12/26/14…about those anti-police riots…

Quote of the Day from the Friars Club Encyclopedia of Jokes: “You know you’re getting old when the heat from the candles on the birthday cake keeps you from getting close enough to blow them out.” – and when…”by the time you’ve lit the last candle, the first one has burned out.” – will let you know if that becomes a problem tomorrow!

Bloomberg Quotes of the Day: “Keep your face toward the sunshine – and shadows will fall behind you.” – Walt Whitman

Bloomberg Top Stories:

*U.S. Gas Futures Drop Below $3 First Time Since 2012 as Inventories Grow – !!!

*Stock Futures in U.S. Climb With Gold, Oil (?); Ruble Trims Weekly Jump

*Japan Plans to Split Japan Post Holdings Into Three Publicly Traded Units – ?

*Ruble Weakens After Exporters’ Currency Sales Drive Best Week Since 1998

*Credit Suisse Ordered to Face Potential $10 Billion Suit on Mortgage Fraud – good!

*Sony Film “The Interview’ Packs Theaters in U.S. Without Promised Violence – Sony was hacked again, making it impossible for kids with new X-Boxes to complete setup!

*Tesla to Help Chinese Vehicle Buyers Trade in Their Old Cars for Model S -?!?

*Emerging-Market Stocks Rise, Led by China, as Ruble Gives Back Some Gains ???

*Traders Dive Into Junk-Bond ETF Hedges Amid Oil- Price Concerns – oh, oh!!!

*Oil Rises as Fighting With Islamists Intensifies Near Libya’s Biggest Port – a tad!

*Junk-Bond Standout Has No Rivals as Mexico Housing Collapse Rewards Javer

*Build America 21% Return Outperforms ETF in Local Government

*Saudi Budget Assuming $80 Crude Seen as Sign of Confidence in Oil Market – huh?

 

Wednesday’s holiday shortened Summary:

What a joke…like a lump of coal…the early close in stocks and bonds (10am EST), knocked stocks down to new session lows. First, run-ups to new record highs then thank you very much, back to close at the session lows. But then you knew that was going to happen didn’t you? If you didn’t you don’t study past Decembers very much: a good trade on the ‘Eve’ is to see how the market trades at and after the open then fade it….sure worked Wednesday if you had the stomach for it. Still best thing was to let those little boys with their computer toys have fun while you socialized around the office. Both the Dow and S&P closed up <0.1%), the rest from up 0.1-0.4% (Russell 2000), ah, but Dow Utilities did what they do so well: rallied to a new 12-month high AND RECORD HIGH and closed just below it – posting a huge 1.7% gain!!! Now one has to wonder if that is the typical investment manager scratching his head and asking ‘hisself’ why he didn’t overweight ‘the boring sector’ all year. In fact, since 12/31/08 the index is up 13.17% annualized with divvies reinvested…quite a feat! AND compared to the other equity indices, volatility was virtually non-existent. But they aren’t ‘exciting’ you say…neither are those ‘hot’ bank stocks paying dividends of <0.5%, but that hasn’t stopped the fools from buying them! Consider: over that past 12 months, Bank of America is up 15.81% with divvies…and look: if you had invested those dividends instead in t-bills your return would have been 15.75% (this is not atypical of other stocks and indices which is a definite anomaly!). You want to see something funny (if you didn’t own BAC), over the past five years the annualized return was just 2.95%, and over the last TEN years just 7.5% – worse yet, IF you had invested said divvies in t-bills your loss would be just 5.8%!!! Why in God’s name do people like banks stocks when they are paying virtually NO dividends??? Irrational but no exuberant…aka: STUPID!!! Better yet Citi (the one Prince Alaweed bet heavily on and cost himself a small fortune): over the past five years the return is    BUT over the last 10 -18.29%…again, had you instead put those divvies in t-bills your loss would have been just 12.77%!!! There’s one born every minute…Allah willing! Now for poster child, Jamie Dimon’s JPMorganChase: over the past 12 months 19.3%; five years 10.7%; ten years 7.2%…not bad? True, but compared to Jamie’s income gains (plus appreciation on the dividends they handed him…despite a Congressional inquiry and being responsible (a la Robert Rubin) for pushing the derivatives geeks in London to take more risk, a pittance! …and boy do they love him…one of the new robber barons! What’s that you say? You chickened out and sold in ’08? Then you like him not so much…

