12/11/14…it’s good to own a hedge fund! and a 401(k)

Quote of the Day from the Friars Club Encyclopedia of Jokes: “My sex life is very bad. If it weren’t for pickpockets, I’d have no sex life at all.” – Henny Youngman
Bloomberg Quote of the Day: “Respect for the truth is an acquired taste.” – Mark Van Doren
Bloomberg Top Stories:
*Jobless Claims Drop as U.S. Corporations Hire at Strongest Pace Since 1999 – ah, but what are the salaries???
*Retail Sales in U.S. Climb by Most in Eight Months Amid Cheaper Fuel Price – yawn
*S&P 500 Futures Rise with Dollar on Retail Sales Growth While WTI Declines – huh?
*ECB Stimulus Case Boosted as Long-Term Loan Offering Draw Muted Response
*Carney Seeks Fed-Like Timing, Instant Minute4s in First Revamp in 17 Years
*Barclays, Deutsche Bank Forex Algorithms Said Probed by New York Regulator – !!!
*Fed Bubble Risks Paly Out in $550 Billion of Energy Debt – watch this!
*Banks Face Tougher Rules for Asset-Backed Debt as Basel Rejects Warnings
*Russian Central Bank’s One-Point Rate Increase Fails to Halt Ruble’s Slide
*Wal-Mart China Stores Inflated Profit Via Accounting, Internal Study Shows – oh oh!
*GE Is Poised to Increase Dividend in Climb Back From Cut in 2009 Recession – want to bet they do it by issuing debt so they can keep their cash offshore? Huh, sukkahs?
*Jeb Bush’s Offshore Private Equity Fund Raises Specter of Mitt Romney Woes – yep!
*Manhattan Prosecutor Bharara Fenced In By Ruling Undercutting Insider Wins – sick!
*Netanyahu Strengthened After Likud Vote Seen as referendum on Leadership – thought Netanyahu was a merger of Netflix and Yahoo! ???
*Putin’s Friends Reap Billions in State Deals as Russia’s Economy Teeters – so does he!
*Can You Spare 12 Cents a Gallon for Better U.S. Highways? – by Barry Ritholtz
Wednesday’s Market Summary:

You want to know how bad it was? Not only was every index down from 1.3% (Dow Utilities!!!) to -2.2% (Russell 2000), volume was a strong 4.05B shares, highest in 8 sessions! Oh but it gets worse…much worse: A/D’s and Breadth were very weak with NYSE Breadth an incredible -15.5:1! The final nail was the S&P VIX which ranged from 15.40-18.92 (highest since 10/20), and closed at 18.53 +3.64!!! That’s a 24.5% increase! Talk about bearish! New 52 week highs were steady at 215, while new lows dipped slightly to a still very high 430! Bonds continued to rally while Gold held most of Tuesday’s gain, but Crude was slammed once again to a new 5+ year low. Still bullish are you? Remember they didn’t even like Utilities yesterday!

Total NYSE Volume was 4.05B shares vs 3.95B vs 3.72B vs 3.36B vs 3.37B vs 3.58B vs 3.64B vs 4.14B. Average volume since 9/30 remains about 3.6B shares or about 600M more than the 12-month average. Shares traded on the NYSE floor (aka REAL) rose again to a strong 913M shares (1st 900M day since October!) vs 834M vs 770M vs 755M vs 798M vs 776M vs 809M vs 877M. For comparison purposes, for the prior 12 months it is a historically weak 720M shares…but since 10/1: 814B 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 11/1’s 619M share session. April 30 – September 30 we had just SEVEN 800M shares…since 10/1: now at 20 – just one in Nov, and now SIX 900M+ days. Now three 800M days and one 900M day for Dec.

A/D’s were very negative! NYSE: -4.6x!!! vs +1.5x vs -2.3x vs +1.1x vs -1.7x; Nasdaq -4.6x!!! vs +2.1x vs -2.9x vs +1.9x vs +1.5x. Breadth was worse on the Big Board: NYSE -15.5x!!! (Unbelievable!) vs +1.4x vs -3.8x!!! vs 1:1 vs -2.4x vs +2.4x;; Nasdaq -2.5x vs +2.1x vs -3.3x vs +1.6x vs -1.5x. New 52 Week Highs steady at a weak 215 vs 207 vs 386 vs 363 vs 302 – their range for the year is 39-612!!! New Lows remain VERY strong at 460 vs 467! vs 416 vs 283 vs 248. The 2014 range is 24-1043!!! S&P VIX rocketed to 18.92, highest since 10/10, and extremely bearish and closed just below at 18.53 +3.64, with a ‘low’ of 15.40!!! Now THAT’S bearish! We ‘could’ again see those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!). The average of the past 12 months is 13.98, with a low of 10.28!…high close of 26.25 on 10/15/14!

