10/24/13…it’s a wonderful life…isn’t it???

Today’s Quote from the Friars Club Encyclopedia of Jokes: “Baseball’s been calle3d the national pastime. It’s just the kind of game someone deserves who has nothing better to do than to try to pass the time.” – Andy Rooney

Bloomberg Quote of the Day: “Eat food. Not too much. Mostly Plants.”  – Michael Pollan…bet he doesn’t get many invites to parties…or guests to HIS dinners!!! TB

Bloomberg Top Stories:

*More Americans Than Estimated Filed Initial Jobless Claims Last Week

*Stocks in Europe Rise With S&P Index Futures, Gold as Italian Bonds Slide – ?

*Credit Suisse Shrinking Rates Business After Net Income Trailed Estimates

*Broker Bonus Costs Shrink as Morgan Stanley Joins BofA in Recruiting Truce

*Bonds Erase 2013 Worldwide Losses as Rally of Three Decades Survives Bears

*Central Banks Drop Stimulus-Exit Talk as Easy Money Seen Lasting Into 2014

*Trade Deficit in U.S. Little Changed in August as Exports, Imports Stalled

*Ford Raises 2013 Forecasts on North America Truck Sales, European Outlook

*Euro Hedging Jumps as LVMH Joins Lufthansa Bemoaning Strength – !!!

*Hamptons Sales Surge Fuels Flippers Tearing Down Multi-Millionaire Homes

*Germany Summons U.S. Ambassador After Merkel Called Obama on Phone Tapping

*Republicans Defying Obama on Immigration Seen Losing Again After Shutdown

*Drone Pilot Fined for Flying Low Leads Industry Seen Reaching $89 Billion

*Hillary Clinton’s Early Moves Providing Years of Fodder for 2016 Opponents  

Wednesday’s Market Summary:

You were warned yesterday about what happens when all markets move the same direction the same day…and for Crude which plunged both days it is bad news!!! Heed!

Total NYSE Volume slipped slightly to 3.64B shares from 3.8B. REAL NYSE Volume also declined but remains at an above average 709M shares vs 753M – a far cry from Friday’s 892M shares – highest since 9/28’s 2.06B share day on quarterend with that big Dow member change. All indices were down EXCEPT Dow Transports +0.9% and Dow Utilities +0.3%, with the most pain in the two Nasdaq indices down 0.6% and 0.7% respectively.

The Nasdaq 100 FELL by 22 points vs +5.75 points, or 0.7%. This is the biggest move since Friday’s 53 point gain of 1.6%. TEN members moved by more than 1 point: SEVEN losers while just 3 gained: MSFT -6.2 vs -3; QCOM -2.9; AMZN -2.3 vs +2.5 vs -1 vs +7.4; CSCO -1.9 vs -1.3; INTC -1.6; ALTR -1.4; FB -1.2 vs -1.2; GOOG +6.3; AAPL +3.8 vs -1.2 vs +10 vs +3.5; GILD +1.2 vs +1.5 vs -1.7 vs +1.2.

Advance/Declines and Breadth swung back to the minus side. New 52 week highs declined by more than half to 298 vs 745 vs 746 vs 890, while new lows stagnated at 35 vs 36 vs 33 vs 40 – weak! VIX rose slightly for a third day following the options expiry plunge to12.34, closing at 13.42 +.09. Since hitting 21.34 on 10/9 – close to the 12/28 high of 22.72 and 6/24 high of 21.91 – over the Congressional debacle, it has fallen by 36%!!!

Bonds closed higher continuing the rally but TIPS stalled. Gold reamains sound but closed modestly lower. Crude was blasted yet again falling to $96.16 – before bouncing slightly and is unchanged overnight.

Dow 30 -0.3% vs +0.5% vs -0.1% vs +0.2%; Dow Transports +0.6% vs +0.8% vs +0.4% vs +1.2%; Russell 2000 -0.4% vs +0.3% vs -0.2% vs +1.1%; Dow Utilities +0.3% vs +1.4%!!! vs -0.1% vs +0.3%; S&P 500 -0.4% vs +0.6% vs flat vs +0.7%; Nasdaq Composite -0.6% vs +0.2% vs +0.2% vs +1.3%; NDQ 100 -0.7% vs +0.2% vs +0.2% vs +1.6%.

