11/27/13…Minnesota vs. Wisconsin? Left vs Right??? (Updated)

Today’s Quote from the Friar’s Club Encyclopedia of Jokes” “When I was a kid, one cop have taken care of the whole neighborhood. Now one cop wouldn’t be safe in the neighborhood.” – Mike Royko

Bloomberg Quote of the Day: “Here’s a new day. O pendulum move slowly.”

– Harold Munro

Bloomberg Top Stories:

*AMR Merger Settlement Approved by Bankruptcy Judge; Details at Noon EST

*Jobless Claims in U.S. Unexpectedly Fall to the Lowest Level in Two Month…now if we just had hiring…especially full-time and with decent pay!

*Michigan Sentiment Index Increased More than Estimated in November to 75.1

*U.S. Leading Economic Indicators Index Unexpectedly Rose 0.2% in November

*Stocks Gain on U.S., European Economic Reports as Crude Oil, Yen Retreat

*CVS Caremark to Acquire Coram From Apria Healthcare for About $2.1 Billion

*Chicago ISM November Business Barometer Declines Less Than Estimated to 63

*Long Bonds Spurned as Buyers Seek Shelter Amid Speculation Fed to Taper

*Monte Paschi Wins European Approval for $5.3 Billion Italian Bailout

*Bitcoin Surges to $1,000 as Virtual Money Gains Wider Acceptance Globally – B.S.!

*BlackRock Says Curve Steepener Offers Fed Taper Protection for Canada

*Rich Russians Spar With Putin Over Who’s on hook for $48 Billion Olympics – Ha!

*Bank of America to Goldman Sachs Pitch Venezuela Deals to Drum Up Dollars – greed begets strange bedfellows…no? Right Mr. Chavez?

*Storm Disrupts U.S. Travel Ahead of Holiday; Macy’s Delays Parade Decision

*Obama’s Iran Nuclear Deal Strains Mideast Diplomacy From Israel to Syria – idiots want it all while this buys some time…you can’t always get what you want, right?

*Ukraine Needs to Fix Russia Relationship Before EU Deal, Yanukovych Says – for a second TB thought that was ‘Weird Al’

*Democrats Control 12 Biggest City Halls as U.S. Sorts Itself by Politics

*Obamacare Is the Result of All Politics, All the Time Culture; Opionon by Clive Crook

Tuesday’s Market Summary:

Yesterday…all our troubles started yesterday…stocks rose out of the chute, per usual, then dropped back to FLAT, then up and down SIX more time allowing the Dow make another ‘slight’ new record high – just 11 points!…then someone looked down! In the final half hour all was given up, on every index??? Well, except the Russell 2000 which took honors up 0.9%, the two Nasdaq indices +0.5% and Dow Utilities – the goat again – down 0.9%. A pathetic kind of trading day, no? Note that the daily highs have been above 16k every day since 11/15! The number of up days since has extended to 10 with just two losing sessions11/19-20.

To those of you who mock TB on volume consider this: amid the record highs, etc. NYSE Volume came back to a weak 3.27B shares from 2.98B shares from just 3.05B shares – lowest since Vets Day! (since then the average has been just 3.17B shares vs about 3.6B over the past 12 months …with Thanksgiving coming don’t expect much more for the remainder of the week.. REAL NYSE Volume however surged to 828M shares – BUT with 400M coming in the final 15 minutes – 325M at the close…you don’t really believe those were investors do you? Position squaring since Friday is month end and nobody will be home! Since November 11, there has now been just ONE 700M+ sessions…winter doldrums??? Or just plain apathy?…you decide!

Advance/Declines and Breadth were slightly positive. New 52 week highs slipped to 456 vs 540 vs 477 vs 348 vs 170, while new lows were stable at 111 vs 111 vs 88 vs 123 vs 118 vs 93 vs 56. VIX barely budged and was in a very tight range for a second day, closing at 12.81 +.02 – if you see a 13 print again…heed!  

Bonds also eked out yet another slight rally since the 11/20 swoon but the long end remains precariously close to the 8/21-11/20 3.92-3.93% levels!!! Gold closed about even a $1241.50 -.10??? after losing $43 in the prior three days, a low print of $1226.40 on Monday, lowest print since July 8th. Crude closed slightly lower at $93.58 -.44 vs Friday’s $95.44, highest since 11/1 – and a high print of $95.63??? Makes you check the futures before you go to buy gas: last Friday here…$2.91, yesterday, $3.15.

