Interdum stultus opportuna loquitur...

Thursday, November 06, 2008

USRant: Isn't This Just The MOST Fun?

Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.

Before I start, just take a good look at the stock price of GM ($4.80). Then, go through the Rant Archive and look for references to "Kerkorian" - for example this piece from 2005 which followed up the November 14th 2005 "Well Done, Kirkie Boy" which in turn was a reprise of "Good Money After Bad"

You will see that my advice would have saved him billions of dollars.

And now, on with the show...

Although I am on record as declaring that the Euro zone is fundamentally sounder than the US, you should not then assume that I think that Europe is well run, dearest Reader. The Euro will outperform the dollar simply because the friction between nations in Europe will prevent the politician-parasites from interfering too much; contrast that with the US, where Jefferson's Nightmare is coming to fruition... a standing army deployed domestically, a central bank that fulfils the whims of the banksters, and a government dominated by sectional (party) interests. All things against which Jefferson warned... but it seems that Hamilton (and Lenin) won the longer-term ideological battle: this will eventually bankrupt the US and cause its utter ruin. 

Now jsut because the US is doomed, does not mean that Europe is not a basket case as well.. it's just less of a basket case. Charles Manson and Jeffrey Dahmer are both nutters - but they have different screws loose.

Virtually every economy in the Euro zone will soon fail to comply with the 'stability pact' - they will all be outside their agreed bands on either external imbalances (the ratio of trade deficit to GDP) or government finance (the ratio of government deficit to GDP and the ratio of the public sector borrowing requirement to GDP). Nobody is making much noise about that.

That's how politicians expect to be able behave - a 'pact' is only a pact if it can be adhered to without genuine discomfort; a promise is a statement to be discarded whenever it becomes inconvenient.

It's a bit like the idea that the law of Contract is important, or the idea that people should pay their debts. Both are true, but neither apply to government if the government decides otherwise. 

In other words, politicians expect their herds to be upstanding (and threaten them with hordes of armed goons if the herd misbehaves), but the political class themselves view any constraint on their own behaviour as (a) non-binding; and (b) something to be 'got around' either by smart-arse weaseling or by appointment of friendly judges to various benches.

Ask yourself what you would call it if a person had a relationship in which they were forced to accept a specific service, under threat of kidnap, imprisonment and - if they sought to defend themselves - DEATH.

Now assume also that whatever it is they were forced to accept could be bought at a lower price in the marketplace, but they were forced nonetheless to pay the higher price. In fact, when all things were taken into account, fully half the income of the average individual was forcibly extorted by the 'supplier'.

Furthermore, the suppliers of this forced consumption at excessive prices could also force consumers to kit up to fight turf wars between similar suppliers. And the costs of these pissing contests would be borne by... you guessed it - the consumer.

What would you call such a situation? You would call it either slavery, or a Mafia protection racket. Politicians call it "government".

And that is why, dear Reader, any right-thinking individual will conduct a personal pogrom against every politician that crosses their path. They are not like us - they are not members of the species homo sapiens sapiens; they are a parasitic subspecies that must be made extinct if humanity is to make any genuine progress.

Now I'm not a nasty guy - although I have often mentioned that in my view 'an eye for an eye' does not go far enough; aggressors need to face a highly asymmetric response (thus my motto: "hurt The Lovely, get gutted"). 

There are very very few species on Earth that I would willingly wipe out if given the chance: guinea worms, leeches, ticks, lice, and politicians. See the pattern? All of them are parasites that do no good whatsoever to their hosts - the relationship between these species and their hosts has no genuinely symbiotic element whatsoever.

I could spend time writing colourful prose about how, in the name of Liberty (and backed by 100% of my constituency - me) a trial was held and - after weighing the evidence, and consistent with the laws that were promulgated (again, backed by a 100% mandate from my constituency - me), all politicians were found guilty of crimes against my constituency (me), and, after full consideration of their lack of remorse, the guilty were condemned to a punishment as laid down in the laws as promulgated by my representative body (my Parliament, which has one member who was elected with 100% of the popular vote). That punishment being "death by whatever means presents itself, at any time and place at which the opportunity arises".

And of course , pursuant to GT Law GT/2008-002 of 2008, jurisdiction is universal (land, sea, air, space, dimensions other than the 4 we experience directly) and with no statute of limitations.

What is the difference between that, and the same behaviour undertaken by some jerkoff megalomaniac who claims to represent 'The People', despite having been voted for by a minority of the population?

