Posts Tagged Jon Corzine

4/20/15…the future of America and how we got to this juncture…

April 20, 2015 at 9:28 am · Filed under banking, Citicorp, Federal Reserve, financial, JPMorganChase, Market Regulation, politics ·Tagged , , , , , , , , , , , , , , , , , ,

This is a letter in response to a friends email to TB on Paul Volcker’s attempt to tighten regulation of  banks:

Thanks, I hadn’t seen that. It is tragic that Obama said that Volcker was his idol, yet acted on advice of his ‘trusted’ allies (Emanuel and Bill Daley – who came from Citi and got a $900k kiss from them). Volcker said he was too old to lead a committee but would have been glad (eager?) to have been kept in the loop.

The most disgusting and degrading act Congress did with Dodd-Frank was the ‘Volcker Rule’ which he should have threatened to sue them for defamation over!

Jamie Dimon, the ‘much-loved’ CEO of JPM led the charge, not only against the legislation but against Elizabeth Warren who has come back to be his worst nightmare. She is who should be the Dem nominee for President. I am disgusted with the media for all but handing the nomination to Hillary Clinton, a horrible choice as he proved in the Senate changing her stance on equal pay for women (as Warren made clear), to do the bidding of her Wall Street donors.

Sadly, I believe were are where the Venetian and Roman Senate were just before the downfall. We don’t even have an oligarchy, we have a handful of people owning the Congress and the President (the two biggest donors to Obama’s campaign were Goldman, and JPMorgan).

Next, we come to Jon Corzine who was effectively kicked out of Goldman, then spent millions to become governor and then a senator. He then had the backing of two exclusive clubs. He was asked to be CEO of MF-Global to find a buyer. Instead, he practiced the same risk-taking he did at Goldman, only they didn’t have the capital to do it, so, at his direction, they ‘borrowed’ money from customer accounts, yet he tried to blame it on an underling. It was investigated but before charges were filed it was dropped. Why? Answer is above.

More on MF-Global: I was at L.F. Rothschild when they were becoming a primary government dealer. We had to jump through hoops for this privilege. Only when MF went down did I learn that they were a primary dealer! How could this happen? The NY Fed said they are not responsible for the financial condition of its dealers! Really!!! Since when? This leads back to Volcker’s recommendations. One of the ‘evil’ things the banks did by diversifying was to come under the control of several regulators. They then chose the weakest one to supervise them. That should have been the Federal regulators for any financial organization operating in multiple states. This is also why the GOP is dead wrong on ‘states rights’ and why insurance companies should be able to be national. Had this happened AIG would not have gotten into the mess they were in (oddly it was the Texas regulators who blew the whistle, but AIG solved that by cleaning up their act in the Texas subsidiary, and putting it in other states who did not do their due diligence.

I got to know Bill Dudley when he was government economist at Goldman. Met and had lunch with him on two occasions at their SF institutional bond buyers conference (about 20 people at each!). So I wrote him as President of the NY Fed. I told him how saddened I was to see what had happened to the Fed and this only added fuel to the fire that Goldman controls the Fed (he was NOT a GS insider and did not fit the mold). The letter went unanswered, as I expected.

It is the banking lobby that is pushing to have the Fed brought under control of Congress – they have already proven in their grilling of Fed Chairman that that would be the worst thing they can do.

How did we get here? In the Reid interview by Bill Moyers (which thankfully you brought to my attention), he laid out exactly how Glass-Steagall was brought down: thanks to Rubin (who was later well-rewarded for his blessing), Summers (the academic dictator and fool), and Greenspan (the true believer in Ayn Rand – how in hell did we get a Fed Chairman that was anti-regulation?).

William Donaldson, SEC Chairman in 2000, at the time of the demise of Glass-Stegall, came up with a plan to monitor the big five banks, which were to be exempted from regulation, by performing ‘random audits’ on the banks to keep them in line. He was, however, replaced shortly thereafter by former GOP Congressman Christopher Cox, who abandoned the idea, which had to contribute to the problem, as well as naked shorts of financial institutions, which he saw as no problem.

Now back to the beloved Gipper, who did four things:
1. destroyed labor unions and federal unions while municipal unions became virtual dictators);
2. by bailing out Continental over the objection of my former boss, Don Regan, created TBTF;
3. deregulated the S&L industry causing two crises and allowing Keating to cause the biggest S&L debacle – with the help of FOUR congressional members – no one had ever controlled more than one before;
4. appointed Greenspan as Fed Chairman in 1987, by Reagan, then re-appointed by three successive presidents

This is the idol of the GOP, who, by the way is not conservative enough to get elected – or even nominated today.

Now that I have vented – have a nice day!

Trader Bill

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12/3/14…trouble at the New York Fed!

December 3, 2014 at 9:55 am · Filed under banking, economy, financial, Market Regulation, markets, politics ·Tagged , , , , ,

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Americans are getting stronger. Twenty years ago it took two people to carry ten dollars’ worth of groceries. Today, a five-year-old can do it.” – Henny Youngman

Bloomberg Quote of the Day: “The ultimate inspiration is the deadline.” – Nolan Bushnell

Bloomberg Top Stories:
*Russia Economic Pain Worsens as Central Bank Attempts to Stem Ruble Losses
*European Shares Advance (slightly) With Italian Bonds, Crude Oil While Euro Weakens
*Osborne Says U.K. Borrowing to Be Higher Than Forecast, Deficit Is Too Big- !!!
*Hedge Funds Urged to Outperform Benchmarks Before Charging Incentive Fees-DUH!
*ADP Says U.S. Companies Added 208,000 Jobs in November, Missing Estimates – !!!
*U.K. Will Boost Real Estate Tax for Richest Buyers While Rest to Pay Less – just the opposite of NYC’s condo tax which is appalling!
*Wall Street Called Out by Regulators for Dragging Its Feet on Swaps Rule – Finally!
*Even U.S. Lawmakers Don’t Like the Tax Break Package They’re Ready to Pass – Veto!
*Ukraine Premier Yatsenyuk Roils Bonds With False Alarm on Nuclear Accident – !!!
*Oil Price Plunge Leads Unexpected Hand to Crisis-Ravaged Southern Europe – for now
*Takata Poised for Clash in Congress After Rejecting U.S. Air-Bag Recall
*Mother, Baby Dying in Malaysian Crash Shows Global Spread of Airbag Crisis – !!!
*Tesla Model S Electric Car Beats Out Porsche in Owner-Satisfaction Survey –US made!
*Brazil’s Levy Casting Shadow Over Central Bank Sways Traders on Rate Boost
*Tumbling Gas Prices Seen lifting U.S. Auto Sales in December – doesn’t it always? Sad!
*Top Independent Advisor Who Once Lived on Credit Now Manages $3.5 Billion
Tuesday’s Market Summary
Round and round she goes, where she stops, nobody knows.” – except the flash boys, right? Moe confusion: Monday’s goat wsa Dow Transports, -2.7%! Yesterday, it took honors BUT up 1.2% – you do the math! Next was the Russell 2000 small cap, up 1.1% but again vs down 1.6%. Two steps back, one forward? Of course, these are things you will never hear on CNBC, right? Next best was those ever-loving Dow Utilities +0.7%, following a 0.1% gain and the only index in the black on Monday! The rest were up 0.4-0.6% with only the Dow 30 netting a positive: +0.6% vs -0.3%; S&P 500 broke even, while the rest had a net loss of +/- 0.5%. Is that any way to run an airline? No way! Volume dropped by 500M shares to an ‘average’ 3.6B shares; A/D’s and Breadth were positive but again, only about half the negatives of Monday; New 52 week highs were slightly lower at 197 while new lows plunged to a still strong 253! The VIX declined sharply but just to 12.97 – on the cusp again with a range of 12.90-14.17!

Total NYSE Volume came back to earth at 3.64B shares from 4.14B vs 2.5B vs 2.73B vs 3.36B. Average volume since 9/30 is about 3.6B shares or about 600M more than the 12-month average. Shares traded on the NYSE floor (aka REAL) also declined but to a solid 809M shares vs 877M vs 649M shares (lowest since 11/11 and unusual for a monthend) vs 700M vs 846M – the ONLY 800+ session of Nov. – vs 707M vs 1.04B, highest since 10/31. For comparison purposes, for the prior 12 months it is a historically weak 717M shares…but since 10/1: 816B 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 18 – just one in Nov, and FIVE 900M+ days. Now two 800M days for Dec.

A/D’s were positive but not like Monday’s negatives: NYSE: +2x vs -3.5x vs -1.6x vs +1.6x vs +1.2x; Nasdaq +2.1x vs -3.5x vs -2x vs +1.6x vs 1:1 vs +2.4x. Breadth was less positive: NYSE +1.3x vs -3.8x!!! vs -2.4x vs +1.3x vs -1.1x; Nasdaq +2.1x vs -4.7x!!! vs -1.1x vs +2.2x vs +1.1x vs +3.1x! New 52 Week Highs were little changed at 197 vs 201! vs 515! vs 321 vs 296 – their range for the year is 39-612!!! New Lows declined but to a still bearish 253 vs 447!!! vs 276 vs 84 vs 80. The 2014 range is 24-1043!!! S&P VIX ranged from 12.90-14.17, before closing at 12.97 -1.32! Just when you thought those ’12’ handles were gone too! This 7 days after hitting a very bearish 15.74, highest since 11/4! Now in reach of those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!). The average of the past 12 months is 14.00, with a low of 10.28!…high close of 26.25 on 10/15/14! Friday is the payrolls report and a lot of data in between!

U.S. bond market closed VERY WEAK for a 2nd day, more than reversing Friday’s STRONG session?!? The recent 12 month low yields (10’s 2.09%; 30’s 2.87%; and long TIP 0.83%), 10’s closed at 2.29% -1/2; 30’s 3.01%! -15/16, and the long TIP 1.01%!!! -1-1/4! Overnight little changed but gaining traction : 10’s 2.29% +1/16; 30’s 3.00% +1/4; and long TIP 1.00% +3/8.
Libor update: 0.235% 3 mos.; 0.329% 6 mos. – and still near their new record lows! The Fed Funds rate has averaged 0.09% and is currently 0.11-0.13% – a 9-month high. T-Bills: 0.02% one-month, 0.02%! 3 mos, 0.12% one year.
Foreign bond yields little changed and mixed with PIIGS lower (Benchmark is 10yr): Germany 0.75% +1; UK 1.98% +1; France 1.02% -1; Italy 1.98%! -3; Spain 1.82% -3; Portugal 2.76% -3; Greece 7.56%! -3 – wow what an ‘E’ ticket ride! 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.43% +2.

Gold had an ‘inside’ session but don’t let that fool you as the prior two sessions wer so wide. It closed at $1199.40 -$18.70 – still holding on to Monday’s HUGE ‘key reversal’ that had a high of $1220.40 that almost closed a gap going back to 10/28 ($1226.40), and only the 2nd time above the 40/50 day since 10/21! 11/7’s low was $1130.40, a new 12-month low!). The last 24 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/Sup is at $1200 (psych), then the 40 day at $1202, the 50 day $1204, then the 200 day at $1274. The 12-month high is $1392.60 on 3/17, highest high since 9/4/13. 11/7’s low was $1130.40! Overnight little changed at $1202.80 +$3.40. There have now been just 8 highs above $1200 since 10/31. Silver still holding in mid-$16’s. Wednesday’s high close was $16.61! 12/1’s low was $14.12, more than a five year low. CRAZY and crazy if you think you can outguess it…not another ‘Libor’?

Crude closed slightly lower at $66.88 -$2.12, also in an ‘inside session’ bit like gold the ranges have been huge. Yesterday’s was $69.62-$73.64 – 4 handles??? Monday’s low was $63.72 – a new five year plus low (6/2010)! Friday’s session high was $77.83. 10/25’s high was $84.83. There have been 43!!! 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 ($78.86!), then the 50 day ($81.44!), and lastly the 200 day (95.80!), all increasing their rate of decline! A failure here could take us to $59!!! The recent range is now $63.72-$112.24 since 3/1/12. Overnight it is quiet and is currently $67.10 +.21. 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%!!!).

Global equities mostly higher, UK, Hong Kong lower: UK -0.3% vs +1.2% vs -0.9% vs -0.2% vs +0.2%; France – vs +0.3% vs –0.3% vs -0.3% vs -0.1% vs +1.4%; Germany +0.3% vs -0.2% vs -0.1% vs +0.6% vs +1.4%; Japan +0.3% vs +0.4% vs +0.8% vs +1.2% vs -0.1%; Hang Seng -1%! vs +1.2% vs -2.6%!!! vs -0.1% vs +1.2%; Korea +0.2% vs – vs -0.8% vs -0.1% vs –; India – vs -0.4% vs -0.5% vs +0.9% vs +0.2%. U.S. equity futures little changed: DOW — (range 38); SPX +0.30 (4!); NDQ +0.30 (4!!!).

Some random thoughts:

…TB has mentioned this in the past but there is trouble at the N.Y. Fed…and it is self-inflicted (again). First, there was the scandal during the crisis when then Chairman Stephen Friedman (2008-09 and ‘forced’ to resign after buying GS stock as the Fed was considering making them a ‘bank’ – which they aren’t and never will be!), nothing happened to him (unlike Martha Stewart), and his resignation claimed it was due to still being on the GS Board! Unconscionable.

Then, a man TB knows and respects, Bill Dudley, became President of the N.Y. Fed. He is not of the GS ‘cut’ – although he was their U.S. Government Economist. But recent new prompted TB to write him (which was never acknowledged) over the MF-Global debacle in which MF, a primary dealer of the Fed, under control of Jon Corzine, was not audited or even monitored as the Fed ‘no longer does this’. How in hell can they do that? Could any investment firm deal with another without knowing their financial condition?

It fell on Corzine, but the former GS CEO, former Senator, and former Governor, was not held accountable for allowing customer funds to be misappropriated (borrowed) to inflate the firm’s capital position.

Recently, we heard of a Fed examiner ensconced in GS headquarters as part of a team (Carmen Segurra), saw that violations were being swept under the rug by her supervisors and for the remainder of her seven month tenure at the Fed (after which she was fired, despite being a whistleblower!), The way the Fed is dragging its feet on this investigation and the summary firing of Segurra has caused TB to lose faith in Bill Dudley: is he merely not up for the job or just another part of the GS ‘revolving door’?

A huge investigation is going on of not just the NY Fed but San Francisco and others (who probably were all clean). It was finally reported on PBS last night. What appalls TB is the failure of Dudley to do something to investigate (Segurra had made ‘illegal’ tapes of meetings with her superiors in which they vigorously defended GS. There is now a move to make at least the President of the NY Fed a government appointed position, which could also be extended to the other branches. This, in an institution that has fought long and hard to maintain its independence from the government – which in theory is the correct method.

