Posts Tagged Bernie Madoff

1/9/14…’wolves’ or sly foxes?

January 9, 2014 at 9:38 am · Filed under banking, economy, financial, markets ·Tagged , , , , ,

Quote of the Day from the Friars Club Encyclopedia of Jokes: “If love is the answer, could you please rephrase the question?” – Lili Tomlin, and…”Love is what happens to a man and a woman who don’t know one another.” – W. Somerset Maughan, or…

“Love is like an hourglass, with the heart filling while the brain empties.” – Douglas Jerrold

loomberg Quote of the Day: “If you can’t feed a hundred people, then feed just one .” – Mother Teresa…better make that two Mother…like ‘one hand for the ship and one for yourself.’

Bloomberg Top Stories:

*First-Time Unemployment Claims in U.S. Decrease to Lowest Level in a Month- booyah

*Draghi Reinforces Pledge for Low Interest Rates to Stoke Europe’s Economy

*BlackRock Traded Using Nonpublic Data From Analsyts, Investigations Shows – No!?!

*Gross Says Focus on Shorter Maturities as Slow Inflation Pace Trumps Jobs

*Alcoa Will Pay $384 Million in Penalties, Fines in DOJ, SEC Bribery Cases –same old

*Ford Boosts Quarterly Dividend 25% as Automaker Cites Improved Liquidity – really?

*KKR Raises $2 Billion for Credit Fund Investing in Global Distressed Market

*Bitcoin Believers Stoke Computing Arms Race Seeking Virtual Currency Glory – hmmm, could the ‘unknown programmer’ actually be the guy in New Zealand?

*Christie Presidential Prospects Face Early Test Amid Traffic-Snarl Crisis

*U.S. Energy Secretary Moniz Cancels India Trip Amdi Diplomatic Fraud Row – ???

*Military Costs Are Resolved ass Congress Moves to Avoid Government Shutonwn

Wednesday’s Market Summary:

The rallies of late are…uh…short and uh…not so sweet! Biggest volume day since December 20th and it was a mixed day…3.63B shares for NYSE stocks and Real NYSE Volume of a well above average 759M shares – not only highest but first time above 700M since 12/20! True, it wasn’t a down day but it sure was mixed. Dow Transports and the two Nasdaq’s both in the green at +0.3% – puny! Next best was the S&P 500 and the Russell 2000, both FLAT! Dow -04% and Dow Utilities the goat again at -0.5%! What’s a mother to do? Or how about the schizophrenic NYSE Financials? Brokers -0.4%; KBW Banks +0.8%, Nasdaq Banks +0.4%…for a combined +0.4% – isn’t that special?

Nothing to see here folks, except another psychotic indicator: Apple, which can’t make up its mind what to do? UP 0.6% yesterday but on Tuesday’s rally it fell 0.6% vs up 0.8% and DOWN 2.2% a day after plunging 2.4%. Why the interest in Apple? Because it is a significant part of the two Nasdaq’s (especially the 100) and the S&P 500, weighting unavailable.

Also yesterday, we got the release of the December FOMC minutes…why did they begin the taper? Strong economy – survey says NO! Well, why then? Because they felt the taper wasn’t really stimulating the economy! Consequence? Bonds which had been sharply lower came back wth minor losses…except TIPS which posted more than a half point gian to 1.48%! – why do you want inflation protection after that??? Oh, and the 10-30 curve FLATTENED again. That spread was as wide at 125bp’s on March 28th , and as low as 89bp’s on September 5th – yesterday? It came in to 90!!! Hmmm…

Advance/Declines were slightly negative while Breadth were slightly positive? The VIX declined ever so slightly to 12.87 -.05, but the range was 12.86-13.24 – back to that pesky 13 handle…a state of flux…flummoxed?.

The Nasdaq 100 gained another 10 points (8 of them from three stocks) vs +31 vs -12 vs -25 vs -28 vs +22. Breadth was barely positive at +1.3:1 vs +3.5:1 vs -3:1 vs -2:1 vs -6:1 vs +3:1. Just six members gained more than one index point, while one (MSFT -4.8!), lost more than a point: BIIB +3.5; APPL +2.7 vs -3 vs +4.4 vs -9.7!!! vs -6.4! vs +5.3! vs -2.6 vs -3 vs -2;  MU +2 vs +1; AMZN +1.6 vs +1.8 vs -1.1; CELG +1; GILD +0.9; MSFT -4.8!!! vs +1.9 vs -5.6! vs -1.9 vs -2 vs +1.

Dow 30 -0.4% vs +0.6% vs -0.3% vs +0.2% vs -0.8%; Dow Transports +0.3% vs +0.7% vs -1.3%! vs +0.5% vs -1.5%!Russell 2000 – vs +0.9% vs -0.8% vs +0.5% vs -1.1%!Dow Utilities -0.5% vs +0.8% vs +0.2% vs -0.3% vs -1.6%! S&P 500 — vs +0.6% vs -0.3% vs – vs -0.9%; Nasdaq Composite +0.3% vs +1% vs –0.4% vs -0.3% vs -0.8%; NDQ 100 +0.3% vs +0.9% vs -0.3% vs -0.7% vs -0.8%.

*NYSE Volume rose again to an above average 3.63B shares vs 3.48B vs 3.23B vs 2.76B vs 3.06B vs 2.3B vs 2.27B vs 2.04B. The record high (?) is the 4.97B shares of 12/20/13 and Q3 end of quarter while 11/29’s 1.59B is weakest of 2013). REAL NYSE Volume also rose to 759M shares vs 699M vs 669M vs 544M vs 624M vs 568M vs 462M vs 424M, from the new 12-month low of 272M. The average since 12/20 is just 618M shares with a high of 759M! The 12 month is 719M shares. Last year there were just TEN 1B+ share sessions! There were 39 800M+ shares in 2013: 18 up, 19 down, three mixed.