Moving right along…total volume was just 1.4B shares or over 2.2 billion below average – if you were in playing, what were you thinking??? As for shares traded on the NYSE floor: 343M shares or nearly 400M below average, and lowest since 12/24/13 (see what TB meant?), 272M shares! If Wednesday had been measured at the close, volume would have been worse than the 12 month low at 253M shares. To follow on the 12/24 theme…in 2012 it was 286M shares. Note that the prior low was 12/31/99 (ahead of y2k), at 374M shares. Now THAT is impressive! Note that 12/31/99 was a solid positive, but in the frenzy of that great bull market, while two of the other three ended down. A/D’s and Breadth were slightly negative for NYSE and modestly positive for Nasdaq. New 52 week highs fell to 325, while new lows were nearly halved to 59! The S&P VIX closed at 14.37 -.43 – the entire session with ‘14’ handles!!!

What to expect? More of the same and not worth the effort…or risk!

Total NYSE Volume was HALVED to 1.4B shares from an already weak 3.0B, lowest in 18 sessions (typical for December after options expiry), vs 3.34B vs 5.9B vs 4.9B vs 4.93B vs 4.9B vs 4.38B. Average volume since 9/30 which had a 600M cushion over the 12 month average (3.6B shares or so), is being hacked away Shares traded on the NYSE floor (aka REAL), also plunged to 343M shares, a new 2014 low and just ahead of 12/26/13’s 253M share session, from a below average 613M vs 791M vs 2.49B – 3-year high!!! vs 976B  vs 1.05B. For comparison purposes, for the prior 12 months it remains at a historically weak 729M shares (unaffected due to the 2012 low now left out). Since 10/1: 849B shares –  including FIVE 1B+ share sessions), and since 12/1 927M vs 961M shares!!! The lowest was 12/24’s 343M share session. April 30 – September 30 we had just SEVEN 800M shares…since 10/1: 22 – but just one in Nov, and NINE 900M+ days! FOUR 800M days, FOUR 900M and FIVE 1B share days in Dec.!!!

A/D’s were flat to slightly negative on NYSE and only modestly positive on Nasdaq: NYSE: 1:1 vs +1.8x vs +1.4x vs +1.8x vs +4.1x! vs +6.7x!!! Nasdaq +1.4x vs +1.0x vs +1.6x vs +1.1x vs +3.2x vs 4x!!! Breadth was similar: NYSE -1.2x vs +1.1x vs +2.3x vs +8.1x!!! vs +14.3x (compare to that incredible -15.5x on 12/16!!!); Nasdaq +1.5x vs -1.3x vs +2.2x vs +1.4x vs +4.6x! vs -9.5x!!!. New 52 Week Highs shrunk to 325 vs 488! vs 352 vs 467 vs 330 vs 118 vs 56!!! – their range for the year is 39-612!!! New Lows nearly halved to a weak 59 vs 92 vs 79 vs 82 vs 73 vs 223 vs 712!!! The 2014 range is 24-1043!!! S&P VIX had traded the entire session with a ‘14’ handle, significantly lower than Friday’s 17.20, and closed at 14.37 -.43 – compare to 12/16’s high of 25.20, which was highest since 10/17  During the prior brief ‘rally’ it only made back down to 15.94! We remain at risk of those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!). The average of the past 12 months is 14.12 and slowly climbing, with a low of 10.28!…high close of 26.25 on 10/15/14!

