11/18/13…the billionaires club

Today’s Quote from the Friars Club Encyclopedia of Jokes: “I find that the three major administrative problems on a campus are sex for students, athletics for the alumni, and parking for the faculty.” – Clark Kerr, 12th president of the University of California, and first chancellor of UC Berkeley, whose vision turned it into what it is today. Also, although he signed the McCarthy, anti-communist loyalty oath he fought against firing those who refused to sign. For this he was ‘blacklisted’,  yet in 1953, President Eisenhower appointed him to the Commision on Education. Hurray for Ike! We need him back!

Bloomberg Quote of the Day: “We would often be sorry if our wishes were gratified.” – Aesop…ain’t that the truth…think Tea Party for one!

TB’s Quote of the Day: “A half-truth is the most cowardly of lies.” – Mark Twain…if you want proof listen to the mindless drivel that is purportedly fact by the two parties and their mouthpieces.  TB

This week’s economic calendar is packed with important indicators. The highlight of the week will be the October CPI and October Retail Sales (Wednesday), and October PPI (Thursday). We will also get Q3 Employment Cost (Tuesday), October Existing Home Sales and September Business Inventories (Wednesday), November Philadelphia Fed Survey (Thursday) and September JOLTs Job Openings (Friday).In addition, the Federal Reserve will release the minutes to the October 29th–30th FOMC Meeting on Wednesday. Courtesy of Economic Advisory Service

Bloomberg Top Stories:

*Stocks Advance as China Equities Climb on Reforms; Gold Declines With Oil

*Fed’s Largess Aids U.S. Financial Strength BofA Deems Unrivaled in the World – talk about a very low bar!!!

*Credit Funds Rejecting Fed Policies as Reckless Likely to Post 2013

*Buying Low Thwarted in S&P500 With Smallest Stock Valuation Gap on Record – !!!  

*Interest Rate Swap Spreads Narrow Versus Treasuries in Search for Yield – think!

*China Embarks on Quest for a Safe Cure for Its Economic Headaches – get real!

*Boeing-Airbus Invest $5 Billion in U.A.E.’s Mubadala as Gulf Orders Climb

*Rabobank Said to Avoid EU Yen Libor Fine as Other Lenders Poised to Settle

*Stalin Shutdown Survivor Extends Luxury Brands to Masses in Russia – juxtaposition!

*Even Billionaires Recoil at London Mansion With 25-Million Pound Ask Price

*Dubai Rents Outstrip Pay for Expats Making Moves Every Other Year Normal

*Paris on Alert After Shootings at SocGen Head Office, Liberation Newspaper

*Storms Sweep Midwestern U.S., Killing at Least Five as Travel is Disrupted

Friday’s Market Summary:

Fizzle…that is what happened to the options expiry…out with a whimper. Stocks rallies but not with a lot of excitement, certainly not the normal for an expiry. Bets performer was Dow Transsports (up SIX straight sessions for 3.9% total) +0.7% vs +0.3% BUT followed by Dow Utilities +0.6% vs +0.9%(NYSE Financials ditto), while the laggards were the two Nasdaq indices up 0.3% and 0.2% respectively.

NYSE Volume however barely budged to 3.24B from a very weak 3.13B vs 3.35B – all below average of about 3.6B shares…thus a second day of rally on low volume. REAL NYSE Volume however jumped to 796M shares, the first time above 700M this week and bringing up the average for the week to a still well below average 663M shares and  which until Friday had averaged just 630M shares – Monday’s 538M shares was lowest since August 5th !

Advance/Declines and Breadth were positive – but unimpressive. New 52 week highs were stable at 430 vs 444 vs 331 vs 226 vs 254 vs 253, while new lows were nearly halved to 66 vs 102 vs 93 vs 64 (Vets Day – never short a thin market). VIX declined again , closing at 12.19 -.18, only the 6th close below 13 since 10/18, AND the first time below 12 intraday with a range of 11.99-12.65!

Bonds, Gold, and Crude were all little changed as focus – what little there was, went elsewhere. Question is…where does it all go from here?

