6/16/14…a day for truth…through quotes

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Confession is good for the soul. Only in the sense that a tweed coat is good for dandruff. – Peter De Vries

Bloomberg Quote of the Day: “You only live once – but if you work it right, once is enough.’
– Joe E. Brown…didn’t Mae Wast say something similar?

This week’s economic calendar is full of important indicators. The highlight of the week will be the May CPI (Tuesday). We will also get June Empire State Manufacturing and May Industrial Production (Monday), May Housing Starts (Tuesday), Q1 Current Account (Wednesday), June Philadelphia Fed and May Leading Indicators (Thursday). In addition, the Federal Reserve FOMC will be meeting on June 17th – June 18th with an announcement on the 18th. Courtesy of Economic Advisory Service
Bloomberg Top Stories:
*Medtronic Agrees to Buy Covidian for $42.9 Billion to gain Tax Advantage – got that??? FOR TAX PURPOSES the company will be based in Ireland! How long do we let them screw us?
*Stocks in Europe Decline as Gold Rallies on Iraq Violence; Yen Strengthens
*Bond Markets Hidden Liquidity Threat Revealed in Derivatives Trading Boom
*Level 3 Agrees to By TW Telecom in Cash, Stock Deal Valued at $5.7 Billion
*Siemens Said to Be Preparing Alstom Energy Offer With Mitsubishi, Hitachi
*Sandisk Agrees to Buy Fusion-IO in Transaction Valued at About $1.1 Billion
*Credit Suisse Fined for Savings Product With ZERO Chance of Maximum Return – !!!
*New World’s Plan to Go Private Is Rejected by New World China Shareholders
*Porsche’s Le Mans Return Features Racing Version of $845,000 Spyder Hybrid
*Better Get Used to Oil-Price Craziness as Iraq Chaos Deepens – yep, and WE caused it!
*Oil at $125 Seen as Iraq Chaos Brings Back Price Volatility – the Kurds and Ways (sic)
*’BItcoin Jesus’ Wants You to Join Him Living in Tax-Free Earthly Paradise – St. Kitts!
*Iraq Forces Fight Sunni Militants as Maliki Says Army Is Regaining Control – big fat HAH!
*Russia Cuts Gas Supply to Ukraine While Maintaining Flow to European Union – Putin lies!
*California Legislators Increase Spending by 5.8% to Record $156.4 Billion
*Kenya Attack by Suspected Al-Shabaab Gunmen Leaves 48 Dead in Coastal Town
*Davos of Art World Lures Wealthy Trophy Hunters to $4 Billion Base Fairs

Friday’s Market Summary:

It was a strange day and while it was an ‘up’ session, only Dow Transports +0.8% and Dow Utilities +0.6% showed us anything…the rest were up 0.3% – that is across the board! NYSE Financials were flat. Most active BofA was up just 0.1%, that followed -1.1% and -2.1%, while Citi was slammed – down 1.4%! Volume went from a still below average 3.03B shares to 2.58B shares proving once again, TB’s corollary: up on low volume down on higher volume. But in the doldrums who cares? Certainly not TB when you have rigged high frequency trading, dark pools, and you name the market, it has been rigged. Rigged by people whose companies pay fines which, of course, ultimately come from shareholders pockets. Go to jail? You have to be kidding!

Total NYSE Volume reversed again plunging to 2.58B shares vs 3.03B vs 2.67B vs 2.69B vs 2.8B vs 2.84B vs 3.1B. Real trades on the floor of the NYSE also took a header to an extremely weak 575M shares vs 621M vs 532M vs 557M vs 608M. The 12-month average held at a very weak 715M shares.
A/D’s were slightly positive – so what? NYSE +1.3x vs -1.4% vs -1.6x vs -1.4x vs +1.6x; Nasdaq +1.04x vs -1.8x vs -1.5x vs -1.2x vs +2.2x. Breadth was similar: NYSE +2.2x vs -2.2x vs -1.6x vs -1.01x vs +1.7x; Nasdaq +1.8x vs -2x vs +1.05x vs +1.3x vs +1.5x. New 52 Week Highs slipped for a fifth session to 171 vs 186 vs 193 vs 256 vs 515 vs 532 – recent low 71!!! New Lows were slightly higher but remain very weak at 36 vs 30 vs 25 vs 24 vs 25 vs 36 vs 66 vs 96 – recent range is 24-214.
S&P VIX remained above ‘12’ for a third straight session 12.18 -.38 with a range of 11.89-12.69….13 is the key here and the low end is moving higher! There have now been THREE straight closes above ‘12’ in 14 sessions. You do know that the long-term average is ‘20’, right?

Overnight markets:

Bonds closed about even. 10 yr closed at 2.60% -1/16. 30 yr closed 3.41% -1/16. The long TIP, which hit a low of 0.978% on 5/29, closed 1.13% -1/16. Overnight they are rallying! 10’s 2.59% +1/8; 30’s 3.39% +3/8; and long TIP 1.11% +9/16. Cycle highs: 30 yr high was 3.97% on 12/31; the 10 yr recent high 3.03%! Long TIP was 1.64%. The (record?) low of 0.36% was set on 4/5/13.
Libor update: 0.231% 3 mos.; 0.326% 6 mos., both remain just off their record lows, set recently: 0.227% and 0.320% respectively! NOTE the Fed Funds rate has averaged 0.08% since 5/22/13 but is finally slightly higher at 0.09% -0.10%. Foreign bond yields slighltly lower, ex-Greece, which remains strong! Germany 1.35% -1; UK 2.74% -1; France 1.71% -2; Italy 2.75% -2; Spain 2.63% -2; Portugal 3.34% -1; Greece, which took out the old lows is now 5.72% +5. The recent high on selloff was 6.75%. Highly volatile!!! Range is now 5.42% to 12.57%. Japan: 0.59% –.

