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Morning Musings From Art Cashin

Tyler Durden's picture


Via UBS Financial Services

Earnings Optimism Allows Bulls To Mount Jacob’s Ladder – Readers may recall the story in Genesis of Jacob’s ladder. In the story, Jacob falls asleep only to find a ladder to heaven which he ascends.

Yesterday, we may have seen the mercenary analog. The bulls shifted their sleepy, dreamy (but persistent) rally into a meaningful up-move.

The catalyst for the up-move was not heavenly inspired (at least as far we can could tell). Rather it came from better data and lots of earnings season optimism. Intel’s numbers and outlook were solid. So, too, were those of shipper, UPS. The JPM numbers were good, but perhaps more important, Chairman Jamie Dimon sounded far more optimistic than in the last quarter. Also, important was JPM’s announcement that it would hire 9000 new workers. That sparked a lot of pundit commentary about the job outlook finally turning.

On the data front, upbeat retail sales gave hope that the consumer was coming out of hibernation. Traders also viewed the Fed Tan Book as upbeat, homing in on the comments that economic activity was picking up in 11 of the 12 Fed districts.
The only downbeat stuff seemed to come from the Bernanke testimony. He said that economic conditions would keep rates low for, the now well-known, extended period. Clearly, the Fed was looking at something other than the headlines and it appears to still be quite concerned with the economy. The market seemed to shrug off the testimony as though it was simply the comments of a spoil sport.

All the bubbly backdrop allowed the bulls to produce a solid rally with great breadth and a sharp jump in new highs. Best of all, it came on higher volume.

Marinating With Mauldin – Our friend, John Mauldin, was in town this week and we got together twice. John made a surprise visit to the Friends of Fermentation on Monday. Then we had dinner last night.

The topics covered were wide-ranging as usual. They ranged from the Greek crisis to the fate of the Euro, the analyst as detective, the outlook for China and whether the internet will evolve into the modern Library of Alexandria. We hope to touch on some of these next week.

Leaky Sanctions – The United States, most of its allies and Russia are halting or blocking gasoline supplies to Iran. China, however, seems to be filling in the gap. Andy Lees reports that China sold two cargoes of gasoline to Iran. He further notes that China’s Sinopec is also getting ready to sell gasoline to Iran for the first time in six years.

Cocktail Napkin Charting – Yesterday’s action did a lot of good for the bulls. Volume was solid by recent comparisons. Advances beat declines heavily as did up-volume over down-volume. The real victory was in the new highs column. New highs were 609 to 8. That’s key because new highs had begun to diverge by slipping back.

With the new highs back at new highs, as are breadth indices, the technicals are solidly in the bulls’ camp. Topping may be weeks or months away according to handbook guidelines.

The S&P has been up in eight of the last nine sessions and it sits clearly in overbought territory. That condition may be resolved either by sideways churning or a small consolidating pullback. But, as previously noted, the technicals say the bulls reinforced their controls yesterday.

The S&P blew through 1200 yesterday and closed solidly above that number. The napkins suggest resistance in the S&P may lurk at 1218/1222. Support should be the old resistance 1197/1200.

Tax Day Hat Tip To One Of America’s Loveliest CPA’s – Happy Birthday, Mary!

Consensus: What could happen today? Well, in 1865 Lincoln expired after a bad trip to the theater; in 1912 the RMS Titanic disappeared after an ill-timed stop for ice; and in 1945, thanks to Curtis LeMay, Tokyo lay in ashes after one of the most vicious fire-bombings in history. Now that you feel better - - sip your coffee near the exit door and stay very nimble.
Trivia Corner

Answer - Da boys decided it was 27 pitches. That would be true if you were the winning pitcher. But if you were on the visiting team and you lost, the answer would be 25, since the winning home team would not bat in the bottom of the ninth. Thus…..24 put outs through eight innings and one home run to give you the loss.

Today's Question - Sock it two me! Little Simple Shoo has to get a pair of socks but can't put the light on for fear of waking his evil twin brother, Staplehead (they still sleep in bunk beds). In the drawer - but not paired - are 21 blue socks, 17 gray, 11 black, 7 maroon and 3 tan. How many socks must he pull out in the dark to be sure there was a pair in the group? (Yes, I know all the numbers were odd but you do know the "lost sock syndrome".....and yes, Little Simple Shoo will be able to see the socks when he tiptoes into the next room.)


On this day (+4) in 1536, there began one of those ventures that remind us cynics of the hope and promise that once was America. To hear today's citizens tell it, there's something in America that brings out a "dog eat dog", survival of the fittest attitude. When did all this happen??