U.S. bond market closed slightly positive after being weak most of the session after slip-sliding away from those new 12 month low yields (10’s 2.06%!; 30’s 2.69%! and long TIP 0.76%!!!), 10’s closed at 2.26% –; 30’s 2.84% +3/8, and the long TIP 0.91%!!!! +1/8. Overnight moving on up: 10’s 2.25% +1/8; 30’s 2.81% +7/16; long TIP 0.88% +7/16.

Libor update: 0.257% 3 mos.; 0.357% 6 mos. Both moving higher into yearend but still not that far off their recent record lows! The Fed Funds rate has averaged 0.09% and is currently 0.12-0.14% – the new 9-month high. T-Bills: 0.00%! one-month; 0.00%! 3 mos; 0.23% – 0.25% is recent high!

European bond markets closed for Boxing Japan up a tad. Wednesday’s closes : (Benchmark is 10yr): Germany 0.60%; UK 1.88%; France 0.82%; Italy 1.89%; Spain 1.60%; Portugal 2.69%; Greece 8.20%; look at the last 12 days range: 7.03% to 8.88%!?! Not for the faint of heart! 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.32% +2.

Gold closed slightly lower in a narrow range session at $1173.50-$4.50. Last Monday’s low was $1172.20, lowest since 12/1! Dragged down by Crude and now below $1200 for the 8th time since 12/2: tell it goodbye as Harry Carey would have put it. Last week’s intraday high was $1238.00 – highest since 10/22. This is the 7th straight sub-$1200 close which ended seven straight closes above. Stuck below the 40/50 day! 11/7’s low was $1130.40, the current 12-month low!). Now 36 of the last 37 sessions with prints below $1200. Last close above $1300 was on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! MAJOR RESISTANCE now at at $1189-1198, the 40 day ($1189!), the 50 day $1198, then the 200 day $1262. The 12-month high is $1392.60 on 3/17, highest high since 9/4/13. 11/7’s low was $1130.40! Overnight $1195.10 +21.60 and just off the session high of $1199.10!!! Silver back above $16 with a session high of $16.31, following its $17.27 high last week! $14.12 is the recent low, not seen in more than five years!

 

Crude took yet another header in an inside session to closing at $55.84 -$1.28 and back inside Monday’s downdraft and remains VERY weak, following a 3-day high of $58.91, four days after plunging to $53.60, lowest since 5/6/09! Consider: 10/25’s high was $84.83. There have been 51!!! 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 ($68.67!!!), then the 50 day ($71.32!), and lastly the 200 day ($92.19!), all FURTHER increasing their rate of decline! Likely to test $50 over the next couple of weeks! The recent range is now $53.60-$112.24 since 3/1/12. Overnight, it is slightly higher at $56.52 +.67 in yet another narrow inside session. 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 Equity Markets:

European markets closed for ‘Boxing Day’, Asia little changed. Friday’s European closes: UK +0.2% vs +0.3% vs +1% vs +0.4% vs +1.6%! France -0.4% vs +1.1% vs +0.7% vs  -0.7% vs +2.9%!!!; Germany +0.6% vs +0.4% vs +1.1% vs 0.8% vs -0.9%; Japan +0.1% vs +1.2% vs closed vs +0.1% vs +2.4%!!! vs 2.3%!!!; Hang Seng +0.1% vs -0.3% vs +1.3%! vs +1.3%! vs +1.1%! Korea +0.1% vs +0.4% vs -0.2% vs +0.7% vs +1.7%!; India +0.1% vs -1.1% vs -0.7% vs +1.2% vs  +0.9% vs +1.6%! vs -0.3% vs -2%!!! U.S. equity futures slightly higher: DOW +36 (7 + 29 gap!!!); SPX +4 (2 +2 gap); NDQ +13.25 (5! +8 gap). Avoid!!!