See how easily TB can be distracted from what he planned to report this week?

Have a great and prosperous day!

TB

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11/18/14…Eric Cantor: loser…or is he?

November 18, 2014 at 8:34 am · Filed under banking, economy, financial, Market Regulation, markets, politics ·Tagged , , , , , , , , , , , , , , , , , , , , ,

Quote of the Day from the Friars Club Encyclopedia of Jokes: “I like long walks, especially when they are taken by people who annoy me.” – Fred AllenBloomberg Quote of the Day: “A man who limits his interests, limits his life.” – Vincent Price

Bloomberg Top Stories:

*Abe Tries to Salvage Abenomics With Early Japan Election, Sales-Tax Delay – arigato!

*Abenomics Tries to Shake Up Japan to Wake Up Its Tired Economy – good luck!

*German Investor Confidence Unexpectedly Surges as Economy Skirts Recession – that’s good?

*Stocks Advance With Euro on German Confidence as Gold, Pound Strengthen – some rally!  

*Bank Indonesia Raises Key Interest Rate to 7.75% as Fuel Prices Increase – increase???

*Greek Bailout Review Is Said Stalled as Furious creditors Demand Savings – 10 yr now 8.09%!

*Fed Dual Mandates Collide as Drop in Jobless Rate View With Weak Inflation – 11.2% is low?

*Russia Predicts Recession Next Year If $60 Oil Adds to Tighter Sanctions – good, but ouch!

*China Steps Up Internet Censorship, Blocks Verizon Cloud Before Conference – LMAO!

*Home Depot Third-Quarter Profit Tops Estimates as Customer Traffic Gains – huzzah!

*Wall Street Banks to Reap $316 Million From Actavis, Halliburton Takeovers

*Keystone Vote May be Too Late to Help Democrats Hold Louisiana Senate Seat

*U.S. Said to Pursue More Mortgage-Bond Fraud Cases After Ex-Jeffries Suit

*Eastern European Elections Surprise As Voters Reject Authoritarian Rule

*Thieves Blow Up ATMs in Crime Wave That’s Leaving Chileans Stuck in Lines – hmmm

*Carnival Enlists Public in Marketing Push to Boos Cruise Industry Image – hah!

*Flash Boys Invade $12.4 Trillion Treasury Market in New Era of Volatility – BAD NEWS!!!

*A Witch Hunt in Finance Won’t Make the World a Safer Place – by Mark Gilbert

*Time for Hong Kong’s Protestors to Think Long-Term – not like Occupy Wall Street, sadly!

Monday’s Market Summary

If you had any doubts that this Friday is options expiration, all you had to do was look at yesterday’s markets. The Russell 2000 -0.7%, Dow Transports -0.5%, and whoa…those Dow Utilities surged 1.3% – so much for their selloff last week. The rest? Dow 30 and S&P 500 both up a whopping (sic) 0.1%, while the Nasdaq’s were down 0.4% and 0.3% respectively. NYSE Financials were flat but within that NYSE Brokers -1%; KBW Banks -0.1%; Nasdaq Banks -0.6% (BofA, usually the most active NYSE stock has been 5th the last two sessions. Since 11/6 it is down 2.5% and on the cusp of breaking $17. A/D’s and Breadth were moderately negative; new 52 week highs rose slightly and new lows declined similarly. Ahem, the VIX which had gotten into neutral/slightly bullish territory, corrected rising to 14.73 before settling at 13.99 +.67…don’t think any of this is options related? Think again!

Total NYSE Volume pretty steady at 3.13B shares vs 3.2B vs 3.46B vs 3.25B vs 2.93B. Average volume since 9/30 is 3.6B shares and now falling, or about 600M more than the 12-month average. Shares traded on the NYSE floor – affectionately referred to by TB as REAL volume dipped below average at 694M vs 705M vs 708M vs 718M vs 614M (lowest since 9/15) – still trending lower. For comparison purposes, for the prior 12 months it is a historically weak 712M shares…but since 10/1: 828B shares (and falling) – 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 modestly negative: NYSE: -1.3x vs +1.1x vs -1.8x vs +1.2x vs +1.1x; Nasdaq -1.9x vs -1.1x vs -2x vs +1.6x vs -1.1x. Breadth was strange: NYSE 1:1? vs +1.5x vs -2x vs 1:1 vs +1.1x; Nasdaq -1.7x vs +1.4x vs -1.2x vs +1.6x vs +1.1x. New 52 Week Highs turned around to 242 vs 207 vs 249 vs 276 vs 339 – their range for the year is 39-612!!! New Lows slightly lower at 115 vs 127 vs 146 vs 113 vs 100 vs 85. The 2014 range is 24-1043!!! S&P VIX rose sharply intraday hitting 14.73 (very negative), then closed near the low of 13.99 +.68 and well back in bear territory – bottom of range was a high 13.84. This is its 15th sub-15 close since peaking on 10/15. Heading back toward those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!)? You decide. 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 closed slightly lower. The recent 12 month low yields (10’s 2.09%; 30’s 2.87%; and long TIP 0.83%), 10’s closed at 2.34% -1/8; 30’s 3.06% -3/16; and the long TIP 1.01%! -7/8. Overnight slightly better: 10’s 2.33% +1/16; 30’s 3.06% +1/8; and long TIP 1.00% +5/16.  

Libor update: 0.232% 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 0.09-0.10%. T-Bills: 0.1%, one-month, 0.02% 3 mos, 0.14% one year???

Foreign bond yields lower, except Greece, now back above 8%; watch Japan! (Benchmark is 10yr): Germany 0.79% -1; UK 2.12% –; France 1.14% -1; Italy 2.31% –; Spain 2.09% -1; Portugal 3.13% –; Greece 8.09% +23!!!1 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.50% +3.

Gold closed little changed at $1183.50 -$2.10 – but the range was very narrow. Friday’s session high was $1192.90 – highest since 10/31 AND a ‘positive key reversal for 2nd time in six sessions. 11/7’s low was $1130.40, a new recent low!). The recent intraday high of $1255.60, highest since 9/10/14, was rejected. The last 14 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 $1206, the 50 day $1211, then the 200 day at $1278, 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, it is STRONG! $1201.80 +$18.30 and near its high of $1204.10 – first time above $1200 since Halloween! Silver also rising to $16.40 – 2nd day above $16, also highest since 10/31 and back from 11/5’s low of $15.12, more than a five year low.

Crude closed slightly lower at $75.64 -.18, two days after setting a new recent low of $74.07, lowest since 9/17/10!!! 10/25’s high was $84.83. There have been 33!!! 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 ($83.63!), then the 50 day ($85.48), and lastly the 200 day (97.14), all continuing to plunge and accelerating to the downside. If it fails here we are now looking at $70! The recent range is now $74.07-$112.24 since 3/1/12. Overnight it is slightly better at $75.92 +.28 with a high of $76.44.

European equities higher, Asia mixed but Japan/Korea strong!!! UK +0.5% vs -0.1% vs -0.1% vs -0.1% vs -0.4%; France +0.7% vs – vs +0.4% vs -0.4% vs -1.1%; Germany +1.2%! vs – vs +0.1% vs -0.2% vs -1.3%; Japan +2.2%! vs -3%!!! vs +0.6% vs +1.1%! vs +0.5% vs +2.1%! Hang Seng -1.1%! vs -1.2%! vs +0.3% vs +0.3% vs +0.8%; Korea +1.2%! vs -0.1% vs -0.8% vs -0.3% vs +0.2% vs +0.2%; India -0.1% vs +0.5% vs +0.4% vs -0.2% vs +0.4%. U.S. equity futures little changed in a narrow range: DOW -3 (range 41?); SPX -2 (6!); NDQ -5.50 (18).

 

Some random thoughts:

…loser…only if that means earning $1 million a year and a guaranteed $400k bonus! Ah, but that’s next year. He was hired for $400,000, a $400,000 signing bonus and $1 million in restricted stock that vests over five years. Next year, a guaranteed $1 million plus $400,000 in restricted stocks. Moelis says the former college professor turned Tea Party advocate and a House Majority Leader, will add to their boardroom talent (bored room?). Let’s drill down, shall we?

Cantor is a college professor turned Tea Party politician…he has no background in investments (not that that means anything). So while he is licking his wounds from being surprisingly defeated, in the primary no less, by a nobody (a first for a Majority Leader), he gets the deal of a lifetime. Isn’t that special?

Who the hell is Moelis and Company? Founded in 2009 it received accolades from financial publications in 2009-11. But…have you ever heard of them? Not TB, not until now! Well you will hear more starting today as they are doing a secondary offering (IPO was April 15th – interesting date, that)…led by Goldman, Sachs, natch. The IPO wsa priced at $25 and was one of those rarities where it didn’t soar on opening day…high on April 15th was $27.32. It was fallow for about a month then rose to $37.36 on 9/2, closing yesterday at $34.22. So what about today’s offering? Bolster capital? Hardly! The company says the proceeds will allow existing shareholders to sell and while the company will buy some shares, those will be used to buy out employees holdings. Net effect on company – zero…but less equity for management…isn’t OPM great???

So beside Cantor, why the interest in this company by TB? Well…they bill themselves as a ‘boutique’ firm serving international clients…ok…but that word has a lot of bad historical connotations. For instance:

In 1982, when TB was an institutional bond salesman with Merrill Lynch, a firm called Drysdale Securities, ‘couped’ a treasury auction – that is, they bought it driving the price of the bonds high as the other primary dealers were forced to cover. Ah, but then, it came out who owned it and guess what? The bid vanished! (TB knew of Drysdale as a no-impact muni bond dealer so when he was told it was a ‘boutique’ government securities firm, TB was left scratching his head: how does a small firm outsmart Salomon Brothers and Goldman on a huge treasury auction. The answer is: they don’t!) They had to finance it and that was a problem. Hint: when you own most of what there is of anything in a transparent market like U.S. treasuries) more or less. But how?

They tried borrowing but nobody wanted to lend to them…enter Chase: they were ‘retained’ to get repo customers for the paper. Here is what they said to the big banks they called: “would you do a repo with Drysdale?” Answer of course was an emphatic NO! “Okay, would you do it if Chase guaranteed it?” Sure! Why not! So when the firm imploded under the weight of the treasuries, Chase was on the hook (which they tried to deny) for the losses on the repo’s (actually reverse repurchase agreements as the client was putting up the money in return for the bonds as collateral.

Then of course, there was another politician who really turned bad but as a member of two tightly-knit clubs: being a former senator and a governor (NJ): Jon Corzine, former CEO of Goldman Sachs (why does that name always come up???). Interesting as he was preceded by Stephen Friedman who later, while a director of Goldman, and serving as president of the New York Fed, was buying up Goldman shares, even as Lehman was collapsing on insider knowledge that GS would be declared a bank and thus get a bailout…the bailout engineered by Corzine’s successor, now Treasury Secretary Henry Paulson…got it?

Corzine became the CEO of MF Global and with knowledge of its teetering financial condition tried to arrange a sale so he could collect a nice bonus. Failing that, it was shown that client funds were used to inflate the capital of the firm – without their knowledge – which Corzine denied but which the courts held that he was responsible…not that anything happened to him however. What was interesting to TB was that MF was a ‘primary government securities dealer’. TB having worked for two (Merrill Lynch, and LF Rothschild when their application was in to be a primary), and they were closely monitored by the New York Fed. That practice was abandoned by the Fed in the early 1990’s, who said they were not responsible for the financial condition of the primaries. Not responsible??? That is like a bank making a loan with no documentation…an unacceptable excuse! (He was beaten for governor by Chris Christie…who got his own share of scandals).

Back to Friedman, when GS became a ‘bank holding company’ – which is not the same as a bank – he was elected to and served as president of the New York Federal Reserve while a director of GS…a violation of Fed rules, but he got a ‘waiver’. Then while president he began accumulating GS stock claiming it was ‘undervalued’ – this ‘used to be’ known as insider trading. Without admitting guilt he relinquished the shares and disgorged the profits and resigned from the board – of the Fed, not GS! Compare and contrast to Martha Stewart for just one minor infraction!

Enough! How about some other cases of politicians doing well in the private sector:

Let’s start with Sen. Billy Tauzin…ah, another GOP guy. He led the Bush 43 – induced design of the seriously flawed Medicare Part D…insuring that unlike Medicaid, it not be able to contract for prescription drugs. For this he was awarded (after not running again for ‘health’ reasons), was named head of the Pharma lobby and earned several million over the next few years. Nice work if you can get it…and have no morals!

Next, good old boy Sen. Phil Gramm of the great state of TEXAS! Where do we start with him? How about first, his wife Wendy, a former CFTC chair who exempted Enron from commodities regulation, then served on the audit committee of Enron and found nothing wrong, while making a million on the stock. Unbelievable! As for Gramm, he co-authored the Commodities Futures Modernization Act, and then not as a senator violated rules by lobbying on the floor of the Senate. What the Act did was destroy all efforts to regulate derivatives as former CFTC head had attempted, only to be slandered by Rubin, Summers, and of course, Greenspan, who failed to see three bubbles which he oversaw, and never saw a regulation he liked (here is a link to this slime: Phil Gramm/Mother Jones . What did Gramm get?…why to be Chairman of UBS Americas Investment Bank, retiring in 2012.

Getting tired of reading? TB is tired of writing so skipping Larry Summers brief stint being paid by the Wall Street lobby…not as a lobbyist but giving speeches paid for by firms, let’s skip to the wonderful Robert Rubin, former Treasury Secretary…oh yeah and from…Goldman Sachs.

Thanks to the revolving door the Bill Clinton promised to close, he left treasury to become Vice Chairman of Citicorp – without portfolio…and charged with dealing with their biggest accounts (just like Cantor will do!). As a former Citi exec told me, he constantly told them to take more risk…be like Goldman (but Citi really was a bank!), and watched as its assets declined by 70%. Then, when CEO Chuck Prince resigned in the scandal.. Rubin briefly served as Chairman…Sandy Weill stepping aside – wisely! Rubin said he had no idea they were taking risks…despite whistleblowers warning in memos to senior management of undocumented loans!

(Note also that while Treasury Secretary Weill enlisted his support to kill Glass Steagall, which he did and which allowed Citi to do a stock swap for Travelers, which Weill also controlled. Weill, couldn’t even wait for the ink to dry on the bill so he ‘illegally’ did the swap before it died! Nothing, of course, was done.

Get it? Nothing to see here…nothing new…just another quid pro quo…ain’t that special!

TB

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11/1/13…it’s later than you think! A RANT!!!

November 1, 2013 at 9:08 am · Filed under banking, economy, financial, healthcare, markets, politics ·Tagged , , , , , ,

Today’s Quote from the Friars Club Encyclopedia of Jokes: “Did you hear about the dyslexic who committed suicide? He threw himself behind an oncoming train.” anon

Bloomberg Quote of the Day: “The truth will set you free. But not until it is finished with you.” – David Foster Wallace – note that he committed suicide…moral?