For example - Sarkozy got 53% of the 67% who voted... 0.57*0.67=35% of the adult population. Obama got 53% of those who voted (66%) - 34% of the adult population.

And don't try this "they got a majority of people who bothered to vote" malarkey... I will counter by saying that "None of the above" is as valid a choice as either candidate. In fact, for people of good will, it is the only valid choice.

Economic News

The Bank of England cut the official UK cash rate by 1.5 percentage points (150 basis points) to 3%; the ECB cut by 50 basis points to 3.25%; the UK rate is now the lowest it has been in over half a century.

Apart from that, Initial Jobless Claims for the week 'fell' to 481,000. I put 'fell' in quotes, because last week's number was initially reported as 479,000.

Now not all of us topped our year in Economics and Econometrics - I don't hold that against you, Dear Reader. But even the least numerate amongst us will see that 481,000 is a larger number than 479,000 (to make it easier let's just say that 481 is a bigger number than 479).

But if you're the government, you get to rewrite history (as the German government did recently - reducing the death toll for the Allied war crime committed at Dresden... apparently death tolls for goyim are permitted targets for historical revisionism).

Anyway - as I say, governments get to rewrite the historical record whenever it suits them... so the US Department of Labour now says that last week's new jobless claims were the highest since January 2002, and this weeks were lower... an improvement.

See how the game works? It's the same at the macro level - government denies that things are bad ("we are not in recession"), and produce numbers to reinforce their claims. Then once they think things have bottomed they tout the new dawn, and show revised historical numbers that show that the worst is behind us....  

Fed Open Market Operations

The Fed's Open Market Operations desk performed another liquidity drain today - a $ 25bn reverse repurchase entirely in Treasury-backed collateral.

Headline Indices

The Dow Jones Industrial Average lost 443.48 points (4.85%) to 8695.79 points. The index high for the day was 9155.44, while the low was 8637.17; only a 50-point bounce in the last three minutes saved a close under 8650.

The Dow Jones Industrial Average index (DJI) contains 30 components; the total volume traded in the index was 1279.47m units. Today all 30 issues fell, The main decliners (in percentage terms) being -

  • General Motors (GM) -0.76 (13.7%) to $4.80 on volume of 39.73m shares;
  • Alcoa (AA) -1.54 (13.1%) to $10.26 on volume of 24.23m shares;
  • American Express (AXP) -2.91 (10.5%) to $24.92 on volume of 21.49m shares;
  • AIG (AIG) -0.19 (9.2%) to $1.87 on volume of 68.98m shares; and
  • Citigroup (C) -1.11 (8.8%) to $11.52 on volume of 150m shares.

The S&P500 Index lost 47.89 points (5.03%) to 904.88 points..

The S&P500 index (SPX) contains 500 components; the total volume traded in the index was 4.9BN units. Within the index, 22 issues rose, and adfvancing volume was 204.53m units; 469 issues fell, with declining volume of 4.73bn units.

The main decliners (in percentage terms) were -

  • Big LotsInc. (BIG) -5.99 (25.7%) to $17.31 on volume of 7.68m shares;
  • XL Capital (XL) -2.12 (21.1%) to $7.95 on volume of 7.65m shares;
  • Hartford Financial Svc.Gp. (HIG) -3.57 (20.8%) to $13.58 on volume of 21.41m shares;
  • CONSOL Energy Inc. (CNX) -6.4 (20.3%) to $25.12 on volume of 10.29m shares; and
  • Developers Diversified Rlty (DDR) -2.11 (18.6%) to $9.23 on volume of 5.36m shares.

The Nasdaq Composite lost 72.94 points (4.34%) to 1608.70 points and the Nasdaq100 lost 58.01 points (4.46%) to 1241.97 points..

The Nasdaq100 index (NDX) contains 100 components; the total volume traded in the index was 1.23bn units. Within the index, only 6 issues rose and advancing volume was just 65.24m units; 93 issues fell, and total declining volume amounted to 1.16bn units.

The main decliners (in percentage terms) were -

  • Foster Wheeler (FWLT) -4.035 (14.5%) to $23.735 on volume of 7.93m shares;
  • Applied Materials (AMAT) -1.57 (12.6%) to $10.89 on volume of 30.1m shares;
  • Flextronics International (FLEX) -0.5 (12.5%) to $3.51 on volume of 13.11m shares;
  • Discovery Holding Co (DISCA) -1.64 (11.9%) to $12.09 on volume of 1.63m shares; and
  • Focus Media Holding (FMCN) -2.19 (11.8%) to $16.3 on volume of 4.29m shares.


