9/4/14…the road to serfdom?…or middle class poverty?

Quote of the Day from the Friars Club Encyclopedia of Jokes: “A woman’s dress should be like a barbed-wire fence; serving its purpose without obstructing the view.” – Sophia Loren…ouch!

Bloomberg Quote of the Day: “Be yourself. The world worships the original.” – Ingrid Bergman

Bloomberg Top Stories:

*ECB Unexpectedly Lowers Interest Rates as Europe Economic Outlook Darkens – 0.05%!!!

*Euro Weakens to Lowest Since July 2013 Against Dollar After ECB Cuts Rates – natch!

*Stocks in Europe Advance After ECB Reduces Rates – oh? Perilously close to DEFLATION!

*Money Funds Urge Wary Fed to Accept Closer Embrace in Settling Rate Floor

*Goldman Sachs Said to Plan First Foray Into Islamic Debt With Dollar – the sukuk – don’t laugh!

*Emerging-Market Stocks Extend Three-Year High as ECB Spurs Forint to Zloty – what goes up?

*American’s Fast-Food Appetite Peaks as Burger Chains Chase Foreign Growth

*GE Considering a Second Ceramics Plant to Meet Record Jet-Engine Backlog

*Vector Connects Harvard Money to Payday Loans at 600% by Way of St. Croix – thieves!

*College Consultant’s Algorithm Guarantees Ivy League Slot for $600,000 Fee – how special!

*NATO Questions Putin Peace Commitment as Russian Troops Advance in Ukraine – DUH!!!

*Beirut Band Satire Masks Disquiet With Islamic State Knocking at the Door – hey, it’s Beirut!

*Siblings Orphaned by Ebola Miss Saying Goodbye to Parents in West Africa – more sadness

*What Do You Get When You Join a $140,000 Wine Club? Sometimes, a headache – awww

Wednesday’s Market Summary:

Another mixed but generally down day with the gainers of Tuesday giving back and even more. Dow and S&P +/- 0,1%: Dow Transports -0.2% vs -0.9% vs +1.3%, the two Nasdaqs an Russell 2000 -0.6%, all vs +0.4%!; while Dow Utilities rose 0.5% vs -0.9%. What fun! Got a hunch? Bet a bunch! NYSE share volume flat at 2.8B shares and slightly higher for those traded on the floor , while A/D’s and Breadth were negative (a 2nd day for NYSE issues!). New 52 week highs lower but still solid, while new lows stagnated again. VIX up slightly closing above ‘12’ for a 2nd day.

Total NYSE Volume steady at 2.77B shares vs 2.8B vs 2.23B vs 2.3B vs 2.3B. Real NYSE Volume rose slightly but remains well below average at 616M shares vs 593M vs 617M from the new 12-month low of 491M vs 497M. The average for last week was 522M shares – a new 2014 low – average volume at the closing bell was also a new low for the year of 387M shares! Note that the average for the final week of 2013 was 424M! There have been just four sessions above 800M since 4/28! The 12-month average is a historically weak 699M shares. Since 4/30 the average volume has been just 651M shares ranging from 517M to 927B….12 month high is 2.06B shares on 9/20/13!

A/D’s were minimally negative: -1.1x vs -1.1x vs +2.4x vs -1.3x vs +1.3x; Nasdaq -1.8x vs +1.5x vs +2.4x vs -1.9x vs -1.3x. Breadth was similar:: NYSE -1.1x vs -1.2x vs +2.6x vs -1.7x vs +1.2x; Nasdaq -1.4x vs +1.7x vs +3.5x vs -1.2x vs +1.2x. New 52 Week Highs were sharply higher at 374 vs 288 vs 192 vs 264 vs 318 – recent range is 46-580!!! New Lows climbed back to 56 vs 41 vs 52 vs 26! vs 50 – recent range is 24-260! S&P VIX rose and for a 2nd day closed above ‘12’ at 12.36 +.11. The range was 11.91-12.90, climbing – recent low was last Monday’s 11.24.

U.S. bond market rallied despite Europe closing weak, but still above Tuesday’s low: 10 yr 2.40% +3/16; 30 yr 3.14% +5/8, the long TIP 0.87% +5/8. Overnight little change: 10’s 2.39% +1/16; 30’s 3.15% -1/16; and long TIP 0.88% -3/16.

Libor update: 0.233% 3 mos.; 0.330% 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 0.08%-0.10%, where it has been for weeks! T-Bills are -0.01%-0.00%!!! out to 6 months AND -0.01% for one year!!! DE-FLATION? Foreign bond yields lower, especially PIIGS!!! (note: benchmark is the 10yrs): Germany 0.92% -4; UK 2.43% -4; France 1.24%! -9!; Italy 2.30% -15!!!; Spain 2.11% -15!!!; Portugal 3.10% -11!!!; Greece 5.56% -19!!!, Recovery low: 5.42%; Crisis high: 12.57%. Japan: 0.53% –.

Gold closed slightly higher, but only after falling even lower to its worst since 6/17, $1261.90, before closing at $1270.30 +$5.30.! Last Thursday’s high was $1296.40 – this marks it’s 12th straight sub-$1300 close! It remains well below the 40/50 and 200 day m/a’s. 7/17’s session high was $1346.60, highest since March 19th!!! 6/9’s $1240.20 was lowest since 1/31/14!!! RES is the 200 day $1285, then the 40/50 day at $1299-1303! Next support: $1260.90 – the 6/17/14 low! Recent high was $1392.60 on 3/17, highest high since 9/4/13. Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!! Overnight is it is little changed at $127080 +.50, in an ‘inside’ session.

