Today’s Quote from the Friars Club Encyclopedia of Jokes: “Insanity is hereditary – you get it from your children.” – Sam Levinson
Bloomberg Quote of the Day: “It is better to risk saving a guilty person than to condemn an innocent one.” – Voltaire…is that what Justice is thinking about the bankers??? TB
Bloomberg Top Stories:
*U.S. Plans to Sell Remaining 31.1 Million GM Common Shares – you want ‘em?
*Fewer Americans Than Forecast File First-Time Claims for Jobless Benefits – yawn
*Wholesale Prices in U.S. Declined in October for a Second Straight Month – yet we are concerned about the Fed ending the QE’s? Not in this economy!
*Credit Suisse Will Separate Swiss Businesses to Meet Too-Big-to-Fail Rules – yawn
*Anxiety Over Asset Bubbles From Housing to Internet Rising in Global Pool – !!!
*Americans Recovering Home Equity at Record Place Signals Increasing Sales – Bull! Interest rates are rising over fear of Fed and they think this will continue? Econ 101!
*CFTC’s Chilton Says He’d Vote Against Current Volcker Rule Over Hedging – hedging? What’s that…it has turned into market manipulation pure and simple!!!
*Sears Loss Widens as Lampert Seeks Asset Sales for Cash Amid Sales Slump-like JCP?
*Fidelity Dividend Shows Challenge of Energy Futures $44 Billion Debt Knob – !!!
*Swiss Regulator Forces Basler Kantonalbank to Give Up Profit on Misconduct- yawol
*Green Mountain Gains on Earnings; Abercrombie Dropsl – about sums it up, no?
*Resilient U.S. Shoppers Offer Holiday Season Hope to Deal-Weary Retailers – let’s see, big EARLY sales drew in shoppers, hired temps early, is this sustainable? You decide!
*Home-Care Aides Making $10 an Hour Seen Proliferating as Newest U.S. Labor – want to trust your care to someone making that little? Baby sitters do as well, no?
*Karzai Lauds U.S. Security Pact as Afghans Debate Keeping Troops Post 2014 – why is that ‘their’ decision? We are losing and they have a corrupt president…’nuf said!
*State Insurance Heads Snub Obama Meeting to Dodge ‘Divisive’ Health Topic – and that is exactly why the ACA is doomed to fail. We need NATIONAL healthcare, not state!
*French Farmers Snarl Roads Into Paris in Latest Protest Against Hollande Taxes
*Recessions During Midlife Links to Increased Risk of Cognitive Decline – oh boy!
*Hong Kong House Fetches $95M, 2nd Highest Price for home in City – like Japan?
Wednesday’s Market Summary:
Another down day on low volume with Dow Utilities taking the brunt again, -1.4%! vs -0.8%, the rest down from 0.1% (Russell 2000) to down 0.4% (Dow and S&P 500!). NYSE Financials were off another 0.4% vs -0.2% .
NYSE Volume stagnated again for a SIXTH day 3.1B shares vs 3.2B vs 3.15B vs 3.24B vs 3.13B vs 3.35B – all below average of about 3.6B shares. REAL NYSE Volume slipped and remains below average at 622M shares vs 646M vs 655M vs 796M (the only time above 700M last week) – the prior Monday’s was 538M shares – lowest since August 5th !
Advance/Declines and Breadth were both negative for a third day. New 52 week highs were stable at 170 vs 171 vs 514 vs 430 vs 444 vs 331 vs 226, while new lows rose to 118 vs 93 vs 56 vs 66 vs 102 vs 93 vs 64 (Vets Day – never short a thin market). VIX barely budged, despite it being a losing day closing at 13.40 +.01, but closing above 13 for a third day which broke the string of six closes below 13, AND negating Fridays low print of 11.99, first time below 12 intraday. Yesterday’s high however was 13.94! Rising!
Bonds were clobbered…losing a point early on then more than doubling that on the FOMC announcement – more QE ending fears….and they are just that…and unwarranted because the Fed cannot allow rates to rise without killing what little they accomplished. The long TIP which another 2-1/4 points for a two day total of 3-3/8!!!! Gold took a horrendous hit losing $25.50 to close at $1258.00 (strange adjustments to close in gold and crude – trading in the yellow metal was suspended TWICE due to $200 million in sell trades!!!), but the low print was $1240.20, lowest print since July 8th. Crude remained moribund for a third day down .01.