Bloomberg Top Stories:

*Barclays Said to Suspend Chief Currency Dealer Ashton, Two Others in Probe

*RBS Forecasts Loss After Pushing $61 Billion of Toxic Assets Into Bad Bank

*Euro Slides as Italian Bond Yields Drop on ECB Rate-Cut Bets While Copper Advances

*Chrysler’s U.S. Sales Increase Trails Estimates on Delays in Jeep Cherokee

*Economists Cut Fourth-Quarter U.S. Growth Forecast on Government Shutdown

*Global Stocks Cap Biggest Advance in Two Years to Beat Bonds, Commodities

*Sony’s Bond Rating May Be Cut to Junk by Moody’s! – a major fall from grace!

*Tesla’s Stock Rally Hits $4.1 Billion Pothole With Tumble in October – 18% QTD!!!

*JPMorgan Joins Citigroup in Responding to Currency-Exchange Investigations

*Twitter Said to Get More Than Enough Demand to Sell IPO Shares Next Week

*Speedy Lunches Urged at SEC as Union Boss Says Agency Is Tracking Workers

*Snowden Considers Testifying in Germany on NSA If Russian Conditions Met

*Wife Poisoning Husband’s Lover Tests Chemical Weapons Law in Supreme Court

*High Winds, Thunderstorms Pose Potential Travel Problems in U.S. Northeast

Due to Government Shutdown Payrolls for October to be released NEXT Friday, November 8th – well done, GOP extortionists!…ideological fools!

Thursday’s Market Summary:

A second day of weakness in stocks following the ‘faux’ rally. All indices were down from 0.2% (NDQ 100) to 0.8% (NYSE Financials, with most down about 0.4% or more.

Total NYSE Volume rose slightly for a fourth straight session to a slightly above average 3.82B shares vs 3.53B vs 3.33B vs 3.19B vs 3.11B. But do you want to see rising volume on two consecutive down days??? REAL NYSE Volume also surged to a high 908M shares vs below average 687M vs 683M vs 732M vs 670M – finally above two weeks ago’s 892M shares – highest since 9/28’s 2.06B on quarterend. Does this mean ‘real’ investors were selling? You decide!

The Nasdaq 100 was off 0.2% vs -0.2% vs + 0.3% vs flat vs +0.5%. Decliners outpaced by 1.5:1. SEVEN members lost more than 1 point while three gained more than a point: GILD -2.3 vs +4.3 vs +1.2 vs -1.4; AAPL -2.1+6.4 vs +2.6 vs -4.7 vs +5.7 vs +3.8 vs -1.2 vs +10 vs +3.5;  CELG -1.1 vs -1.4; BIIB -1 vs +1.4; CSCO -1; BIDU -1 vs +1.4 vs -1.3; FB +2; AMZN +1.2; EXPE +1

Advance/Declines and Breadth were both negative for a 2nd day. New 52 week highs plunged to 252 vs 394 vs 460 vs 380 vs 500, while new lows rose again to 79 from a weak 46 vs 29 vs 31 vs 34 vs 29! VIX rose slightly again, closing at 13.65 +.24 with an intraday high of 14.02 following a 15.27 print, highest since 10/16! Since hitting 21.34 on 10/9 – close to the 12/28 high of 22.72 and 6/24 high of 21.91.

Bonds closed mostly lower except the  30 yr which gained 1/8. All weaker overnight following payrolls. Gold PLUNGED to $1318.70 before closing at $1323.50 -$25.80!!!  Crude also closed lower with another low of $96.03 before closing at $96.38 -.39.

Dow 30 –0.5% vs -0.4% vs +0.7% vs flat vs +0.4%; Dow Transports –0.5% vs -0.6% vs +0.2% vs +0.4% vs -0.2%; Russell 2000 -.0.5% vs -1.2%! vs +0.4% vs flat vs -0.1%; Dow Utilities -0.6% vs -0.6% vs +0.2% vs -0.3% vs +1%!!!; S&P 500 -0.4% vs -0.5% vs +0.6% vs +0.1% vs +0.4%; Nasdaq Composite -0.3% vs -0.6% vs +0.3% vs -0.1% vs +0.4%; NDQ 100 -0.2% vs -0.2% vs +0.3% vs flat vs +0.5% . No one said it is easy!

*NYSE Volume rose an above average 3.83B shares vs 3.53B vs 3.3B vs 3.19B vs 3.11B. The record high (?) is 4.82B shares on Q3 end of quarter while 2.52B is 4th weakest of 2013…1.96B is the low). REAL NYSE Volume surged to a rare 892M shares from a below average 687M vs 683M vs 732M vs 670M (2.06B shares also on Sept. expiry was 3rd highest ever (6/30/06 3.38B; 7/12/02 2.29B while 482M on 7/3 in a shortened trading session is the 2013 low). The 12-month average is 723M shares. The average since 6/28’s 1.75B share day, is just 694M shares, ranging from 482M to 2.025B shares on 9/20. There have been just EIGHT 1B+ share sessions! There have now been 35 800M+ shares in 2013: 14 up, 19 down, and two mixed.

*New 52 week highs have ranged from 33-864. They plunged to 252 vs 394 vs 460 vs 380 vs 500. Recent high is a super-strong 890!!! New lows rose to 79 from a weak 46 vs 29 vs 31 vs 34 vs 29.  

  1. Advance/Declines were negative again: -1.5x vs -2.4x vs +1.6x vs -1.2x vs +1.4x vs +1.4x (recent range -17.5x to +6x) on NYSE and -1.6x vs -2.8x vs +1.5x vs -1.1x vs -1.1x (recent -4x!!! to +3.8x). Breadth was similar: -1.8x vs -1.8x vs +1.8x vs -1.2x vs +1.5x (recent -18.6x!!! to +7.2x!!!) on NYSE and -1.1x vs -2.8x vs +1.4x vs -1.3x vs -1.2x (recent -12.8x to +6.5x).  
  2. NYSE Financials fell by 0.8% vs -0.5% vs +0.1% vs +0.2% vs +0.2%. BofA most active plunging -1.4% vs +0.1% vs +0.3% vs -0.6% vs -0.2%, closing at $1 +.02. It has struggled since hitting $15.03 on 8/1 – highest since Jan. 14 and major res. Brokers -0.95 vs -0.5% vs +0.4% vs -0.4% vs +0.4%; KBW Banks -1.1% vs -0.2% vs +0.1% vs +0.2% vs +0.3%; Nasdaq Banks -1.1% vs -0.2% vs -0.2% vs +0.5% vs +0.1%.
  3. Volatility (S&P VIX) rose slightly with a session high of 14.02 vs 15.27 – highest since 10/16 before closing at 13.75 +.10. The recent range is now 11.83-21.01!!! It peaked at 22.79 on 12/28/12. It is still BELOW the 40 day (15.05), the 50 day (15.23) and the 200 day (14.39)…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks mostly weaker: UK +0.1% vs -0.4% vs +0.2% vs +0.6% vs -0.1%; France -0.3% vs +0.4% vs +0.1% vs +0.6% vs -0.7%; Germany -0.1% vs +0.1% vs flat vs +0.3% vs -0.2%; Japan -0.9% vs -1.2% vs +1.2% vs -0.5% vs +2.2% vs -2.8%!!!; Hang Seng +0.2% vs -0.4% vs +2%!!! vs +0.2% vs +0.5%; Korea +0.5% vs -1.4%! vs +0.4% vs +0.2% vs +0.7%; India +0.2% vs +0.6% vs +0.5% vs +1.7%!!! vs -0.6%. U.S. stock futures higher but in an extremely narrow range: DOW +47; SPX +4.10; NDQ 12.50.

Bonds closed lower ex the 30 yr and are weak overnight: 10 yr Treasury 2.58% -3/32 (recent range 2.99% to 1.63%!!!), and the 30 yr range 2.67% to 3.90%, 3.65% -5/16. The long TIP is 1.35% -1/2. The (record?) low of 0.36% was set on 4/5. Recent high yield: 1.63%! Libor update: 0.242% 3 mos, 0.355% 6 mos. Both just a tad above  record lows!!! Banks remain cautious and loaded with cash!!! Foreign bonds little changed and mixed – but look at Greece, lowest yield since May 15th!!! Germany 1.69% +2; UK 2.63% +2; France 2.16% +1; Italy 4.10% -3; Spain 4.00% -2; Portugal 6.14% +3; Greece 7.83%!!!! -3!!! Another new low! Recent range now: 7.83%-12.57%. Japan 0.59% unched.

Gold was blasted losing over $25 with a low that $5 below that and are back below both the 50/40 day m/a’s now major res, closing at $1323.50 -$25.80!!! – a 7 day low! The recent low is $1251 on 10/15 – lowest since 7/10. Recent high was $1375.40 on 9/19.  6/27’s intraday low was $1179.40 – lowest since at least 2011 and critical support. $1300 remains psychological support, but major res now at the 40 day ($1326) and the 50 day ($1340). Major resistance at $1375, the 9/19 high. The 200 day is at $1430. Overnight it is being hit hard again again  to $1311.20 and remains weak at $1313.80 -$9.90!!!

Crude closed lower after falling to $96.03 before coming back to close at $96.38 -.39!!!. Last Thursday’s low was $95.95 – was lowest since 6/27 and was taken out overnight!!! It has shown no sign of strength since 9/18’s surge to $108.49. 9/19’s session high was $108.99! Recent rally high and close are $110.70 and $110.53 respectively. It is way below the 40/50 day m/a’s ($103.83-103.80), converged, and still major resistance! The 200 day ($98.73) is also 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 is lower again at $95.72 -.66…with a session low of $95.59, lowest since 6/27!!!.

Some random thoughts:

TB has received just one letter on his rants of late and it said why not blame Obama, with a follow-up to impeach him? The author said Obama lied about his healthcare plan…concept: all politicians lie…but does this deserve impeachment?

How about shutting down the government and leaving the people without someone to do ‘their’ business for months? All so a few ideologues can overrule the majority. Want more?

  1. As cited yesterday, both parties and Obama are culpable but the use of extortion in shutting down the government (and the reason October payrolls won’t be until 11/8!), falls squarely on the shoulders of the GOP. Furthermore, Rand Paul’s plan to stop the nomination of the well-qualified Janet Yellen to pressure Dems on his Federal Reserve plan is unconscionable. We remain in crisis mode yet Congress is doing nothing!
  2. National health care was a GOP proposal, until the Clinton’s and later Obama jumped on it. As a result we have a bad law. The GOP claims they weren’t asked for input yet the Tea Party zealots didn’t want that, they wanted to kill it. As passed it is a seriously flawed act but one that is fixable. There are two major issues: first, we are a mobile nation and workers need to be protected. Since each insurer has to have a separate subsidiary in each state, some that are not profitable to work in have only a couple of insurers. Thanks to our brilliant Supreme Court and interpretation of the Constitution, it cannot be done at a federal level leaving it to the states many with corrupt insurance commissioners or good old boy networks. This is a major cost factor. The insurers are opposed to mobility as it means they cannot refuse to insure anyone or continue their insurance. Flawed. The second, like with Bush’s ill-advised Medicare Part D which was not funded and the real reason for Medicare’s problems had the added albatross of tying Medicare’s hands from negotiating prescription drug costs making them 30% higher than Medicaid’s…and Obama fell into this trap too! Seriously flawed
  3. As for the roll-out, the problems are inexcusable but TB has experienced similar with ill-designed programs in the private sector…so enough! Fix it!
  4. True unemployment remains high while the Congress sits on its collective fat (and wealthy) ass, while trying to cut all costs except the military…even giving them money they didn’t ask for…yet blaming it on entitlements, which can and should be fixed. Food stamps are not the problem…average cost $4 a day…and most going to children of families in poverty. Unemployment caused by a financial sector gone wild with no accountability and likely to repeat the process again. As a former banker I am thoroughly disgusted with the actions of the biggest banks and mortgage companies as well as Countrywide Savings. No one held accountable, except a handslap for Angelo Mozillo who is guilty of securities fraud! Meanwhile Congress continues to weaken Dodd-Frank as they are beholding to the banks and their contributions.
  5. A corrupted Congress whose members protect themselves and build up war chests that can be used for leverage after they leave office…many of whom have registered to become lobbyists…get it? Tea Party, why aren’t you stopping this?
  6. Congressional ethics? Never heard of it. Also they protect their own. Why hasn’t Jon Corzine been prosecuted? Because he is a member of the club…former Senator and Governor…and who fraudulently tried to sell the company to get his bonus while illegally borrowing from client accounts. Where is the justice in this?
  7. Blaming the Senate for a failure to pass a budget when the control is by the ideologues in the House. Boehner should step down as he can do nothing with this unruly crew. Holding up nominations for qualified individuals just to make Obama look bad and be ineffective…when he was re-elected by a majority of the people. How un-American! If you were asked to take an appointed position would you do it and place your life in limbo for perhaps a year? Not TB!

Impeach Obama? …and then what? Do you seriously believe that, even if successful it would accomplish anything. Meanwhile the white/blue collar Tea Party members continue to coddle the wealthy giving special tax treatment to the wealthiest Americans like carried interest that taxes investment income at 15%…how many of you who WORK for a living would like that? Also, the Tea Party loves to talk about all the members and their small contributions…bullshit…it was and is financed by the Koch brothers for their own benefit who must get a good chuckle every time they pick up the newspaper.

No, it should be impeach Congress…with an approval rating of less than 10% (lowest on record), but assured reelection in the House by their special districts which with a wink favor incumbents of both parties.

You tell me if the founding fathers would be proud of us and our new robber barons, who are unwittingly aided and abetted by misinformed individuals an a press that is either biased or gives time to fallacious remarks and causes just to appear ‘unbiased.’  No wonder our young people get their news from The Daily Show…comedy but with fact!

Enjoy your weekend…if you can…while the country disintegrates…its your kids and grandkids problem!

TB

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7/11/13…”I am not a crook”

July 11, 2013 at 8:57 am · Filed under banking, economy, financial, markets, politics ·Tagged , , , , , , ,

From The Friars Club Encyclopedia of Jokes: “Marriage means commitment. Of course, so does insanity” – unattributed, and…

“Marriage is bliss. Ignorance is bliss. Ergo…” – unattributed…to protect the author!

Bloomberg Quotes of the Day: “Humility is attentive patience.” – Simone Weil – is that Sanford’s wife? If so she has the patience of a saint while he has no humility.

Bloomberg Top Stories:

*Bernanke Supports Pressing On With Stimulus Amid Debate Over Tapering QE

*Stocks Advance With Metals, Bonds as Dollar Weakens on Bernanke Comments

*First-Time Jobless Claims in U.S. Unexpectedly Climb to a Two-Month High

*Deutsche Bank Opaque Loans From Brazil to Italy Obscure Risk for Investors – !!!