The Nasdaq 100 rose by 18 points vs +5.5 points vs +19 or 0.5% vs +0.2% vs +0.6% vs +1.1% with 1.8:1 advancing vs -1.8:1 vs +3.2:1 vs +6.6:1. Just SIX members gained more than a point while two lost more than a point: APPL +7.8!!! vs +3.2 vs -1 vs +4.9 vs -3.6 vs -0.3 vs -5.2; GOOG +3 vs +3.4; AMZN +1.9 vs +1.8 vs +1.4 vs +2.6 vs -1; QCOM +1.8; FB +1.7 vs -2.3; BIDU +1.6; MSFT -2.2; BIIB -1.4 vs +2.2 vs +7 vs +1.3. Talk about the ‘usual suspects!!! The rest were…boring!!!

In case you didn’t see the plethora of negative comments on Twitter…obviously Barron’s was not all a-twitter…it closed at just $40.18 vs $39.06, the low close… with a new low of $38.80!

Dow 30 flat vs +0.1% vs +0.3% vs +0.7% vs -0.4%; Dow Transports -0.1% vs +0.3% vs +0.4% vs +1.1% vs -0.3% vs -1%; Russell 2000 +0.9%? vs flat vs +0.5% vs +1.8%! vs –0.1%; Dow Utilities -0.9%! vs +0.1% vs -0.1% vs +0.1% vs -1.4% vs -0.8%; S&P 500 flat vs -0.1% vs +0.5% vs +0.8% vs –0.4%; Nasdaq Composite +0.6% vs +0.1% vs +0.6% vs +1.2% vs –0.3%; NDQ 100 +0.5% vs +0.2% vs +0.6% vs +1.1% vs –0.3% vs -0.3% vs -1%!

*NYSE Volume got back above 3B to 3.27B shares from to a very weak 2.98B vs 3.05B vs 3.25B vs 3.1B. Since 11/11 the average has been just 3.17B shares – that is weak!!! 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 rose again to a STRONG 828M shares BUT with over 400M shares at the close!!! This vs 626M vs 607M vs 665M vs 622M (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). Since 11/11 the high has been 828M shares on 11/26 followed by 796M shares on 11/15, thus only two days with a ‘7’ or higher handle and the average is just 675M shares! The 12-month average is 723M shares. The average since 6/28’s 1.75B share day is just 696M shares, ranging from 482M to 2.025B shares on 9/20. This year there have been just NINE 1B+ share sessions! There have been 38 800M+ shares in 2013: 16 up, 19 down, and now three mixed.

*New 52 week highs have ranged from 33-864. They dipped to 456 vs 540 vs 477 vs 348 vs 170. Recent high is a super-strong 890!!! New lows were stable at 111 vs 111 vs 88 vs 123 vs 118 vs 93 vs 56.  

  1. Advance/Declines were modestly positive: +1.3x vs -1.2 x vs +1.6x vs +2.9x vs -2x (recent range -17.5x to +6x) on NYSE and +1.8x vs +1.1x vs +1.6x vs +3.3x vs -1.2x (recent -4x!!! to +3.8x). Breadth was less so: 1:1??? vs -1.2x vs +1.9x vs +2.7x vs -1.8x (recent -18.6x!!! to +7.2x!!!) on NYSE and +1.4x vs -1.2x vs +1.4x vs +5.2x vs -1.3x (recent -12.8x to +6.5x).  
  2. NYSE Financials were flat vs -0.1% vs +0.4% vs +1.1% vs -0.4%. BofA most active +0.4% vs +1.1% vs +0.3% vs +3%! vs -0.4% vs +1.9%, and closing at $ 15.88 +.07, with a high of $15.97, just shy of Monday’s new 12-month high of $15.98, highest since 6/1/10. Had not been above $15 since 8/10. C missed the cut bud declined by 0.5% from its 12-month high vs +1.7% vs +1.3%!?! Brokers +0.1% vs +0.4% vs +0.5% vs +2.2%! vs +0.3%; KBW Banks -0.3% vs +0.4% vs +2.3% vs +1.5% vs -0.1%; Nasdaq Banks +0.5% vs +0.8% vs +1.7% vs +0.1% vs -0.2%. Barron’s was al ‘ga-ga’ about financials…apparently not realizing the earnings are largely a result of recaptured reserves for loan offices.
  3. Volatility (S&P VIX) remained below 13 for a 3rd day, but rose to 12.789 +.53 with a high of 12.92. 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: 14.51/14.40/14.36!!! It peaked at 22.79 on 12/28/12…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks higher ex-Japan, India flat: UK -0.4% vs +0.3% vs -0.2% vs flat vs -0.2%; France -0.3% vs +0.5% vs +0.2% vs 0.3% vs -0.3%; Germany flat vs +0.9% vs flat vs -0.2% vs -0.1%; Japan –0.4% vs -0.7% vs +1.5% vs +0.1% vs +1.9%!!!; Hang Seng +0.5% vs flat vs -0.5% vs +0.5% vs -0.5%; Korea +0.3% vs +0.3% vs +0.5% vs +0.6% vs -1.2%! vs -0.7% vs +1%; India flat vs -0.9% vs +1.9% vs -0.1% vs -2%!!! vs -1.2%; U.S. stocks opening higher – again but where will they end? DOW +26; SPX +2.25; NDQ +18.

