11/12/14…to catch a thief!

Quote of the Day from the Friars Club Encyclopedia of Jokes: “I’m not afraid to die. I just don’t want to be there when it happens.” – Woody Allen

Bloomberg Quote of the Day: “I am not an adventurer by choice but by fate.”

– Vincent van Gogh…and I thought he was an artist!

Bloomberg Top Stories:

*Five Banks to Pay $3.3 Billion in First Wave of Currency Rigging Penalties – none ours – yet!

*”Let’s Double Team It,” Currency Traders Banter In ‘Cartell’ Transcripts – appalling

*Barclays Falls After Delaying Currency Settlement, Missing Out on Discount – and reason is???

*Carney Sees European Stagnation Hurting U.K. as Growth Forecast Lowered

*European Stocks Drop With S&P Futures as Bonds Gain, Oil Falls

*Leverage as High as 50:1 Lures OTC Forex Traders who Lose Most of the time – individuals!

*UBS Precious Metals Misconduct Found by Swiss Regulator in Currency Probe – beat goes on!

*BOE Chief Currency Dealer Fired as Probe Says He Didn’t Escalate Concerns – Idiot, or…???

*Shale Boom in U.S. Masks Multiple Threat to Global Oil Supply, IEA Says – BUT not to U.S.!

*Saudi Arabia Leads OPEC’s Oil Production Lower With Meeting Two Weeks Away

*Junk Bond Risks Escalate With Leverage Back to 2008 Levels – Heed this warning, a + for UST!

*Silent Generation Wins Life Lottery to Become Most Affluent U.S. Age. Group – a sad comment!

*U.S. China Agree on Deeper Carbon Emissions Cuts to Fight Climate Change

*Mali Reports Its Second Ebola Death as Nurse Succumbs to Spreading Virus – sad

*Republican Dan Sullivan Defeats Incumbent Begich for Alaska Senate Seat – more of the same!

*Ukraine Tells Military to Prepare for Battle as Tensions as Tensions in East Increase

*Burgundies at $14,000 a Bottle Help Prop Up Stagnant Market for Fine Wine

Tuesday’s Market Summary

Two straight nothing days! Both on successively lower volume and declining A/D’s and Breadth to virtually even. New 52 week highs declined to 339 while new lows got back up to a solid 100. The VIX rose slightly but remains just below 13 so not bearish – yet. Dow Utilities gave up 0.4% for the ‘goat’ award, while the Dow 30, Russell 2000 and NYSE Financials all closed flat. The rest

ranged from -0.1% (Dow Transports) to +0.3% (NDQ 100). Nothing to see here…

Total NYSE Volume dropped to below average at 2.93B shares vs 3.24B vs 3.45B vs 3.6B vs 3.76B vs 3.92B: note the trend! Average volume since 9/30 is about 3.7B shares, or about 700M more than the 12-month average. Shares traded on the NYSE floor – affectionately referred to by TB as REAL volume also declined to 614M shares (lowest since 9/15! Also at the bell it was just 522M shares – a double whammy as not only was it low but only 90M shares traded on the close! ), vs 717M vs 752M vs 796M vs 833M – again: note the trend!!! For comparison purposes, for the prior 12 months it is a historically weak 711M shares…but since 10/1: 8528 shares – including that HUGE 1.22B share day – highest since 9/19, followed by two more 1B plus days leading to options expiry!. The lowest was 10/6’s 696M share session. April 30 – September 30 we had just SEVEN 800M shares…since 10/1: 16, and FIVE 900M+ days.

A/D’s were only positive by rounding, Nasdaq slightly negative: NYSE: +1.1x vs +1.3x vs +1.6x vs 1.3x vs +1.4x; Nasdaq -1.1x vs +1.6x vs -1.1x vs +1.4x vs +1.1x. Breadth was similar: NYSE +1.1x vs +1.1x vs +1.9x vs +1.4x vs +1.7x; Nasdaq +1.1x vs +1.4x vs +1.1x vs +1.5x vs +1.4x. New 52 Week Highs slipped to 339 vs 368 vs 313 vs 328 vs 390 vs 316 vs 416 vs 612 – their range for the year is 39-612!!! New Lows climbed back to 100 vs 85 vs 114 vs 145 vs 155 vs 155. The 2014 range is 24-1043!!! S&P VIX closed slightly higher but retained the ‘12’ handle at 12.92 +.25 a day after closing the gap from 9/19/-9/22 and its 11th sub-15 close since peaking on 10/15. Barely in bull territory from those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!). Yesterday’s range was 12.60-13.18. The average of the past 12 months is 13.97, with a low of 10.28!…high close of 26.25 on 10/15/14!