The Nasdaq 100 rose just 7.5 points or 0.3% vs +0.3% vs +1.2% vs +0.1% vs -0.1% with just 7:3 advancing! Compare to +9:1, +1.5:1, +1.1:1, +9:1, and -13:1…warning signals? Just THREE members gained more than a point and while only TWO lost a point: BIIB +1.6; QCOM +1.5; GILD +1.2; APPL -2.5 vs +6 vs +0.1% vs +0.1% vs -1.1 vs +6.6 vs -6.7 vs -3.9 vs -0.9 vs +5.4; MSFT -1.1 vs -1 vs +6 vs -1.8 vs -1.3 vs +1.9 vs -4.7 vs +11.3!!! vs +5.2.

Twitter (TWTR) made TB eat crow as while it closed at $43.98 -.71 it had an intraday high of $45.25…still support by the underwriters is about to end…let’s see.

Dow 30 +0.5% vs +0.4% vs +0.5% vs -0.2% vs +0.1%; Dow Transports +0.7% vs +0.3% vs +0.6% vs +0.7% vs +0.5%; Russell 2000  +0.4% vs -0.1% vs +1% vs flat vs +0.1%; Dow Utilities +0.6% vs +0.9%! vs +0.2% vs -0.8% vs -0.1%; S&P 500 +0.4% vs +0.5% vs +0.8% vs -0.2% vs +0.1%; Nasdaq Composite +0.3% vs +0.2% vs +1.2% vs flat for 2 days; NDQ 100 +0.2% vs +0.3% vs +1.2% vs +0.1% vs -0.1%. Boring week!

*NYSE Volume barely budged to a weak 3.24B shares vs 3.13B vs 3.35B vs 3.12B vs 2.53B. 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 however rose to 796M shares from a well below average 633M shares vs 678M vs 652M vs 538M, lowest since August 5th (2.06B shares on the 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 723M shares. The average since 6/28’s 1.75B share day is 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 were steady at 430 vs 445 vs 331 vs 226 vs 254. Recent high is a super-strong 890!!! New lows fell sharply to 74 vs 102 vs 93 vs 64 vs 103 vs 109 vs 85…a setup for today’s expiry???

  1. Advance/Declines were modestly positive: +1.9x vs +1.9x vs +2.2x vs -1.7x vs +1.1x vs +1.3x (recent range -17.5x to +6x) on NYSE and +1.5x vs -1.1x vs +2.3x vs -1.2x vs 1:1 (recent -4x!!! to +3.8x). Breadth was similar: +2.3x vs +2.4x vs +4.3x vs -1.5x vs +1.3x (recent -18.6x!!! to +7.2x!!!) on NYSE and +2x vs -1.1x vs +5.5x vs +1.2x vs +1.2x (recent -12.8x to +6.5x).  
  2. NYSE Financials rose by 0.6% for a second day vs +0.8% vs -0.7% vs +0.1% BofA most active rising another 0.8% vs +1.1% vs +2.2%, closing at $14.91 +.16, highest close since August 5th, with a session high of $14.96! It has struggled since hitting $15.03 on 8/1 – highest since Jan. 14 and major res. Brokers +0.9% vs -0.5% vs +1.3% vs -0.2% vs +0.8%; KBW Banks +0.3% vs +0.6% vs +0.9% vs -1.1% vs -0.2%; Nasdaq Banks -0.2% vs +0.3% vs +0.9% vs -0.7% vs -0.9% – note weakness in small banks over past week!
  3. Volatility (S&P VIX) declined yet again closing at 12.19 -.18, with a range of just 11.89-12.45… Only the 7th day below 13 since 8/13! But 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 40/50/200 day: 14.63/14.58/14.33!!! It peaked at 22.79 on 12/28/12…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

 Global stocks higher for a 3rd day on China, following two weak sessions: UK +0.5% vs +0.5% vs +0.4% vs -1.4% vs -0.4%; France +0.8% vs +0.3% vs +0.7% vs -0.6% vs -0.3%; Germany +0.7% vs +0.3% vs 0.7% vs -0.6% vs -0.3%; Japan flat but vs +2%! vs +2.2%!!! vs -0.2% vs +2.3%!!!; Hang Seng +2.7%!!! vs +1.7% vs +0.8% vs +1.4% vs -0.6%; Korea +0.3% vs +1.9% vs +0.2% vs -1.6% vs +0.9%; India +2.2%!!! vs closed vs -0.4% vs -1% vs -0.9%; U.S. stock futures rallying but trading range is narrow a la mode: DOW +52; SPX +3.20; NDQ +2.25 – very narrow range last three sessions!