Bonds still struggling back from the abyss…rallying for a fourth session but remain…WEAK! However the ‘breakdown’ on the 30 year turned out to be a ‘false break’ – at least for now. Weaker though overnight: 10 yr Treasury 2.74% -1/4 (recent range 1.63% to2.99%), and the30 yr range 2.67% to 3.92%, 3.82% -5/16. The long TIP is 1.52% -5/8. The (record?) low of 0.36% was set on 4/5. Recent high yield: 1.63%! Libor update: 0.238% 3 mos,0.346% 6 mos. (both just above their new record lows!). Foreign bond yields higher ex-Portugal and Spain: Germany 1.71% +2; UK 2.76% +3; France 2.17% +2; Italy 4.06% –; Spain 4.14% -1; Portugal 5.80% -2; Greece 8.62% +2. Recently: 7.71% – 12.57%. Japan 0.60% -1.

Gold did little but at least didn’t go any lower following Monday’s new low of $1226.40, lowest since 7/8. It closed at $1241.50 -.10, still off $43 in the prior three sessions. A week ago the high was $1293.80!  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 ($1299!) and the 50 day ($1305), both still dropping. Major resistance at $1375, the 9/19 high. The 200 day is a distant $1393. Overnight it is slightly higher at $1244.60 +$3.10.

Crude closed lower in a narrow range at $93.68 -.44. 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 ($97.34/98.57), both now plunging and major resistance! The 200 day ($98.49) remains between the 40/50 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 it is being pounded at $92.38 -$1.30!!! WITH a new low of $92.15, lowest since 6/26!!! 

 

Some random thoughts:

…yesterday’s discussion of Minnesota unemployment prompted an avid reader to send the following article on how Wisconsin under the leadership of Gov. Scott Walker. Here is the link: http://www.nytimes.com/2013/11/24/opinion/sunday/right-vs-left-in-the-midwest.html?_r=1&pagewanted=print&

Then, last night on PBS Nightly News, there was an interview with Walker who just wrote a book (won’t plug it!), and has dreams of becoming president. Not only that but despite what the GOP has done to government at the federal level…we’ll discuss Wisconsin later…he had the unmitigated gall to suggest that with so many governors being Republican if we only had a GOP Congress AND president, things would be better…trust him! Then he said Romney was unelectable since he was too ‘moderate’.

There are 18 states with GOP governors, most, led by Texas having fought implementing state health care exchanges. According to Bloomberg News today however, Democrats control the 12 biggest city halls. That explains the problem. So you will never get one party in control of everything. Hence, more gridlock. Scott Walker like Tim Pawlenty will become a mere asterisk in history.

Now for the differences shown in the article by Lawrence R. Jacobs, professor of political science at the Humphrey School of Public Affairs at UMinn. You decide if he is right:

Prior to 2010 the two states were very similar…then came Scott Walker. Here we go:

A month after Mr. Walker’s inauguration in January 2011, he catapulted himself to the front ranks of national conservative leaders with attacks on the collective bargaining rights of Civil Service unions and sharp reductions in taxes and spending. Minnesota raised taxes by $2.1 billion, the largest increase in recent state history. Democrats introduced the fourth highest income tax bracket in the country and targeted the top 1 percent of earners to pay 62 percent of the new taxes, according to the Department of Revenue. Which side of the experiment — the new right or modern progressivism — has been most effective in increasing jobs and improving business opportunities, not to mention living conditions?

Obviously, firm answers will require more time and more data, but the first round of evidence gives the edge to Minnesota’s model of increased services, higher costs (mostly for the affluent) and reduced payments to entrenched interests like the insurers who cover the Medicaid population.

Three years into Mr. Walker’s term, Wisconsin lags behind Minnesota in job creation and economic growth. As a candidate, Mr. Walker promised to produce 250,000 private-sector jobs in his first term, but a year before the next election that number is less than 90,000. Wisconsin ranks 34th for job growth. Mr. Walker’s defenders blame the higher spending and taxes of his Democratic predecessor for these disappointments, but according to Forbes’s annual list of best states for business, Wisconsin continues to rank in the bottom half.