U.S. bond market closed STRONG for a THIRD day! Note the 30 yr bottomed at 3.01%. The recent 12 month low yields (10’s 2.09%; 30’s 2.87%; and long TIP 0.83%), 10’s closed at 2.16%! +7/16; 30’s 2.83%! NEW LOW +13/16, and the long TIP 0.87%!!! +1/2. Overnight mostly better: 10’s 2.16% +1/16; 30’s 2.81% ANOTHER LOW +3/8; long TIP 0.85% +3/8.
Libor update: 0.239% 3 mos.; 0.338% 6 mos. Both still near their recent record lows! The Fed Funds rate has averaged 0.09% and is currently 0.11-0.13% – a 9-month high. T-Bills: 0.04% one-month; 0.03% 3 mos; 0.20% – why is it rising?
Foreign bond yields mixed; Greece sharply higher again!!! (Benchmark is 10yr): Germany 0.67% -1; UK 1.87%! -3; France 0.95%! -1; Italy 2.07% +1; Spain 1.88% +2; Portugal 2.94% +1; Greece 8.70%!!! vs 8.24% vs 7.71% vs 7.03% +41!!! Not for the faint of heart! 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.40 +1.

Gold put in a ‘temporizing bid’ a day after a strong rally and close that had a session high of $1238.00 – highest since 10/22 and the first REAL $1200+ close since the selloff began. It closed at $1228.90 -$2.60. Well above the 40/50 day again for just the 5th time since 10/21! 11/7’s low was $1130.40, a new 12-month low!). This was the first time in 30 sessions without a print below $1200. Last close above $1300 was on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! Support is at $1200 (psych) and the 40 day, the 50 day $1203, RES at the 200 day $1270 – all have bottomed! The 12-month high is $1392.60 on 3/17, highest high since 9/4/13. 11/7’s low was $1130.40! Overnight it is slightly weaker again at $1223.40 -$6.00 – holding nicely! There have now been 12 highs above $1200 since 10/31. Silver trading near yesterdays $17.27 high! This following a $14.12 recent low, not seen in more than five years!

Crude dove once again to yet a new low 5+ year low (6/10), of $60.43 –it’s 5th straight ‘lower low’ before closing at $61.74 -$2.08! Consider: 10/25’s high was $84.83. There have now been 45!!! 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 5/15/09 is $56.07: $89.85 is the average! Recent rally high and close are $110.70 and $110.53 respectively. RES at the 40 day ($75.68!), then the 50 day ($78.09!), and lastly the 200 day (94.6!), all STILL increasing their rate of decline! A failure here could take us to $50!!! The recent range is now $60.43-$112.24 since 3/1/12. Overnight it is weaker with another slight new low of $60.30! It is now $60.68 -.24!!! Note that following the financial crisis it traded down to $32.40 on 12/31/08 from a high of $147.27 just three months earlier (-78%!!!).

Overnight Global Markets:

Global equities weak for a THIRD session! UK -0.8% vs +0.1% vs -1.5%!!! vs -0.9% vs +0.8%; France -0.4% vs +0.1% vs -1.8%!!! vs -0.9% vs +1.3% vs -0.9%; Germany +0.1% vs +0.6% vs -1.6%!!! vs -0.5% vs +1.3%; Japan -0.9% vs -2.3%!!! vs -0.7% vs +0.1% vs +0.2%; Hang Seng -0.9% vs +0.1% vs -2.3%!!! vs +0.2% vs +0.7%. Korea -1.5%!!! vs -1.3%! vs -0.4% vs -0.4% vs — India -0.8% vs +0.1% vs -1.2%! vs -1.2%! vs -0.4%. U.S. equity futures somewhat ‘bouncing’ – dead cat bounce? DOW +67 (64); SPX +9.20 (12); NDQ +13.75 (20).

Some random thoughts:

…yesterday, a federal court reversed some of the insider trading convictions for hedge funds. Isn’t that nice? First, they have been ripping off investors for years with their 2% plus 10% fees. Then when the market tanked, realizing they wouldn’t get back above the ‘high water mark’, many of them folded and resurrected themselves. Next came all those insider trading scandals and firings by the State of California and some other ‘wise’ investors. Then the convictions and now this…shameful! As if that isn’t bad enough, they continue to benefit from the ‘carried interest’ provision which allows the operators ordinary income to be taxed as capital gains at 35%! Finally it is getting Congress’ attention but will the Republicans have the guts to go against some of their big contributors? We’ll see, but the issue they are upset with is their 401(k)’s, where a few thousand of them have retirement funds in excess of $1 million (Romney had $101 million if you recall). But how did they do that? By buying shares of companies their private equity firms are doing and with their 401(k) money! So let’s say they get 5,000 shares at a penny a share and take it public at $30 a share…you do the math…oh, and remember they are ripping off Medicare too since without ordinary income (you know that is what ‘ordinary’ working people earn), they are not forced to contribute.

This just in: it seems Jeb Bush also has a nice offshore hedge fund…and an accompanying 401(k). Hmmm, I bet Elizabeth Warren doesn’t! She is the new ‘last hope’ for America! Vote Warren!

Note that there is a bi-partisan plan to raise the social security tax by creating a ‘donut hole’ so that the present cap remains but then kicks back in at $1 million…that alone could save social security…IF they have the cajones to do it! Wanna bet? What? And antagonize those big donors?

Have a great day!

TB

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