*New 52 week highs have ranged from 33-864. They rose again to 355 vs 316 vs 271 vs 217 vs 201! Recent high is a super-strong 890!!! New lows barely budged to a still very weak 30 vs 20 vs 30 vs 23 vs 43 vs 78 vs 72 vs 76 vs  60 vs 44 vs 68 vs 81 vs 127 vs 131. Recent high is 353; low 20!!!  

  1. Advance/Declines were negative: -1.3x vs +1.9x vs -1.2x vs +1.8x vs -2x (recent range -17.5x to +6x) on NYSE and -1.1x vs +2.3x vs -1.7x vs +1.6x vs -1.8x (recent -4x!!! to +3.8x). Breadth was slightly positive: +1.04x vs +1.5x vs -1.3x vs +1.2x vs -2.1x (recent -18.6x!!! to +7.2x!!!) on NYSE and +1.4x vs +3.8x!!! vs +1.1x vs +1.2x vs -1.4x (recent -12.8x to +6.5x).  
  2. NYSE Financials +0.4% vs +0.4% vs +0.1% vs +0.5% vs -1%. BofA most active – natch: +0.4% vs -1% vs +1.5%??? vs +1.9%??? vs +3.4%???, closing at $16.58 +.08. Brokers -0.4% vs +0.7% vs -0.4% vs +0.6% vs -0.4% vs +1.2%!; KBW Banks +0.8% vs +0.4% vs +0.4% vs +0.8% vs -0.5% ; Nasdaq Banks — vs +0.5% vs -0.7% vs +0.2% vs -1.3%!!! vs +0.1%.
  3. Volatility (S&P VIX) fell for the 4th straight time in 7 days and remains below the 40/50 day (13.62/13.56) and well below the 200 day (14.40), closing at 12.87 -.05. 12/26’s (TB’s birthday) 11.69 was lowest since 3/15/13!!! Recent high on 1/2 was 16.67! The recent range is 11.83-21.01!!! It peaked at 22.79 on 12/28/12…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Bonds were weaker but came back from a rout caused by release of the FOMC minutes from last month, while the long TIP closed higher? What? Inflation fears??? Slightly weaker overnight : 30 yr 3.90 -1/16; the 10 yr  2.99% -1/32, recent high 3.03%! Long TIP 1.47% +1/8? The (record?) low of 0.36% was set on 4/5. The recent high yield: 1.64%! Libor update: 0.242% 3 mos,0.345% 6 mos. Just above  record lows 0.240%!!! and 0.344% respectively!). Foreign bond yields slightly higher except Italy/Spain/Portugal – Greece just above a new post-crisis low!!! Germany 1.91% +1; UK 2.97% +1, recent high 3.03%!; France 2.54% +3; Italy 3.87% -1; Spain 3.75% -3; Portugal 5.29%!!! -5; Greece 7.55% +1. Recent range NOW: 7.52%-12.57%. Japan …0.69% -1. Yen weaker again at 105.00…1/3’s 105.44 weakest since 10/1/08!!!

Gold traded in a narrow range and closed lower at $1225.50 -$4.10, following Monday’s ‘outside day’ which had a high of $1247.70, highest since 12/16. This Jan. 2’s low of $1181.40 – A MULTI-DECADE LOW!!!  Recent high is $1375.40 back on 9/19. $1200 is sup while $1300 is psychological resistance with major res at the 40 day ($1238!) and the 50 day ($1255!). The 200 day is $1343. Overnight it is slightly higher at $1228.70 +$3.30.

Crude crushed again falling to $92.26 – lowest since 11/27!!! Before stabilizing to close at $92.33 – talk about a ‘bad day at Black Rock! Down and downer? Note 12/27 was first time above $100 since 10/21! On 11/27 it printed a new low of $91.77, lowest since 6/3!!! 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. It is way below the three key m/a’s which are now major res: 40 day m/a ($95.93!!!), 50 day (95.87!), and the 200 day ($99.03!!!) – the 40/50 still falling and all major resistance! 4/18’s low of $85.61 was lowest since 12/11! The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is up slightly at $92.83 +.50.

Overnight markets:

European equity markets slightly better, Asia weak: UK +0.1% vs -0.4% vs +0.5% vs +0.1% vs +0.3%; France – vs -0.1% vs +0.4% vs -0.1% vs +0.7%; Germany +0.2% vs -0.1% vs +0.6% vs +0.1% vs +0.5%; Japan -1.5%! vs +1.9% vs -0.6% vs -2.4% vs closed three days; Hang Seng -0.9% vs +1.3% vs +0.1% vs -0.6% vs -2.2%!!!; Korea -0.7% vs flat vs +0.3% vs +0.4% vs -1.1%! vs-2.2%!!!India -0.1% vs +0.2% vs -0.5% vs -0.3% vs -0.2% vs -1.2%! U.S. stock futures higher overnight: DOW +38 (range 78); SPX +3.50 (10); NDQ +4.50 (16).

 

Some random thoughts:

The Polar Express is just a memory…+4 degrees here! ‘we’re havin’ a heat wave, a tropical heat wave…’ An idea TB forgot to mention yesterday to amuse yourself in the weather…go to Starbuck’s  – or Caribou – get a Latte…set it on the ground for 10 minutes and recycle the cup…kids, be sure to wear gloves when doing this!