*NYSE Volume slipped  to 3.64B shares vs 3.8B vs  3.05B vs 3.64B. The record high (?) is 4.82B shares on Q3 end of quarter while 2.52B is 4th weakest of 20131.96B is the low). REAL NYSE Volume delined to a slightly below average 709M shares vs 753M vs 678M from a strong 892M shares!!! (2.06B shares also on Sept. expiry was 3rd highest ever (6/30/06 3.38B; 7/12/02 2.29B while 482M on 7/3 in a shortened trading session is the 2013 low). The 12-month average is 722M shares. The average since 6/28’s 1.75B share day, is just 699M shares, ranging from 482M to 2.025B shares on 9/20. There have been just EIGHT 1B+ share sessions! There have been 34 800M+ shares in 2013: 14 up, 18 down, and two mixed.

*New 52 week highs have ranged from 33-864. They plunged to a weak 298 from a  strong 745 vs 746 from a super-strong 890!!! New lows remain steady at 35 vs 36 vs 33 vs 40 – weak!.  

  1. Advance/Declines were negative: -1.2x vs +2.7x vs -1.1x vs +2.6x (recent range -17.5x to +6x) on NYSE and -1.4x vs +1.2x vs -1.1x vs +2.1x (recent -4x!!! to +3.8x). Breadth was similar: -1.9x vs +2.1x vs -1.4x +1.6x (recent -18.6x!!! to +7.2x!!!) on NYSE and -3.4x vs -1.1x vs +1.1x vs +2x (recent -12.8x to +6.5x).  
  2. NYSE Financials declined by 1%! vs +0.4% vs +0.6% vs +0.4%. BofA most active -2.1%!!! vs +0.1% vs -0.9% vs -0.3%, closing at $14.22 -.30! It has struggled since hitting $15.03 on 8/1 – highest since Jan. 14 and major res. Brokers -0.6% vs +0.2% vs -0.5% vs +1%; KBW Banks -0.7% vs -0.5% vs -0.1% vs +0.4%; Nasdaq Banks +0.1% vs +0.1% vs flat vs +0.7%.
  3. Volatility (S&P VIX) rose slightly for a third day after plunging last Friday closing at 13.42 +.09. The recent range is now 11.83-21.01!!! It peaked at 22.79 on 12/28/12. It is now well BELOW the 40 day (15.45), the 50 day (15.33) and the 200 day (14.39)…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks modestly higher, ex-Hong Kong/India: UK +0.5% vs -0.3%; France +0.1% vs -0.7%; Germany +0.5% vs -0.2%; Japan +0.4% vs -2%!; Hang Seng -0.7% vs -1.4%; Korea +0.5% vs -1%; India -0.2% vs -0.5%. U.S. equity futures higher in another narrow range session: DOW +51; SPX +3.70; NDQ +3.25.

Bonds closed modestly higher ex-TIPS. Rallying again overnight including TIPS: 10 yr Treasury 2.48% +1/8 (recent range 2.99% to 1.63%!!!), and the 30 yr range 2.67% to 3.90%, 3.57% +3/8. The long TIP is 1.30% +1/2. The (record?) low of 0.36% was set on 4/5. Recent high yield: 1.63%! Libor update: 0.238% 3 mos, 0.356% 6 mos.  Both at record lows!!! Banks cautious and loaded with cash!!! Foreign bonds mixed again – no big moves: Germany 1.74% -2; UK 2.60% +1; France 2.24% -2; Italy 4.15 +4; Spain 4.14% +1; Portugal 6.10% +4; Greece 8.32% +1. Recent range: 8.04%-12.57%. Japan 0.61% +1.

Gold closed slightly lower but on a very narrow inside session at $1334.00 -$7.40, still safely above $1300 after putting in a low of $1251 on 10/15 – lowest since 7/10. Recent high was $1375.40 on 9/19.  6/27’s intraday low was $1179.40 – lowest since at least 2011 and critical support. $1300 remains psychological support, as now is the 40 day ($1340) while the 50 day ($1342) is close and MAJOR RESISTANCE. The 200 day is at $1421. Overnight it is strong again at $1345.20 +$11.20!!!

Crude closed WEAK yet again with an intraday low of $96.16 – lowest since 7/1  It has shown no sign of strength since 9/18’s surge to $108.49 – since then it is off 9.9%!!! – closing at $97.80 -$1.422. 9/19’s session high was $108.99! Recent rally high and close are $110.70 and $110.53 respectively. It is way below the 40/50 day m/a’s ($104.48-104.86), major resistance and crossed! The 200 day ($98.61) is major support/resistance. 4/18’s low of $85.61 was lowest since 12/11! The recent range is $85.61-$112.24 since March 1, 2012. OVERNIGHT is little changed at $96.88 +.02

Some random thoughts:

TB’s brain is swimming with things to discuss but so many that it hard to organize them.

