8/21/14…have our bankers ever heard of The Four Way Test?

Quote of the Day from the Friars Club Encyclopedia of Jokes: “My grandfather’s a little forgetful. One day he took me aside and left me there.” – Ron Richards

Bloomberg Quote of the Day: “The welfare of each is bound up in the welfare of all.” – Helen Keller…a woman with incredible ‘foresight;…interestingly it was Plato who said, “he who sees with his eyes is blind.” – a lot of wisdom in both those quotes. TB

Bloomberg Top Stories:

 *European Stocks Rise With U.S. Equity Futures on Stimulus Bets; Gold Drops – plunges!

*First-Time Jobless Claims in U.S. Decreased More Than Estimated Last Week

*Millennial Bankers Get 20% Raises as BofA; Goldman Sachs Fight Defections – hear! Hear!

*Argentina’s Defiance in Debt Swap Dims Chances for Bond-Market Redemption – in your face!

*Family Dollar’s Board Rejects Bid From Dollar General, Favors Dollar Tree – still it’s Dollars!

*AstraZeneca Is Tougher Target for Pfizer as Possibility of New Bid Looms

*Bank of America Mortgage Settlement with U.S. Said Coming Soon – just out: $16.67B

*Draghi Gets His Weaker Euro When Reeling Economy Needs It Most

*Allegan Discussions to Acquire Salix in Defensive Move Said to Be Dormant

*Hook-Up Culture at Harvard, Stanford Wanes a Men Confront Assault Alarm

*Hostage Rescue by U.S. Forces Failed Earlier this Year After Ransom Demand

*Retooled Hamas Bloodies Israel in Gaza With a Little Help From Hezbollah

*Cameron Reminds Police of Terror Laws in Hunt for Briton Who Killed Foley

*Ukraine Deaths mount as Fighting With Pro-Russia Separatists Intensifies

(to recap: its an ugly world out there!!!)

Wednesday’s Market Summary:

“Curiouser and curiouser”, said Alice – and that is what this dull and duller market is telling us as “tomorrow and tomorrow and tomorrow creeps on its petty pace.” (the Bard, and the title of a Kurt Vonnegut short story). Ok no more ‘waxing’ poetic for today. This is what happens when you try to follow a market (that isn’t one) too closely, right? Ah, good! You agree!!!

Not much of an ‘up’ session if you can call +0.6% by Dow Transports, +0.4% Dow, +0.3% S&P ‘positives’ – TB can’t…especially when Dow Utilities even rose 0.2%, while the ‘stalwart’(?) Nasdaq indices were both FLAT as boards and the Russell 2000 declined by 0.4%? NYSE Financials rose by just 0.1% (NYSE Brokers flat; KBW Banks +0.2%; Nasdaq Banks -0.2% – but look BofA settles with the Feds for $17 Billion and guess what? The stock, which was unchanged at the time of the announcement ROSE 05% – this is truly a sick society…of investors anyway!

A mixed bag for A/D’s: NYSE 1:1; Nasdaq -1.7x!. Breadth slightly positive on both. New 12-Month highs dropped back by ¼ to 228 while New lows rose slightly to 63. NYSE Volume fairly steady but still below average while NYSE floor trades slipped to an even weaker 542M – contrast to the 12-month average which has been in decline since 4/30 of 542M shares…and since the end of April it is just 664M – incredibly low and long enough to not blame it on the ‘summer doldrums’ – which are acting like global warming (did you see where Siberia is developing sinkholes???).The VIX decline again to 11.78 – clearly in bull (overbought?) territory??? And with a range of just .64 – back to back tight ones! All this on the heels of an FOMC meeting which had more of the ‘non-voting members looking favorably towards ‘tightening’ – at some point but the lone voting dissenter was once again the Dallas Fed’s Plosser…he ain’t no Edward Gramlich…not by a damn sight (ah, another reference to seeing (Merriam Websters’ defines it a damn sight as ‘much’ – one of TB’s grandpa’s favorites!

Total NYSE Volume was flat for a third day at a weak 2.56B shares vs 2.64B vs 2.61B vs 2.96B vs 2.7B vs 2.59B vs 2.76B vs 2.87B. Real NYSE Volume slipped again to a very WEAK 542M shares vs 556M vs 605M vs 758M vs 517M vs 559M vs 543M vs 596M. Last week’s average was just 594M shares! There have been just four sessions above 800M since 4/28! The 12-month average is a historically weak 701M shares. Since 4/30 the average volume has been just 664M shares ranging from 517M to 927B….12 month high is 2.06B shares on 9/20/13!

A/D’s were mixed and minimal: 1:1! vs +1.8x vs +3.6x vs -1.3x vs +2.1x; Nasdaq -1.7x vs +1.2x vs +3x vs +1.2x vs +1.3x. Breadth was slightly positive: NYSE +2.1x vs +4.3x! vs -1.3x vs +1.8x vs +2.1x; Nasdaq +1.3x vs +4.8x vs +1.2x vs +1.6x vs +3x. New 52 Week Highs off by ¼ to 228 vs 294 vs 266 vs 193 vs 141 vs 140 vs 96 – recent range is 46-580!!! New Lows little changed at 62 vs 53 vs 60 vs 99 vs 72 – recent range is 24-260! S&P VIX declined for a 2nd day to 11.78 -.43 – most bullish (overbought?) since 7/24. The range dipped to 11.60-12.84 – no ‘13’s or ‘14’s for a second day, not seen since 7/25.