Crude continued its volatility closing at $95.54 +$2.66 in an inside and almost parallel session, following a nosedive to $92.68. 8/21’s low was $92.50, lowest since 1/15/14! There have been FOURTEEN handles since 6/30! 7/22’s high was $105.20, 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 40 day ($98.44), then the 50/200 day ($99.77), levelling off, finally! The range is $85.61-$112.24 since March 1, 2012. Overnight it is WEAK but still up over $2 from Tuesday’s close $94.41 -$1.13.

European equity markets strong for a 3rd day – this time due to a rate cut to the cusp of ‘deflation’! Asia mixed: UK +0.4% vs +0.8% vs +0.1% vs ‘+’ vs -0.4%; France +1.5%! vs +1.3%! vs +0.2% vs ‘+’ vs –; Germany +0.8% vs +1.4%! vs +0.5% vs ‘+’ vs -0.2%; Japan -0.3% vs +0.4% vs +1.2%! vs ‘+’ vs -0.2%; Hang Seng -0.1% vs +2.3%!!! vs – vs ‘+’ vs –; Korea +0.3% vs – vs -0.8% vs ‘+’ vs -0.4%; India -0.2% vs +0.5% vs +0.6% vs ‘+’ vs closed. U.S. equity futures higher: Dow +33 (range 77); SPX +5.90 (10); NDQ +11 (26).

 

Some random thoughts:

…according to Frederich Hayek (The Road to Serfdom), and Erich von Mises, we are on a slippery slope that must be stopped, or at least that is how the Right views it, which ignores what made America great…and that began in the 20th Century starting with Teddy Roosevelt and continuing through FDR. It was our working and middle class that got us through two wars, prohibition (which sapped tax revenues and gave birth to organized crime). But that is not what TB wishes to discuss today. But first, a reference to the late (politically?) Eric Cantor who was resurrected by Moelis and Co. as a great investment ‘dealmaker’ – despite not knowing an investment if it bit him, and for this received a guaranteed $3.8 million…pretty good for an ‘intern’ – in fact off the charts. But then what did Bob Rubin do for Citi? Cantor is much more valuable to Wall Street as he knows where the dirt is, has politicians ‘beholdin’ to him, and how to get things done…you know, greasing the chutes. ENOUGH! We know the fix is in.

What TB wants to talk about today is Ben Bernanke, a subject that has even more meaning this morning since the ECB cut the reference rate to 0.05% – something Big Ben feared doing as it is precariously close to dreaded ‘De-flation’! What prompted this was of course his reliance on Quantative Easing…not once but three times, and probably what saved us from the brink…albeit at a cost of paying banks 25 basis points (0.25%) on their excess reserves – a cheap way to fund the purchases rather than U.S. government debt, but at a cost of lower interest rates on money market instruments and reduced funds available for loans by the big banks!…and of course widening the wealth gap by enormous gains in the stock market while the real economy languished…pity.

TB was therefore happy to see this Bernanke quote in the Sunday Edition of the WSJ: “September and October of 2008 was the worst financial crisis in global history, including the Great Depression” (of which Bernanke authored the study which blamed the Fed!). He goes on to say of the 13 “most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two.”

Does this cause you to question a European and problem countries (PIIGS) bond and stock rally? It sure does to TB! It also confirms his belief that not only the banks who caused the crisis through their CEO’s and key employees greed, made it the worst, but with personal debt at 25% of income, and two-wage-earner families (so that if just one lost their job, they were in trouble), it was most definitely broader…the 30’s suffering primarily on speculators including the great Irving Fisher (who declared stocks at a ‘permanently high plateau’ a week before the crash, and Keynes who lost his families money buying options – so much for economist investors!

A second victory for TB came from an expert on the PBS Newshour, who said that the free world made the same mistake it did when Hitler said he was just ‘taking back what was Germany’s”…even when he took more! TB saw this and that is typical Putin…we failed, especially Europe by waiting too long for fear of economic reprisals. Now we the world’s nuclear powers in a standoff. Any other time the world would have been at war…or are we?

Enjoy your day…is it later than you think?

TB

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2 Comments »

  1. Yarnman said

    TB-I’m feeling much better after recent surgery to replace an arthritic hip joint (the geezer “surgery du jour” in these parts). So, I’d like to share a bit of satiric humor with you from “The New Yorker”. . .

    “WASHINGTON (The Borowitz Report)—Arguing that his motto “Don’t do stupid stuff” is not a coherent foreign policy, critics of President Obama are pressuring him to do something stupid without further delay.

    “Sen. John McCain (R-Ariz) and Sen. Lindsey Graham (R-S.C.) led the attack on Thursday, blasting Obama for failing to craft a stupid response to crises in Iraq, Syria, and Ukraine.

    “Instead of reacting to these events with the haste and recklessness they deserve, the President has chosen to waste valuable time thinking,” McCain said. “This goes against the most fundamental principles of American foreign policy.”

    “Graham also expressed frustration with the President, telling reporters, “The American people are waiting for President Obama to do something stupid, but their patience is wearing thin.”

    “In his most withering criticism, McCain called Obama’s “stubborn refusal to do stupid stuff” a failure of leadership. “If I were President, you can bet your bottom dollar I would have done plenty of stupid stuff by now,” he said.”

    I’m having a great day!

    Yarnman

    • traderbill said

      Sorry to take so long to get back, yarnman, but didn’t see your note until just now. Glad your surgery went well. Thanks for the satirical piece on McCain…I extrapolated on it today for my piece. Many thanks…glad to know you are still out there!…from a soon-to-be 70’er.

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