Wrong-Way Wednesday – No QE3 For You!

Classic Bernanke Kustomz – I love it when they tell you how things can't possibly happen, as if we're not smart enough to understand how things really work – and then it blows up in their face…

Michelle/Rustle – That's an interesting thing about news girls.   For some reason, the ones they hire for looks they tend to keep many, many years after that's no longer a factor.  Of course CNBC does rotate in a few new hotties like the Indian girl and the Australian girl – maybe that's why Michelle is scowling….  

SVU/8800 – I'm pretty sure they should come back around before the Cubs win the World Series.

PM/StJ – I'm fine with tracking it, just don't want to suddenly change how we're trading something mid-stream so let's make sure future portfolios are set up with whatever rules at the outset.  

DMND/$5KP, StJ – They still look cheap to me but we may as well take them off at $2.90 as we have no time to fix if they go bad.  

CMG/Jabob – As long as they don't hold $400, then we can still hope.  

Not much of a close but we pretty much held yesterday's run so a positive move tomorrow would make this not look like a blow-off top.  

China is very flip-floppy so we'll have to see how their markets react in the morning. 

Dow volume finished at 159M, double last 2 days.  3 decliners to one advance in the broad market – that's just not good.  

So hard to get bullish..

At the close: Dow +0.12% to 13193. S&P -0.14% to 1394. Nasdaq -0.04% to 3039.

Treasurys: 30-year -1.76%. 10-yr -1%. 5-yr -0.59%.

Commodities: Crude -0.96% to $105.69. Gold -3.03% to $1642.95.

Currencies: Euro -0.45% vs. dollar. Yen +0.99%. Pound +0.15%.

Market recap: Stocks limped along near the flatline in another tight trading day. Financials finished mostly higher a day after the Fed's stress tests; BofA and AmEx led the Dow. Tech stocks were led by the big red Apple machine, now closing in on $600. Treasurys sold off; commodities were broadly lower as the dollar rose. NYSE decliners topped advancers two to one.

Treasury prices continued to tumble today, pushing yields on the benchmark 10-year note to their highest levels since October andbreaking above their 200-day MA. The Fed's latest policy statement showed more optimism and seems to have opened the floodgates to higher yields, and traders and investors had taken a lot of short positions. TLT -2.5%, Ultra-Short ETF TBT +5.1%.

An interesting model of asset bubbles (Noahpinion)

Fed stress tests: too harsh, not harsh enough, just right – oran exercise in confusion? One banker says the Fed's numbers made no sense; when his bank ran the stress test on its own, it came up with a higher capital ratio than the Fed reported. Citi and Sun Trust may have been burned because they "thought they had a mile of room” for dividend and share buybacks. 

Scorecard for New Bank Stress Tests

Fitch affirms the U.K.'s credit rating at AAA, but revises its outlook to negative from stable. The agency has mostly positive things to say about the country's attempts at budget reform, but says there is "very limited fiscal space to absorb further adverse economic shocks."

Five years after Meredith Whitney made a name for herself when she said Citigroup (C) was plagued with toxic subprime mortgages, she still hates the stock: "They don't have any earnings power… They're investing in a lot of regulatory processes, but it's like the old broken-down house. You have to put so much money in to get to a modern equivalent of a new house." (earlier) 

Employees at major banks who churned out fraudulent foreclosure documents, forged signatures, made up fake job titles and falsely notarized paperwork often did so at the behest of their superiors, a federal investigation says. "How could so many people have participated in this misconduct?” HUD inspector general David Montoya posits. “The answer: simple greed.”

Chevron CEO John Watson warns high oil prices are destroying demand. As evidence, he points out current U.S. oil consumption of 19M barrels/day is well below the 21M barrels/day peak reached 3 years ago. Watson also warns OPEC has limited ability to ramp production. (earlier)

In-line not good enough for this market: Guess? (GES): Q4 EPS of $1.05 in-line. Revenue of $776M (+2.5% Y/Y) in-line. Shares -12.7% AH. (PR)

One of our stocks getting cheap!  Suncor Energy (SU -4.1%) finished sharply lower a day after reporting one of two upgraders at its oil sands facility will be taken offline for three to five weeks for unplanned maintenance.