Bonds were little changed, surprising for an expiry but then what did stocks do? Overnight slightly higher: 10 yr Treasury 2.70% +1/16 (recent range 1.63% to2.99%), and the30 yr range 2.67% to 3.90%, 3.79% +3/16. The long TIP is 1.48% +1/16. The (record?) low of 0.36% was set on 4/5. Recent high yield: 1.63%! Libor update: 0.237% 3 mos,0.351% 6 mos. (both at record lows!). Foreign bond yields little changed and mixed: Germany 1.70% -1; UK 2.75% +1; France 2.18% +1; Italy 4.08% +1; Spain 4.07% +1; Portugal 5.89% +2; Greece 8.25% +1. Recent range: 7.71% – 12.57%. Japan 0.62% flat.

Gold had a narrow ‘inside’ session a day after trading to a four day high of $1293.80, and closed at $1287.40 +$1.10! This, just three days after trading at the lowest level since 10/15, $1260. and well below $1300 following a week ago’s NEGATIVE key reversal (higher high, lower low, close below prior days low) putting in a high that day of $1326, between the 30/50 day. 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 resistance with major res now at the 40 day ($1313) and the 50 day ($1318), both dropping again. Major resistance at $1375, the 9/19 high. The 200 day is at $1409. Overnight it is $1283.00 -$4.40.

Crude had a very narrow session eking out a slight high of $94.55 just one day after establishing a new recent low of $92.51, lowest since 6/4. It closed at $93.84 +.08. 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 ($99.15/100.77), both dropping rapidly now, and major resistance! The 200 day ($98.60) 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 $93.91 +.07.

Some random thoughts:

60 Minutes segment last night on billionaires pledging at least half their assets to foundations – by the time they die was interesting. I believe there were ten of them present (most remain anonymous). Is this a good thing, sure? But…why aren’t they instead (or at least) advocating higher taxes on income above say $1 million? Here are some other problems with their largesse:

1. While the Bill and Melinda Gates Foundation is actively giving away money, the most noted being to eradicate polio by teaming with Rotary International (Bill’s dad was a Rotarian), and while this is a worthy venture, on education, they are doing study after study and where is the help going…some new computers, etc. More to follow

2. Warren Buffett who has pledged 99% of his assets to the joint foundation with Gates, BUT he says he can make more for the foundation by investing until he dies. Think about this…there are big needs yet he wants to increase the size…isn’t this just more ego for one of the richest men in the U.S. and the world?

3. AOL founder, Steve Case, whose greatest money maker was sucker-punching Time Warner into buying out AOL – at the peak and then becoming a huge loser for them. He should be giving it away!

4. Spanx founder Sara Blakely. Kudos to her. Imagine making over a billion on underwear! She is the one TB had the most respect for – the true spirit of giving!

5. Ah, now to Pete Peterson…Peterson who has added to the hysteria of a U.S. bankruptcy and who also doesn’t believe in higher taxes.

In summary, the problem here is with most foundations: it is still about ego…imagine if they really gave it away, instead of ‘doling’ it out. The only foundation that does this to TB’s knowledge is the Paul Harris Foundation, he, the founder of Rotary. Money is collected and invested for three years on a rolling basis. At the end of that time, only the income is retained and reinvested along with all new contributions. THAT is giving!

A secondary problem, is where the money goes: all of these people made money in the U.S. yet the money goes worldwide…fine, that is the argument that “it is my money so I should determine how it is spent”.  But is that the best use of the funds? Isn’t there overlap? Note that other than Gates/Buffett, foundations normally don’t join up with others for big projects but grab the headlines by their own efforts.

Back to Buffett and his ‘deferred’ gifts to the foundation. Imagine Warren driving across the bridge over the ole Mississippi River and having a rotting bridge collapse taking him with it. Remember it happened in Minneapolis and if memory serves there are over 4,500 bridges in the country in need of replacement…on interstates alone! Meanwhile, John McCains recommendation to raise the federal gasoline tax from the 5 cents where it has been since Eisenhower created it to build the interstate highway system (not to mention landing strips for military aircraft if bases were wiped out), yet that idea, gains no traction.

We remain at the mercy of the extremist wing of the GOP. Yesterday, Joe Scarborough wrote an article an what is wrong with his party, and even Dems see the problem in theirs. Let’s be rational folks…we are destroying our country from within…exactly what was predicted would be the cause of our downfall.

The only positive is looking at editorials/op eds, more and more are coming out against extremists and obstructionists…is it too late? Time will tell…always does!

Have a great week!

TB

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: