compensation above $1 million. Number two was Steven Hemley CEO of UnitedHealth Group, Inc. at $34.7 million, up 7.3% (isn’t it nice that those profiting from high insurance prices while raising rates! Seven others earned more than $10 million. One could argue that since the stock rose by 8.5% he was entitled to 7.3%…you decide. Why? Because of Obamacare health insurers have soared, not on the CEO’s performance but because they were so weakened and stand to get a windfall…got it?

But what have these CEO’s been saying: Obamacare is going to kill them…and worse raising the minimum wage. Some are laying off full-time employees and replacing with part-time/no benefits. So as these CEO’s move up the wealth ladder, while the workers are given no credit for the company’s success, don’t they stop to ask what they are doing for the economy?…or how might their company’s benefit by paying workers more…even if at the expense of their own compensation…ah but that is long-term thinking in an era where management only concerns itself with the tenure of the CEO!

Therein lies the problem…a glass ‘floor’ and a rather opaque one at that. Screw up and you get a golden parachute…and probably get hired by another company thinking you learned from your mistakes. This comes at the expense of loyal high end managers who get passed over in favor of a ‘known’ name…it matters not why they are known.

Tomorrow is payrolls day…how timely!

TB

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