Bonds closed modestly weaker again but not far off the ‘old’ 12-month highs: 10 yr closed at 2.403 -1/4; 30 yr 3.22%- 1/16?; the long TIP 0.93% -5/16. Overnight they are in the red again: 10’s 2.44% -1/8; 30’s 3.23% -3/16; and long TIP 0.94% -1/4. Cycle highs yields: 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: 0.234% 3 mos.; 0.329% 6 mos., both remain near their record lows, set recently: 0.222% and 0.320% respectively! NOTE the Fed Funds rate has averaged 0.09% since 5/22/13 and is at 0.08-0.10% where it has been for weeks! Foreign bond yields mixed…PIIGS lower; all at/near 12-month low yields: Germany 1.00% +1; UK 2.43% +1; France 1.39% +1; Italy 2.57% -2; Spain 2.37% -3; Portugal 3.22%! -7; Greece 5.66% +1; The recent high on selloff was 6.75%. Recently 5.42% to 12.57%. Japan: 0.52% +1.

Gold closed slightly weaker for a 3rd straight decline, but making another new low of $1288.70 (session high was $1299.30), and with the 3rd straight sub-$1300 close since 8/6: $1295.20 -$1.50 It remains well below the 40 day AND 50 day while the 200 day is within $9. 7/17’s session high was $1346.60, highest since March 19th!!! 6/9’s $1240.20 was lowest since 1/31/14!!! First RES is the 50 day $1305, then the 40 day at $1309, leaving the 200 day as sole support at $1286. Note the recent high of $1392.60 on 3/17, highest high since 9/4/13…that too ended the session with a negative key reversal sparking the downturn! Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!! Overnight it is being slammed to $1280.60 -$14.60 but well off an overnight new low of $1274.90, lowest since 6/18!

Crude finally closed higher but of little import following Tuesday’s new recent low of $94.27, lowest since 1/21/14! It closed at $96.07 +$1.59. 7/22’s high was $105.20, still highest since 7/2. 7/15’s session low was $90.01 – lowest since 3/21. 6/20’s run to $107.73 was highest since 9/19/13 (a huge down session which put it in freefall. 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. RES at the 200 day ($99.77), then the 40 day ($100.86), then the 50 day ($101.95)…the latter two remain in freefall! The range is $85.61-$112.24 since March 1, 2012. Overnight the lead shifted to October which ‘adjusted’ the close to $93.45 creating a ‘gap down’ on this mornings open where it plunged again to $92.50, lowest since 1/15/14! (why isn’t gasoline following suit? Summer driving?)…it now has had FOURTEEN handles since 6/30! Last print is $92.84 -.61!!!

European equity markets bouncing back and have now been up 3 of last 4 sessions; Asia mixed: UK +0.2% vs -0.5% vs +0.5% vs +0.7% vs +0.8%; France +0.8% vs -0.8% vs +0.4% vs +0.5% vs +1.2% vs +1%; Germany +0.6% vs -0.07% vs +0.9% vs +1.5%! vs +0.9%; Japan +0.9% vs – vs +0.8% vs flat for 2 days; Hang Seng -0.7% vs +0.2% vs +0.7% vs – vs +0.6%; Korea -1.4%!!! vs +0.1% vs +0.9% vs -0.5% vs closed; India +0.2% vs -0.4% vs +0.1% vs +1.1% vs closed. U.S. equity futures higher after being weak early in the session: DOW +35 (range 53); SPX +3 (7); NDQ +4 (13). 10:30am EDS update: Dow is up 50 BUT Transports, yesterday’s big winner are -23! The rest are pretty much unchanged…hmmm.


Some random thoughts:

…how much longer do true shareholders have to endure paying for the sins of the bankers? JPMorgan shareholders have paid dearly more than 400 times since the crisis began, plus one more (arbitration) due to a breach of contract that cost the bank (read: shareholders), $385 Million by buying the managed accounts of American with a promise not to move them out of American Century managed accounts to JPMorgan proprietary funds unless they provided higher returns to investors. In less than six months they had violated it and the man in charge was Jes Staley, who negotiated the contract in the first place? JPM/American Century arbitration Did Staley get fired? Far from it…he was promoted and got a $5 million bonus …same as Ina Drew (she got the same bonus that year and later was the only  one to return it – voluntarily!), who took the fall for the ‘London Whale’ experience (Staley was sent over to London as part of ‘Seal Team Six’ to solve the problem…more bonuses until he left to go to another firm (Blue Mountain Capital), good luck to them…and of course to the creative Mr. Staley. Again: who paid for these lawsuits? Shareholders…loyal shareholders (just as with BofA where they earn a just-upped 5 cent a shere dividend – 1.2% annualized… big whoopee! What kind of fools do this…especially when the ‘perps’ face no clawbacks and still hold their jobs while earning more??? Where is the damned SEC? Let’s ask Henry Paulson what he thinks…after all it was he who told the banks to increase bonuses to restore ‘confidence’???

So far there have been just TWO perps that have been singled out: Countrywide’s Angelo Mozilo who paid a $49MM(?) fine without admitting guilt for selling shares while telling investors all was well…didn’t we pass a law to prevent this after Enron (has it ever been used in court?…even once??? The other was the ebullient Ken Lewis who bought the company for BofA saying they sent their examiners in and they looked at every loan…not very long apparently…they spent one week there! He was charged with misinforming shareholders of the true condition and recently fined $25MM by the SEC…TB was ecstatic…that emotion lasted for less than a half hour when it was announced it was covered by the banks D&O insurance…got it? The shareholders will pay yet again in the form of higher insurance!

That’s enough for now folks…TB’s blood pressure is rising…as he is sure Martha Stewart’s must be having been sentenced to five years for lying to investigators about ONE insider trade (an irony to this is that the stock she sold on her friend/CEO’s advice came back and was at a much higher price less than a year later – insult to injury. Why don’t more financial execs face the ‘perp walk’? Guess Holder never read Bonfire of the Vanities…sheesh!

…having a hard time with Rotary’s Four WayTest today!

Have a great day!



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