1/30/14…Blinder has insight…you should get it!

Words of Wisdom: “Credit is a system whereby a person who can’t pay gets another person who can’t pay to guarantee that he can pay.” – Charles Dickens…so true!

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Hamlet is the tragedy of tackling a family problem too soon after college.” – Tom Mason

Bloomberg Quote of the Day: “Fall seven times, get up eight.” – proverb; fall again?

Bloomberg Top Stories:

*Economy in U.S. Grew at a 3.2% Annual Pace as Consumer Spending Picked Up – it was however in line with estimates…also weekly jobless claims ROSE by 19k

*First-Time Jobless Claims in U.S. Increased More Than Forecast Last Week

*S&P 500 Futures Rise as Emerging Stocks, Metals Decline on Chinese Output

*Hedge Funds Hire in London to Ready for European Asset-Backed Debt Selloff

*Goldman Bid for Dong Stake Splits Danish Government as Plan Wins Approval

*Facebook Climbs After Mobile-Ad Sales Overtake Desktops for the First Time – how many of you EVER pay attention to those ads? Right, NONE! Worse than TV!

*Bank of America Should Pay $2.1 Billion Over Countrywide, Prosecutors Say – stupid acquisition by Ken Lewis who also paid way too much for Merrill!

*U.K. Home Loans Rebound to Best Since ’07 Without Northern Rock – caution, lags!

*Wall Street Draws Cold Callers Seeking ‘Wolf’ Lifestyle 20 Years Too Late – and this folks is the cruelty of this film…some of ‘best and brightest’ now want to go to WS!

*Obama’s Top Goals Clash as Allies Say Trade Push Fuels Income Inequality – it do!

*Obama’s Starter Retirement Savings Plan Lacks Many 401(k) Features – it do too!

*Keystone Foes Mount New Challenge Linking Pipeline to Enbridge’s Clipper – TB still thinks it’s a bad idea. Should have stopped Kinder Morgan from cutting off flow of natural gas from Canada to Minn/Wisc, etc. This on January 1st reversing flow to pump distillates up north! Wisconsin now 25th state to declare propane emergency! Fools!

Wednesday’s Market Summary:

Worse and worser…stocks tanked and bonds rallied…in spite of the Fed cutting the QE by another $10 billion per month. Makes one wonder if anyone has a clue that is investing OPM, no? Dow and the once bulletproof Dow Transports both lost 1.2% while the Russell 2000 small cap, a good indicator of growth took the cake falling 1.3% for dubious honors. Both Nasdaqs lost 1.1%, the S&P 500 -1%, while once again those lowly Dow Utilities lost just 0.2%! NYSE Financials lost 1.4% and all sectors of it were creamed! Time to look again at ytd returns (skip this part if you have a weak stomach:

Dow -5.1%; Transports -2.8%; S&P 500 -4%; Composite -3%; NDQ 100 -3.5%; Russell 2000 -3.8%. Dow Utilities you ask? UP 0.8%! NYSE Financials -4.2%; KBW Banks -2.3%;  Nasdaq Banks -3.9%. Remember what TB said about financials? Why stop here? Shouldn’t we try for a 10% pullback…seems to be in order since we have been in a fog since last August…a fog of denial!

Advance/Declines and Breadth were horrible again, negating Tuesday’s ‘one day wonder’. Let’s look at the indices A/D’s: Dow -6.5:1 (of the 190 point loss. BofA -47; V: (which sparked the rally last week) -25; GS -15 – huge point losses!) Transports -9:1!!! Down 87: Alaska Air, ALK -15; FDX -13.5. S&P -4.9:1; Nasdaq -3.5:1 and -4:1 respectively. Russell 2000 -48:1!!! Every index is well below the 40/50 day…support at the 200 day?…that is way below!!!

Might as well address AAPL and MSFT’s continued divergence and impact on NDQ 100 again (not to mention S&P:…I told you not to mention S&P!): MSFT +2.9 and only gainer of more than half a point! AAPL -5.1 and biggest loser! Five members lost more than 2.5 points: AMZN -4.2; GOOG -4; YHOO -3; FB -2.7. Another SIX lost more than a point!

Volume rose sharply again…natch…to 3.95B shares!!! from an average 3.43B shares. REAL NYSE Volume not so much BUT from 622M shares – lowest since 1/3/14 – and back above average…from 100M below!

New 52 week highs remain weak but stable at 76, while new lows nearly doubled to 135! vs 71 vs 148. Volatility (VIX) rose after declining for two days and is VERY unstable: 17.34 +1.54 vs 15.80 vs 17.42 vs 18.14 from 13.86.