*Cross-Border Swaps Agreement to End U.S.-European Union Regulation Overlap

*U.S. Consumer Confidence at Highest Level in Five Years in Bloomberg Index

*Commodity Traders Face New Squeeze as Storage Congestion Spreads to Cocoa

*Property Returns Crush Hedge Funds as Investors Seek Alternatives – that is called chasing performance and ultimately ends in a trail of tears!

*Egypt Interim Leader Assembles Cabinet Shunned by Brotherhood Amid Arrests

*Germans Hail Snowden as U.S. Spying Evokes Stasi Seizing Lives of Others – !!!

You can’t tell the players without a scorecard. Yesterday was a mixed day…by every definition. The lagging Nasdaq indices turned in the best performance at +0.5%/0.6% respectively followed closely by Dow Utilities +0.4% vs -0.6% Tuesday’s high flier Dow Transports was the biggest loser a day following that big 2.3% – 142 point gain! Movers led by ALK +5.8 vs +21.7!!!; UPS +2.8; JBH 1.1 while the losers were KSU -11.9 vs +13.3; UNP -9.7 vs +17.2; GMT -7.3; UAL -6.8; NSC -5.3 – six others lost more than one index point! What a difference a day makes! Our continued coverage of the chppy NDQ 100 provides these movers: MSFT +2.5; AMGN +2.4; QCOM +1.6; GILD +1.3 vs +1.4; CSCO +1.2 vs +1.4, these six totalled 9 points of the total 16 point gain where winners outpaced losers by 2.7:1…the losers? ORCL/AAPL both -1.1…AAPL gained 5.7 Tuesday to lead!

Advance/Declines and Breadth were solid on NYSE Stocks, Nasdaq not so much. New 520 week highs slipped to a still strong 606 from 669. while new lows were more than halved to 70 from 180. The VIX declined again to 14.35 -.43…a little stronger. Gold rallied, Crude spiked then closed just slightly higher and bonds held Monday’s gains…can’t ask for much more than that these days.

Here you go:

* Dow 30 -0.1% vs +0.5% vs +0.6% vs +1.3% vs +0.4%; Dow Transports -0.7% vs +2.3%!!! vs +0.1% vs +1.5%! vs –0.3%; Russell 2000 +0.2% vs +0.9% vs 0.4% vs +1.4%! vs +0.2%; Dow Utilities +0.4% vs +0.6% vs +1.3% vs -0.5% vs -0.2%; S&P 500 flat vs +0.7% vs +0.5% vs +1% vs +0.1%; Nasdaq Composite +0.5% vs +0.6% vs +0.2% vs +1% vs +0.3%; NDQ 100 +0.6% vs +0.6% vs +0.1% vs +0.7% vs +0.2%.

*NYSE Volume declined to a below average 2.99B shares vs 3.14B vs 3.3B vs 2.63B vs 2.63B (1.96B is the lowest of 2013). REAL NYSE Volume also declined to a below average 671M shares vs 692M from a strong 905M shares vs 625M vs 482M – a new 2013 low. The 12-month average is 723M shares! The range for 2013 is 482M to 2.01B. There have been just SEVEN 1B+ share sessions! There have been 26 800M+ shares in 2013 – 9 up, 17 down, but on trades of less than that 87 have been up and 31 down…there have been 25 mixed sessions.

*New 52 week highs have ranged from 33-864. They slipped again to 451 vs 606 vs 669 vs 531 vs 165. New lows declined to 60 vs 70 vs 180 vs 64 vs 61 vs 33 (a new recent low!).

  1. Advance/Declines were barely positive: 1.1x vs +2.8x vs +1.4x vs +1.3X vs -1.5% (recent range -17.5x to +4.4x) on NYSE and +1.4x vs +1.6x vs +1.3x vs +2.8x vs -1.1x vs +2.4x vs +1.1x vs +3.5x! (recent -3.5x to +3x). Breadth was also minor and mixed: -1.2x vs +3.4x! vs +1.7x vs +1.8x vs -1.6x (recent -18.6x!!! to +6.4x!!!) on NYSE and +1.3x vs +1.2x vs +2.4x vs +1.4x vs -1.2x (recent -12.8x to +6.2x)  
  2. NYSE Financials declined by 0.4% vs +0.6% vs +1.3%! vs -0.3% vs -0.2%; Brokers -0.5% vs +1.3% vs +0.3% vs +2.4%! vs +0.2%; KBW Banks -1%! vs +0.4% vs +0.6% vs +2.6% vs flat; Nasdaq Banks -0.6% vs +0.4% vs +0.1% vs +2.4% vs +0.3%. BofA was most active: -1.2% vs +1.9% vs +1.7% vs +1.8% vs -0.5%…$13.37 -.16.
  3. Volatility (S&P VIX) declined for a fourth straight day below 15 and the close of 14.21 -.14 is the lowest since May 24! 6/25’s session high of 21.91 was highest since 12/31/12!!! The range since 4/12 is 11.99 (multi year low) to 21.92, It is well below the 40/50 day (15.72/15.24) and the 200 day (15.06)!!!…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

European equities moderately better; Asia STRONG: UK +0.6% vs -0.6% vs +0.8% vs +0.8% vs +0.3%; France +0.9% vs -0.7% vs +0.6% vs +1.7%! vs +0.1%; Germany +1.1%! vs -0.5% vs +0.9% vs +2.3%!!! vs +0.1%; Japan +0.4% vs -0.4% vs +2.6%!!! vs -1.4%! vs +2.1%!; Hang Seng  +2.6%!!! vs +1.1%! vs +0.5% vs -1.3%! vs +1.9%; Korea +2.9%!!! vs -0.3% vs +0.7% vs -0.9% vs -0.3%; India +2% vs -0.8% vs +0.6% vs +0.4% vs +1.2%. U.S. equity futures strong: DOW +128; SPX +16.20; NDQ +27.25! Stocks are opening strong with Dow up 146!

Bonds closed higher yesterday but still near levels not seen since August 2011! Overnight they are stronger. The 30 yr TIP closed little changed at 1.38% -.01. Currently: 10 yr Treasury 2.59% (recent range 2.74% to 1.63%!!!), and the 30 yr range of 2.82% to 3.71%, currently 3.64% +3/16. The long TIP is now 1.36% +9/16 – and remains the weakest link since the (record?) low of 0.36% on 4/5. Recent high 1.53%! Libor update: 0.268% 3 mos, 0.404% 6 mos, still slipping and remains close to the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields mixed: Germany 1.63% -3; UK 2.37% -4; France 2.24% -1, Italy 4.52% +8!; Spain 4.85% +6!; Portugal 6.69% +12!; Greece 10.69% +9 vs 10.85% +28!!! vs 10.52% vs 10.54% +40!!! vs 10.85% -37!!! vs 11.22%. Recent range: 8.04% to 12.57%.  Japan 0.82% -3. Currencies remain a ‘crapshoot’.

Gold closed slightly higher yesterday but was up all session closing at $1247.40 +$1.50. Repeating: the combined bullion in the gold ETF’s was 2450 or so metric tons…it is now 1800 tons– a 25% decline…and when the ETF’s are being sold the metal has to be sold creating a maelstrom. It is nearing last Thursday’s levels again from Friday’s loss of $39 which pushed it down almost to breaking $1200. The high took out minor resistance at last weeks highs at $1257-1259 with a high of $1265– contrast to 6/27’s intraday low of $1179.40 – lowest since at least 2011 and now critical support. Major res is the 40 day/50 day: $1340/1364 – both declining, and way higher, the 200 day – $1585!!!  Overnight it is $1283.50 +$36.10 – with o/n high $1297.20! Crude closed strong at $106.19 +$2.66 with a new rally high of $106.66 – highest since 5/3/12. It remains well above the 40/50 day m/a’s (96.50/96.20), while the 200 day ($92.54), is distant support. First support is $102.19 – a double top from last week!  4/18’s low of $85.61 was lowest since 12/11! It is off slightly overnight at $105.68 -.84, but not before putting in a new rally high of $107.45!! – highest since 3/1/12!The range is NOW $85.61-$107.45 since June 29, 2012..

Some random thoughts:

…today’s slug is the famous quip of Richard Milhous Nixon…which of course he was!

BoA is the barometer since is the only consistently most active of the financials. BAC closed $13.37 -.16 but that is 1.2% following a string of gains. Trading below $13 again would be a key…40 day is $13.19, 50 day $13.09!!! Then $12.73, the July 3 low. Citi follows BoA so no need to watch it.

Wells Fargo WFC is important as it is the cleanest of the big banks. It closed a gap from its run to a 52 week high ($43.08) at $42.07-42.29 closing yesterday at $42.07 but with a $42.29 low. You can also follow the KBW Bank Index which declined by 1% yesterday.The point is they have all moved in tandom!

Contrast to the regionals of which I like USBank USB the best. It’s high Monday was not seen since 10/3/08 – now that’s strong! It closed at $37.07 yesterday with a low of $36.82, nearly closing a minor gap from 7/5 at $36.78. That should be a key. I like it but not with a 2.48% indicated dividend…23 cents up from 19.5 cents in March, 40 day is $35.55, 50 day 35.06 – both steadily rising!  (JPM is highest at 2.77% up from trailing 2.33% – up 13 cents in two raises since Jan.! BUT new capital rules may preclude more increases), The outlier is BBT which just submitted its new stress test on Friday. It peaked Monday at $35.23 but fell to $34.54, closing at $34.80 – gap below at $34.45-34.32.It’s indicated divvie is $2.64% and was just raised by 2 cents to 25 cents.

Brokers…I refuse to call them banks…while GS is the most visible (it is way off its high from 6/10 of $168.20) closing at $155.83 below both the 40/50 day $158.28/156.08), the key ones are the recovering Morgan Stanley MS which peaked at $27.17 on June 10, bottomed out at $23.83 and ran while the others were sliding, to $$25.52 yesterday barely taking out Tuesday’s $25.49 high so that is resistance with support at 40/50 $25.23/$24.79. the other is the formerly underperforming UBS which has been a dog and closed at $17.25 vs the 40/50 day of $17.64/17.71 – just crossed! For it key support is the also rising 200 day at $16.06 – avoid! Of course the crook, Phil Gramm who was Vice Chairman of UBS Americas from 2003-2012 and resigned amid those big losses…how can TB call him a crook (so is Jon Corzine but you never call a former senator a crook…a governor yes, a representative yes – need I provide examples?…but Corzine was BOTH)?  Because he retired from the Senate to take that position and was the first former Senator EVER to lobby (which is prohibited by Senate rules), on the Senate floor! Will end with this quote: “Joining UBS was one of the best decisions I ever made in my life.” do tell, Senator…do tell! Wait…wasn’t your wife Wendy, former CFTC Chairman, on the audit committee of Enron during the scandal…you bet she was, Phil, you bet she was!

Lastly, how about SAC’s Stephen Cohen? Got off with a big fine for insider trading, but no prosecution…so far that is…just look at the hubris:

When Steve Cohen and his investment company SAC Capital Advisors agreed to 

pay a record $616 million in March to settle insider trading charges by the Securities and

Exchange Commission, the billionaire hedge fund manager may have thought the case

and a pocketful of troubles were over. Within days of the settlement, he celebrated by

plunking down $60 million for a new oceanfront home in East Hampton, Long Island;

that same week news came out that Cohen had paid $150 million last fall to buy Picasso

masterpiece Le Reve from casino magnate Steve Wynn.

But Cohen’s troubles are far from finished. In fact, they may be just beginning. 

The U.S. government is considering whether to pursue criminal charges against 

Cohen under the Racketeer Influenced and Corrupt Organization Act, a federal 

law enacted some 40 years ago to prosecute organized crime. More recently, the 

statute has been used to prosecute criminal wrongdoing on Wall Street — most 

notably, Michael Milken, credited for developing the market for high yield bonds,

 was sent to prison by the government in 1990 on RICO-related charges.

The government has already put away a number of high-profile Cohen associates 

for a string of misdeeds related to insider trading. The SAC founder will be the 

biggest fish of all if government lawyers can land him. Using RICO as its 

prosecutorial bludgeon, the U.S. Department of Justice would buy time — another 

five years or so — to build a case that Cohen headed an empire rife with corruption.

The RICO strategy could be an exercise in “swinging for the fences.” As

Institutional Investor contributor Amy Poster writes in her feature-length story, 

the U.S. Attorney’s Office for the Southern District of New York, which under U.S. 

Attorney Preet Bharara is the arm of the DoJ leading the fight against insider 

trading, has racked up a list of stellar successes, with a culture that encourages its 

people not to fear losing. (Source Institutional Investor, latest issue!)

Note that at least Amy Poster is in charge of RICO prosecutions, not Eric Holder who doesn’t want to try bankers…for fear of hurting ‘innocents’…and the common defense is that they don’t have enough evidence to convict. Aha! Just like local government DA’s – its all about the stats. The defense is that instead they are attacking them civilly and collecting serial record crimes (let’s see if they have the guts to prosecute Cohen). Mr. Holder: just who do you think is paying those record fines? Not the perps…the shareholders –  who are being penalized once again while the ‘bad guys’ continue to run the banks (includes faux banks!). Whatever happened to the way Elliot Spitzer used to handle it? …of course it got him in trouble over his personal matter on prostitution but you can bet who tipped off the Feds, right? The guys he went after you can bet!  Spitzer is alive and well and making a run for N.Y.State Controller…why not? After all, disgraced Representative Anthony Wiener is leading in the race for Mayor of New York City. Is that a great state or what? …or what!

Have another great day! It’s beautiful here in Minneapolis!

TB

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12/7/12…just another payrolls Friday

December 7, 2012 at 9:38 am · Filed under banking, economy, financial, markets, politics ·Tagged , , , , , ,

December 7, 1941…a day of infamy, Pearl Harbor Day…which caused this song:

Remember Pearl Harbor, as we march against the foe…the end of U.S. pacifism.

December 7. 1994…we learn that Orange County, CA filed for bankruptcy at 5pm the previous day  in the biggest bankruptcy by a municipality of all time…and caused merely by portfolio speculation, not economic events in a battle egos between two treasurers, the other L.A. County…whose treasurer went on to San Bernardino County, and was later convicted of receiving bribes in the form of travel ‘perks’ by the brokers it did business with…nice, huh? Orange Country forever changed TB as he testified twice before federal grand juries as a victim (his clients), former ML employee, and expert witness. In the second he was the only money manager willing to testify…the others all backed away fearing reprisals from Merrill…they wouldn’t even testify under subpoena as TB did. His satisfaction came when Merrill blinked and settled the case right before the deadline. It’s good to do the right thing…even if it turned his hair white!  