Old favorite:  More on Eagle Bulk Shipping (EGLE): Q4 beats estimatesas the shipper reported fewer-than-anticipated losses, despite a continued decline in net revenue. The company also issues cautious comments on the current quarter, noting that new-building deliveries flooded the market in January, and while demand is steady, it is insufficient at this point to meet unfavorable supply dynamics. Shares-4.8% AH. 

PayPal (EBAY) will reportedly take on rapidly-growingSquare by offering a rival credit-card swiping device that will charge a slightly lower fee (2.7% vs. Square's 2.75%). The move is another example of PayPal's aggressive push into mobile and offlinepayments, leveraging a variety of solutions. However, in this instance, the fact that Square has already signed up over 1M merchants will make things difficult. (previously)

Google Offers (GOOG), which is attempting to take on Groupon (GRPN) and LivingSocial by partnering with rival daily deals providers, now has 30 partners offering deals in 40 cities. The latest partner additions include both startups such as Signpost, and bigger corporate names such as AT&T Interactive. But it still remains to be seen just how effective the platform will at eating into Groupon's dominant mindshare.

Om Malik sees a common thread between Greg Smith'sattack on Goldman Sachs (GS) and James Whittaker's critique of Google's (GOOG) changes: each is going after his ex-employer for no longer putting its customers first. In Google's case, Malik sees a company straying from its core identity as an information provider in the name of a misguided attempt to become more "social."

Doug Kass plots the run-up in Apple (AAPL) from 2009 to today against the move in Google (GOOG) from 2004, and notes the similarities, especially the steepening ascent of the last 3 months. Of course, Google had an epic bear market to bring it down. What's to cut the legs out from under Apple? (via)

WOW!!!  Just how heated has trading in Apple (AAPL +3.8%) become? With 50.6M shares changing hands today, Apple's dollar volume was roughly $30B. For perspective, the entire NYSE has seen an average daily dollar volume of $36.6B in March. Powershares QQQ (QQQ), the ticker with today's second-highest dollar volume, only saw $4B worth of trades. (earlier)

WTF! Apple Eyeing $960, May Settle For Six-Handle (For Today, At Least)

 US Federal Tax Receipts (Dr. Ed’s Blog)

Sharepost/BDC – They seem to have been charged with failing to register as a broker/dealer in their handling of Facebook stock and that does seem to be settled.   That's a BIG no-no as the SEC will always make sure they defend GS's turf!  There's another issue against various Frank Mazzola operations (and that guy is a pisser to see all his excuses) for misleading investors in promoting Facebook and self-dealing and all kinds of nasty stuff that I would think will push back Facebook's IPO for a while.  Maybe that's why so much money is going into AAPL – money that was sidelined for Facebook finding a home. 

Blocks/Shadow – That's those "market on close" orders we talked about last month.  The big boys stuff massive orders in at the close so they don't affect the prices (much) which is why the trick is to run the market up into the close, so they get the best price for their volume dump.  It's a total scam and it's the retail traders who suffer.  

AAPL/JMM – It's just a typo in an ad.  I don't see what the big deal is.  

AAPL/Peedle – See news item above.  It's ALL AAPL all the time. 

Big Chart – So NYSE and RUT did what we thought all indexes would do the day after the Fed, pulling back and looking toppy.  But not the big 3 so very inconclusive but AAPL huge part of S&P and even huger part of Nas makes it impossible to make rational determinations based on chart action.  The fact that the NYSE can't take out 8,259 when that is the broadest measure of market activity is very, very disturbing.  

TLT/Bob – I'd just roll out to April $112 puts at $3, which is about even.  If you do that every month, eventually you should get a break and, if not, in 56 more months you'll be at zero anyway!  