Along with California, Minnesota is the fifth fastest growing state economy, with private-sector job growth exceeding pre-recession levels. Forbes rates Minnesota as the eighth best state for business. Republicans deserve some of the credit, particularly for their commitment to education reform. They also argue that Minnesota’s new growth stems from the low taxes and reduced spending under Mr. Dayton’s Republican predecessor, Tim Pawlenty. But Minnesota’s job growth was subpar during Mr. Pawlenty’s eight-year tenure and recovered only under Mr. Dayton.

Higher taxes and economic growth in Minnesota have attracted a surprisingly broad coalition. Businesses complain about taxes, but many cheered Mr. Dayton’s investments in the Mayo Clinic, the new Vikings stadium, the Mall of America and 3M headquarters.

The lion’s share of Minnesota’s new tax revenue was sunk into human capital. While the state’s Constitution required that half of the new revenue balance the budget in 2013, Mr. Dayton invested 71 percent of the remaining funds in K-12 schools and higher education as well as a pair of firsts: all-day kindergarten and wider access to early childhood education. Minnesota was one of the few states that raised education spending under the cloud of the Great Recession. 

By contrast, Mr. Walker’s strategy limited Wisconsin’s ability to invest in infrastructure that would have catalyzed private-sector expansion, and he cut state funding of K-12 schools by more than 15 percent. Per student, this was the seventh sharpest decline in the country.

Health care presents another difference.  When Mr. Walker refused to establish a state health insurance exchange or to expand Medicaid, even though the federal government covered all costs for three years and most costs after that, ideology trumped pragmatism. The uninsured and the ill bear the burden. Many of the 10 percent of uninsured Wisconsinites were denied new Medicaid benefits and were shunted off to the federal exchange’s stumbling website.

Health care presents another difference.  When Mr. Walker refused to establish a state health insurance exchange or to expand Medicaid, even though the federal government covered all costs for three years and most costs after that, ideology trumped pragmatism. The uninsured and the ill bear the burden. Many of the 10 percent of uninsured Wisconsinites were denied new Medicaid benefits and were shunted off to the federal exchange’s stumbling website.

Mr. Dayton is on course to improve Minnesota’s already low uninsured rate. He expanded Medicaid to cover an additional 35,000 people and accepted Washington’s offer to pick up the cost — as half the states, including a growing number with Republican governors, have. Mr. Dayton also created a state insurance exchange, which enrolled more than 90 percent of its first month’s target. Meanwhile, Minnesota’s tradition of innovative medical care and nonprofit insurers produced premiums in its insurance exchange that are, on average, the lowest in the country, well below premiums in Wisconsin. 

Mr. Dayton’s embrace of progressive fiscal policy is matched by a fierce crackdown on lenient payments to insiders. Cuts in payments to managed care organizations serving Medicaid saved $175 million and produced lower rates in 2013 than in 2010, despite higher costs over all.

Of course, liberal aspirations contend with stubborn realities. Minnesota is a health reform pioneer, but it is dogged by entrenched problems in rural areas, where medical costs and premiums remain relatively high and the capacity of medical care providers may be overstretched by new demand.  As for fiscal policy, Mr. Dayton would have applied sales taxes more broadly, while lowering their rates, but faced intense protests from a broad section of businesses and Democratic legislators who blocked him.

Even after tempering their initial plans, Democrats face a backlash. According to a recent Minnesota Chamber of Commerce survey, a quarter of Minnesota companies — a 10-year high — describe the state’s business climate as worse than elsewhere. Mr. Dayton and his colleagues got the message and are likely to roll back new sales taxes on farm equipment and warehousing facilities that had threatened to leave.

Evidence and common sense should matter more in our overheated political debates. The lesson from the upper Midwest is that rigid anti-tax dogma fails to deliver a convincing optimistic vision that widens economic opportunity and security. The excesses of liberalism may lurk, but Minnesota is building a modern progressivism that plows a hopeful path.

Lest you think TB is a Dayton lover, the legislature passed an estate tax on those of more than $1.5 million…couldn’t they have at least gone to the federal level? As a result there is now an outflow of seniors…even more than before to Florida with its better tax structure and no estate tax. TB has no idea what they were thinking but why would the wealthy remain residents here when they already have a high tax structure?

So the jury is out but it is certain that Minnesota is doing better under Dayton than Wisconsin under its dictator-like Scott Walker.

You decide…

Wishing all of you a happy Thanksgiving but while you are at your table with your loved ones, take the time to think of those less fortunate. We used to care…but greed has won out. Can we ever become humans again? One can hope…and pray!

TB

 

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