Now back to the promised review of The Wolf of Wall Street. Who was that guy from Texas who wrote the funny reviews? Aha…Joe Bob Briggs! Here is what he would have said: Gratuitous sex, gratuitous nudity (including one of a male appendage), gratuitous fu. Destruction of the Lamborghini is worth the price of admission. Too bad it is so far into the movie that it is too late to leave.

But here’s the thing: you have Leonardo de Caprio, a minor part by Matthew Mconnaughey (very strange role and even ‘sings’ – raps – one of the songs, ‘Money Chant.’ But was it to show the evil and excesses of Wall Street? Frankly, no, it glorified them.

TB has mentioned his discussion with Michael Lewis before. Lewis wrote Liars Poker as an ex-Salomon bond salesman (stock salesmen were the lowest tier at Solly, especially the Dallas office). He told TB he wrote it to try to get college students to think about careers that did some good…engineering, etc. He was giving a speech at OhioState and then in the Q and A the first question was this: “How did you get your job at Salomon?”

He threw in the towel it was hopeless.

Back to Wolf…how many people saw it that were disgusted? How many felt revulsion for Jordan Belfort? How many envy? Sex, drugs, and rock and roll was the game from the 60’s on…especially on Wall Street, but it was muted and undercover at the big Wall Street firms. Remember Bonfire of the Vanities? How tame that was…Sherman McCoy just had a mistress! But after becoming a convicted felon he became an idol…whereas he thought he would be a pariah. Belfort skipped that step…and there is no doubt in TB’s mind that if he showed up on career day at any college, there would be a line at his booth.

Reportedly he paid over $110 million in fines, but he then wrote the book, and a sequel, and now has movie rights. Of course, he has seen the light…sober for more than ten years, or so he says anyway…but what about the victims? How much of their purloined funds did they recover? He spent three years at a ‘Club Fed’ with tennis courts…swell!

Can’t wait for Bernie Madoff’s book which he would write about the greed of those who are trying to recover their lost retirement funds? He now believes that he and his family are victims and mourns the loss of his son who committed suicide. If they had let him keep going none of this would ever have happened…right? Damned SEC!   

By the way, the movie fails to make the distinction between a Wall Street firm and a ‘boiler room’ operation…he never had credibility…no ‘pink sheet’ trading ‘penny broker’ ever has! Well…mostly…last night on Frontline: To Catch a Trader, they made mention of Gruntal, a firm where the rule was: there are no rules!

How about the last $2.6 billion slap on the wrist for JPMorganChase, the once respected bank headed by the once respected ‘wunderkind’, Jamie Dimon? Why? For not doing due diligence in investing client money with ….Bernie Madoff! It was about those big finders fees…like the hedge funds that had 100% of their clients money with him and were earning 2% +20…and that didn’t include the kickbacks from Bernie!

How many lost suits…without admitting guilt…can one bank have? They run the gauntlet of crimes from ripping of municipalities, to breaches of contract, to Madoff. Ethics start at the top…if the ‘perps’ were punished by Dimon, there would be no incentive to be a liar and a cheat. Who does he think he is? Eric Holder?

There is a growing school of thought that another financial crisis is on the way and this one will be too big for the taxpayers to absorb. One has to look no further than JPM to see who the cause will be. While the U.S. finds loopholes in the voluminous Dodd-Frank ‘reform’ act, Europe is shoring up their banks…finally. Damn, we are a stupid nation!

Ending on a bright note: it seems that even Newt Gingrich believes there is a ‘wealth gap’ problem…of course he doesn’t see it necessary to eliminate the ‘carried interest’ provision which applies a mere 15% tax on hedge fund operators, and why Mitt Romney has $100 million in HIS 401(k). This, on the 50th anniversary of LBJ’s ‘war on poverty’ – that program worked up until the 1980’s but then came Reaganomics and it has been downhill for middle class and below since then. But finally, perhaps in a Machiavellian way, the GOP is coming to the conclusion that ‘Houston, we have a problem.’ This is not in the spirit of largesse…it is survival of the fittest…and the status quo! This from the party that has driven a democracy towards a ‘duopoly.’ Are they serious? Not when the House Speaker John Boehner chimes in that he would like to have extended unemployment benefits but only with $7 billion in spending cuts – Grinch!!! Not to be confused with ‘Gingrich’ hmmm hominym? Is this what you want?  

Beautiful sunrise on LakeMinnetonka…but red sky in the morning? (sailor takes warning). Have a great day my friends! 

TB

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4/24/12…hedge this!

April 24, 2012 at 9:05 am · Filed under economy, financial, markets ·Tagged , ,

Bloomberg Quote of the Day: “Do you realize if it weren’t for Edison we’d be watching TB by candlelight?” – Al Boliska…weird but funny! TB

Bloomberg Top Stories:

 

*European Stocks Rise After Bond Sales; Copper Gains Before U.S. Homes Data – +-+-+-+-

*Widening U.K. Deficit Intensifies Pressure on Osborne’s Austerity

*French Yields Test Hollande’s Pledge to Alter Economic Course

*Wall Street Promoting Junk As Europe Erupts – ya gotta wonder???

*Goldman Sachs, JPMorgan, Morgan Stanley Preparing Job Cuts – when profit is from trading!

*Citi,Goldman, JPMorgan MAY Cut Senior Banking Jobs – Dimon equal to 67Iinv. Bankers!

*Weidmann Rejects as ‘Ridiculous’ Soros Claim bundesbank Ready for Euro End – but is it?

*3M Profit Tops Analyst’s Estimates on Rising U.S. Demand for Auto Supplies –  is it lagging?

