12/5/13…you can’t teach brilliance…or can you?

TB’s Quote of the Day: “The reasons for the current lack of support among millennials for the Affordable Care Act are many,” the survey’s (Harvard University’s Institute of Politics) findings said. “Young Americans hold the president, Congress and the federal government in less esteem almost by the day, and the level of engagement they are having in politics is also on the decline.” – Note this includes both parties, Congress and Obama. Bet you could toss in the Supreme Court too!

 

Today’s Joke of the Day from the Friar’s Club Encyclopedia of Jokes “Ask your child what he wants for dinner only if he’s buying.” – Fran Lebowitz…trust TB on this. Took friends to dinner and 11 year old ordered LOBSTER…never had it before…parents just laughed and said she was going to cost some man a a lot of money…she did! ME!!!

 

Bloomberg Quote of the Day: “We don’t see things as they are. We see them as we are.” – Anais Nin

 

Bloomberg Top Stories:

 

*Economy in U.S. Expands at 3.6% Rate as Inventories Grow Most Since 1998 HELLO!

*First-Time Jobless Claims in U.S. Unexpectedly Decrease to a Two-Month Low

*ECB Cuts Inflation Forecasts for 2013, 2014 – now reread top headline

*Dollar Strengthens Against Euro After GDP Report; Pound Weakens

*Job Cuts Loom at European Investment Banks as Stagnant Economy Crimps Fees

*Lockhart Setting of Timetable for Tapering of Fed’s Bond Purchases – or is he? And:

*Draghi Says ECB Ready to Keep Rates Low for Extended Period Amid Recovery -!!!

*Commodities Workers Cut to 2009 Levels as Banks Cope With Declining Prices

*GM to Pull Chevrolet From Europe After Decade to Strengthen Opel, Vauxhall

*Lampert’s Hedge-Fund Clients Pull Money, Unimpressed With Sears 54% Rally

*Commodities Workers Cut to 2009 Levels as Banks Cope With Declining Prices

*Spanish Credit Shrinks to Shadow of ’05 After Six-Year Drop in Home Prices

*The Rise and Fall of Blackberry as Told by Those Who Rode It Up…and Down

*Angry Self-Insured Voters Packing Democratic Districts Dim House Takeover

*Warren Calls on Big Banks to Disclose Policy Research Group Contributions – !!!

*Cameron Advises British Children to Learn Mandarin, Not French or German – hmmm didn’t we go through this with Japan…and what would that have gotten you? Arigato!

*Democrats in U.S. Congress Urge Fast-Food Chains to Raise Worker’s Wages  

Wednesday’s Market Summary:

What can you say about a day where the only winner is an index that is still off 2.6% over the past month and the worst performer of the year, Dow Utilities was the only gainer? For a second day, no less! +0.2% vs +0.9%!?! The big loser, Dow Transports at -0.4% is the winner year to date, up 34.9%!!! The rest were flat to down 0.2%. Sign of a market top??? TB believes we will not see another 16k print on the Dow this year. This is the first time since 11/15 that the Dow has not touched 16k! Also the number of up days since 11/15 stopped at 10 with now SIX losing sessions, 11/19-20-29, and 12/2-3-4!

Can’t wait for Friday the 13th – can you? Hey, this is no time to be superstitious, right? Then the following Friday is options expiry…again…final for the year…things that go bump in the night?

NYSE Volume rose to an above average 3.6B shares vs 3.44B vs 3.08B and the 12-month low of 1.59B shares last Friday! Meanwhile, Real NYSE Volume, also coming off a 12-month low of just 159M shares Friday slipped to a still strong 756M shares vs 770M vs 657M.

The only index to close in the green was the forlorn Dow Utilities which gained 0.6%, while Dow Transports were the goat -1% vs +0.3%. The Nasdaq 100 lost just 0.1% but had it not been for Apple it would have lost 1.1%! – this applies to the Composite and the S&P 500 too, so don’t think of this as a minor selloff…it wasn’t. It was a shot across the bow!

Advance/Declines were negative while Breadth was neutral. New 52 week highs were nearly stable at 153 vs 151 vs 331 vs 560, while new lows slipped to 126 vs 132 vs 108 vs 35 vs 64 vs 111. VIX not only closed higher traded as high as 15.71 a day after closing a gap down from 10/16-17 before settling in at 14.70 +.15. Remember TB’s warning about ‘13’! now 15…er 16!!!

Bonds tanked again, especially the long TIP which lost 1-1/2 and are very close to the highs of August and November: 3.92-3.93%! Gold surprised with a positive key reversal after printing $1210.80, lowest since $1187.90 on 6/28, the lowest since July 2010! Crude closed very strong for a third day at $97.20 +$1.16, up $5 in three days following a new low of $91.77 – lowest since June 3rd! The session high was $97.58, highest since 10/30! The record high of $114.83, courtesy of JPM/MS/GS’s manipulation (not necessarily in that order was on 5/2/11), while the low since on 10/4/11 was $74.95: $93.60 is the midpoint!!!