Bloomberg Quotes of the Day:

“Greatest Fools are oft most satisfied.”  –Nicolas Boileau

…certainly seems applicable these days…don’t ya think? TB

“The reward of a thing well done is to have done it.” – Ralph Waldo Emerson

…of course the money certainly helps! YN

 

U.S. Non-Farm Payrolls rose by 146k in November vs 85k median forecast! Revisions however cut Sept/Oct by 49,000…so about in line…no conspiracy theories please!!!

But Factory jobs fell by 7k while Construction fell by 20k…meanwhile Services rose by 169k where they have exceeded the total private jobs changes for two of the last three months and barely missed in October (171k vs 189k)! That is the bad news as these are mostly lowpaying jobs. To wit: Financial Activities rose by just 1k, Professional Business Services buy 43k …the remaining 125k were Temp workers, Health and Education and Leisure and Hospitality…capische?

Meanwhile the Unemployment Rate, as reported in the Household Survey dropped 0.2% to 7.7% but eliminating rounding about a 0.1% decline. It was more than due to a modest decline in the labor force of about 350k, while those not in the labor force fell by 550k. The Augmented Unemployment Rate fell by just 0.1% to 9.2% and the U6, which includes Part-Time for Economic Reasons also fell 0.2% to a still very high 14.4%.

Average Weekly Hours worked are stagnant at 34.4 and Average Hourly Earnings rose by just 0.2% – same as Average Weekly Hours – niggardly gains when we need BIG! They are up just 1.7% the last 12 months for both categories!  Manufacturing hours rose by just 0.1% to 33.7% – where they have been for a year! Manufacturing Hourly and Weekly wages were also up just 0.2%  They are up just 1.3% the last 12 months for both categories! 

Market Reaction (9:15 EST): Bonds reversed and plunged with the 10 year yield rising from 1.57% to 1.62% or -3/8, and the 30 year to 2.81% vs 2.78% -13/16…the crazy long TIP however just moved back to 0.23% from 0.22% – avoid!

U.S. Stock Futures also reversed with DOW +53 but surged to +78; SPX +4.66 and at session high; NDQ +18.41 – session high was +23. Could be an interesting day! The Dollar Index was little changed before the number but is now up to the highest level since 11/23. Gold is now off $4 to 1698.10 while Crude is now up just 15 cents…little effect there! Happy Trading!

Bloomberg Top Stories:

*Payrolls in U.S. Rose 146.000 in November as Jobless Rate Declined to 7.7% – hey, conspiracy theorists: still think Obama is cooking the books? To what purpose?

*U.S. Stock-Index Futures Gain After Job Growth Tops Economist’s Foreasts – recovery from Superstorm Sandy? Could be part of it…what does business know now it didn’t?

*ECB Governing Council Said to Have Majority Supporting Interest-Rate Cut – to what?

*Bundesbank Lowers 20163 German Growth Forecast to 0.4% on EU Crisis – hello!!!

*London Fund Managers Become More Confident on U.K. Economy – gimme a break!

*London Whale’s Unprofitable Trade Back in Favor as Junk bond Allure Fades – just goes to show you that Mr. Dimon and Co’s management was pure speculaton!

*Netflix CEO Hastings Faces SEC Threat as Facebook Posting Drives Stock up – he posted that Netflix view ‘exceeded 1B hours’ of videos in June…stock rose 6.2% on that!

*Chinese-Group Said to Be in Talks to Acquire AIG’s Aircraft-Leasing Unit – TB may not have been off the mark when he speculated China Mobile may want to buy Nokia!

*JPMorganChase Investment Pool Is Said to Decline as Much as 2% – Two percent???

Is that a typo? What sacrifices that team is making…but will it go to Jamie instead?

*BlackBerry Still Loved in Asia Where RIMM Can’t Afford to Lose – can u spell loser?

*New Jersey Seen Most Vulnerable to Widening of Minimum Tax – Christy? Hello?

*Lone German Keynesian Bofinger Says Redemption Lies in Pooling Euro Debt – that’s Bo-fan-jay to you…Keynes is dead but rolling over in his grave…slowly, very slowly!

*Democrats Hint at Entiltement Cuts Signalling Shift in U.S. Budget Talks – Go for it!

*Bernanke’s Fiscal Cliff Analogy Overstates Immediate Harm to U.S. Economy – !!!

*You Know Students Are Out of Control When Harvard Pushes New Regulations – !!!

*Goldman CEO Blankfein Said to Buy Hampton’s House Listed for $32.5 Million – still doing ‘god’s work’…see, GOP’er’s THAT is the one of the people you are sacrificing to protect. Think about it! 

In addition to Wednesday’s Deutsche Bank hidng $12 billion in losses, yesterday Reuters  announced that HSBC may have to pay a $1.8B fine by Christmas for money laundering Iranian funds…the Mafia would drool for the opportunities provided and taken by the big banks…so why do we keep protecting them? Ask your elected officials…they know damned well why!

Apple update: after falling to $518.63 yesterday, lowest since ll/16s’s $505.75 intraday low, it rebounded in what can at best be termed a ’dead cat bounce’ of about 50% of the loss from Wednesday (+1.6% vs -6.5%!). It was the third straight lower high and lower low. Over the past three sessions volume has totaled 97M shares, high 40M yesterday vs an average of 21.7M this year. Since the last bout of big volume in the first quarter, there have been just 3 days where volume has been close to 40M, all in November (normal volume is 20M shares)…is the pain over? Ask the hedge funds who have huge positions and whose yearend cutoff is 12/26 (coincidentally TB’s birthday in case you were thinking of a present). Stay tuned!

Yesterday’s NYSE volume fell back from 4.14B shares to another puny 3.17B shares. REAL trades on the floor also declined to 616M shares from the ‘surge’ to 759M. There simply is no retail…can you blame them? Advance/declines and breadth were barely positive again. Nasdaq breadth of +2.3x was due to the Apple ‘rally’ while A/D’s were 1:1. It also comprised 7 of the 18 points gained on the Nasdaq 100

Bond market closed little changed and is up slightly overnight: 10 yr note 1.57%, 30 yr 2.76%. The big story remains TIPS…with no sign of inflation in sight but risk of fiscal cliff reduced which caused the stock rally yesterday, the 30 yr TIP yields just 22bp’s over the inflation rate – another record low. The long TIP yields MINUS 254bp’s to the long bond and -202 to the 10 yr! Looks like a setup for yearend…buyers caution!

Gold was up $8 closing at $1701.80, back above $1700…barely above $1700 on an unconvincing ‘inside’ session and remains well below the 40/50 day moving averages,while Crude lost $1.62 closing at $86.26, lowest since 11/15, and is well below both the 40/50 day m/a’s. Overnight Gold is $1696.20 -$5.60. Crude is off 44 cents and weak.

– – –  . . .  – – –

(Correction: a blog reader informed TB that the ice chunk that fell off in Greenland was NOT bigger than the U.S. but bigger than Manhattan…TB must have heard it from a broadcaster in the Big Apple. Mea Culpa!)

…why would any rational person trade this market? OK, jockeying for tax purposes, but no other sane reason. Meanwhile the GOP continues to disintegrate by the hour.

Sen. Jim DeMint (or as Herb Caen would have said it, DeMint Jim), announced he is leaving the Senate to head the conservative and about to become ‘uberly’ so, Heritage Foundation which makes the Hoover Institute look like a bunch of cock-eyed optimists! Hope we find out what his salary is going to be…bet is significantly more than his Senate salary…and he can still be addressed as Senator…not much meaning there though as former Dem Senator/NJ Governor Jon Corzine disgraced himself by not only bringing down MF Global but by trying to negotiate a sale when he knew it was going there – to get his own $40 million bonus…no wonder Goldman voted him out as Co-Chairman. So much for “if you can do it there you can do it anywhere…”

It is a sad state of affairs when one party created a fiscal cliff – an imaginary one which could have been solved at least a year ago but what would have been the political advantage in that…especially when there stated goal was to make Obama a one-term president (still think there were racial overtones or undertones there), and implied goal

was to have him leave office in disgrace. So much for the best-laid plans of…mice and men? Bring on the women…they most certainly couldn’t do worse and likely better!

Meanwhile the global banking system…of which the GOP has done its utmost to protect the biggest U.S. ones…including the faux banks of Goldman Sachs and Morgan Stanley…is embarrassing itself by the day…with lawsuits and fines continuing to pile up, and of course the bill is not footed by the perps but by you the shareholders? Ain’t that a ‘beatch?’ Heck, if they collect a few more there will be no fiscal cliff, imaginary or otherwise and at least a big chunk of that will be paid by the wealthiest in terms of shareholder value…they have so many ways to get you…

Well, TB has spoken far too long this week, with not one column falling below the 2100 words (total column including stats), so he will take a breather and let the payrolls summary fill up the rest.

Have a great weekend!

TB

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

Volume plunged back from Wednesday’s solid 4.14B shares to a weak 3.17B shares. NYSE shares executed without the aid of the ETN market also plunged to 616M shares vs 759M vs 674M vs 658M vs 1.18B. There have been just 21 700M+ days since 8/3. The high ytd was 9/21’s 1.8B shares. Since 6/29 just 18 sessions have surpassed 800M shares, mostly down days. The average since 8/1’s 1.03B is just 675M. The average for 2012 is just 764M shares and since 6/29 just 696M shares– WEAK!!! 126 of the last 170 sessions have been less than 800M shares (74%!). Since 2/29 there have been just 27 ‘average’ days (mostly down!), and just 22 have been above 900M – 768M is the 12 month ave. and falling! Since 11/1/11 there have been just 18, 1B share days…14 in 2012! Since 2/6 there have been 76 sessions less than 700M shares. 242 of the last 265 sessions have been less than the 12 mo ave (91%)! Don’t go hear…yearend is coming!

Advance/Declines were about neutral: +1.1x vs +1.1x vs -1.1x vs -1.5x vs +1.2x on NYSE and 1:1 vs -1.3x vs -1.1x vs -1.2x vs 1:1 on Nasdaq. Breadth slightly positive: NYSE: +1.2x vs +2.3x vs -1.1x vs -2x vs +1.3x on NYSE and +2.3x vs +1.1x vs -1.1x vs -1.9x vs +1.1x on Nasdaq. New 52 week highs dipped to a weak 116 vs 130 vs 105 vs 226 vs 206 (768 is cycle high, 28 low), while new lows were 71 vs 78 vs 71 vs 51 vs 43. The ratio is barely positive: +1.6x vs +1.9x vs +1.5x vs +4.5x vs +5x. Recent high was +7x! The S&P VIX rose slighlty to 16.58 vs 16.46 vs 17.12 vs 16.64 vs 15.87! Tuesday was first time above 17 since 11/15. 17.54 is the 200 day m/a! The 12-month low was 13.32 on 8/17 while the 2012 high is 27.73 on June 4.

Here are the results of last 5 sessions: Dow +0.3% vs +0.6% vs -0.1% vs -0.5% vs flat;  Dow Transports -0.1% vs +0.9% vs +0.3% vs -1.1% vs -0.5%;Dow Utilities -0.3% vs +1.4%! vs -0.6% vs -0.7% vs +0.9%; S&P 500 +0.3% vs +0.2% vs -0.2% vs -0.5% vs flat; Nasdaq Composite +0.5% vs -0.8%! vs -0.2% vs -0.3% vs -0.1%; Nasdaq 100 +0.7% vs -1.1% vs -0.2% vs -0.2% vs -0.1%; Russell 2000 +0.2% vs -0.2% vs +0.2% vs -0.1% vs -0.2%; NYSE Financials +0.2% vs +0.9% vs flat vs -0.3% vs +0.1% (KBW Banks +0.3% vs +1.7% vs -0.7% vs -0.8% vs -0.2%; Nasdaq Banks flat vs +0.3% vs -0.5% vs flat for 2 days; NYSE Brokers -0.2% vs +0.9% vs -0.3% vs -0.5% vs +0.3%.NYSE Financial Leaders: BAC -0.1% vs +5.7% vs +1.1% vs -0.6% vs +0.3%. C +1.5% vs+6.3%!!! – remember those changes are only pennies on price. BAC holding above $10, closed $10.48. Second close above $10 since 7/11/11!!! No other leaders.

Global equities weaker ahead of U.S. payrolls, except Korea: FTSE -0.2% vs +0.3% vs +0.3% vs -0.1% vs +0.2%; CAC 40 -0.3% vs +0.2% vs +0.3% vs +0.5% vs +0.8%; DAX -0.3% vs +1% vs +0.3% vs flat vs +1%;Nikkei -0.2% vs +0.8% vs +0.4% vs -0.3% vs +0.1%; Hang Seng -0.3% vs -0.1% vs +2.2% vs +0.2% vs -1.2%; Korean KOSPI UP 0.4% vs +0.1% vs +0.6% vs -0.3% vs +0.4%;Indian Sensex -0.3% vs +0.5% vs +0.2% vs +0.2% vs -0.1%. U.S. stock weaker ahead of payrolls and at session lows: DOW -25; SPX -4.10; NDQ -4.75.

U.S. treasury bonds closed little changed yesterday and are up overnight…this has been the pattern this week: 10 yr 1.57% +1/8 – record low of 1.40%; 30 yr 2.76% +1/4. Long TIP 0.22% +5/16 – and another new record low!The 5 yr TIP yields –1.56% vs -1.54%; 10 yr -.94% vs -.92%.T-Bills: 0.05% 1 month; 0.08% 3 months; 0.13% 6 months. Reverse Repo 0.31%. 3 mo. Libor 0.31%; 6 mo. 0.52%.  European problem sovereign 10 years, Germany-bench: 1.29% vs 1.34%; Japan 0.70% +1; Italy 4.57% +1; Spain 5.48% +5; Greece 13.92%!!! vs 14.72% -45!!!…on 9/20: 19.75%; Portugal 7.38% +3; Ireland 4.45% +5. BIG DROP in GREECE AGAIN…and bunds!!!

Gold closed up $8 at $1701.80, after two straight closes below $1700 and worst since 11/5! It had an inside session following two lower highs and lower lows of $1686 not seen since 11/16 and remains well below the 40/50 day moving averages,while Crude lost $1.62 cents closing at $86.26, lowest since 11/15 and well below the 40/50 day m/a’s. Overnight Gold is $1696.20 -$5.60 ahead of payrolls. Crude is off 44 cents and remains below the 40/50 day m/a’s

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5/23/12…let the layoffs begin…is this when we cut deficits? NO!

May 23, 2012 at 8:44 am · Filed under economy, financial, markets ·Tagged , , , , , ,

TB’s Quote of the Day: “You have to take more risk.” Attributed to Robert Rubin and Citigroup, Jon Corzine at MF-Global, and now Jamie Dimon at JPMorgan Chase. Color TB disgusted!