U.S. bond market was closed for Vets Day but closed weak Monday giving back Friday’s gains and more. The recent 12 month low yields (10’s 2.09%; 30’s 2.87%; and long TIP 0.83%), 10’s closed at 2.36% -9/16; 30’s 3.09% +1-3/4; and the long TIP 0.97% -1-1/2. Overnight rallying again: 10’s 2.34% +3/16; 30’s 3.06% +9/16; and long TIP 0.94% +3/4. QE’s may end, but dump $4.3 trillion???…is there an App for that?  

Libor update: 0.233% 3 mos.; 0.326% 6 mos., both steady and just above new record lows! The Fed Funds rate has averaged 0.09% and is steady at 0.08-0.10%. T-Bills range from 0.03%, one-month, to just 0.10% one year!!! Foreign bond yields mostly a little lower, Greece plunging – Japan higher! (Benchmark is 10yr): Germany 0.81% -2; UK 2.19% -4; France 1.16% -2; Italy 2.33% –; Spain 2.09% –; Portugal 3.19% +1; Greece 7.78% -19!!!. 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.52% +4!

Gold closed slightly higher again closing at $1163.00 +$4.20 in a boring session following Friday’s surprise rally to $1176.70 culminating in a positive key reversal (session low was $1130.40, a new recent low!), and a day after its lowest close since 3/14/14. The recent intraday high of $1255.60, highest since 9/10/14, was rejected. The last 10 sessions have had prints below $1200 first time since 12/31/13 Last close above $1300 was on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! Res is at $1200 (psychological), then the 40 day at $1211, the 50 day $1219, then the 200 day at $1280, all declining. The 12-month high is $1392.60 on 3/17, highest high since 9/4/13. $1130.40. 11/7’s low was $1130.40! Overnight slightly weaker at $1161.40 -$1.60. Silver remains weak but in mid-15’s following 11/5’s low of $15.12, more than a five year low, but with the positive key reversal (higher high, lower low, and close above prior day’s high), that should be at least a near-term floor.

Crude closed little changed and below $78 proving Friday’s $78.65 an outlier, and closing at $77.94 +.54. Still struggling following 10/31’s intraday low of $75.84, lowest since 10/14/11!!! 10/25’s high was $84.83. There have been 32!!! handles since peaking at $107.73 on June 13th, highest since 9/19/13. The record high of $147.27 was on 9/30/08, the low since on 12/30/11 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 ($85.34), then the 50 day ($86.93), and lastly the 200 day (97.57), all continuing to plunge and accelerating to the downside. The range is now $75.84-$112.24 since 3/1/12. Overnight it is weaker again at $77.19 -.75.

European equities weak, Asia higher: UK -0.4% vs +0.2% vs +0.5% vs +0.3% vs -0.1%; France -1.1%! vs +0.7% vs +0.3% vs -0.9% vs -0.3%; Germany -1.3%! vs +0.4% vs +0.3% vs -0.7% vs -0.2%; Japan +0.5% vs +2.1%!!! vs -0.6% vs +0.5% vs -0.9%; Hang Seng +0.8% vs +0.3% vs +0.8% vs -0.4% vs -0.2%; Korea +0.2%+0.2% vs +1%! vs +0.2% vs +0.3%; India +0.4% vs +0.1% vs flat vs -0.2% vs closed. U.S. equity futures weak and gapped down on open: Dow -60 (range 52 +9 on gap); SPX -7.70 (8); NDQ -12.75 (14+1).

 

Some random thoughts:

Thomas Jefferson said in 1802:
“I believe that banking institutions are more dangerous to our liberties than standing armies.
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property – until their children wake-up homeless on the continent their fathers conquered.”

…today’s title is derived from former Federal Home Loan Bank attorney, William K. Black’s book, The Best Way to Rob a Bank is to Own One.” It is not for the faint-hearted. The book was mentioned earlier but having just finished it, the mistakes made by government control of the regulators were abominable. Had it not been for Black and other stalwarts and a change of heart from deregulation to ‘reregulaton’ by Reagan friend and confidante (the importance of this cannot be overstated), the 1980’s S&L Crisis which resulted in the takeover of Charles Keating’s Lincoln Savings & Loan, would not have happened. It is a story of how money corrupts politicians (as Lawrence Lessig says, ‘they aren’t corrupt, they are corrupted’ – no small distinction). Coupled with ideology (Reagan’s contempt for any government regulation, a feeling shared by former Fed Chairman Alan Greenspan, and others in his administration), it was a blueprint for disaster and what could and should have cost the taxpayers a ‘few billion dollars’, instead cost ‘hundreds of billions’ and if the ‘free-market’ Reagan administration, had had its way, the cost would have been well over a trillion dollars! It is a story of ignorance, contempt, and greed…all the elements of a good mystery. At one point, Hollywood considered making a movie of the Keating scandal but decided it wouldn’t be believable! But it was!

The rest of this week will be devoted to banking…and as SIX! of those top stories show, it is a stinkhole of greed!

Have a great day…and hug a vet…or at least do more than say ‘thank you for your service’.

TB

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