*Ford, Ford Credit Raiswe to Investment Grade by Fitch on Performance Gains

*Pfizer’s Fortuitous Sale Seen in Credit Swaps

*Oil Inventories Increase to Almost 11-Month High in Survey – but what about gas prices???

*Supreme Court Seems to Favor Lenders on Credit Rating Issue –

*Hollande’s Call to Weaken European Austerity Drive Meets German Resistance – Achtung!!!

*U.S. Social Security to Exhaust Trust Fund in 2035, Earlier Than Projected – yes, but if they weren’t earning ZERO on T-Bills – look how Canada solved it…by allowing corporates!

*California Taxes Go for Pensions, NOT Schools – get used to it…everywhere!  

A rout…lowest close on Dow since 4/16, and low since 4/13! Dow 13k? it plunged on open and never even saw 12950 after that! RESISTANCE at 13012 (50 day m/a), 13039 (40 day), then 13131, the 4/17 high…not going to happen. Support you ask? 12710, the 4/10/12 low! Exception to TB’s rule: NYSE stock volume was not that high on a big down day? 3.6B shares vs 3.7B vs Thursday’s 4.17B ahead of options expiry, but selloff was much bigger yesterday. NYSE shares executed on the Big Board however were LOWER, 785M vs  959M (highest since 4/10/12 and the first ABOVE average volume day since April 10! 9 of the last 12 sessions have been less than 800M shares! Since 2/29 there have now been just FOUR ‘average’ days, including 3/16’s high for 2012, but average has fallen to 807M shares. Since 11/1 there have been just eight 1B share days…only three in 2012! Since 2/6 there have been FIVE sessions less than 700M shares. 105 of the last 117 sessions have been less than the 12 month average! Advance/Declines were very negative: -3.8x vs +2x vs -1.4x vs  -2.1x vs +3.4x on NYSE and -3.1x vs +1.5x vs -1.7x vs -2.3x vs +3.2xon Nasdaq. Breadth was worse: -5.5x vs +1.1x vs -2x vs -2.4x vs +7.3x! on NYSE and -4.8x vs -1.2x vs -1.6x vs -2.3x vs +5x! on Nasdaq. New 52 week highs fell by nearly ¾ to 58 vs 198 (high was 420 on 3/26), while new lows more than doubled to 164 vs 78! Ratio is NEGATIVE again by about 3x! vs +2.5x vs +1.5x vs 1:1 vs +3.5x vs 1:1. The S&P VIX gapped up on the open to a session high of 20.27, then closed at the low 18.97 but still UP 1.53, high since 4/16. CAUTION!

Here are the results of the last five sessions: Dow -0.8% vs +0.5x vs -0.5% vs -0.6% vs +1.5%; Transports -0.9% vs +0.1% vs -1.4%! vs -0.1% vs +1.4%; Dow Utilities -0.5% vs +.9% vs -0.3% vs -0.2% vs +0.6%; S&P 500 -0.6% vs +0.1% vs -0.6% vs -0.4% vs +1.6% vs -0.1%; Nasdaq Composite +1% vs -0.2% vs -0.8% vs -0.3% +1.8%; Nasdaq 100 -0.8% vs -0.4% vs -1.1% vs -0.3% vs +2%; Russell 2000 -1.5%!!! vs +0.6% vs -0.6% vs -0.9%! vs +1.6%; NYSE Financials -1.1%! vs flat vs -0.4% vs -0.8% vs +1.6%; NYSE Financial Leaders: BAC -2.2% vs -4.7%! vs -1.7% vs flat vs +1.5% vs +1.3% vs -5.3%!!! vs +3.4% vs +3.8% vs -4.4% vs -3.3%, GE -1.5% vs +1.2% vs -3.6%! Citi -1.9% vs -2.8% vs 0.7% vs flat vs +3.2% vs +1.8% vs -3.5% and since peaking at $38.40 on 3/19, it is now off 13.4%!!! Recall this was the bank who proposed in their capital plan to the Fed which was rejected buying back 8 million shares…pullease!!! Stop the insanity!

Global equities slightly better (look at two day changes…ouch!:  FTSE +0.1% vs -1.7%! vs +0.2% vs -0.4% vs -0.4%; CAC40 +0.7% vs -2.3%! vs +0.3% vs -0.7% vs -1.6%; DAX FLAT vs -2.8%!! vs +0.8% vs -0.1% vs -0.9%; Nikkei DOWN 0.8% vs -0.2% vs -0.3% vs -0.8% vs +2.1%!; Hang Seng +0.3% vs -1.8%! vs +0.1% vs +1% vs +1.1%; Korean KOSPI -0.5% vs -0.1% vs -1.3%! vs -0.2% vs +1%; Indian Sensex +0.7% vs -1.6%! -0.7% vs +0.6% vs +0.2%. U.S. stock futures little changed and mixed…compare to yesterday morning: DOW +12 vs -127!!!; SPX -0.70 vs -14.40!; NDQ -7 vs-25.50! Bonds quiet following yesterday’s rally: 10’s well thru 2% and 30’s still closing in on 3%.10 yr 1.94% -5/64, RECORD low 9/23 of 1.6855%; 30 yr 3.09% -3/16; Long TIP 0.70% +1/8. It was 0.57% at high. The 5 yr TIP yields MINUS 1.17%; 10 yr -.32%. Bills 0.04% 1 month; 0.08%; 3 months; 0.16% 6 mos.. Reverse Repo 0.17 – down from 0.25% last week! 3 mo. Libor 0.47%, and 0.73%; steady. European problem sovereign 10 years, Germany-benchmark: 1.68% +4 bp’s; Italy 5.71% +1; Spain 5.86% -8; Greece 20.53% -23; Portugal 10.97% +1; Ireland 6.57% +2.