Stay put until Groundhog Day…at least!

Dow 30 -1.2%! vs +0.6% vs -0.3% vs -2%!!! vs -1.1!%Dow Transports -1.2% vs +1.1% vs -0.8% vs -4.1%!!! vs +0.3%; Russell 2000 -1.3% vs +1.2% vs -1.4%! vs -2.4%!!! vs -0.9%; Dow Utilities -0.2% vs +0.5% vs +0.2% vs -1% vs0.2%; S&P 500 -1%! vs +0.6% vs -0.5% vs -2.1% vs -0.9%; Nasdaq Composite -1.1% vs +0.4% vs -1.1% vs -2.2%! vs -0.6%; NDQ 100 -1.1% vs -0.1% vs -0.9%! vs -2%!!! vs -0.5%.

*NYSE Volume rose to 3.95B shares from an average 3.43B vs 3.99B vs 4.64B. The 2014 low is 2.76B. The record high (?) is the 4.97B shares of 12/20/13 and Q3 end of quarter while 11/29’s 1.59B is weakest of 2013). REAL NYSE Volume while not rising as much rose to an above average 736M shares vs 622M (lowest since 1/3/14) vs 780M vs 919M vs 771M. It has now been above 700M just nine times since 12/20! The 12-month low is 272M on 12/24. The average since 12/20 is just 651M shares. The 12 month is still 721M shares. Last year there were just TEN 1B+ share sessions! There have been 41 800M+ shares since 12/31/12: 18 up, 21 down, three mixed.

*New 52 week highs have ranged from 33-864. They were stable at 76 vs 75 vs 74 vs 81 vs 211 vs 440 vs 498. 74 is the recent low eclipsing 201! Recent high is a super-strong 890!!! New lows nearly doubled to 135 vs 71 vs 148 vs 110 vs 62 vs 46 vs 37. Recent high is 353; low 20!!!  

Advance/Declineswere NEGATIVE: -3.3x! vs +3x vs -2.8x vs -6.3x! vs -2x (recent range -17.5x to +6x) on NYSE and -3.2x! vs +2x vs -3.4x vs -4.6x vs -2.2x (recent low -4.6x!!! to +3.8x). Breadth was similar: -3.5x! vs +5.3x!!! vs -2.5x vs -13x!!! vs -3.2x(recent -18.6x!!! to +7.2x!!!) on NYSE and -2.6x vs +2.2x vs -3.9x vs -4.6x!!! vs -2.3x (recent -12.8xto +6.5x). 

NYSE Financials -1.2% vs +1.2% vs -0.9% vs -2.5%! vs -1.4%!!! BofA most active per usual: -0.2%? vs +2.6% vs -0.9% vs -2.4% vs -1.7%. Closed $16.70 -.03. The high print was $17.42 on 1/15/14 – highest since 5/10/10!!!C also made most actives -2.9%!Brokers -1.4% vs .+1.4% vs -2.1% vs -2.4% vs -1.4%;KBW Banks -1.3% vs +0.9% vs -0.7% vs -2.6% vs -1.6%.Nasdaq Banks -1.5%! vs +0.1% vs -1.1%! vs -1.5%! vs -1.2%!

Volatility (S&P VIX) rose triggering a warning again to 17.34 +1.54 AND with a range of 16.71-18.04! This from 15.80 vs 17.42 and 18.14 on Friday’s surge. Just over a week ago it was at 11.81! 8/15’s close of 12.28 was near its lowest close and low since 8/5/13! From 13.31 with a high of 13.65 to 12.29 -.99 with a low of 11.96! It is now well above the 40/50 day (13.87/13.65) and the 200 day. 14.43. 12/26’s 11.69 was lowest since 3/15/13!!! Recent high on 1/2 was 16.67! The recent range is 11.83-21.01!!! It peaked at 22.79 on 12/28/12…the range since 12/31/12 is 11.05 (3/14) to 21.92 (6/24)!

Bonds were STRONG (10’s gained 5/8 and long end and TIPS a full point!) and seem to have lost their fear of the Fed…while stocks got the jitters. Yields now lowest since mid-Oct. Weaker overnight: 30 yr 3.64% -3/8 – the high was 3.97% on 12/31; the 10 yr 2.70% -3/16, recent high 3.03%! Long TIP 1.34% -5/16. The (record?) low of 0.36% was set on 4/5. The recent high yield: 1.64%! Libor update: 0.238% 3 mos,0.337% 6 mos. BOTH just above NEW record lows 0.234%!!! and 0.332% respectively!). NOTE that the Fed Funds rate has averaged 0.08% since 5/22/13 and is currently 0.06%. Foreign bond yields mostly lower: Germany 1.71%!!! -3; UK 2.74%! -2 – recent high 3.03%!; France 2.31%! -2; Italy 3.85% –; Spain 3.72% +2; Portugal 5.09% vs 5.02!!! +2; Greece 8.49% +8! Recent range 7.51%-12.57%. Japan: 0.62% -1. Yen stable after rising to 101.77!!! on Monday. It is now 102.62. Recent range 101.77-105.44 last week – weakest since 10/1/08!!!