 

From Keep Calm and Carry On: “The darkest hour in any man’s life is when he sits down to plan how to get money without earning it.” – Horace Greeley and…

“For a greedy man even his tomb is too small.” – Tajikistani Proverb

Bloomberg Top Stories:

 

*Banks in Europe Unprepared for Pandora’s Box Contagion of Greek Euro Exit – told you!

*Stocks in U.S. Decline Amid Concern Greece May Have to Leave Euro Region

*Facebook IPO Scrutiny Increases ass Morgan Stanley Defends Handling of Sale – HA!

*BOE Voted to Keep Bon-Buying Total as Panelist Weighed Stimulus

*Hallande’s Honeymoon Give France Record-Low Borrowing Costs – for how long?

*Bundesbank Says Euro Countries Could Handle Greece Leaving Single Currency

*JPMorgan Joins MF Global in U.S. Business-Lobbying Victories That Backfire – sick!

*Iran Receives New Offer From Global Powers at Nuclear Talks Amid Iraq Ruin

 

A string of downs, a solid ‘up’ day, and then a day The Dow was up and closed FLAT!. Net, net: down and dirty! This highly increases the chances that Monday’s rally was options expiry related ahead of the long Memorial Day weekend. Dow stocks were up down by CAT ( -3.6 pts after leading with +25 Monday), Google minus 3 and there rest little changed. At the other end of the spectrum was JPM gaining 11.4 index points after losing 7.4 on Monday – this despite bad press and multiple investigations?  Does that sound real to you? Not to TB. Facebook (fecesbook?) lost another 8.9% yesterday and that was on a bounce from the session lows. Remember, May is almost over and the summer doldrums are about to set in…get defensive!  Since peaking on 5/1 at the highest level since the crash, 13338.66, the Dow has been DOWN for 12 of the past 15 sessions, and the loss is still 5.4% from that days close. Furthermore, the 11 of the past 14 have resulted in LOWER LOWS. We have almost entirely wiped out that Q1 boost! Reminiscent of last year…ancient history?…when the 3rd quarter wiped out the second quarter gains and even with a strong 4th  we just about got back to where we were at end of Q1!!! We are now at risk of returning to that Q1 2011 level…we closed just 11 points above it on Friday…and the low was 14 points below!

The Dow is still 5.4% below the 3/30/12 close! April was a flat month. Dow Utilities are now the only index up qtd, just 2%! As for Financials, so far this quarter they are off 11.4% surpassed only by Gold and Silver -14.1%, Telecom -17.3% and Semis -15.4%, and Oil Services -13.1%.

NYSE Financials remain a disaster…thanks mainly to Mr. Dimon! DOWN 11.8%, since MAYDAY of 9.7%!!! Friday’s close of 4171 was less than TWO POINTS above the 12/30/11 close!!!

NYSE stock volume rose to 4.08B vs 3.74B shares but the increase was concentrated in the final 20 minutes of trading when the Dow gave up the ghost after Greek leader said they may have to exit the Euro!!! Now??? NYSE shares executed on the Big Board rose to 846M vs 798M shares. 18 of the last 33 sessions have been less than 800M shares!!! Since 2/29 there have now been just SEVEN ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B, but average has fallen to 820M and just eight have been above 900M – 960M is 12 month average. Since 11/1 there have been just nine 1B share days…only five in 2012! Since 2/6 there have been FIVE sessions less than 700M shares. 124 of the last 138 sessions have been less than the 12 month average! Advance/Declines were mixed and weak: +1.1% vs +5.8x vs -3x vs -6.3x!!! vs -2.1 vs -1.8x vs -5.4x!!! vs -1.5x on NYSE and -1.6x vs +3.4x vs -2.6x vs -4.2x!!! vs -2x vs -1.2x vs -3.1x vs -1.5x on Nasdaq. Breadth was negative: -1.1x vs +3.8x vs -2.2x vs -7.5x!!! vs -2.5x vs -4x! vs -7x!!! vs -2.3x on NYSE and -1.3x vs +5.5x vs -1.7x vs -7.9x!!! vs -2.6x vs -2.3x vs -2.9x vs -1.1x on Nasdaq. New 52 week highs were about unchanged at 41 vs 40 from an incredibly low 34 (high was 420 on 3/26), while new lows dropped sharply but remain high at 141 vs 191! Ratio is still negative by -5x! The S&P VIX, rose to 22.48 vs 22.01 so the buying is likely done for now.

Here are the results of last 8 sessions:  Dow FLAT vs +1.1% vs -0.6% vs -1.2%! vs -0.3% vs -0.5% vs -1%! vs -0.3%; Transports +0.1% vs +2.9% (best performer) vs -1.3%!!! (worst performer!) vs -3.2%!!! vs -0.1% vs +0.1%  vs -0.8% vs +0.1x; Dow Utilities +0.5% vs +0.3% vs flat vs -0.7% vs -0.1% vs -0.5% vs -0.4% vs +0.1%; S&P 500 +0.1% vs +1.6% vs -0.7% vs -1.5%!!! vs -0.7% vs -0.6% vs -1.1% vs -0.3%; Nasdaq Composite DOWN 0.3% vs +2.5% vs -1.2% vs -2.1!% vs -0.7% vs -0.3% vs -1.1% vs flat; Nasdaq 100 DOWN 0.2% vs +2.7% vs -1.2% vs -2.1%!!! vs -0.7% vs -0.4% vs -1% vs flat; Russell 2000 DOWN 0.7%! vs +2.3% vs -0.9% vs -2.3%!!! vs -0.7% vs -0.2% vs -1.4%!!! vs -0.2%; NYSE Financials +0.5% vs +1.4% vs -1.1% vs -2.2%!!! vs -0.9% vs -1.9% vs -1% (KBW Banks +1.1% vs +0.6% vs -1.6% vs -1.7% vs -2.6%, Nasdaq Banks -0.3% vs +0.8% vs -0.7% vs -1.2% vs -1.4%); NYSE Financial Leaders: BAC +2.2% vs – 2.7% vs +0.6% vs -1.8%! vs -0.7% vs -2.7%! vs -2%!, JPM UP 4.6% vs -2.9% vs -1.3% vs -4.3%!!! vs +1.3% vs -3.2% vs -9.3%; C +2.6% vs +0.9% vs -1.5% vs -1.9%! vs -1.2% vs -4.1%! vs -4%!; GE +0.3% vs +0.9% vs +0.3% vs -0.6% vs -1.1% (ranked by volume!).Would you buy any of these stocks? TB thought not!

European stocks DOWN after two up days, Asia weak too: FTSE  -1.9% vs +1.2% vs +0.6%; CAC 40 -2.2%! vs +1.2% vs +0.8%; DAX -1.8% vs +1% vs +1%; Nikkei -2.2% vs +1.1% vs +0.3% vs -3%!!!; Hang Seng -1.3% vs +0.6% vs -0.2% vs -1.3% vs -0.3% vs -3.2%!!!; Korean KOSPI -0.9% vs +1.6% vs +0.9% vs -3.4%!!! vs +0.3% vs -3.1%!!!; Indian Sensex -0.5% vs -1% vs +0.2% vs +0.5% vs +0.3% vs -1.8%!. U.S. stock futures DOWN: DOW -76; SPX -9; NDQ -17.

Bonds rallying, nearly offsetting Tuesday’s loss. l0’s and 30’s still well below 2% and 3% respectively: 10 yr 1.74% +9/32, RECORD low 9/23 of 1.6855%; 30 yr 2.83% +13/16; Long TIP 0.56% – 1 pt. New record low yield Monday of 0.535%. The 5 yr TIP yields MINUS 1.14%; 10 yr -0.46%. Bills 0.06% 1 month; 0.08% 3 months; 0.14% – steady. Reverse Repo 0.24%. 3 mo. Libor 0.47%, and 0.74%; also steady. European problem sovereign 10 years, Germany-benchmark: 1.41% -6 bp’s; Italy 5.61% +6; Spain 6.07% +4; Greece 28.37%!!! +23; Portugal 11.80% +8; Ireland 7.05% -2.

Gold and Crude suffered losses again. Gold closed at $1576.60 -12.10. The hit is now $215 since 2/28, a  loss of 12%! 2/28’s $1792.70 intraday high was not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. Res is $1633, the 40 day and $1639, the 50 day, then $1700, the 200 day – 40/50 are dropping rapidly. It is now $1559.80 -$16.40. Wednesday’s o/n low of $1526.70 was lowest since 12/29! Crude closed $91.66 -$.91 on an inside session. Friday’s low of $90.93 was lowest since 11/1!!! On 4/26 it closed at $104.55…that is a 12% LOSS!!! We took out 4/10’s low of $100.68, worst since 2/15/12 on May 4, a day crude fell by $4.55, or 4%! The range of $105-110 had held from 3/28!!! RES at $96.29, the 200 DAY!!!, the 40 day (101.82), the 50 day (101.94), and closed BELOW $92.52-54, the lows of 12/16-12/17, a prior double bottom, MINOR sup at $89.17, the 11/1/11 low!!!. It is now $91.03 -.63.

Facebook (FB) continues to fall, especially after the fouled Nasdaq trading which executed orders placed before the open at the high…suit filed! Then there is the inquiry into whether an MS analyst advised some institutional investors to stay away. No matter what Morgan Stanley looks ridiculous on this chance to re-emerge as a leader!

More ‘stuff’ coming out that makes FB look like a bad idea: besides GM pulling ads, they bought an ‘ap’ company for $1 billion to access smart phones…this will lower profit margins on growth…and what do most teens use for web access? Insiders were huge sellers and now with stock plummeting ($31.65 now in o/n market), it will continue to decline a possibly accelerate!

JPMorganChase is getting worse! Look at these headlines:

*Dimon Says He Doesn’t See Investigation to Unveil Big Surprises – of course not!

*Dimon Says Loss is an Isolated Event – of course HE says that!

*Dimon Says He Agrees With Intent of Volcker Rule –  just not for JPM!

*Dimon Says He Can’t Estimate Size of Revenue at Risk from Volcker Rule

(Get it: all that matters is the bottom line and return on equity, NOT RISK!!!)

*Legitimate Portfolio Hedging is a Good Thing – this was NOT hedging – nor was it legitimate…it was increasing RISK for HIS bottom line

*Dimon Says He Won’t Give Running Tally on Losses – because they don’t know!

*We Have Right Team in Place – you said that before, you let Drew retire yet said it was her fault but had respect for her, you hired a risk manager that had been fired by Carroll Mac for not performing properly

*Dimon Says There’s Unrealized $8B Profit From CIO? You cannot tell us amount of loss but there is a profit of $8B? Also, IF it was a true hedge, how can there be a profit?

*JPM Suspends Stock Buybacks but not Dividend – splendid idea…uh…clawbacks?

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

Despite the screaming by the GOP extreme right to cut the deficit before we all die, which is preposterous, Alan Blinder, former advisor to Clinton, Vice Chairman and governor of the Fed came out yesterday saying that this is not the time to focus on deficit reduction. Stimulate now, cut later is the message and watching the number of companies now announcing layoffs, including Minneapolis based General Mills and Medtronics, if Paul Ryan, Ron Paul, and Eric Cantor have their way we will be in deep recession within six months…and worse with House Speaker Boehner once again charging windmills over the debt ceiling. All for the benefit of the wealthiest Americans and powerful Wall Street element whose greed is running rampant at the expense of not only Main Street, but placing our entire system of government at risk…THINK!!!

The GOP has lost its center…it no longer should call itself ‘that party of Lincoln.’ That would be an insult to a great leader. The failure to compromise, to blindly adhere to the edicts of Grover Norquist, while a few people are enriched and yet refuse to correct the problems on taxation. This is not letting the Dems off the hook, but all of our recent problems can be traced to the GOP.

The Dems are blamed for Fannie and Freddie, yet despite their complaints, GOP senators took money from them. As for encouraging every American to own a home as Clinton did, Dubya picked up that torch. Then two rounds of Bush tax cuts in a minor recession after a decade of boom, and enactment of Medicare Part ‘D’ without any funding, plus two unfunded wars (thanks to cover from the other leading powers we may finally be able to extricate ourselves from a corrupt Afghanistan where it is not a question of win or lose but lose how much and how many hundreds of billions do we pump into it (here, TB agrees with Ron Paul and on South Korea as well).

The Chris Cox led SEC failed us and allowed the major banks to go without regulation. Yet the GOP wants less control with Romney in favor of repealing the already weak Dodd-Frank and can find no problem with JPMorgan…is this good for our country?

TB has said, a market without transparency is not a market. The U.S. had the most respected financial markets in the world but there is no transparency and risk has overtaken prudence. Return on equity is not measured in terms of shareholder value but taking all the risk you can get away with for short-term (read CEO) gain.

Last night, on Frontline, they did a story…expose…on MF-Global. Jon Corzine should be in jail but instead he is ‘one of us’ in the Senate. They overlooked their better judgment and instead ruled in favor of a risk-taking addict. Watch it!  A hedge fund manager who lost money in MF-Global said there is never just one cockroach…and Jamie Dimon is proving it with a $100 billion bet that was billed as a hedge…it wasn’t!

We are doomed to another, more frightening financial crisis…one we may not be able to recover from…we pulled out all the stops last time…what do we do for an encore.

Have a great day!

TB

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12/12/11…let’s get outside the beltway and stay out!

December 12, 2011 at 8:57 am · Filed under economy, financial, markets ·Tagged , , , , , ,

This will be the only commentary this week as I will be out of town all week. TB

 

 

This week’s economic calendar is relatively full with an emphasis on inflation and the manufacturing sector. However, the highlight of the week will be November Retail Sales (Tuesday). We will also get November Treasury Budget (Monday), October Business Inventories (Tuesday), November Import & Export Prices (Wednesday), the November PPI, the December Empire State Manufacturing Survey, November Industrial Production, and the December Philadelphia Fed Survey (all on Thursday), and the November CPI (Friday). In addition to the economic data, the FOMC will have a policy-setting meeting (Tuesday). Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA.

 

TB’s Quote of the Day: “I believe that capitalism without failure is not capitalism.” – John Huntsman when asked about too big to fail by Fareed Zacharia.

 

Bloomberg Top Stories:
*Stocks Drop in Europe as Euro Weakens on Moody’s Review; U.S. Futures Fall

*Euro Undermined as Draghin Undoing Trichet Interest Rates Removes Support

*Italy $71 Billion Funding Needs Remain Debt Crisis Flashpoint

*Bank Credit highest Since Before Lehman Bankruptcy as Expansion Continues

*EU Failure on Unanimous Agreement May Consign Top-Rated Bonds to History

*Magnus Says Downgrade of an AAA-Rated European Country Is an Inevitability

*Regulators in U.K. Seek Automatic Sanctions on Bank Executives After RBS

*Tax Increases Drawing Most fund Cash Since 2010 Prolong Muni Rally

*Firing Fades Without hiring in U.S. as Obama Pushes Payroll Tax Extension

*States Spending at Recession Levels Keep Lid on Borrowing – thus prolonging slow growth

*Luck May Be Key Ingredient for EU Leaders’ Latest Blueprint to Save Euro – pray for them!