Gold closed below $1700 for a 29th straight session, -10, making the hit $160 since 2/28, closing $1632.60 -$10.20 – low $1623.60! 2/28’s $1792.70 intraday high was not seen since 11/16! It has been above $1600 since Jan. 31, which remains below major support!!! The record high is $1923.70, a buying climax on 9/6. Res is $1674, the 40 day and $1689, the 50 day, then $1700, the 200 day. It is now $1646.40 +$13.80. Crude closed little changed at $103.11 +.06. 4/10’s low of $100.68 was worst since 2/15/12! It remains below the range of $105-110 which held from to 3/28!!! RES still at the 50 day (104.82), the 40 day (105.09), and major support at $96.01, the 200 day, all but 40 day still rising. It is now  $103.92 +.81. $101.08, the April 4 low is still minor support..

Wow…a big down day but on lower volume. Still it was worse than last Thursday’s drop on big volume. The Dow’s session low was 12845, lowest since April 13th and the close of 12927 was lowest since 4/16. Only 3 stocks were up, 27 down: XOM +3, TRV +1, no others of a point or more. WMT led the way down with 22, then UTX -9, IBM/PG -7, CAT/DD/MCD -6, BA -5…ug…ly! Only other lowlight was the Nasdaq 100 with 15 up, 83 down Microsoft -2.3 and five others lost a point or more…there were NO winners of even a point! Russell 2000 small cap was the big loser at -1.5% followed by NYSE Financials -1.1% and Nasdaq Composite -1%. Stocks just opening with Dow up 45.

Don’t stand in front of a moving train…or below a piano falling from a building!…you decide!

. . .   – – –  . . .  (SOS)   . . .   – – –  . . .  (SOS)   . . .   – – –  . . .  (SOS)   . . .   – – –  . . .  (SOS)

…thank you Mediacom…internet access delayed for two hours, so today will be brief.

First, the hedge fund lowlife’s who channeled money into Madoff’s Ascot Fund. Gabriel Bitran (sounds like a computer term) and his son founded GMB Capital Management and put the money with Madoff. Dad is a professor of Operations Management at MIT’s Sloan School of Business (hopefully fired for this sick scheme!), who claimed he had a computer model that guaranteed results. While small it was growing rapidly and hit $500 million and misled clients with both methodology and by claiming annual returns of 16.2% and 11.7% annualized for their two funds. They were fined $4.8 million…not enough and where is the jail time. Martha…what do you think?

The worst though was Fairfield which channeled its entire $3.2B to Madoff, and received a kickback as one of his feeder funds..plus 2% +20. Egregious doesn’t even begin to tell the story. Or how about Aubrey Hicks who claimed to have a Harvard PhD and has been fined $7.5 million…jail time? Hello? One UK based fund has waived fees to trying to gain back those who lost money with them on Madoff…fool me once…

Is this what investment management has become? Buy an indexed ETF and forget about it…or if in an IRA/401(k) you can use Vanguard…remember…number one reason for using an ETF is tax efficiency…but know what is in it and if index is representative. Also, watch out for companies in several of your ETF’s that reduce diversification.

Many of you read just the last part of these missives…that is the part TB enjoys writing the most but the value is in the first part. The only way you can begin to understand these markets is through comparatives. That is why TB provides at least the last five trading sessions changes…without it you are flying blind. If you are serious about markets, read that part. Also, note he doesn’t tell you what to do…you decide that. Pretty innovative that in a world where egos are rampant and knowledge is scarce and fleeting.

Have a fun day!

TB

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12/2/11…what kind of fool’s are we?

December 1, 2011 at 9:10 am · Filed under economy, financial, markets ·Tagged , , , , , , , , , , ,

TB’s song of the day is dedicated to those stalwart politicians with their huge egos and also to the fools who continue to elect them. We have met the enemy and they are us – Pogo

What kind of fool am I
Who never fell in love
It seems that I’m the only one
that I have been thinking of

What kind of man is this?
An empty shell-
A lonely cell in which
an empty heart must dwell

What kind of lips are these
That lied with every kiss
That whispered empty words of love
that left me alone like this

Why can’t I fall in love
Like any other man
And maybe then I’ll know what kind of fool I am.

What kind of clown am I?
What do I know of life?
Why can’t I cast away the mask of play
and live my life?

Why can’t I fall in love
And maybe then I’ll know what kind of fool
Till I don’t give a damn I am

– Words and music by Leslie Bricusse, and Anthony Newey who also sang it in Stop the World I Want to Get Off…and how appropriate that title is now.

 

TB’s Quote is an excerpt from Stealer’s Wheel: Clowns to left of me, jokers to the right
Here am I stuck in the middle with you. What? You aren’t in the middle? You have to move! Get us back on track. Or is ‘intelligent design’ what it’s all about, Alfie?

 

Here is a shocker for you: U.S. Unemployment Rate plunged to 8.6% from 9%, the lowest since March 2009…oh happy day! Note that the labor pool declined by 402k helping make it possible and the adjusted unemployment rate only declined 0.2% to 12.4%! the labor pool has declined by an average 187k for the past three months…lower the denominator and what do you get? Better numbers of course! Also, that doesn’t include expiring benefits and discouraged workers, add in part-timers and the REAL unemployment rate is 15.6% -0.6%…if that could be sustained it would take us 11 months to get to 9% but that is ignoring people entering the work force. Payrolls only climbed by 120k vs consensus 125k and that isn’t going to make a dent in REAL unemployment! Wake up! Figures lie and liars figure! Ahem….but September was revised UP to 210k from 158k and October to 100k from 80k…that’s 72k more jobs. Note also that the average duration of unemployment rose to 40.9 weeks, +1.5 weeks and the highest of the last six months, while the median duration of unemployment ROSE to 21.6 weeks just above the six month average. Ah such good reasons to rally stocks, no? NO!   

