11/13/13 – the incredible shrinking middle class in America

Today’s Quote from the Friars Club Encyclopedia of Jokes: “I wouldn’t mind being the last man on earth – just to see if all of those girls were telling the truth.” – Ronnie Shakes

Bloomberg Quote of the Day: “I shop, therefore I am.” – Barbara Kruger

Bloomberg Top Stories:

*Stocks Drop With Copper on Fed Tapering Outlook as Treasuries, Pound Rally – if you believe this nonsense, read commentary and wake up and smell the coffee!!!

*Barclays Says Compliance Chief Sants, Operations Head Leave Bank – hmmm!

*Bonuses for Equity Traders Seen Rising in 2013 as Rates Salesmen Face Drop – DUH!

*Twitter Seen Below $28 by June as Structured-Note Investors Turn Bearish – told ya!

*Great Rotation Into Equities From Bonds Seen muted by Pension-Fund Demand – hmm

*Banks Rom Emerging Markets Threatened as End of Credit Boom Raises Rates

*Scripps Howard Service Shuts Down After 96 Years as Newspaper Demand Wanes – and with it any interest in REAL honest reporting! Good grief…go to Comedy Central

*Macy’s Profit Tops Estimates as Local Strategy Boost Sales, Shares Climb

*Porsche 911s at 39% Discounts Spur Anti-Laundering Act in Argentina – !!!

*Israel’s Secret Property Boom Defies Discord Over West Bank Settlements

*Nazi Trove Reveals Dresden Holocaust Survivor’s Art Feared Lost in Bombing

*Philippine Typhoon Survivors Fleeing City as Aid Bottleneck Fuels Looting

Tuesday’s Market Summary:

It was a mixed day following a blah day…blah…blah…blah. Only Dow Transports were up – for a second straight session: +0.7% vs +0.5%! Dow Utilities were the goat -0.8% and the rest were flat to down. NYSE Financials off 0.7% as banks big and small tumbled: Brokers -0.2% vs +0.8%; KBW Banks -1.1%!  vs -0.2%, Nasdaq Banks -0.7% vs -0.9%. This, on higher but weak volume of 3.12B shares vs 2.53Bshares, while REAL NYSE Volume only came up to 652M shares from 538M shares – lowest since August 5th !

Twitter (TWTR) continues to fulfill TB’s expectations giving back the modest gain on Tuesday by closing at $41.90 -.90 on an inside day.since even though it closed at $42.80 +$1.25, the high close was just $43 and low is $39.40./ Opening lower this morning too.

The Nasdaq 100 edged up at 0.1% vs -0.1% vs +1.4%, with 1.5:1 advancing. Compare to +1.1:1, +9:1, and -13:1…warning signals? Just three members gained more than a point while two lost more than a point – awkward! ORCL/CSCO +1.3; INTC +1; AMZN -2 vs +1.7 vs +2.8 vs -5.2 vs -1.2; MSFT -1.8 vs -1.3 vs +1.9 vs -4.7 vs +11.3!!! vs +5.2 vs +1.2; vs +1.2 APPL not a factor but gained 0.1% vs -1.1 vs +6.6 vs -6.7 vs -3.9 vs -0.9 vs +5.4.

Advance/Declines were negative while Breadth was mixed – Nasdaq slightly positive? New 52 week highs dipped to 226 vs 254 vs 253 vs 206 vs 228, while new lows soared back to 93 vs 64 (never short a thin market) vs 103 vs 109 vs 85.

VIX rose but held below 13 with an intraday high of 13.06, closing at 12.82 +.29 following Tuesday’s session low of 12.40 – lowest since 10/18 and more importantly the close was lowest since 8/13 – on a nothing day??? All the more reason to be concerned about options expiration on Friday!

Bonds modestly weaker although long TIPS managed to eke out a slight gain – we’ll take it! Gold closed weakest since JULY 10th as was the low of $1260.50, closing at $1271.20 -$9.90! and now off $37 in FOUR sessions! All due to that NEGATIVE key reversal last Thursday…caution! Overnight it is $1274.30 +$3.10 in an ‘inside’ session.Crude also hammered closing at $93.04 -$2.10 wit a session low of $92.86 – lowest since June 24th !. Currently $93.70 +.66 – also on an ‘inside’ session. What does this mean? Can’t be good!