Well, back in 1536, America was new, pristine, an innocent wonderland. Columbus had found it just 44 years earlier. Cabot and Verrazano claimed to have seen wondrous shores teeming with lobster just a few years earlier. It would be nearly a century however until there were pilgrims, or Henry Hudson, or John Smith or even Pocahontas. But rumors of this new and glorious virgin land inspired curiosity - a kind of Jurassic Park of its day. And as Michael Eisner might say when folks are curious, or seek adventure and hope to see something new - there is money to be made. (Okay! Okay! Skip Euro Disney.)

So, a man named Richard Hoar (or Hore) offered (for a fee) a fantastic cruise to this wondrous new land and back. He was an experienced sea-captain and also knew how to advertise. Soon, 25 well-to-do young men (and their servants) as well as a small group of the aspiring middle class signed on. Capt. Hoar rented two boats and with 120 adventurers sailed west.

Ship A, which Hoar captained, led the way and also led a rather spartan, disciplined life for a cruise ship. Ship B, which had more of the wealthy young men aboard confused itself somewhere between "the Love Boat" and a frat party. When they arrived in Newfoundland, Ship B had somehow run out of both wine and food.

Hoping to conserve the remaining provisions, Hoar suggested they set out in this bountiful land, to hunt and forage to feed themselves. Used to playing fox and hounds (but lacking the requisite horses, grooms, valets or even red riding coats), these well-bred lads tended to come back to camp bearing bunches of either dandelions or poison-ivy (often both). Soon all the food ran out.

Then two lads, whom we'll call Percy and Throckmorton, went off on a two man foraging party. They went into the woods and over the hill. The next day folks saw smoke from the boys' campfire. The second day, more smoke. The third day, Percy came back and said Throckmorton got lost on the way home. After a brief memorial service, folks began to notice Percy kept picking his teeth and burping which was strange in a guy starving to death. Soon Percy asked one of the chubbier guys if he would like to go over the hill and look for Throckmorton. Soon everybody was inviting everybody to go for a walk, and more and more folks seemed to get lost. That Sunday, for some reason, Captain Hoar felt compelled to preach a sermon on cannibalism.

Ironically, that very night more tourists showed up in the person of a French fishing boat. The stranded cruise crew waved hello and when the French came close enough they seized the boat and pummeled the crew. Now having food and a functioning boat, they returned to England. Apparently nobody signed up for the cruise the following year.

Where have those innocent good old days gone?

The good old days returned to Wall Street yesterday as the bulls shifted the rally into high gear.


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Thu, 04/15/2010 - 10:33 | Link to Comment Eduardo
Eduardo's picture

Well, today I went to check the insider trading activity and ...

I had to triple check it there was not a single buy... not even one insider bought anything. Not even a 5 bucks share of C.

... but yes this could stay high for sometime

EDIT: excuse me there is 1 (ONE) buyer for u$s 1,500,000

A patriot !

Thu, 04/15/2010 - 11:11 | Link to Comment hamurobby
hamurobby's picture

WOW, those are the sales list, where is the buyers list? <saroff>

Thu, 04/15/2010 - 10:35 | Link to Comment Assetman
Assetman's picture

This is exactly the way Uncle Ben wants it.

But, there will be unintended consequences down the road.

Thu, 04/15/2010 - 10:43 | Link to Comment hamurobby
hamurobby's picture

Its starting to suck in the real victims, as intended.

Thu, 04/15/2010 - 11:24 | Link to Comment Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

 I didn't think I could get any more frustrated or angry,but his whimsical ramblings and "the markets gone parabolic-isn't it great?" tone,just serve as a reminder why the Fed and those parasites on Wall St need investigating,prosecuting,and shooting - in that order.

Thu, 04/15/2010 - 11:55 | Link to Comment dead hobo
dead hobo's picture

As of this moment today, about 40% of the volume on the NYSE is made up of 10 stocks. As of this moment about 25% of the total NYSE volume is from C. This is not uncommon. More and more, the sell side comes across to me as looking hard for someone to be left holding the bag when the next fall comes, and the retail investor is the only segment left to exploit. Even though HFT flows rule the markets, I would guess that nightly, someone is left holding a bag of stocks that may or may not have value the next morning.

Thu, 04/15/2010 - 12:29 | Link to Comment dead hobo
dead hobo's picture


Here's a neat idea if you know a programmer who can do it. I would like to see a reasonably real time  number that shows the percentage of volume of the NYSE held by the top 10 stocks trading at that moment with the percentage held by the top three, which could be named.