 

Some random thoughts:

…70 today…not the temp either! Feeling a bit cantankerous and entitled to be…

When TB was a young idealist, he saw A Man for All Seasons, starring Paul Scofield as Sir Thomas More, in an Oscar-Winning performance by him and one for the movie as well. Scofield was an afterthought after Richard Burton and Alec Guinness, but Robert Bolt chose correctly (Scofield also won a Tony for the London stage performances). In all it won six Oscars.

TB says this because of one particular line of More reprimanding Roper, his son-in-law, a barrister for saying the law should be set aside (for More’s refusal to sanction a divorce for Henry VIII):

MORE (Roused and excited) Oh? (Advances on ROPER) And when the last law was down, and the Devil turned round on you-where would you hide, Roper, the laws all being flat? (He leaves him) This country’s planted thick with laws from coast to coast-man’s laws, not God’s-and if you cut them down-and you’re just the man to do it-d’you really think you could stand upright in the winds that would blow then? (Quietly) Yes, I’d give the Devil benefit of law, for my own safety’s sake.

What is the significance? Because not only are ‘mobs’ protesting police actions, but some actually called for killing policemen just two days before the NYPD officers were assassinated (there is no other name for it). It was brutal, and yesterday TB saw this banner” NO COPS, NO PRISONS. How could one not think of More’s august retort?

Can you imagine these people – especially those in the black community – IF all prisoners were released? For God’s sake, didn’t they listen to what kind of lunatic the killer was? This is irresponsible and this year there have been 11 officers executed, up from four last year!

TB has been holding his tongue as many have. We chastised Muslims for not coming out against the 9/11 terrorists, but what about the black community who (not a majority, but the most vocal), place more value on race (isn’t that racism?), than justice. This in no way excuses the police or district attorneys for (TB believes) being more concerned about protecting the officers rather than fact-finding, and thus eliminating any chance of transparency which makes some of the men appear as the ‘vic’ when ‘some’  are the violator. Compare Trevon Martin, where Zimmerman (a wanna-be cop and from TB’s prior personal experience in law enforcement , a very dangerous type of person who was aided and abetted by Florida’s lunatic ‘stand your ground’ law), had no reason to be have the confrontation, leave it to the police as the 911 operator told him.

In Ferguson, I believe there was possibly some guilt on the officer’s part but they were also unable to make any statements about the theft that had just been committed. If there had been a trial would the results have been different? Sadly, we will never know.

In the case of the New York killing for ‘resisting’ arrest (?), it was but in the loosest definition of the term, he wasn’t combative. Furthermore, when TB went to the Los Angeles County Sheriff’s Academy in 1969 it was known that the ‘arm-bar strange’ could result in death and with four officers present, once he was taken down there was NO excuse to continue to choke him. But the grand jury once again said, ‘harm but no foul.’

Yesterday, TB heard of an even more egregious killing by a police officer in Wisconsin. A Milwaukee police officer responding to a call, and apparently unaware that a team of officers had already cleared the suspect who was lying on a park bench, approached the subject and an altercation ensued after a pat down in which the officer said he felt a cylindrical object. The officer had tried to use his baton on the man, who seized control of it. He then drew his weapon, an automatic and emptied it, firing 14 shots! Despite this, the officer was cleared. However, he was then ‘fired’ for failing to follow departmental policy!?!

When the victim’s family heard this they were upset (quite understandably), and are demanding a federal investigation, which to TB seems the only thing that can happen. What a time for this to happen…and it too could lead to more police officer deaths…shameful and unnecessary if the police would have done a thorough and unbiased investigation.

Besides the police, there is the administration which the prosecutors know does not want to be fined, which in this case could be very big (IMHO). It is time for all police-involved shootings to receive at least a state investigation and should be a federal investigation.

Don’t just accept what TB says, think about it and you decide what is proper.

Have a great day, then enjoy your new ‘toys’ over the weekend…no need to do a single trade except position squaring and tax trades for the rest of the year and probably first half of Jan.

TB

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