Gold closed unchanged in a very narrow session with a slightly new high of $1278.10 – highest since 5/27 – but closed at $1273.70 +.10. Last Tuesday’s $1240.20 was lowest since 1/31/14!!! It hit $1304.10 on 5/22 – the last time it saw $1300! It remains way below the 40/50/200 days and the psych support level of $1300 with first res at the 40 day $1281, then the 50 day $1286, and the 200 day $1292 – note convergence and thus formidable resistance! It has fared poorly since the ‘key reversal’ on 3/17, after printing the recent high of $1392.60, highest high since 9/4/13! Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!! Overnight it is rallying at $1281.30 +$7.20….session high $1285.10 – still highest since 5/27 – a big down day.

Crude took off like a rocket for a second straight session hitting $107.69 on Iraq issue – still highest since 9/19/13 – a huge down day – before settling at $106.91 +.38. 6/5’s low of $101.60 was lowest since 5/16. 3/2’s session low was $97.37, lowest since 2/4! 1/14’s low was worst since 5/2/13: $91.24! 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 well above all three moving averages: 40 day ($102.35) then the 50 day ($102.41), and 200 day $100.17. The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is slightly higher at $107.02 +.11 in an ‘inside’ session.

Global equity markets weaker: UK -0.3% vs -1.1%!!! vs +0.2% vs -0.5% vs -0.3%; France –0.6% vs -0.8% vs +0.2% vs -0.8% vs +0.1%; Germany -0.3% vs -0.8% vs +0.1% vs -0.9% vs +0.2%; Japan -1.1%! vs +0.8% vs -0.6% vs +0.5% vs -0.9%; Hang Seng -0.1% vs +0.6% vs -0.4% vs -0.3% vs +0.9%; Korea +0.1% vs -1%!!! vs -0.2% vs +0.1% vs +1.1%! India -0.2% vs -1.4%!!! vs +0.4% vs -0.4% vs –; U.S. Stock Index Futures weaker: DOW -40 (range 48); SPX -4.30! (8); NDQ -8.75 (16).
Some random thoughts:

…”the only things that are sure are death and taxes.” That quote has been attributed to many, from Benjamin Franklin to Mark Twain. On the other hand, “the wages of sin is death” Romans 6:23 (also on billboards all over the country at various times). If the latter is true, perhaps the GOP is trying to save you from being damned to hell by not raising the minimum wage or god-forbid imposing a ‘living wage’. How long can this go on…hard to say but it is not only counter-productive but counter-intuitive!

Too big to fail once again rears its ugly head and this time from a Stanford professor, Admat Admati…so much for those liberal freaks who are trying to lead us down the road to communism
Moyers-Admat Admati – too big to fail. This woman is smart, articulate, and cannot accept the way we continue to allow the banks to create crises and then get bailed out by the government, pay token fines, nobody charged or convicted, and do it all over again.

Worse, it is members of Congress who are beholding to the bankers (not to mention the pushover, Eric Holder, along with apologists from Henry Paulson to Tim Geithner (keeping quiet are Robert Rubin and Larry Summers). Worse than apologists, these people aided and abetted them and then when a ‘still weak’ Dodd-Frank was proposed watered it down so as to be ineffective – at best!

Meanwhile, the bankers draw huge salaries and bonuses, have no sense of guilt – or if they do, hide it well. Ever hear Jamie Dimon confess his or his banks sins? Nope, just plead no contest, pay the fines and do it all over again. The closest anyone came to saying anything was wrong – and that was more like ‘everyone else is doing it so we had to’ – was Citi’s Chuck Prince who said “when the music is playing you have to get up and dance.” Guess he never heard of “face the music”. Anyway, for his efforts, was sacked and replaced as temporary chairman….drumroll please…Robert Rubin! Yes, thanks to the ‘revolving door’ he left Treasury, passed GO, and went directly to Citi collecting hundreds of millions – is this a great country or what?

Look at today’s headlines (Medtronic buying Covidian so as to establish Ireland as its headquarters for tax purposes!!!), which trace back to the last Moyers interview of Nobel laureate, Joseph Stiglitz on how we must fix our tax code because in its present form it is driving a wedge between the people (note they are the MAJORITY), and our ‘corporate owned’ Congress. Oh, and those Congressmen, what do they do when they leave office? Head for ‘K’ Street and register as lobbyists…for the financial lobby…an obvious quid pro quo.

TB is sick…disgusted and sick…of libertarians who give the name an odious smell…while watching as the country divides and in a manner only an illusionist can appreciate (you look here when you should be looking there). We are told that so and so will fight for us, they get elected (think Obama), and it is back to business as usual.

That’s enough of a rant…on Obama…while Bush, Cheney, and Rumsfeld have upset the balance of power in the Middle East in their neo-con ways…and we will pay for that for decades. Unlike Gulf War I we had NO business invading Iraq, should have left Afghanistan when we found out Bin Laden was no longer there, and it is inconceivable that there is a solution that will end the secular violence. Cheney and Rumsfeld should be in jail for their actions…but if you like them, don’t worry…noting is going to happen.

Have a great week while the world around us crumbles and our once-admired markets become the laughing stock of Wall Street…sukkahs!!! “What, me worry?” As Alfred E. Neuman would say. Pogo on the other hand said, “we have met the enemy and they are us!”

TB

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