The Nasdaq 100 lost another 3.7 points vs -2 vs -7 (would have been -16 if APPL hadn’t saved the day) vs +17 vs +25 by -1.5:1 vs -2:1 vs -2:1 vs 1:1 vs +7:3. Just four members gained more than a point, while just two lost more than a point:  MSFT +4.7 vs +2.4 vs +3.9 vs -2.2; FB +3.1; YHOO +1.4; YHOO +1.4; GOOG +1.2; APPL -1.1 vs +12.3!?! vs -3.9 vs +8.2!!! vs +9.9!!! vs +7.8!!! vs +3.2; EBAY -1.

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

*NYSE Volume rose slightly having increased for three straight days – all losers – to a typical 3.6B shares vs 3.44B vs 3.08B vs 1.59B (12-month low) vs 2.6B vs 3.27B vs 2.98B. Note the higher volume on three straight down days vs low volume on the three prior ‘winners’. The record high (?) is 4.82B shares on Q3 end of quarter while 11/29’s 1.59B is weakest of 2013, replacing 1.96B as the low). REAL NYSE Volume slipped to a still above average 756M shares vs 770M vs 667M vs 474M (new 12-month low) vs 482M (lowest since 7/3, a half day!), vs 828M vs 626M vs 607M (2.06B shares on the Sept. expiry was 3rd highest ever: 6/30/06 3.38B; 7/12/02 2.29B while last Friday’s 474M is the new 12-month low). Since 11/11 the high has been 828M shares on 11/26 followed by 796M shares on 11/15, and just four days with a ‘7’ or higher handle! The 12-month average is 721M shares. The average since 6/28’s 1.75B share day is just 695M 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, three mixed.

*New 52 week highs have ranged from 33-864. They were stable at 153 vs 151 vs 332 vs 560 vs 602 vs 456. Recent high is a super-strong 890!!! New lows slipped to 126 vs 132 vs 108 vs 35 vs 64 vs 111 vs 111 vs 88.

  1. Advance/Declines were negative for a 3rd day and remain very weak: -1.6x vs -1.6x vs -2.5x vs +1.2x vs +1.7 vs +1.3x (recent range -17.5x to +6x) on NYSE and -1.4x vs -1.6x vs -2.5x vs +1.6x vs  +2.4x vs +1.8x (recent -4x!!! to +3.8x). Breadth was FLAT: -1.1x vs -2x vs -2x vs +1.1x vs +1.7x vs 1:1 (recent -18.6x!!! to +7.2x!!!) on NYSE and +1.1x vs -1.6x vs -1.4x vs +1.5x vs +2.6x vs +1.4x (recent -12.8x to +6.5x).  
  2. NYSE Financials were -0.1% vs -0.9% vs -0.4% vs -0.1% vs +0.4%. BofA most active and UP 0.6%??? vs -1.2%!!! vs -0.6% vs -0.1% vs -0.3% vs +0.4% vs +1.1%, closing at $15.63 +.10, 11/25’s new 12-month high was $15.98, highest since 6/1/10.. Brokers flat! vs -1%! vs -0.1% vs flat vs0.1%; KBW Banks +0.4%? vs -1.1%! vs -0.2% vs -0.1% vs +0.3%; Nasdaq Banks -0.1% vs -0.9% vs -1.2%!!! vs flat vs +0.7%.
  3. Volatility (S&P VIX) rose for a 4th straight session to 14.70 +.15, and worse with a session high of 15.71!!! – even the low was 14.22!! This one day after closing the gap down from 10/16-17!!! It is now well above the 40/50/200 day m/a’s: 13.75/14.33/14.38!!! 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 It peaked at 22.79 on 12/28/12…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks mixed: UK +0.1% vs -0.5% vs -0.7% vs +0.3% vs -0.4%; France -0.1% vs -0.9% vs -1.8%!!! vs +0.1% vs -0.3%; Germany +01% vs -1% vs -1.3%!!! vs +0.1% vs flat; Japan +1.5%! vs -2.2%! vs +0.6% vs flat vs -0.4%; Hang Seng -0.1% vs -0.8% vs -0.5% vs +0.7% vs +0.4%; Korea -0.1% vs -1.1% vs -1.1% vs -0.7% vs flat; India +1.2%!!! vs -0.7% vs -0.2% vs +0.5% vs +1.4%! U.S. stock futures lower: DOW -25; SPX -4.20; NDQ -7.50.