 

But how are the workers faring? Average hourly earnings fell 0.1% following the 0.3% rise in Oct and 0.2% in September while the workweek remained stagnant at 34.3 hours. Where were the jobs: SERVICES +146k vs +121k vs +184k…not the best paying, Manufacturing gained 2k while Construction fell by 12k and goods-producing by 6k. Only service providers have had meaningful three-month growth averaging 150k! Government declined by 20k about in line with the three month average of -16k…flat at the Federal level!

 

Market Reaction (8:50am EST): Bonds were stunned at first with the 30 year off 11/16 but not moving, then came back and it is now up 1/32. Dollar little changed…not a big factor here. Gold gave up a bit as did stock futures: +129 vs +1165 at o/n high; SPX +12 vs +19; NDQ +23 vs +35.

 

Bloomberg Top Stories:

*Euro Region’s Central Banks Seen Providing Up to $270 Billion Through IMF

*Stocks Jump as U.S. Futures Climb Before Jobs Report – what? Jobs don’t matter?

*Payroll Increase In November Probably Failed to Reduce U.S. Unemployment – Prolly???

*RIM Q3 Revenue Misses Company Forecast on Slowing Device Demand – poor Cramer

*U.S. Set for Best Year Since ’02 as Debt Tops $15 Trillion – bond returns that is!

*Taxable Yields Lowest Since 1994 Lure Buyers – to Muni’s!

*Oil Profits Plunge as U.S. Ends 62 Years as Fuel Importer – but we’ll be back!

*Iran Faces Oil Curbs as U.S. Targets Central Bank While EU Adds Sanctions

*Syria Risks ‘Full-Fledged Civil War’ Unless Assad Ends Crackdown, UN Says

 

 


Volume plunged again to a below average 3.82B shares from 5.76B shares…OK, ‘fess up, who looked down? Look at the number of one-day wonders that then lack follow-thru. Note that initial jobless claims reported yesterday were back above 400k killing that fantasy…will today’s numbers drive a nail through it? Was the rally a Hail Mary??? Meanwhile, NYSE stocks executed on the Big Board were HALVED to 855M, lowest ‘full’ session since 11/15…on the day following a huge rally??? …from 1.67B shares, last Friday’s 442M was lowest since 12/21/10!!!  13 of the last 15 sessions have been less than 1B! This IS a very good time to set stop losses! Advance/Declines were negative:-1.5:1 vs +30:1 on NYSE and -1.6:1 vs +4.5:1 on Nasdaq. Breadth was mixed???: +1.2x vs +30x on NYSE and PLUS 1.3x vs +10x vs -1.4x vs +14.4x! vs -2.2x vs -12.4x!!! vs -1.1x vs -3.9x on Nasdaq. New 52 week highs slipped to 156 from 180 while new lows declined to 83 from 108. The ratio is now almost 2x positive. VIX continued its descent closing 27.41 -.39, just above the 26.46-27.01 gap up from 10/27 and 10/31. Second time below 30 in the past 16 sessions. Meanwhile the 12 mo. ave. lies at 23.50 – fear prevails!

Here are the results of the past two sessions: Dow -0.2% vs +4.2%!!!; Transports -0.8% vs +4.8%; S&P 500 -0.2% vs +4.3%; Nasdaq Composite UP 0.2% vs +3.8%; Nasdaq 100 +0.6% vs +3.8%; Russell 2000 UP 0.9% vs +5.9%!!!; NYSE Financials also -0.9% vs +5.9%.  BAC +1.7% vs +7.3%!!!. Note Nasdaq indices only positives, and Russell and Financials were worst.

 

European markets strong, Asia less so. FTSE +1.5% vs +0.5% vs +2.9%; CAC 40 +1.9% vs flat vs +3.5%;  DAX +1.7% vs -0.5% vs +4.2%!; Nikkei +0.5% vs +1.9% vs -0.5% vs +2.3% vs +1.6%; Hang Seng +0.2% vs +5.6%!!! vs -1.5% vs +1.2% vs +2% vs -1.4% vs -2.1%!!!; Korean KOSPI  FLAT vs +3.7% vs -0.5% vs +2.3% vs +2.2% vs -1% vs -2.4%!!!; Indian Sensex +2.2% for a second session vs +2.2% vs +0.7% vs -1% vs +3%, up only six times in the last 17 sessions due to huge withdrawals from India funds: U.S. stock futures strong…what do initial jobless claims mean anyway… DOW +146; SPX +15; NDQ +28. Bonds weaker for a SIXTH straight session with 10’s and 30’s well above 2% and 3% respectively. 10 yr 2.13% -3/8. RECORD low 9/23 of 1.6855%; 30 yr 3.13% -11/16; Long TIP 0.83% -11/16. .57% at high three weeks ago. The 5 yr TIP yields MINUS 0.92%! 10 yr 0.02% vs -.00%. Libor  0.53% 3 mo., and 0.75% 6 mo. – 3 mo. above 0.50% and six month now AT 0.75%…intervention seems to have done the job – for now, but yearend approaches! Bills 0.01% from one month out to six months 0.05%!  