The Nasdaq 100 declined by 11 points for a second day or 0.3% vs -0.4% vs -1% Compare to recent positives of +9:1, +1.5:1, +1.1:1, +9:1, then -13:1…warning signals? Five members lost more than a point and four gained a point: APPL -3.6 vs -.03 vs -5.2 vs -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; EBAY -2; QCOM/CMCSA -1.2; BIDU -1.1; DTV/AMZN -1; MSFT +2.5 vs -3.4 vs -5 vs -1.1 vs -1 vs +6 vs -1.8 vs -1.3 vs +1.9 vs -4.7 vs +11.3!!! vs +5.2; GILD +1.9 vs +0.9; ECLN +1.3; YHOO -0.9. Stocks commented on yesterday:
Twitter (TWTR) had its lowest close since the IPO, $41.05; BBY -0.2%. The banks, despite negative press did nothing, with BAC losing 0.4% but following a 1.9% gain.
Dow 30 -0.4% vs -0.1% vs +0.1% vs +0.5% vs +0.4%; Dow Transports -0.3% vs -1% vs -0.3% vs +0.7% vs +0.3%; Russell 2000 –0.1% vs -0.3% vs -0.8% vs +0.4% vs -0.1%; Dow Utilities -1.4% vs -0.8% vs flat vs +0.6% vs +0.9%; S&P 500 –0.4% vs -0.2% vs -0.4% vs +0.4% vs +0.5%; Nasdaq Composite –0.3% vs -0.4% vs -0.9% vs +0.3% vs +0.2%; NDQ 100 –0.3% vs -0.3% vs -1%! vs +0.2% vs +0.3%. Caution!
*NYSE Volume stagnated at a weak 3.1B shares vs 3.2B vs 3.24B vs 3.15B vs 3.13B vs 3.35B. The record high (?) is 4.82B shares on Q3 end of quarter while 2.52B is 4th weakest of 2013…1.96B is the low). REAL NYSE Volume fell to a weak 622M shares vs 646M vs 655M vs 796M vs 633M (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 721M shares. The average since 6/28’s 1.75B share day is just 698M 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 stable at 170 vs 171 vs 514 vs 430 vs 445. Recent high is a super-strong 890!!! New lows rose again to 118 vs 93 vs 56 vs 66 vs 74.
- Advance/Declines were negative for a 3rd session: -2x vs -2.1x vs -1.6x vs +1.9x vs +1.9x (recent range -17.5x to +6x) on NYSE and -1.2x vs -1.7x vs -1.7x vs +1.5x vs -1.1x (recent -4x!!! to +3.8x). Breadth was similar: -1.8x vs -2.2x vs -1.9x vs +2.3x vs +2.4x (recent -18.6x!!! to +7.2x!!!) on NYSE and -1.3x vs -1.6x vs -3x vs +2x vs -1.1x (recent -12.8x to +6.5x).
- NYSE Financials fell 0.4% vs -0.2% vs +0.6% vs +0.6% vs +0.8%. BofA most active gave back a bit losing 0.4% vs +1.9% closing at $ 15.14 -0.6 a day after its highest close since 1/14/11!!!. It had struggled since hitting $15.03 on 8/1. Brokers +0.3% vs +0.3% vs -0.1% vs +0.9% vs -0.5%; KBW Banks -0.1% vs +0.1% vs -0.1% vs +0.3% vs +0.6%; Nasdaq Banks +0.1% vs -0.2% vs flat vs -0.2% vs +0.3%.
- Volatility (S&P VIX) closed at 13.40 +.01 but only after trading to 11.94. Last Friday’s close was 12.19… this is only the 10th close with a 13 handle since 8/13! The recent range is 11.83-21.01!!! Since March 11th the average has been just 14.44…way below the five year average of 23.32~~~ and the 40/50/200 day: 14.56/14.44/14.36!!! It peaked at 22.79 on 12/28/12…ytd the range is 11.05 (3/14) to 21.92 (6/24)!
Global stocks lower ex-Nikkei: UK flat vs -0.2% vs –0.5% vs +0.5% vs +0.5%; France –0.3% vs -0.3% vs -0.9% vs +0.8% vs +0.3%; Germany -0.2% vs -0.1% vs -0.2% vs +0.7% vs +0.3%; Japan +1.9%!!! vs -0.3% vs -0.3% vs flat vs +2%! vs +2.2%!!!; Hang Seng -0.5% vs +0.2% vs +2.7%!!! vs +1.7% vs +0.8% vs +1.4%; Korea -1.2%! vs -0.7% vs +1% vs +0.3% vs +1.9%; India -2%!!! vs -1.2% vs +0.2% vs +2.2%!!!; U.S. stock futures higher after dipping early: DOW +59; SPX +5.70; NDQ +14.50!