Volume/StJ – Sure, as long as you pick something internally consistent.  That's why I like my little Dow number, it's right in front of me on my Etrade screen and, for me, I have an easier time getting my head around 10M, 25M, 116M, than numbers in the Billions.  It changes just enough from hour to hour to give me a good idea of what's happening during the day.  

Transport action very similar to late April-early May of last year.  Dow dropped like a rock on June 1st.  The decline was about 4 weeks total before the cliff and 12,850 was the top on 5/2 after a huge run from 11,600 on 3/15 (1,250 points in 6 weeks).  This run started at 11,800 on 12/16 and, 3 months later, we're at 13,200 (1,400 points).  Very similar.  That would seem to make this week the end of the run if we're in that pattern….

GLW/IZega – Yes, I love them.  They are certainly good for my next 10 bull picks.  There's no need to own the stock but you can sell the 2014 $12 puts for $1.90 and buy the $12/17 bull call spread for $2.10 for net .20 on the $5 spread that's $2.05 in the money to start and worst case is you own them for $2.20.  

So let's say your alternative is a buy/write where you buy the stock for $14.05 and sell the 2014 $15 puts and calls for $5.60 for net $8.45/11.72.  If you put in $8,450 you can make up to $6,550 at $15 – not bad either.  If you put instead $300 cash into 15 of the spreads instead, TOS says the margin on the short puts is $1,650 and, at $15, you make $4,500 but, at $17 you make $7,500 so you are shooting for a little higher strike to make the same money but you commit WAY less cash.  On the downside, you can have 1,500 shares put to you at net $12.20 on the spread while the buy/write puts you into 2,000 shares at net $11.72 so a lower total commitment at a slightly higher price.  

For me the key is flexibility and the spread is more flexible as you have tons of cash on the side to make adjustments with and GLW is a volatile stock.  

Facebook/ZZ – I can't relate to it.  I do have 160 friends but I never talk to them and I'm not all that interested in what their puppy did today.  I think it's mainly because, coming off the generally high-quality chat we have here every day – Facebook just seems so damned mundane.  Also the ads drive me nuts but that's what it's all about, right?  If you want to beat Facebook – just do something that's ad-free with a nicer format where no one asks you to help them with their farm or whatever and I bet it would do great but then you'd have to add all that crap to "monetize" it and get your Billion anyway.  I mean seriously, who wants to spend all day on pages where 1/3 of the page is commercials?  Even that wouldn't be so bad if they kept them on the sidelines but they don't – the dumbest stuff pops up in the middle of your "news".  I keep saying ignore all but then new stuff comes along based on, I suppose, my "habits" – just like GOOG.  

Look at this, this is just ridiculous:  

Adrienne Sugerman-Bandiero and 4 other friends recently played games.

That's just one entry on my Facebook wall or whatever it's called.  She didn't make it but, because she's a friend, Facebook feels they can annoy me with their silly game commercials.  Also, Scott should be ashamed of himself playing that Cityville when he owes me a phone call! 

On the other hand my friend Mike is having Creme Brule' in Paris and took a picture – that's kind of cool! 

That's what Facebook should be (to me), a nice way to just share your day or family events with friends.  If they stuck to that, I'd enjoy it a lot more. 

One day I'd like to see a study on how much time people in this country waste on Facebook, Twitter, YouTube etc.  My daughter showed me a video of a dancing banana that went on for 3 minutes and I was crawling out of my skin in the first 15 seconds but it had 74M views and that gave me time to contemplate that that worked out to 1,779 people working for an entire year spent instead watching a dancing banana.  Figure we pay them $30,000 and that video cost America $53M of productivity lost.  

We could wipe out poverty, build homes for all the homeless, rebuild our bridges and dams and highways and put up high-speed rails from coast to coast – if we just ban Youtube, Facebook and Twitter!!!

Good morning!  

Shanghai down 0.7%, India down 1.25%, Hong Kong flat but Nikkei happy up 0.6% and why not because they slammed the Yen down to 84.17 to the Dollar for a while.  Didn't last, now 83.70 but it did it's job into the Nikkei close at 3am, of course.  