Gold dipped Thursday but is still above $1700. It closed at $1739.80 -$10.50 is now $1760.80 +$21!!! Have you notice that it is now correlated to stocks? Weird, huh? The record high is $1923.70, a buying climax on 9/6. RES is again $1706, the 40/50 day convergence. Crude dipped slightly closing $100.20 -.16, and is now $101.20 +$1. Will $100 hold? Support at the 200 day (95.87), still rising. Major support is the 40/50 day m/a at $93.52-90.87, also still moving up.

 

…who is (are) the fools? Those of us who allowed Jon Corzine to act recklessly as governor…crashing his car at 90mph and nothing happening, hiring his girlfriend in a position that did not require her reporting to work and for which she had no duties…well, maybe one. That is singling out those of us from New Jersey of course (sorry, John), but also the principle shareholder in MF Global who appointed him. Or perhaps it is the CFTC whose chairman Gary Gensler (has a nice ring to it), said that there was no reason for them to suspect problems. Could it be that they relaxed a rule allowing dealers to ‘borrow’ from clients accounts on bond transactions since the risk was so small? Or was it the SEC who didn’t make Corzine retake the principal’s exam, not that it would have mattered. See he was in a position like Bernie Madoff where no one dared question him. That is the state of regulation and investor protection in this company. Meanwhile, had it not been for Bloomberg filing a freedom of information act suit, we would not know that the bailout number was $7 trillion, not $720 million…must have been using British numbering system.

 

. . .   – – –  . . .

TB is reading Inside Wall Street by Mike Mayo. This should be required reading for all bank officers…but management would prefer they not read it. It would also be wise for those buying bank stocks to read it, because they won’t. It is comforting to TB to read someone else who also understands banking telling it as it is…TB felt at times he was reading his own columns but more detailed and some interesting stories…a word of caution, you won’t much care for bankers after you read it (he also refers to the brokerages as bankers which is confusing and shows how that concept has crept into our vocabulary when they are anything but bankers!).

 

But it extends to all corporate management…oops, BIG company corporate management where you make eight figure salaries when you do good and if you fail you get an eight figure kiss-off. Where are the shareholders objections to this? In the wastebasket as the board answers to its chairman, not the owners…who in most cases IS the CEO also, and they are beholding to him.

 

That was a fatal flaw of Sarbanes-Oxley as it punished the thousands of honest CEO’s of smaller companies for the sins of a few…thank you, Enron.

 

Wow, there is the segue TB wanted. Yesterday, TB heard some former Enron officers say that Enron was a good company attacked by overly-zealous regulators and prosecutors…oh, really? Arthur Anderson and the company couldn’t beat federal prosecutors? Come on. Now, TB did sympathize with them on one point: most of them were very strong and new nothing of the abuses. But that is where they crossed the line: instead of separating themselves from the den of thieves they said they were maliciously prosecuted. As Governor Davis and the taxpayers of California for one if it was malicious. It was worse…it was rulthless market manipulation and it is sad that Ken Lay died while his case was on appeal as he was guilty along with Skilling and Andrew Fastow…either complicity or by dereliction of duty. The smartest guys in the room, make TB sick! Thanks to Bethany Mclean for busting it wide open!

 

In closing, back to the fools who have fooled you. Apparently not, as a study back to 2005 shows that Congress hasn’t had an approval rating of higher than 45% in all those years. Yet, the incumbents (until the last election), continue to survive. We need election reform and we need leaders…before it is too late.

 

Have a great weekend!

 

TB

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1/12/09…a job’s a job

January 12, 2009 at 6:10 am · Filed under economy, financial, markets ·Tagged , , , ,

…TB and a former boss used to debate that point. His feeling was regardless of sector it is the number of jobs that counts…he is also an ardent believer in Reaganomics. TB repeatedly said that losing a manufacturing or construction job and then becoming a WalMart greeter or taking a low-paying retail or service sector job was a big negative, but you can never convince Art Laffer, Larry Kudlow, or any supply-sider of that.

 

Yesterday, on Meet the Press, David Bonior said what TB has been saying for the last couple of years: 90% of the income gains of the past decade went to the wealthiest 10%; 70% to the top 1% and 30% to the top ½ of one percent! Actually, TB was referring to the past twenty-five years when an income of $100,000 has been the benchmark for the top 10%. TB’s former boss also argued that the error in that thinking is that jobs are fluid and that people move up and down the spectrum constantly. On an individual basis yes, but entire groups don’t and more importantly, it is the wealth-gap that concerns TB and should concern you.

 

It does not concern Newt Gingrich, who says the market just leveled it out again…that is pure B.S. Barring the Bernie Madoff scheme (perhaps Made-Off will replace Ponzi as Ponzi was really a rank amateur even in inflation adjusted dollars), which, while impacting a lot of people, foundations, charities, etc. is still a very small percentage of investors. They chose to invest with him without asking questions or if they did ignoring his answer that if he did he would have to kill them…or thru highly paid hedge funds or in one case a bank that charged clients 4% just for the privilege. Other hedge funds (purportedly funds of funds who either concentrated their assets or went all in with Bernie), ignored every basis rule of investing and should be sued out of business!

 

If you don’t care about the wealth gap then you should as all we seem to talk about is average income (mean), not the median which is important when you have more than a years supply of unsold homes in the wings, banks restricting credit, and incomes stagnant.