Dow 30 -0.2% vs +0.1% vs +1.1% vs -1% vs +0.8%; Dow Transports +0.7% vs +0.5% vs +1.1% vs -1.4% vs -0.7%; Russell 2000 flat vs +0.1% vs +1.9% vs -1.8% vs -0.5%; Dow Utilities -0.8% vs -0.1% vs -0.2% vs -0.9% vs +1.3%; S&P 500 -0.2% vs +0.1% vs +1.3% vs -1.3% vs +0.4%; Nasdaq Composite flat vs flat vs +1.6% vs -1.9% vs -0.2%; NDQ 100 +0.1% vs -0.1% vs +1.4% vs -1.9% vs -0.1%…hmmm.

*NYSE Volume rose but to a still well below average 3.12B shares from a WEAK 2.53B shares vs 3.82B vs 4.14B vs 3.33B. 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 also rose to a below average 652M shares from 538M, lowest since August 5th from a strong 820M shares from a super strong 910M vs 704M, lowest since 10/14 (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 on 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 now just 700M shares, ranging from 482M to 2.025B shares on 9/20. There have been just EIGHT 1B+ share sessions! There have been 37 800M+ shares in 2013: 16 up, 19 down, and two mixed.

*New 52 week highs have ranged from 33-864. They slipped to 226 vs 254 vs 253 vs 206 vs 228. Recent high is a super-strong 890!!!New lows came back to 93 vs 64 vs 103 vs 109 vs 85.  

  1. Advance/Declines were negative: -1.7x vs +1.1x vs +1.3x vs -3.5x vs +1.1x (recent range -17.5x to +6x) on NYSE and -1.2x vs 1:1 vs +3x vs -3.4x vs -1.1x  (recent -4x!!! to +3.8x). Breadth was mixed? -1.5x vs +1.3x vs +2.7 vs -6.4x!!! vs +1.2x vs -2.3x (recent -18.6x!!! to +7.2x!!!) on NYSE and +1.2x? vs +1.2x vs +3.8x vs -4.7x!!! vs -1.4x (recent -12.8x to +6.5x).  
  2. NYSE Financials fell by 0.07% vs +0.1% vs –1.3% vs +0.5% vs -0.7%. BofA most active -0.6% vs +0.6% vs +1.2%! vs +0.2% vs 0.6%, closing at $14.32 -.08, reversing Monday’s gain. It has struggled since hitting $15.03 on 8/1 – highest since Jan. 14 and major res. Brokers -0.2% vs +0.8% vs -1.9% vs +1.2% vs -0.2%; KBW Banks -1.1%! vs -0.2% vs -1.1% vs +0.3% vs flat; Nasdaq Banks -0.7% vs -0.9% vs -0.9% vs +0.5% vs +0.1%.
  3. Volatility (S&P VIX) reversed Monday’s decline closing At 12.82 +.29 (with a range of 12.63-13.06) vs 12.90 vs  13.91. Only the 4th day below 13 since 8/13! Note in August it surged back on the expiry! The recent range is 11.83-21.01!!! Since March 11th the average has been just 14.47…way below the five year average of 23.32~~~ and the 200 day: 14.39!!! It peaked at 22.79 on 12/28/12…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks weak for a 2nd day –this time including Japan/Korea; India lower for a 7th straight session!!! UK -1.4% vs -0.4% vs +0.3% vs -0.7% vs +0.1%; France -0.6% vs -0.3% vs +0.5% vs -1.5%!!! vs +1.2%!; Germany -0.6% vs -0.3% vs +0.2% vs -0.8% vs +1.3%!; Japan -0.2% vs +2.3%!!! vs +1.3% vs -1% vs -0.8% vs +0.8%; Hang Seng +1.4% vs -0.6% vs -0.7% vs flat vs -0.7%; Korea -1.6% vs +0.9% vs -0.4% vs -1% vs -0.5% vs flat; India -0.4% vs -1% vs -0.9% vs -0.8% vs -0.4% vs -0.4% vs -1.3%! U.S. equity market opening lower: DOW -53; SPX -4.40; NDQ -6.onds were little changed but weaker, while the long TIP was up slightly after being destroyed on Friday! Overnight a rally! Hoop-de-doo: 10 yr Treasury 2.74% +5/16 (recent range 1.63% to2.99%), and the30 yr range 2.67% to 3.90%, 3.84% +5/16. The long TIP is 1.51% +5/8. The (record?) low of 0.36% was set on 4/5. Recent high yield: 1.63%! Libor update: 0.241% 3 mos,0.355% 6 mos. Both steady and slightly above new record lows!!! Banks remain cautious and loaded with cash!!! Foreign bond yields lower, ex-U.K., Greece. Germany 1.74% -5; UK 2.81% +1; France 2.21% -5; Italy 4.11% -4; Spain 4.08% -3; Portugal 5.86% +4; Greece 8.36% +2 vs 8.19% vs 8.02% Recent range: 7.71% – 12.57%. Japan 0.59% -1.

Gold closed sharply lower but at the lowest level since 10/11 and well below $1300 following Friday’s NEGATIVE key reversal (higher high, lower low, close below prior days low) last Thursday, closing at $1271.20 -$9.90…-$46 in four days. It had a lower high and lower low at $1260.50, lowest since July 10th! The recent low is $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 with major res now at the 40 day ($1316) and the 50 day ($1322), both falling. Major resistance at $1375, the 9/19 high. The 200 day is at $1413. Overnight it is        at $1280.70 -.40

Crude was also slammed closing at $93.04 -$2.10, lowest since 6/24, but with a session low of $93.04 -$2.10! Not seen since June 24th!. It has shown no sign of strength since 9/18’s surge to $108.49. 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 ($99.72/101.38), both plunging, and major resistance! The 200 day ($98.63) is also major 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 $94.96 -.18, with a session low of $94.31.

 

Some random thoughts:

What is a good American? Sadly, I don’t think any of us…we aren’t trying to stop the insanity in our government and seem resigned to the destruction of the middle class. On Monday a link was provided to a story on the decline of the middle class. Here again is the link: http://www.startribune.com/opinion/commentaries/231223651.html

The author, Steven B. Young is global executive director of the Caux Round Table, an international network of business leaders working to promote a moral capitalism. Here’s to their success! But is it too late?

For those of you not willing to take the time here are some excerpts:

*Do you trust your institutions”. Here are the nays: Congress 95%; Big business and newspapers 91%; Banks and criminal justice system 90%; Television news 80%; Supreme Court 87% (amazing it is only that bad!); Public schools 87%; Presidency 86%; Organized religion 75%…wonder what the Catholic church alone would be? 99%?

*The cost of a presidential election was $1.4 billion in 2000 and $2.6 billion in 2012! For Congress $1.6 billion and $3.7B (total I presume).

*The average global confidence in the future is 89%; the U.S. just 67% (only 33% report themselves as being happy – Denmark is the highest taxed yet has the happiest best educated people…that speaks volumes!)

*Americans living in middle-class neighborhoods in the 117 largest metropolitan areas have declined in numbers. 1970: 65%; 2013 44%, while Americans living in poor neighborhoods grew from 15% to 30 %

*Now for the ‘meat’” in 1980m the top 10% of Americans took home a third of total income; by 2011 it declined to 48.2%. Meanwhile the top 1% took in 10% in 1980; 20% in 2011. Since the end of the Great Recession in 2009, the top 1% have taken in 95% of all income gains. This is clearly not a sustainable trend…in some countries it would foretell a revolution…here a peaceful one at the polls? Hmmm

*In June, only 42% of Americans had a full-time job, on only 58.7% of the civilian population was working…we now have the lowest labor participation rate since 1978!

On 2007, there were 121.7 million full-time jobs and 24.8 million part-time jobs. Today, there are 117.7 million full-time jobs and 24.4 million part-time jobs…think about that as the population has grown!

*Wages for males working full-time have been stagnant in real terms since 1973. In 1975; the average hourly wage in manufacturing was $20 (in current dollars), last year it was just $18.50!

*Jobs with median hourly wages of less than $14 provided 60% of all job growth between 2008 and 2010    

*A ‘bad job’ is now defined as one making less than $37,000 a year in 2010 dollars. In 1979, 18% of Americans had ‘bad jobs’. In 2010, 24% did!

*Today, only 58% of national income is paid out in wages. Average since WWII: 63%

*The top 10% of Americans owns 80% of all financial assets. After the Great Recession, median household wealth dropped 36.1% while net wealth for the top 1% dropped by only 11.1%’

*Average wealth for American’s in their mid-30’s today has dropped 21% compared with their parents, as their debt from education and lifestyles has increased (for jobs now paying less), has dropped 21% compared with their parents. We are truly the first generation to leave our kids worse off than ourselves…pity! Awkward!

*In 1970, about 12% of college graduates came from homes in the lowest 20% of income. Today that number has fallen to SEVEN PERCENT!

*Among Americans with no high school diploma, 35% have no job. 

I could go on but hopefully this will shock you into reading the entire article and perhaps even trying to do something about. The ‘great experiment’ is in danger of failing.

Have a great day if your appetite hasn’t been ruined…mine has!

Still think this is a great country?

Tomorrow: what if the government was a publicly traded company?

TB

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