Europe opening flat and our Futures are flat with the Dollar at 80.89, down from 81.16 so not impressive futures.  It worked on oil as it's back to $105.75 and gold is back at $1,648 but still both weak.  Silver $32.25, copper very weak at $3.84 (and $3.85 is our long-standing danger line on copper for global weakness), nat gas super-lame at $2.25 and gasoline all the way back to $3.34 from $3.38 at yesterday's inventory report which means they are getting a lot of resistance to prices over $3.33.

Euro $1.3042 after bouncing off $1.3003 – SO CLOSE to breaking down!  Pound $1.566 and EUR/CHF at $1.211 despite Euro weakness so $1.3042 is WITH the Swiss propping the Euro up like crazy (to the point where they have diminished their own currency more than the Euro has fallen – so far). 

Woops, SNB holding rates steady.  That sent EUR/CHF down (Franc stronger) and knocked the Euro and Pound back down (they were rising).  Snapping back already so they may not be lowering rates but they sure are buying a lot of Euro.  

Thursday's economic calendar:

8:30 Producer Price Index

8:30 Initial Jobless Claims

8:30 Empire State Mfg Survey

9:00 Treasury International Capital

10:00 Philly Fed Business Outlook

10:30 EIA Natural Gas Inventory

4:30 PM Money Supply

4:30 PM Fed Balance Sheet 

The NY and Philly Fed have been nothing but positive lately and jobs have generally been good for us so very toppy sign if we can't make positive progress today.  

China is already in a hard landing, says JPMorgan analyst Adrian Mowat. "If you look at the Chinese data, you should stop debating about a hard landing… Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact."

China's Foreign Direct Investment Falls for Fourth Month. Foreign direct investment in China fell for a fourth straight month in February as companies reined in spending amid a slowdown in the world’s second-biggest economy and the prolonged European debt crisis. Investment declined 0.9 percent to $7.73 billion last month from a year earlier, the Ministry of Commerce said in a statement today, following a 0.3 percent drop in January. Overseas spending in the first two months decreased 0.6 percent to $17.7 billion. The outlook for foreign investment in China is “grim,” ministry spokesman Shen Danyang said last month, citing “slack” external demand, rising operating costs and funding difficulties faced by some companies.

The sleeper story today is China, says Art Cashin. The Shanghai Stock Market was clobbered overnight on comments by Premier Wen, raising questions about the need for reform to avoid slipping back into the "Cultural Revolution." The issue gets its legs from the fact that the leader of the communist party right now is going around the country touting a revival of Mao, and at present, no market in the world has yet priced in a potential power struggle in China. (video) 

Chinese Airlines' 1Q Profit May Drop 50% on Year. Airfares for domestic flights have dropped on year for the first time in three years. Airlines may post core operating losses in Feb. because of lower passenger and cargo volumes and high fuel prices, citing Zhu Feng, an analyst at Industrial Securities Co. – NOW can we short PCLN?

China is easing lending curbs at three of the nation's four biggest banks, insiders say, letting the banks use more of their deposits to make loans after data showed new loan growth at a four-year low.

The Reserve Bank of India keeps its repurchase rate at 8.5%, as expected, after inflation accelerated. RBI reiterates that future actions will be toward lowering rates, though remaining inflation risks "will influence both the timing and magnitude of future rate actions.”

U.S. May Sanction India Over Level of Iran-Oil Imports. Obama administration officials say they are worried India may run afoul of a new U.S. law restricting payments for Iranian oil, forcing the White House to impose sanctions on one of its most important allies in Asia.

Rice Prices 10-30% Higher in Many Asian Nations. A number of countries in the Asia Pacific region have come close to their limit for agricultural expansion, Jose Graziano da Silva, director general of the Food and Agriculture Organization, said in prepared statement to be delivered at a conference in Hanoi today. High food prices and volatility remain a threat to nations, with retail rice prices in many Asian countries 10 percent to 30 percent higher than in 2011, according to the remarks.