Bonds were pounded once again and for the fourth time since last August when the ‘tapering talk’ began pushed 3.9% on the 30 yr while the 10 yr closed above 2.8% for the first time since hitting 3$on 9/5! The long end is modestly higher overnight: 10 yr Treasury 2.84% unched (recent range 1.63% to 2.99%), and the 30 yr 3.89% +1/8 (recent range 2.67% to 3.92%). The long TIP is 1.61% +5/32. The (record?) low of 0.36% was set on 4/5. NOTE recent high yield: 1.63%! Libor update: 0.242% 3 mos, 0.346% 6 mos. (both just above their new record lows!). Foreign bond yields mixed: Germany 1.81% -1; UK 2.89% -1; France 2.41% +1; Italy 4.14% -1; Spain 4.16% -2; Portugal 5.90% +6; Greece 8.66% +5. Recently: 7.71% – 12.57%. Japan 0.62%.

Gold buyers awoke yesterday after driving the yellow metal down to $1210.80, lowest since 6/28, then created a positive key reversal to $1251.50, before closing at $1247.20 +$26.80!!! Recent high is $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 ($1289!) and the 50 day ($1295!), both still dropping. Major resistance at $1375, the 9/19 high. The 200 day is a $1384. Overnight it is weaker in an inside session at $1233.60-$13.60. Too bad. Note the last time we had a positive key reversal it was a false breakout – too?

Crude had a 3rd positive day four days following a new low of $91.77, lowest since 6/3!!! The record high of $114.83, courtesy of JPM/MS/GS’s manipulation (not necessarily in that order) was on 5/2/11, the low since on 10/4/11 was $74.95: $93.60 is the midpoint!!! It closed at $97.20 +$1.16, up $5 in three days, with a session high of $97.58, highest since 10/30! First time it has shown any 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 now between the 40/50 day m/a’s ($96.47!/97.79!), both still dropping and major resistance/support! The 200 day ($98.47) is back above 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 about even at $97.40 +.20 with a session high of $97.72 – highest since 10/30.

Some random thoughts:

The dumbing down of America. Shame on us, coming in at best, 24th in the world in science and math, with the five top honors going to Asian countries…Viet Nam in 5th place!!! Damned liberal teachers, right? WRONG! What we need to concern ourselves with is industrialized nations and here is what the guy who designed the test said:

*we have a more diverse population than any other country which presents many problems. As far as poverty goes, the ranges show that our demographics are similar to the Asian countries.

*we should not be looking at the world but to similar countries bearing in mind the diversity issue, and even more so comparing major cities to major European cities.

Of course the right…the extreme right…will seize on this to gripe about how we are throwing money away on education and they are right that we aren’t getting much bang for the buck but the problem is one of their own creation: too little money for higher education subsidies. A few years ago the then-president of Stanford said that the freshman year is devoted to teaching what students should have learned in high school!

This brings us to grade inflation caused by theoretical courses which provide up to a 5.0 and thus many applicants have a 4+ grade point average, yet these courses aren’t really preparing as the man from Stanford said but promoting creative thinking without teaching the fundamentals.

Can you recall what the most valuable class you ever took was? TB can, but there were two: the first was an English lit class taught by a homely but wonderful woman who got TB interested in reading…and writing (this was true for my son too who backed into it). The second and much broader one was two semesters of History of Western Civilizations. TB bombed it in college but the insights he learned have been of more value than any other course. Yet today, Western Civ isn’t even a requirement at many universities…remember the rush to Black Studies? When TB’s son went to college he was told to take Western Civ…instead he was offered and took this: History of Rock and Roll…this at University of Oregon! Wonder how much that has helped him professionally? That is what is wrong with America and as the Black Studies comment illustrates, we are so diverse that to teach to blacks, Asians, etc. a course that could be renamed History of White Supremacy, could almost be termed racial. But the point of it is that we live in a Judeo-Christian Anglo-Saxon country and to succeed you had better understand how it works…you don’t have to agree with it, just understand it.

Lastly, on scores, how many of those kids in the highest scoring countries can express their thoughts well? For more than a dozen years TB attended a global investment conference in London. At first, he thought the ‘schooled’ contemporaries were so much smarter…they talked smarter. But when the Q and A came of all the brilliant speakers, including Nobel laureates, TB never had to worry about his questions being answered. Why? Because hardly anyone else asked any…consistently. A Brit friend, educated at Michigan gave TB the answer: they are taught to not question authority…they are in college to learn, not ask questions…got it? Now do you see why Germany lost WWII to a bunch of Americans whose main strength was that when the leader was killed some soldier stepped up and could lead. Contrast that to German military authority.

Now if we could only blend our distrust of our leaders with some training in logic and insight, we might not be in the mess we are currently muddling through. You decide.

But what does it matter…in a country where the citizenry has lost the ability to think for themselves. We used to watch the news and make up our own minds, now the news has no conscience…instead the right listens to the blather of FOX which is all commentary that they agree with; the left to MSNBC which is also opinionated, and our youth, our precious youth to Comedy Central for what is probably the best we have to offer. So why worry about how we rank against other nations? To save a buck, our big companies will outsource the jobs anyway.

Is this a great country or what?  You decide.

(tomorrow: more on JPMorgan and the corruption in our banking system…and impact on our markets!)

Have a great day!

TB

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