First, is there any doubt that in January we will face another crisis on the budget? Not to this reporter…especially with the GOP extremists chortling about the shortcoming of the ACA rollout? It ain’t over as TB said the other day, quoting Yogi Berra…it’s only just begun to quote the Carpenters.

Now the party that insists on shooting itself in the foot…and then reloading…is now back railing on immigration…wonder how Rubio and Jeb Bush feel about that…sheesh!

The banks are under fire but not the CEO’s – especially Jamie Dimon. Monday night on NPR, there was a discussion with Bert Ely, CEO of Ely & Co, and Dennis Kelleher head of Better Markets an activist group squared off on the JPM fine.

Ely prefaced it that although his firm does bank consulting, JPMorgan is not a client. He then proceeded to defend Jamie Dimon and the lack of personal fines or prosecution while Kelleher railed pointing out as TB has on numerous occasions that it is the shareholders who are penalized and the fines collected do not go to the injured parties but to the government and its agencies. He also stressed how the $13 billion fine pales when you figure they got Bear, Stearns AND its headquarters building for FREE along with federal guarantees making the BS acquisition a lay-up…for management.

He also tried to point out the influence of the financial lobby and how nothing has been done to prevent another disaster…which will come…bet on it! No penalty, not incentive to reform…Dimon already demonstrated this by pushing his people to take on more risk, culminating in the London Whale debacle. All that has happened to him is on an  OCC recommendation he stepped down as CEO of the operating company (bank), but remains very much in control. Such a deal!

Meanwhile, the combining of NASD with FINRA in regulating and FA’s and investment advisors is, as the advisors predicted playing into the hands of the brokers and their in-house FA’s (hired guns) who trade off the firms recommended lists and do all trades with the firm with NO fiduciary responsibility to the client! This is SICK!

Here are some recent developments…brokers who have been censured can now appeal to have the record expunged…doesn’t the client have a right to know and make the guilty party explain how it occurred? More crackdowns on investment advisors (some good like the just announced fines for repeated violations of compliance issues), such as not being able to claim as AUM (assets under management), non-discretionary accounts, requiring that combined performance which has to be reported net of fees, be based on the ‘highest fee charged’ which will cause firms to reject small accounts who will then move to…you guessed it…brokers! This is precisely what registered investment advisors were concerned about when the merger took place.

A Bloomberg article today titled ‘In What Sense Are Financial Markets ‘Efficient’? by Mark Buchanan explores whether they really are efficient…TB thought the market was for once and all disproved in the 2004 debt crisis…along with the myth of ‘free market capitalism.’ There is no such animal…if markets were truly efficient there would be no brokers offering ‘free’ advice, and if capitalist markets were truly free there would be no need to regulate them. They would be self-regulating. Ponder that!

Lastly, an old friend, Lacy Hunt had the most negative speech at last summer’s Fed Confab in Jackson Hole. Hunt is a recognized, schooled economist, with decades of experience and who has teamed up with another old friend, Van Hoisington in a ‘bonds only’ firm that has been very successful for years…decades? Hunt pulled no punches, laying the economic problems on the Fed and forecasting further problems as, due to excess debt, both public and private, neither fiscal nor monetary policy can do anything to bring the economy back to life. In other words, the Wall Street firms should have been allowed to fail and let the economy reach a new equilibrium which would promote growth. The stimulus (sic) applied to the current economy is only inflating asset values – real estate and stocks – and thus furthering the wealth gap and causing more people to slip from the middle class (sic).

In defense of the Fed, do to the lack of consensus in anything by our Congress, the Fed is the only one who kept us from going over the brink…but Lacy would argue it offers no way out. We have very serious problems which are being ignored by our dysfunctional government at all levels: Congress due to the Tea Party, Executive due to Obama’s lack of leadership other than ‘feel good’ speeches, and Justice which would rather collect fines from companies (without admission of guilt), no penalties civil or criminal on anyone, and the shareholders are left to pay for managements misdeeds while CEO and senior executive compensation, especially on Wall Street, runs unchecked…the new oligarchy!

Is this the world you want to live in?…to bring your kids and grandkids up in? Not to TB!

Have a wonderful day…it’s a wonderful life…or is it?

TB

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