 

On to Friday’s payrolls reports and how stupid it was for the stock market to rally because we only lost 524,000 jobs instead of the ADP forecast (using a new formula) that projected nearly 700,000 fewer jobs. But we did lose more than 750,000 jobs! But nobody paid attention: October was revised down by 104k to a loss of 423k and November by 51k to 584k. But wait…there’s more! Thanks to the BLS’s birth/death census of businesses which is supposed to pick up jobs that fall thru the cracks from small businesses and is still pumping out 70k jobs…neither you nor they believe that…the December loss would have been 594k and add to that the 154k revision from the prior month and you get 748,000 lost jobs! Also, undoubtedly December will be revised down. What is truly shocking is that 2.589 million jobs were lost in 2008, and 1.531 million of them were in the fourth quarter alone….or 60%! Obama is right: it is worsening! TB would add that there are also still a ‘few’ employers out there with hearts who waited until the new year to layoff employees. So it has to be even worse, right?

 

Take the Unemployment Rate that shocked us by rising by 0.4% to 7.2%. But TB pointed out that a lot of people were either out of town or too occupied with the holidays to file. Not spoken openly was that several states had their employment offices closed during the week. So again, it was higher…note also that the participation rate declined 0.1% to 65.7% and discouraged workers (no longer counted) rose to 13.5% of the population. The augmented employment rated rose to 10.4% from 9.8%, now include those working part-time who want full-time jobs and it jumps to 13.5% +0.9%…versus 8.7% a year ago.

 

Those sound like good reasons to not tank the market…right?

 

La Cucaracha! Remember there is never just one cockroach! This is the most adaptable creature on the planet. Since Madoff, they are starting to come out of the woodwork. TB heard from a client of one in Paso Robles…fortunately all are wannabe’s but the point is they are out there….in good markets or bad but they are always uncovered when things turn bad. Thanks to his reader friends TB is getting all kinds of articles about them. A friend in Palm Beach sent a story on the bank mentioned above who was managing investor money and put it with ‘BLM’. For years they had a great return and gladly paid the bank 4% of the increased value. Well BLM turned out to be Bernie L. Madoff, not Bureau of Land Management and they were wiped out. The bank, who ripped them off on excessive fees? Westport National Bank in Connecticut. People were solicited by a representative of the bank at their clubs and yet the bank claimed now wrongdoing. They were merely a conduit…if so on what basis did they believe their advice was worth 4%?

 

Then there are the elected officials who benefitted from the corruption…TB is not talking about Congress who is either on the take or stupid to have written…or allowed as in the case of the bankruptcy act, the credit card companies to write it…so they got it right…no, TB is talking about local officials (Chicago and Illinois are rife with them), the first to come to light was Jefferson County (Birmingham), Alabama, where a former commissioner turned investment consultant entered into interest rate swaps with JPMorgan, Bear Stearns and Lehman that resulted in fees higher than the entire sewer systems revenues…which they were sold as protecting! Back to Florida, where it seems all roads lead. A commissioner, Mary McCarty…who wouldn’t trust a good Irish Catholic girl-o? Her Husband worked for Raymond James in 2002, which was a bond underwriter for the county. He then went to work for Bear Stearns and she worked to get them to move the business to them. Raymond James did not object…which is unheard of! Then with the help of another partner in crime she objected when they let Smith Barney run a bond issue and demanded an investigation…she got it…and now will pay for it.

 

Then there is the stupid side on the opposite coast…San Jose, California, who like another, Contra Costa County (where TB lives), caved to retirees claims that they should get more money…after all if they retired now instead of when they did, they would. So San Jose, put in a clause that when pension fund returns exceeded a percentage the retirees would receive more benefits…but they forgot to take it out when the market plunged and have thus grossly overpaid the recipients…and the fund is now…well… underfunded! So much for the future retirees and the taxpayers…government in action!

 

Also, TB read some more articles that sum up how we are not only bailing out the companies that got us in this mess…with the help of Congress and the SEC but has taken no action to punish or even demand the resignations of those involved…pathetic.

 

To those of you who thought TB was nuts alleging manipulation of the commodities markets by the banks, Gene Epstein was the first to point it out in Barron’s last April! It was done by banks being able to buy unlimited amounts of commodities futures due to an exemption…that also applies to investment banks by the way. Due to a huge flood of $60 billion or so into commodities index funds, these banks, led by JPMorgan, Goldman Sachs, and Morgan Stanley drove the prices of all commodities to the moon and sent the entire world into recession. 60 Minutes reported on this last night but missed the point: it was not only oil…it was everything! Remember food prices were soaring too! They had a hedge fund manager on who told how it was done…and how the ‘experts’ were so blind as to think that a $25 jump in one day in the price of crude was due to increased demand! TB wishes they would have done their homework…Jamie Dimon is no saint and no genius…we are about to see that. Oh…and where did all those sharp energy traders come from? Why Enron Energy of course and this is what should really drive you mad…that was eight years ago and nearly bankrupted California…yet the CFTC was asleep at the switch again and we all get to pay for it…this is totally disgusting!

 

This morning a Bloomberg story talks about Citi selling Smith Barnery to Morgan Stanley and may book a $10 billion profit…thanks to the tarp this is merely shoveling more money into Citi with Morgan Stanley the conduit this time…when will we get mad?

 

Stop the world and let TB off!

 

Is this a great life or what? Those of us who are honest and work for a living are penalized while the spoils of the wealthy are maintained…except for their own stupid investments.

TB

 

Trader Bill thinks it is clear to anyone reading these missives that they are merely commentaries…as he sees it…and do not necessarily reflect the views of anyone other than his own. Information is gathered from sources he has found reliable, but no guarantees of accuracy are implied. These are merely observations of events in the marketplace offering in an attempt to offer a non-mainstream viewpoint. Hope you find it useful. Copyright TBD Capital LLC January 12, 2009.

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