Bonds fell by over a point then doubled the loss on release of the Fed minutes which once again scared investors into becoming irrational…but not exuberant! Nothing doing overnight: 10 yr Treasury 2.80%!!! -1/16 (recent range 1.63% to2.99%), and the30 yr range 2.67% to 3.92% (breakdown!), 3.91% +1/16. The long TIP is 1.61% +1/16. The (record?) low of 0.36% was set on 4/5. Recent high yield: 1.63%! Libor update: 0.238% 3 mos,0.347% 6 mos. (both at or setting new record lows!). Foreign bond yields higher across the board: Germany 1.77% +6!; UK 2.83% +10!!!; France 2.24% +5!; Italy 4.09% +1; Spain 4.11% +2; Portugal 5.97% +2; Greece 8.43% +7. Recently: 7.71% – 12.57%. Japan 0.62% +2. Blame it all on the Fed!!!
Gold plunged, exacerbated in sales of $200 million and trading to $1240.20, lowest since July 8th with a last trade at $1242 BUT adjusted up by the exchange to $1258.00 -$25.50 – either way it was ugly!. A week ago the high was $1293.80! The recent low is now $1240.20 – lowest since 7/8. 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 at the 40 day ($1308) and the 50 day ($1311), both still dropping. Major resistance at $1375, the 9/19 high. The 200 day is at $1403. Overnight it is even worse $1246.40 -$11.70, inside session however?
Crude closed bizarrely off just a penny at $93.33 -.01 (close was to $93.85 on heavy sales just like gold), but Tuesday’s session low of $92.43 held, lowest since 6/4, holding. Last Friday’s slight high was $94.55. 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 ($98.41/99.88), both dropping rapidly now, and major resistance! The 200 day ($98.55) and converging with the 40 day!!! Thus very 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 slightly higher at $94.10 +.25….best to avoid commodities – like the plague they are!
Some random thoughts:
…tell who goodbye? No, you see that was the old way…golden parachutes. Well they aren’t gone but like something old, something new, we have a new one. Big money to lure ‘hot’ CEO’s to run companies…just one more case of ‘anti-capitalism’. Sorry to sound negative but whatever happened to risk-reward? It’s still alive and well but transferred to investors, big and small…how much more democratic than that can you get? We are talking big money here…one recent one at $35 million. Hey, TB is available!…and will do it for just ten mill!
TB told his wife about this and she said, ‘so what, it’s just a ‘signing bonus’? He gave up trying to fight the argument. TB is well aware of signing bonuses in the financial sector and sports but this is out of sight, particularly when you look at JCPenney…hot CEO comes in redefines the company, sales fall, earnings drop, and shareholders lose…and he is out the door. How about a Carly Fiorina or her successor Mark Hurd? The first was out for herself and all about herself (including the $15M she got for the Agilent deal, an utter disaster). Hated by the employees, divisive…gone but now speaks out for the GOP.
Enter Hurd…likable, however his management style went from all inclusive to dictatorial, but he was turning the company around until ‘inappropriate conduct’ brought charges of sexual harassment! By the way, HP stock peaked at $68.09 on 9/29/00 – this on a surge from $26.46 on 3/31/99, swept up in the irrational exuberance. Note the Carly’s reign began it 1999, and not long after with a challenge mounted by Hewlett’s son over the Agilent merger and ended in January 2005 with the stock trading around $20 ah but only after she took it down to $10, prompting board dissatisfaction. The stock rallied back to over $50 on her ouster and Hurd’s becoming CEO reaching $54.75 just as he was ousted (he is now CEO of Oracle, which is a good fit with its founder Larry Ellison, right?). The stock fell to $11 last yearend and is now at $25, a shadow of itself.
Comparing CEO’s to athletes (or even traders…although TB would say that they are hired after a big year that is most likely not sustainable), is questionable. True, mistakes are made with stars too but their impact is limited to their performance and does not necessarily impact the season, but with a CEO, it is all about him.
Now think…excluding ‘signing’ bonuses, as the clip provided yesterday shows, is a CEO worth 350 times what an ‘average’ worker earns…in other words in one hour more than an employee earns in a month and not the least cost employee, the average!
This brings us to minimum wage which should be a living wage if we want real economic growth and is the reason people are dropping out of the labor pool…it ain’t worth it. For years, due to high taxes, the French have had high unemployment but that has created an underground economy paying people under the table. That is likely happening here.
So…how can a CEO say they can’t afford to pay employees more while their own compensation soars? Even middle managers aren’t only not making more in REAL dollars, they are forced to work longer hours to hold on to their jobs.
Welcome to America…land of opportunity!