Fitch Puts U.K. Debt on Negative Outlook Days Away From Budget. Fitch Ratings said Britain risks losing its top investment grade because of its limited ability to deal with shocks, days before Chancellor of the Exchequer George Osborne will present his annual budget. Fitch changed the outlook on Britain to “negative” from “stable,” indicating a “slightly greater” than 50 percent chance that the AAA rating will be reduced within two years, the company said in a statement in London late yesterday, citing the weak economic recovery, high debt levels and threats from Europe’s debt crisis. 

Britain's Inflationary Route to Default. George Osborne’s idea of refinancing the national debt with 100-year gilts, or even gilts issued in perpetuity, is a bit too clever by half.

Spanish Stocks Left Out of Rally on Rajoy Budget Gap Skepticism. Spanish stocks are the only developed market suffering losses this year as Prime Minister Mariano Rajoy fails to rein in the budget deficit fast enough to assure investors. The IBEX 35 Index (IBEX) has dropped 2.1 percent in 2012, the only decline among 24 developed markets tracked by Bloomberg. That compares with an 11 percent rally in the Stoxx Europe 600 Index (SXXP), the best start to a year since 1998. 

Euro-Zone Firms Find Loans Hard to Get. 

Watch Bernanke's 'Little' Inflation Capsize U.S.: Amity Shlaes. The thing about inflation is that it comes out of nowhere and hits you. Monetary policy is like sailing. You’re gliding along, passing the peninsula, and you come about. Nothing. Then the wind fills the sail so fast it knocks you into the sea. Right now, the U.S. is a sailboat that has just made open water, and has already come about. That wind is coming. The sailor just doesn’t know it.

Goldman (GS) clients know they're being played, claims CNBC's David Faber in response to today's New York Times op-ed written by a former Goldman Sachs executive criticizing the firm. In his private conversations with many Goldman clients, Faber says they know they don't "come first" and that they're "fully aware" they're being "played." but are stuck because they still have to do business with the firm. (video)

Wise Up on Goldman Sachs(GS). In his extraordinarily public resignation letter, Greg Smith, who had spent time recruiting the best and the brightest to Goldman Sachs, wrote, “I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.” The proper functioning of Wall Street is too vital to the economy to tolerate the duplicitous practices of Goldman Sachs and firms like it, especially after what the American people did to rescue these businesses in their darkest hours. The country’s political class appears to lack the power or will to hold large financial institutions to account. There is a massive leadership vacuum at the top of Wall Street today; and it’s quite possible that only continued, relentless public shaming will force the leaders of these firms to make the kinds of cultural changes necessary to bring their actions in line with normative behavior.

Meredith Whitney: Invest In Citi(C)? Not In My Lifetime.

Bank of Communications Co., China’s fifth-largest lender, plans to raise about 57B yuan ($9B) in the world’s biggest share salesince May, sources say. China’s Ministry of Finance and HSBC (HBC), the Shanghai-based bank’s two largest shareholders, will reportedly take part in the private placement.

New iPad: a Million More Pixels Than HDTV. Apple's(AAPL) iPad could be described as a personal display through which you see and manipulate text, graphics, photos and videos often delivered via the Internet. So, how has the company chosen to improve its wildly popular tablet? By making that display dramatically better and making the delivery of content dramatically faster.

Advertising/JMM – Here is my idea for TIVO – they pay you to watch commercials!  I think they should let you work off your monthly subscription fee by paying people (through the sponsors, of course) to watch commercials.  They already know what kind of things you like and they can let you select from categories of ads and pay you, for example, .15 per commercial with maybe 2 or 3 questions at the end of each one.  That would give the sponsors great feedback and let them test commercials and people who watch 100 commercials a month would have a free Tivo subscription so they could skip all the other commercials – totally worth it for everyone.  A similar thing could be done on the web or with interactive cable boxes – at some point, there should be a consumer revolution when they finally wise up and realize that they are GIVING AWAY their attention –  which is something the advertisers value highly…  

Riffs/Scott – I like that!  