*No One Telling Who Took $586 Billion in Swaps With Fed Condoning Anonymity

*Medvedev Orders Russia Vote-Fraud Probe After Largest Anti-Putin Rallies  


Volume slipped bact to a below average 3.8B shares from 4.25B shares, in a strong rally without much action…aka an absence of sellers. Meanwhile, NYSE stocks executed on the Big Board DIPPED plunged to a way below average 819M, from 930, lowest since 11/15.leaving the string of 900M share days at just TWO  in the last seven sessions! Also, 18 of the last 21 sessions have been less than 1B! Here we go again: up on low volume down on bigger volume! Advance/Declines were VERY strong but compare to Thursday: +6:1 vs -6.5:1 on NYSE and +4.6:1 vs  -6.5:1 on Nasdaq!!! Breadth was similar, but… +9.2x vs -32x!!! on NYSE and +8x vs -6.6x on Nasdaq. New 52 week highs climbed to 151 from 122 while new lows slipped to 72 from 100, attributable to a lack of sellers. The ratio rose to just above 2x positive! VIX PLUNGED, way out of proportion to the rally, closing at 26.38 -4.21 and nearing the 200 day (25.55) while closing the gap finally of 26.46-27.01 from 10/27 and 10/31! This following the  highest close since 11/29!

Here are the results of the past two sessions…note that on rallies ALL indices perform amazingly similar…index trading?: Dow +1.6% vs -1.6%; Transports +1.9% vs -2.5%; S&P 500 +1.7% vs +1%; Nasdaq Composite +1.9% vs -2.1%; Nasdaq 100 +1.6% vs -2%; Russell 2000 +3.4% vs +3.1%; NYSE Financials +2.3% vs -3.5%!!!.  Leaders: BAC +2.3% vs -5.1%!!! C +3.7% vs -7%!

 

Global equity markets weak except Japan and Korea: FTSE -0.6% vs +0.7%; CAC 40 -1.5% vs +1.8%;  DAX -2% vs +1.6%; Nikkei +1.4% vs -1.5%; Hang Seng -0.1% vs -2.7%!!!; Korean KOSPI +1.3% vs -2%; Indian Sensex -2.1%!!! vs -1.7% vs -2.3%!!!, up only 7 times in the last 22 sessions! U.S. stock futures also weak: DOW -74; SPX -9; NDQ -13. Bonds rallying on Euro and equity concerns: 10’s and 30’s still above 2% and 3% respectivley. 10 yr 2.03% +9/32. RECORD low 9/23 of 1.6855%; 30 yr 3.02% -1/2; Long TIP 0.84% -9/16. 0.57% at high three weeks ago. The 5 yr TIP yields MINUS 0.90%! 10 yr -0.03%. 3 mo. Libor 0.54%, and 0.76% 6 mo. – 3 mo. above 0.50% and six month above 0.75%… still stable but yearend approaches! Bills 0.00% from one month out to six. 6 months 0.03%.

Gold rose modestly on Friday and remains above $1700. It closed at $1716.80 +$3.40 but is now $1684.70 $-32.10!!! Why is it weak??? The record high is $1923.70, a buying climax on 9/6. RES is 1726, the 40 day and SUP $1711, the 50 day m/a! Major Res at $1800-1806, the November highs. Crude rose slightly Friday but remain below $100 and closed $99.41 +$1.07, but is now $98.50 -.91.  Support at the 200 day ($96), peaked. Major support is the 40/50 day m/a at $95.44-92.73, AND still moving up.

 

 

…looks like nobody wanted to short, or even sell on Friday as we had a rally that is being negated today…natch! Low volume as is the usual M.O. in rallies.

 

Bloomberg story today on how Jon Corzine used his influence to stop the CFTC from changing a rule which allowed dealers to ‘borrow’ funds from client accounts for ‘risk-free trades’ paying no interest. Just before MF Global blew up he testified (MF Global was the biggest commodities firm), that it would ‘hurt profits’ but didn’t stop there as he lobbied his former colleagues in Congress and CFTC Chairman Gary Gensler…they, of course complied. The hearings were as a result of the deterioration of sovereign debt.  An outrage!

 

Let’s review…the Fed said that it does not pass or condemn the credit of broker dealers that they deal with as counterparties. They only review their balance sheets as pertains to their own ‘counterparty risk!’ But even before Corzine joined MF Global a year ago, they had had numerous violations of trading rules resulting in substantial fines…and it was all on the regulatory website. One manager who insisted on doing all their repo with MF Global said it was because they were the biggest…and therefore safest!?! Guess they too couldn’t read a balance sheet nor did they check the firms regulatory filings. Question: why was the Fed still allowing MF Global to be a primary dealer with the implication that their credit condition was good???

 

This brings up another issue that is akin to ‘too big to fail’ and that is manager risk: money flows to the biggest managers who have had good performance and thus are deemed to be safe. This not only makes it more difficult for them to maintain those outsized returns but encourages more risk-taking…with other people’s money…in this case…the clients!

Ah, but there was another BIG RED FLAG: when Corzine took over as CEO, he said he was going to change MF Global from a sleepy little firm to an industry powerhouse. This of course implies taking on even more risk…when they had already shown they had poor audit controls, as evidenced by losing hundreds of millions on a rogue trade (all audit controls are suspect now aren’t they as the lunatics are running the asylum…with no oversight!). Given the prior problems and Corzine’s incentive to unload the firm, couldn’t that have been the reason he was hired in the first place…remember his efforts to sell just before it all crashed down?

 

All of the above is a wonderful reason to rally stocks…don’t you think? Hell no!

 

. . .   – – –  . . . note that the same old SOS applies…perhaps more so after the rally!

Jon Huntsman was interviewed on both This Week and Fareed Zacharia GPS. In both he handled himself well and looked extremely presidential…as one would expect of a former ambassador. But more than that, on tough questioning by Zacharia, he didn’t hedge and showed, to TB at least, why he would make a good president. Just what is wrong with a moderate who is a fiscal conservative as president? Dump the ideologues. By the way, Huntsman supports both the Simpson-Bowles proposals and Paul Ryan’s plan…which was derived from that report. The best thing is he is a former ambassador –Singapore and China – and an Asst. Secretary of State under both a GOP and Dem president…and he doesn’t go postal while speaking…measured!

 

Michele Bachmann was interviewed on Face the Nation and when asked about extending the payroll tax she said, correctly, “there is no evidence that cutting the payroll tax produces a single job.” Very true, Michele…but…there is strong evidence that adding $1,000 to the average workers take home pay SAVES jobs! Worse, since it is already in place, a failure to extend the cut would have a very adverse effect on consumer spending and cause more layoffs!

 

Why is it that a failure to extend the Bush tax cuts…even for the wealthiest Americans…is a tax increase? Because Grover Norquist says it is! But neither the GOP nor Norquist believes that the same is true of the payroll tax extension! It is as faulty as their argument that lowering taxes produces revenue growth…only in a vibrant economy – one that produces jobs!

Back to Fareed Zacharia… he set the record straight on the GOP claim that government regulation and taxation has made the U.S. unable to compete:

 

*According to the latest OECD report the U.S. ranked 28th of 30 countries making us the lowest taxed of any major industrial nation!

*According to the latest World Bank report the U.S. ranks 4th in ease of doing business…meaning regulations are not excessive. The first three are all tiny countries…like Singapore.

*20 years ago manufacturing was 36% of GDP, today it is just 9% – outsourced jobs!

*Over the past five years, the percent of spending on infrastructure has gone declined taking us from 10th to 24th (Air travel 12th -31st, Roads 8th to 20th)

*From 1989-2000 we have gone from the number one nation for college graduates to 14th! We are near the bottom in international test scores. Engineering graduates have declined by 11% over that period! Corporations have also had a decline in investment in plan and human capital.

 

The above figures should shock you and hopefully show you that we cannot fix the country by tax cuts along with budget cuts when there is shockingly low revenue growth. To do so is a recipe for falling back into recession…or worse…much worse.

 

In closing, TB feels Obama did himself no good in the 60 Minutes interview last night. He feels that there is nothing more that he could have done and that bipartisan bickering is the problem. That is denial as he pointed to his accomplishments. Like all politicians, he feels the world would be a worse place without his leadership…possibly…but we need better…again, though, stop with the ‘anyone but Obama’ rhetoric…talk about lowering the bar!

 

Hope you all have a great week…back next Monday!

 

TB

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12/9/11…we don’t want no stinkin’ consumer protection!

December 9, 2011 at 8:49 am · Filed under economy, financial, markets ·Tagged , , , , , , , , , , , ,

Bloomberg Top Stories:

*Euro Leaders Agree on Budget Rigor With Next Step Left to Central Bankers – BIG YAWN!

*Stocks Rise With U.S. Futures as Euro Gains After Summit; Italy Bonds Drop

*EU Leaders Drop Demands for Investors to Take Writeoffs in Future Bailouts – gimme a break!

*Prime Money Funds in U.S. Cut Holdings of French Bank Debt 68% in November – no problemo

*U.S. Company Borrowing Reached Slowest Since ’10 on Europe – loaded with cash!

*Toyota Cuts Annual Profit Forecast by 54% After Thai Floods Disrupt Output – but the Volt???

*Texas Instruments Drops After Forecasting Sales Below Analyst’s Estimates – hello!!!

*Las Vegas Condo Fraud Exposed by ‘Old Ladies’ Angry With Rigged Elections

*Putin Protests Lift Default Swaps as VEB Cancels Bond Sales

*Disasters From Tsunami to Floods Imperil Supply-Chain Disruption Insurance

*Buddhist Packing James Bond’s Pistol Shows Warm Embrace of Guns in America – a Buddhist!

*Cameron Wishes Euro Nations Well as U.K. Negotiates Isolation in Brussels – Take that!

*Romney to Spend More Time Courting Voters in Bid to Blunt Gingrich’s Surge


Volume rose yet again to an above average 4.25B shares from 4.1B shares, in a second hodge-podge session producing mixed results. Meanwhile, NYSE stocks executed on the Big Board DIPPED to a still below average 930M, from 968, and while still 10% below average,still only the second 900M share day in the last six sessions! Also,18 of the last 20 sessions have been less than 1B! Once again TB’s adage proves itself: up on low volume down on bigger volume! Advance/Declines were VERY weak after being mixed for three sessions: -6.5:1 vs +1.1:1 vs +1.1:1 vs +3.5:1 vs +1.4:1 vs -1.5:1 vs +30:1 on NYSE and also -6.5:1 vs -1.2:1 vs -1.3:1 vs +2.2:1 vs +1.5:1 vs -1.6:1 vs +4.5:1 on Nasdaq!!! Breadth was even worse: -32x!!! vs +1.8x vs -1.1x vs +5x vs +1.6x vs +1.2x vs +30x on NYSE and -6.6x vs -1.2x vs -1.5x vs +3x vs -1.1x vs +1.3x vs +10x on Nasdaq. New 52 week highs slipped to 122 from 135 while new lows rose to 100 from 70….climbing even more sharply The ratio fell to just 1.2x positive! VIX rose  for a FOURTH session, closing at 30.59 +1.92, never even closing the 26.46-27.01 gap up from 10/27 and 10/31. This was highest close since 11-29! Meanwhile the 12 mo. ave. lies at 23.76 – fear still prevails!

Here are the results of the past seven sessions negating the rally: Dow -1.6% vs +0.4% vs +0.5% vs +0.6% vs flat vs -0.2% vs +4.2%!!!; Transports -2.5% vs +0.1% vs -0.8% vs +1.5% vs +0.8% vs -0.8% vs +4.8%; S&P 500 +1% vs flat vs -0.2% vs +4.3%; Nasdaq Composite -2.1% vs flat  vs +0.1% vs +1.1% vs flat vs +0.2% vs +3.8%; Nasdaq 100 -2% vs flat vs -0.2% vs +1.1% vs -0.3% vs +0.6% vs +3.8%; Russell 2000 +3.1%!!! vs -0.1% vs flat vs+1.6% vs +0.6% vs +0.9% vs +5.9%!!!; NYSE Financials -3.5%!!! vs +1% vs -0.1% vs +1.8% vs +1.3% vs  -0.9% vs +5.9%.  Leaders: BAC -5.1% vs +1.9% vs -0.2% vs +2.7% vs +1.7% vs +7.3%!!! C -7%!!! Vs +0.3% vs -0.3% vs +5.9%. Guess those 4,500 layoffs DID mean something!

European equity markets strong, Asia weak: FTSE +0.7% vs +0.3% vs -0.4% vs +0.2% vs +0.7% vs +1.5% vs +0.5% vs +2.9%; CAC 40 +1.8% vs -0.4% vs -0.5% vs -0.5% vs +1.4% vs +1.9% vs flat vs +3.5%;  DAX +1.6% vs flat vs -0.9% vs -0.8% vs +0.8% vs +1.7% vs -0.5% vs +4.2%!; Nikkei -1.5% vs -0.7% vs +1.7% vs -1.4% vs +0.6% vs +0.5% vs +1.9% vs -0.5% vs +2.3% vs +1.6%; Hang Seng -2.7%!!! vs -0.7% vs +1.6% vs -1.2% vs +0.7% vs +0.2% vs +5.6%!!! vs -1.5% vs +1.2% vs +2% vs -1.4% vs -2.1%!!!; Korean KOSPI -2% vs -0.4% vs +0.9% vs -1% vs +0.4% vs flat vs +3.7% vs -0.5% vs +2.3% vs +2.2% vs -1% vs -2.4%!!!; Indian Sensex -1.7% vs -2.3%!!! vs +0.4% vs closed vs -0.3% vs +2.2% vs +2.2% vs +0.7% vs -1% vs +3%, up only 7 times in the last 21 sessions! U.S. stock futures rallying and ignoring corporate earnings reports! DOW +89; SPX +11; NDQ +15. Bonds weaker as they are every morning lately, then rally back on stock weakness with 10’s AT 2% and 30’s still above 3%. 10 yr 2.00% -1/4. RECORD low 9/23 of 1.6855%; 30 yr 3.02% -1/2; Long TIP 0.84% -9/16. 0.57% at high three weeks ago. The 5 yr TIP yields MINUS 0.91%! 10 yr -0.04%. 3 mo. Libor 0.54%, and 0.76% 6 mo. – 3 mo. above 0.50% and six month above 0.75%…stable but yearend approaches! Bills -0.00% from one month out to six. 6 months 0.04%.