Thu, 04/15/2010 - 12:22 | Link to Comment AnonymousMonetarist
AnonymousMonetarist's picture


'I've abandoned free-market principles to save the free-market system ... I am sorry we're having to do it'
-George W. Bush, December 16, 2008

'The new normal is not sub par economic growth. The new normal is the roll back of free markets.'
-Russell Napier, yesterday

'Nothing that says' FED couldn't buy more MBS. FED won't 'monetize debt'.
- Ben Bernanke, yesterday

'They have spoken words, swearing falsely in making a covenant: thus judgment springeth up as hemlock in the furrows of the field.'
- Hosea 10:4

Above the fold, today's WSJ : 'Evidence Mounts of Strong Recovery.'

The evidence?

First, retail sales.

But pay no attention to the little tidbit that the Commerce Department put out in their Dec. 11 release: "Special Notice -- The advance estimates in this report are the first estimates from a new sample. The new sample for the Advance Monthly Retail Trade Survey is selected about once every two and a half years." 

What a shock that retail sales have been trumpeted ever since this 'new sample' has been implemented.

And what was the new sample?

Out of 5,300 retailers and restaurants sampled, only half of those in November were also sampled in October. The other half were brand new to the survey!

Might one suppose that a number of companies that weren't questioned were ex-companies?

Might one suppose that the brand new spankin' companies to this survey were chosen with some purpose in mind?

Ya think?

It's like diagnosing the health of a fish whilst only observing the severed head.

The article goes on though to highlight one glorious example of the evidenced strong recovery:

'The rebound is benefiting Robert Mayfield, owner of five Dairy Queen restaurants around Austin, Texas, where he recently launched a new five-dollar deal including a quarter pound burger, fries, a drink and a small Blizzard dessert. The response was tremendous, said Robert.' 

Seriously WSJ? How could you not comment on the land rush to get the Jalapeño triple stacked at Whataburger? And what about Daisy Mae trumpeting that the very berry pancakes at IHOP are going like .. er hotcakes! Its' a V-creped recovery!

That's a round mound of reboundin' recovery in the service sector eh?

Of course the WSJ also cites the rising financial markets as prima facie not to mention the new efforts to forgive mortgage debts....

Every day and in every way this s%&t is starting to resemble a bad science fiction movie from the 70s.

And segueing from fiction and dead fish we have Jaime 'Whine on you Crazy' Dimon seeing not a wolf at the door but a big bad recovery. Considered by many as a good bankster (oxymoronic?) his endless opprobrium to any and all (perceived) anti-bankster slash populist slash counter-productive initiatives on the Hill is only matched by his delirium in staying in front of the currently dyked creative destruction wave that would too expose his grand enterprise as being too bankrupt to go broke...

Mr. Dimon's rising optimism, states the WSJ in the top of the fold headline Section C, 'The Day the Banks Turned the Corner', is triggered partly by a show of hands in meetings where he asks how many of youze entrepreneurial guys plan to hire more?

"20%, 30%, 40% raise their hands" Jamie D gushes. And then to fun-house mirror the quixotic anecdote referenced in the Page 1 article above, the WSJ goes on to highlight one of the (presumed) hand raisers:

'John Sang Wilbur organizes summertime ski, snowboard and Spanish-language instruction trips to Argentina {and} expects business to increase 35% ... Mr. Wilbur scrambled to get a new business credit card last year when the issuer of his old card stopped extending credit. He found a new issuer but soon plans to switch to a cheaper card from J.P. Morgan's Chase unit.'

Viva la recovery! 

Pay no attention folks to the facts that J.P. Morgan's loan levels are stagnant, retail banking has swung to a net loss and mortgage default rates are rising.

Oh and please completely ignore the off-balance crap like QSPEs and VIEs. If the QSPEs alone ($574,000,000,000 on 06/30/09) are valued in aggregate less than 77% of par then Jaime's Tier One is Tier None.

And my oh my just don't think about the fact that if junior-lien home mortgages were fairly valued J.P Morgan would have to be 'forced' to take money from a TARP 2.0 that 'it didn't need.'

Instead, gentle reader, please concentrate on the plum that is the 55% surge in quarterly profit which had 75% of its' origin in the investment banking operation- home of the bankster's 'potemkin solvency trifecta' :a 79 trillion derivatives book (mark to necessity), the MSR bucketshop (mark to farce), and the avalanching yield curve (mark it zero).

Hemlock as libation in Reflation Nation . 

The Reimagining of Capitalism.


Thu, 04/15/2010 - 13:25 | Link to Comment Sisyphus
Sisyphus's picture

Thank you! That was nicely written.

Thu, 04/15/2010 - 13:03 | Link to Comment Trifecta Man
Trifecta Man's picture


Do NOT follow this link or you will be banned from the site!