China/Diamond – Wow, that's just a great excuse to chop off a few heads (and already got one last night).  Art has it backwards anyway, it was Bo Xilai, now gone, who was making pro-Mao noises, not Wen – who kicked him out the door.  Don't forget "cultural revolution" in China is code for murdering rich people and intellectuals – warnings like this are more like Wen putting the squeeze on the top 1%, who, like our top 1%, have gotten a bit too greedy for the good of the country.  No one in China considers the Cultural Revolution to be "the good old days."  Here's context on Wen:  

 

"Without a successful political reform … such historical tragedies as the Cultural Revolution may happen again," said Wen, referring to a decade of social upheaval sparked by Mao Zedong in 1966.

That event turned China's society in on itself as Mao urged a nationwide movement to, among other things, seek out counter-revolutionary elements. Millions of people were displaced, beaten or killed.

For many leaders of Wen's generation, it's a piece of history that reminds them of the chaos they're obsessed with avoiding. The summoning of the words "Cultural Revolution" lent a particularly stark tone to Wen's remarks as he said the need for change has reached "a critical stage."

Str
Read more here: http://www.kansascity.com/2012/03/15/3491789/invoking-tumult-of-cultural-revolution.html#storylink=c

Stratfor/ZZ – Can those guys be any stiffer?  

Lightening up/1020 – Here you go, enjoy.  There's 417 of these videos, you can subscribe to his channel and I'll see you at Christmas…  8)  

Study/1020 –  Perhaps the thing is that, for the unexceptional, you need to be kind of a jerk to get rich.  This is a big topic, of course but it does occur to me the the reason it seems like a rat race to most people is because most people are as ordinary as rats so you just have to be the meanest, least moral, most obnoxious rat to claw your way to the top of the pile.  Then there are people who are simply talented and they cut through the crowd like a knife through butter and they will be successful in almost whatever they do and they can ascend very far up the ladder, without it having to be at the expense of others.  

Those people are few and far between by comparison.  I guess an example of the two types would be people like Sting and Trudie, who are literally working their asses off for the Rainforest Concert at the moment vs the people who buy tables to take their clients to the event.  Not that all people who buy tables are jerks, of course, but for most of them, it's just a business thing and they come to the reception with stacks of business cards trying to network – that's the majority of the people there, unfortunately.   

Why do we have to have an event in the first place?  Because, sadly, without the tax deductions and business expenses and the big concert with lots of celebrities – we'd be lucky to save 5 trees.  Charity is a funny business, you really have to twist arms to get money – watch Celebrity Apprentice if you think otherwise and see what they have to go through to raise money – and that's from their closest friends!  Unfortunately, the people who are genuinely generous – with time or money are tapped over and over again until they are exhausted.  They are the "low hanging fruit" in the charity circuit so everyone goes after them for so many things and then we have to deal with the "jerks" again – the vast majority who need a reason to give and usually want to know what's in it for them in some way or another.  

That's the odd thing, I think.  The really exceptional people, for the most part, consider themselves lucky.  They don't have any illusion that they "deserve" to be better off than other people.  Maybe it's because they didn't have to claw their way to the top – which is not to say they don't work hard, just that when they work hard, it's generally more effective – so they advance further and faster.  I don't know – it's a very complex issue but worth exploring…

Fed Twits – Well you guys got me to look at twitter for the first time in many months!  I even tweeted (I have 6,000 followers, I guess I SHOULD say something) how it puts things into perspective that only 12,000 people are following the Fed – we are actually a very small community of people who care about such things…

Now, Lady Gaga has 20M people following her.  It would be an interesting experiment to set up a twitter account and simply copy every single tweet of someone super-popular and see if anyone cares about the exact same tweets coming from someone who is not a brand name.  

Speaking of time-wasters.  20M people, even if they only take 2 seconds to read the tweet, is 11,000 hours per tweet.  So each utterance by Lady Gaga, at $8.50 an hour, costs America $93,500 in lost productivity.  I'm telling you there's at least a good magazine article in this premise….

$36Tn/Kustomz – Let's see, that's AAPL $5,000 for sure.  You heard it here first folks….

Fixed/Diamond – That was easy.