Gold tanked again Thursday but remains above $1700. It closed at $1713.40 -$31.40 but is now $1722.200 +$8.80. Once again correlating to stocks??? The record high is $1923.70, a buying climax on 9/6. RES is 1725, the 40 day and SUP $17611, the 50 day m/a! Major Res at $1800-1806, the November highs. Crude really TANKED Thursday crashing thru $100 support and closing $98.34 -$2.15, and is now $98.47 +.13.  Support at the 200 day (96), peaked. Major support is the 40/50 day m/a at $95.42-92.71, AND still moving up.

…stocks tanked and bonds rallied after stocks as the entire selloff was blamed on the central banks not going to buy up mortgage debt as speculated…of course this too is speculaton. About 15 minutes prior to the close stocks bottomed with the Dow at 11967 or -229, then short-covering (what else would it be?) attempting to get it back above 12k but failed leaving it at 11997. But as the news turns, today is a new day…full of hope, ah yes! Please Lucy, jerk that football away one more time!

Meanwhile the picture for corporate earnings continues to deteriorate…wait…doesn’t that lower the ‘e’ in p/e? Who cares, stocks are dirt cheap. Volatility? What’s that you say you perma-bear?

Note that while volume increased BIG BOARD volume DECLINED and remains well below average…more high frequency trades…when will they ever learn?…it is so funny to see the guys on CNBC trying to explain rallies and selloffs…of course the selloffs are just buying opportunities, right? Right???

Much is being made of Jon Corzine being subpoenaed and not taking the 5th. True, but his former brethren didn’t ask him any tough questions…no sir, he just sat there looking contrite as if the CEO isn’t where the buck stops…but then why should he think otherwise? Afterall, look at Mozillo and Pandit among others…

. . .   – – –  . . . note that the same old SOS applies…only more so!

Thomas Jefferson said that an informed electorate is the key to a democracy. He was right!

TB is not slipping, he decided to use Jefferson’s comment again…after a discussion with a friend and reader. He first called Obama a ‘pinko’ and then ‘the most divisive president in history.’  TB is not making fun of him as he is saying what a large number of Americans think. Where do we get these ideas.

But the worst part was the theme: ” anyone but Obama.” Do we really believe that things would be any different under McCain/Palin? The Tea Party would still have acted the same. We would still have gridlock in Congress, and the people would still be the losers. McCain is a maverick and would not support their cause either.

No, the most divisive president in history was Abraham Lincoln! To TB’s knowledge Obama has not gotten us into a civil war…one that, by the way, proved Lincoln right but at a cost of more lives than any war since. So let’s not bestow that ‘honor’ on Obama. Also, let’s grow up and stop blaming him for the budget deficit (all GOP candidates), or cutting defense spending (Gingrich). This is sheer pandering…pandering to the most extreme right who will possibly dictate who the eventual GOP presidential candidate is.

Karl Rove, the man who brought us George W. Bush, is now bashing Newt, and saying the RNC should disavow the Trump debates. On the other hand, he is making up more lies about Elizabeth Warren…now even blaming her for TARP – when she was opposed to bailouts! This comes at a time when the Senate rejected a qualified candidate to head the new Consumer Financial Protection Bureau, just as they did Warren but without the personal attacks. This time though, the reason is said to be he is qualified but we don’t need more consumer protection…especially from Wall Street as the SEC and other agencies are doing that. Wrong! They aren’t and for precisely the reasons that this bureau was being created: Congress controls them! …and Congress is bought and paid for by Wall Street. One only had to listen to the diatribe of Mitch McConnell to see the true motivation for both rejections.

Newt has already shown his derision of the electoral process by declaring himself the GOP candidate (Putin pay attention), sucking up to the conservative media, and instead of answering questions from what he perceives to be the liberal media, spent the time chastising them for asking the wrong questions. If he is elected president, don’t expect a spirit of cooperation.

TB stopped being a conservative after listening to Limbaugh and others, who since have become even more inflammatory in their remarks…it is good for ratings…and money! The right hates Rachel Maddow, who uses sarcasm instead to make her points…no screaming or ranting. Guess they prefer hearing people called terms like ‘pinhead’ or worse.

NPR is hated by the GOP…yet it is the only honest (fair and balanced) reporting in this country. The other day they had on a conservative blogger (powerline.com), who showed just how off point they can be (by the way whatever happened to radical and reactionary?). He said the left controls journalism and after bringing down Nixon, everyone wanted to become an investigative reporter “so they could bring down a Republican president” – huh? Guess he missed the Viet Nam protests when LBJ was running the country. The exception he said is the Wall Street Journal who employs liberal reporters but the editorial page is conservative.

Ahem, let’ look at history. Remember Michael Milken? While the investigative reporters did an excellent job of calling him what he was, the editorial page, under the control of Jude Wanniski not only defended him but made him an idol. While Milken was in prison in Pleasanton, Cal., TB met Wanniski when he met with TB’s company. He talked about the economy etc. then said: “I have to go now as I am going to have lunch with ‘Mike.” See, being a convicted felon did not stop him from defending him…another vast left wing conspiracy?

Once again, TB is not anti-capitalism, or anti-Wall Street, but he is against crony capitalism which is what we have and what allows the CEO’s of the biggest companies to earn hundreds of millions while the shareholders get their…well…lumps of coal or worse.

We haven’t had true capitalism in this country for at least a decade and the roots were planted three decades ago…not coincidentally when the average worker’s real compensation began to decline. Remember when CEO’s earned an average 10x the average worker? For most companies that formula isn’t too far off…and those companies do more for their shareholders!

Albert Poujols just signed a ten year $250 million contract, second only to A-Rods, with the Los Angeles Angels. At least he earned it but it is sad that money drives everything these days. Witness the departure of most of the Boston Red Sox after beating the Yankees in the World Series. Poujols talked glowingly of his love for the Cards…but guess the lure of money was greater…perhaps he now thinks like CEO’s: what’s in it for me? Is A-Rod a better player since getting his record contract? Will Albert be even better? Stay tuned. How much is enough?

The difference of course is it is the fans who will pay to see Poujols’ play…not shareholders. In this case there are few shareholders and this is just one investment for them. While TB loathed Steinbrenner, he knew how to play the game by not just owning the team but the media.

In closing, TB does not want you to think his way, and is not trying to convince you, merely try to make you think for yourself. There are two sides to every story…it is up to you to decide.

Have a great weekend…anything that gets us away from the market has to be better than this!

TB

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12/8/11…lies, damned lies, and…

December 8, 2011 at 8:51 am · Filed under economy, financial, markets ·Tagged , , , , ,

Bloomberg Top Stories:

*ECB May Dig Deeper to Stimulate Bank Lending After Cutting Key Rate to 1%

*Euro Weakens, German Two-Year Bond Yield Reaches Record Low After Summit

*Draghi Courts Bundesbank in Bid to Avoid Trichet’s Fate on Bond Purchases

*China Banking Crisis Led by Bad Debts Seen by 61% in Global Investor Poll

*Bernanke Favored by 71% in Poll of Global Investors Preferring Fed to ECB

*European Calls Highest in 20 Months Before Leaders Meet on Crisis

*Companies Face $12 Trillion Equity-Funding Shortage by 2020, McKinsey Says

*Falling U.S. Mortgage Debt Erodes Consumer Spending as Wealth Effect Fades !!!

*Franco-British Alarm of 1989 Comes True as Merkel Drives EU Crisis Plan

*Corzine to Tell Panel He Doesn’t Know Where Missing MF Global Millions Are – HAH!

*Republicans Seeking Jewish Support Say Obama Undermines Israel Security – Desperate?

*U.S. Delay on Climate-Change Deal Prompts Backlash From Europe to Barbados


Volume rose again to an average 4.1B shares from 3.73B shares, in a second hodge-podge session producing mixed results. Meanwhile, NYSE stocks executed on the Big Board rose to a still below average 968M, from 802, and while still 10% below average,the the first 900M share day in the last five sessions! Also,17 of the last 19 sessions have been less than 1B! Don’t get lazy here! Advance/Declines were weak and mixed for a third session:+1.1:1 vs +1.1:1 vs +3.5:1 vs +1.4:1 vs -1.5:1 vs +30:1 on NYSE and -1.2:1 vs -1.3:1 vs +2.2:1 vs +1.5:1 vs -1.6:1 vs +4.5:1 on Nasdaq. Breadth was also mixed: +1.8x vs -1.1x vs +5x vs +1.6x vs +1.2x vs +30x on NYSE and -1.2x vs -1.5x vs +3x vs -1.1x vs +1.3x vs +10x on Nasdaq. New 52 week highs slipped to 135 from 143 while new lows rose to 70 from 66….climbing again! The ratio fell to less thabn 2x positive. VIX ROSE for a THIRD session, albeit slightly. It closed 28.67 +.54, remaining above the 26.46-27.01 gap up from 10/27 and 10/31. Meanwhile the 12 mo. ave. lies at 23.65 – fear still prevails!

Here are the results of the past six sessions: Dow +0.4% vs +0.5% vs +0.6% vs flat vs -0.2% vs +4.2%!!!; Transports +0.1% vs -0.8% vs +1.5% vs +0.8% vs -0.8% vs +4.8%; S&P 500 +1% vs flat vs -0.2% vs +4.3%; Nasdaq Composite FLAT vs +0.1% vs +1.1% vs flat vs +0.2% vs +3.8%; Nasdaq 100 FLAT vs -0.2% vs +1.1% vs -0.3% vs +0.6% vs +3.8%; Russell 2000 -0.1% vs flat vs+1.6% vs +0.6% vs +0.9% vs +5.9%!!!; NYSE Financials UP 1%? vs -0.1% vs +1.8% vs +1.3% vs  -0.9% vs +5.9%.  Leaders: BAC +1.9% vs -0.2% vs +2.7% vs +1.7% vs +7.3%!!! C +0.3% vs -0.3% vs +5.9%. This despite layoffs at Citi and lowered revenues???.

 

Global equity markets weaker, except UK: FTSE +0.3% vs -0.4% vs +0.2% vs +0.7% vs +1.5% vs +0.5% vs +2.9%; CAC 40 -0.4% vs -0.5% vs -0.5% vs +1.4% vs +1.9% vs flat vs +3.5%;  DAX FLAT vs -0.9% vs -0.8% vs +0.8% vs +1.7% vs -0.5% vs +4.2%!; Nikkei -0.7% vs +1.7% vs -1.4% vs +0.6% vs +0.5% vs +1.9% vs -0.5% vs +2.3% vs +1.6%; Hang Seng -0.7% vs +1.6% vs -1.2% vs +0.7% vs +0.2% vs +5.6%!!! vs -1.5% vs +1.2% vs +2% vs -1.4% vs -2.1%!!!; Korean KOSPI -0.4% vs +0.9% vs -1% vs +0.4% vs flat vs +3.7% vs -0.5% vs +2.3% vs +2.2% vs -1% vs -2.4%!!!; Indian Sensex -2.3%!!! vs +0.4% vs closed vs -0.3% vs +2.2% vs +2.2% vs +0.7% vs -1% vs +3%, up only 7 times in the last 20 sessions and today’s wiped out the attempted rally. U.S. stock futures weaker and mixed: DOW -11; SPX -3; NDQ +2.50. Bonds weaker with 10’s and 30’s still above 2% and 3% respectively. 10 yr 2.06% -5/16. RECORD low 9/23 of 1.6855%; 30 yr 3.10% -11/16; Long TIP 0.84% -3/4. 0.57% at high three weeks ago. The 5 yr TIP yields MINUS 0.91%! 10 yr -0.04%. 3 mo. Libor 0.54%, and 0.76% 6 mo. – 3 mo. above 0.50% and six month above 0.75%…stable but yearend approaches! Bills -0.01% one month, 0.00% 3 months. 6 months 0.04%.

Gold rallied Wednesday and remains above $1700. It closed at $1744.80 +$13 and is now $1747.70 +$2.40. The record high is $1923.70, a buying climax on 9/6. SUP is $1710/1725, the 40/50 day m/a’s. Res at $1800-1806, the November highs. Crude dipped slightly Wednesday closing $100.49 -.79, and is now $100.94 +.45. $100 holding – so far! Support at the 200 day (96), still rising. Major support is the 40/50 day m/a at $95.12-92.43, also still moving up.

 

 

…Tb won’t even call it politics…it’s blasphemy! Jon Corzine scheduled to testify before Congress…wonder how they will treat a ‘brother’? He says he has no idea where client money went…uh huh, Jon! Just keep lying as you have done for so long now.

 

We continue to delude ourselves that all is well in Europe…hell, the rest of the world. This despite a Global Investor Poll which shows that two-thirds see a banking crisis brewing in China. They have crony-capitalism (sic?) there that would even embarrass the U.S. Friends get lent money, then lend it to those who can’t get it at Mafia rates of interests…they have had suicides over an inability to pay. Many of these are sound companies who cannot get money elsewhere.

 

Do you really believe all is well with the world? Seriously? Do you really believe that given the record levels of volatility – in stocks AND bonds, on an almost daily basis…that stocks represent value? Do you believe CEO’s of the biggest companies…especially financial stocks deserve what their packages dictate they get? Do you believe that the board of directors represents you, the shareholder? If you can answer ‘yes’ to all of these questions you are either delusional or TB doesn’t know a bond from a hole in the ground. Wake up and smell the napalm! It’s nice!

 

. . .   – – –  . . . note that the same old SOS applies…perhaps more so after the rally!

Thomas Jefferson said that an informed electorate is the key to a democracy. He was right!

 

Now contrast this to the ‘anyone but Obama’ theme…is it rational? Is it informed? Given the candidates the GOP has proposed and the fact that they are dominated by the evangelical vote at this time anyway, do you really want anyone but Obama?

 

This is not an endorsement of Obama but it is disgusting to hear him blamed for things he inherited…and which came about due to the GOP being in control of the White House and Congress. Of course the Dems did their share when in control, but at least they aren’t being hypocritical about it. We have already lost at least two (Perry and Cain), hopefuls that were scary in their lack of understanding of how government functions, and Bachman could be a third. She who wishes to teach Intelligent Design along with evolution and let the kiddies decide. What about separation of church and state…the evangelicals she is pandering to, are already teaching them that. Worse, it is carrying over to spending on science…where we limit stem cell research, and deny global warming, making us look like total fools.

 

TB can find so many things to criticize Obama without the lies being spread by Romney, who when called on them became irate, and now Gingrich, who accuses him of cutting defense spending when the evidence does not support this…yet both stand by their statements. Pity.

 

Capitalism is defined as ‘creative destruction’ and so it is…but what do you call this? Denial? Foolish Destruction?

 

Have a great day…and again, don’t let the Buzzard’s get you down!

 

TB

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