Gold rose yesterday closing at $1262.20 +$11.70. Monday’s intraday high was $1280.10, highest since 11/18!!! Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!!  Recent high is $1375.40 back on 9/19. Psych levels: $1200 sup; $1300 res, with major sup now at the 40 day ($1234) and the 50 day ($1239). The 200 day is $1322 and major res. Overnight it is weaker at $1256.50 -$10.70.

Crude was little changed, closing at $97.36 -.05…Thursday’s high was $97.84, highest since 1/2/14. 1/14’s low was worst since 5/2/13: $91.24! Note 12/27 was first time above $100 since 10/21! The record high of $114.83 was on 5/2/11, the low since on 10/4/11 is $74.95: $93.60 is the midpoint!!! Recent rally high and close are $110.70 and $110.53 respectively. It is back above the 40/50 day m/a’s which are major sup/res: 50 day m/a ($95.77), 40 day (96.30), crossed!!! and the 200 day ($99.06!!!) –  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 $97.86 +.50, with a high of $97.97!, highest since 1/2/14 .

Overnight markets:

Global equity markets weaker: UK -0.4% vs +0.2% vs +0.2% vs -1.3%! vs-0.9%; France -0.4% vs -0.1% vs +0.4% vs +0.2% vs -1.5%; Germany -0.4% vs +0.2% vs +0.1% vs – vs -1.2%; Japan -2.5% vs +2.7% vs -5.1%!!! vs -2.5% vs -1.9%; Hang Seng -0.5% vs +0.8% vs -0.1% vs -2.1%!!! vs -1.3% vs -1.5%; Korea closed vs +1.3%! vs +0.3% vs -1.6%! vs -0.4% vs -1.2%!India -0.7% vs -0.2% vs -0.1% vs -2%!!! vs -1.1%! U.S. stock futures higher but fading quickly following rise in weekly jobless claims: DOW +45 vs +61;SPX +3.20 vs +8; NDQ +13 vs +17

 

Some random thoughts:

Yesterday, TB called your attention to an incredible book written by former Fed Governor, Alan Blinder, After the Music Stopped, the most compelling account of the financial crisis from someone inside the circle and with the contacts to fill in the blanks. It isn’t trying to assess blame as much as show what went wrong…very wrong.

There was plenty of guilt to go around…even to those who did their best…and he understands the frustration…haven’t finished it yet but hope he focuses on the fact that without the greed there would have been no crisis…if, that is, the regulators had done their job and the right ones were regulating companies like AIG. Well done, Alan!

What is great about this book is its honesty. Blinder was former Chief Economic Advisor in Clinton’s first term and provides a lot of insight into the transition to Obama in January 2009…plus the fact that the GOP never gave him a chance. Don’t worry, he doesn’t soft-sell Obama, in fact he blames him for ignoring James Carville’s statement: “it’s the economy, stupid!” This rather than it’s the stupid economy! He pulls no punches at the insanity and damaged caused by a GOP obsessed with debt (obviously none of them studied history back to the causes of the Great Depression…thankfully, not only did Bernanke, but he wrote the book on it!

He also gives a great explanation of the QE’s and REAL – not the GOP version – of the effects. He also showed TB how wrong he was on banks earning 0.25% on their excess reserves when the fed funds rate is less than 0.10%. Too bad Congress can’t read…or won’t! They might learn something and get out of the way of the Fed…doubtful, but…

It is a must-read for anyone wanting facts as opposed to the half-truths expressed on FOX News (sic), and from GOP ‘leadership’ that should have known better. In a world where the playbook was being written as they acted…Paulson, Bernanke, and Geithner (who despite being labeled a Goldman guy, was never at that, or any other Wall Street firm).

The book may prove the playbook for the next crisis which due to the bickering of the two parties who remain under the influence (bribes?) of the financial sector, is a given.

How could Congress condemn both Blankfein and now Dimon and yet do nothing to penalize them? The answer is pretty obvious to TB…you decide!

Have a great day!

TB

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