The CBOE Volatility Index advanced 9.12 points (16.72%) to 63.68 points and the CBOE Nasdaq100 Volatility Index advanced 7.27 points (13.12%) to 62.70 points.

Breadth and Internals

A total of 3539 issues traded today on the NYSE; today's total volume was 1.85bn shares. A total of 598 stocks posted gains for the day, and volume in advancing issues totalled 280m shares. Exerting downwards pressure on the index were 2893 losers, which accounted for a total declining volume of 1.57bn shares. 8 stocks made new 1-year highs on the NYSE, while 175 shares plumbed new 52-week depths.

On the Nasdaq 2968 tickers traded today; total Nasdaq volume was 2.36bn shares. A total of 632 stocks posted gains for the day, with aggregate volume of 0.23bn shares changing hands in the day's winners. The red zone of the Nasdaq exchange comprised 2240 losers, and total declining volume was 2.13bn shares. 5 Nasdaq-listed stocks hit new 52-week highs, while 182 shares dipped to new 1-year lows.

Major Market Statistics
Index Close Gain(Loss) %
Dow Jones Industrial Average 8695.79 -443.48 -4.85%
S&P500 Index 904.88 -47.89 -5.03%
Nasdaq Composite 1608.70 -72.94 -4.34%
Nasdaq100 1241.97 -58.01 -4.46%
CBOE Volatility Index 63.68 +9.12 16.72%
CBOE Nasdaq100 Volatility Index 62.70 +7.27 13.12%

Dow Darlings: none, since no Dow components rose

Dow Duds:

  • General Motors (GM) -0.76 (13.7%) to $4.8 on volume of 39.7m units
  • Alcoa (AA) -1.54 (13.1%) to $10.26 on volume of 24.2m units
  • American Express (AXP) -2.91 (10.5%) to $24.92 on volume of 21.5m units
  • Citigroup (C) -1.11 (8.8%) to $11.52 on volume of 150m units
  • General Electric (GE) -1.59 (8%) to $18.34 on volume of 126.1m units

Most Traded Dow stocks:

  • Citigroup (C) --1.11 (8.8%) to $11.52 on volume of 150m units
  • General Electric (GE) --1.59 (8%) to $18.34 on volume of 126.1m units
  • Bank Of America (BAC) --1.63 (7.5%) to $20.12 on volume of 114.9m units
  • Intel (INTC) --1.19 (7.9%) to $13.87 on volume of 107.7m units
  • Microsoft (MSFT) --1.2 (5.4%) to $20.88 on volume of 94.5m units
Precious Metals

Precious metals futures were pretty soft... we will have t o keep biding our time for the next Precious Metals surge.

Precious Metals Futures
Index Close Gain(Loss) %
Gold 733 -9.4 -1.27
Silver 10 -0.455 -4.35
Palladium 220.05 1.05 0.48
Platinum 838 -42 -4.77

The Gold Bugs index (XAU) contains 16 components; the total volume traded in the index was 122.85m units. Within the index, all 16 issues fell.

The index fell by 7.93 points (8.83%) to 81.87 points. The main decliners (in percentage terms) were -

  • Coeur d'Alene (CDE) -0.098 (14.5%) to $0.58 on volume of 7.19m shares;
  • RandGold Resources (GOLD) -4.69 (14%) to $28.75 on volume of 1m shares;
  • Silver Stand Resources (SSRI) -1.37 (13.2%) to $8.99 on volume of 1.28m shares;
  • Silver Wheaton (SLW) -0.51 (12%) to $3.73 on volume of 7.61m shares; and
  • Freeport McMoran (FCX) -3.18 (10.6%) to $26.88 on volume of 20.74m shares.
Energy Complex

Energy futures were also soft - still over-rating the importance of US demand, and under-rating the impending destruction of the US dollar.

Energy Futures
Commodity Close Gain(Loss) %
Crude Oil 61.15 -4.15 -6.36
Heating Oil 1.9534 -0.1013 -4.93
Natural Gas 6.932 -0.317 -4.37
Gasoline RBOB 1.3496 -0.0748 -5.25
Ethanol 1.733 -0.035 -1.98

The Oil Services index (OSX) contains 15 components; the total volume traded in the index was 125.94m units. Within the index, all 15 issues fell.

Today the index fell by 10.48 points (6.81%) to 143.4 points. The main decliners (in percentage terms) were -

  • Rowan Co (RDC) -2.89 (13.8%) to $18 on volume of 4.98m shares;
  • Nabors Industries (NBR) -1.83 (10.9%) to $14.92 on volume of 9.96m shares;
  • Weatherford International (WFT) -1.53 (9.7%) to $14.21 on volume of 12.36m shares;
  • Smith International (SII) -3.18 (9.4%) to $30.63 on volume of 3.35m shares; and
  • Noble Corp (NE) -2.69 (8.7%) to $28.32 on volume of 5.44m shares.
Currency Futures

Currency futures saw a flight to USD folowing the BoE's surprise rate move - a thoroughly temporary outcome which does not change either the technical or the fundamental rationale for a long Euro position.

Currency Futures
Index Close Gain(Loss) %
U.S. Dollar Index 86.78 1.65 1.94
Euro FX 1.2716 -0.0256 -1.97
Swiss Franc 0.8507 -0.0113 -1.31
Soybeans 906 2 0.22
Australian Dollar 0.6681 -0.0217 -3.15
Canadian Dollar 0.841 -0.0184 -2.14
Japanese Yen 1.0238 0.012 1.19
New Zealand Dollar 0.5881 -0.0114 -1.9


The nine-stock group that makes up the Rant bellwethers declined on average by 6.6%. The fallout occurred as follows:

  • General Electric (GE) -1.59 (7.98%) to $18.34 on volume of 126.14m units.
  • Citigroup (C) -1.11 (8.79%) to $11.52 on volume of 150.02m units.
  • Wal-Mart (WMT) -0.64 (1.18%) to $53.49 on volume of 31.85m units.
  • IBM (IBM) -4.29 (4.8%) to $85.15 on volume of 12.17m units.
  • Intel (INTC) -1.19 (7.9%) to $13.87 on volume of 107.74m units.
  • Cisco Systems (CSCO) -0.45 (2.59%) to $16.94 on volume of 121.58m units.
  • Google (GOOG) -11.02 (3.22%) to $331.22 on volume of 8.22m units.
  • Fannie Mae (FNM) -0.14 (16.47%) to $0.71 on volume of 24.17m units.
  • Freddie Mac (FRE) -0.06 (6.59%) to $0.85 on volume of 16.28m units.
Other Indices of Interest...

The Banks index (BKX) contains 24 components; the total volume traded in the index was 773.24m units. All 23 index components  fell...

Today the index fell by 3.33 points (5.89%) to 53.21 points. The main decliners (in percentage terms) were -

  • Wachovia (WB) -0.6 (10%) to $5.38 on volume of 98.61m shares;
  • Wells Fargo (WFC) -2.91 (9.2%) to $28.77 on volume of 112.92m shares;
  • Citigroup Inc (C) -1.11 (8.8%) to $11.52 on volume of 150m shares;
  • Fifth Third Bancorp (FITB) -0.96 (8.7%) to $10.11 on volume of 10.93m shares; and
  • Capital One Financial (COF) -3.05 (8.1%) to $34.8 on volume of 11.76m shares.

The Semiconductor index (SOX) contains 18 components; the total volume traded in the index was 304.92m units. Within the index, all 18 issues fell.

Today the index fell by 16.81 points (7.12%) to 219.44 points. The main decliners (in percentage terms) were -

  • Applied Materials (AMAT) -1.57 (12.6%) to $10.89 on volume of 30.1m shares;
  • KLA-Tencor Cp (KLAC) -2.57 (11.3%) to $20.2 on volume of 5.17m shares;
  • Advanced Micro Devices (AMD) -0.38 (10.7%) to $3.17 on volume of 20.54m shares;
  • Infineon Tech (IFX) -0.34 (9.7%) to $3.16 on volume of 1.34m shares; and
  • Micron Technology (MU) -0.42 (8.7%) to $4.38 on volume of 15.5m shares.

The ChildKiller ("Defence") index (DFX) contains 17 components; the total volume traded in the index was 171.25m units. All 16 index components fell...

Today the index fell by 18.29 points (6.61%) to 258.58 points. The main decliners (in percentage terms) were -

  • Embraer Empresa (ERJ) -2.6 (12.8%) to $17.72 on volume of 1.12m shares;
  • FLIRr Systems (FLIR) -3.11 (9.5%) to $29.79 on volume of 1.24m shares;
  • Lockheed Martin (LMT) -7.57 (9%) to $76.82 on volume of 4.59m shares;
  • General Electric (GE) -1.59 (8%) to $18.34 on volume of 126.14m shares; and
  • Boeing (BA) -3.83 (7.7%) to $45.72 on volume of 12.82m shares.