Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
MARCH FUTURES BUY PROG = -500 FAIR VALUE = -600 SELL PROG = -700 CASHIN'S COMMENTS MONDAY, DECEMBER 12, 2011 [AN ENCORE PRESENTATION] On this day (-1) in 1930, American savers, the Federal Reserve and a Republican President all got a nasty surprise. The banking system had been shaky for a year or two but it looked like things might finally be beginning to stabilize. That is until today. On this day, a major financial institution, The Bank of the United States went belly up. And, with it went the savings, "in whole or in part", of over 400,000 depositors. The Bank of the United States has been a historically unlucky name for several institutions. The first “Bank of the United States” was proposed by no less than Alexander Hamilton. It was a privately held central bank for the United States some 125 years before the Fed was created. It was very controversial as Southerners saw it as a boon and tool of the mercantile North while the South’s main industry, agriculture, didn’t need strong banking. The bank’s charter was allowed to expire and the bank disappeared. Without a strong central bank, however, the young government had found it very difficult to finance the War of 1812. So, Congress proposed another Bank of the United States. This one succeeded for a while until Andrew Jackson and his Southern coalition determined to kill it. They succeeded and the result, many feel, was the Panic of 1837, one of the worst economic contractions in American history. Now back to the other Bank of the United States. In the early 1900’s, immigrants were pouring through Ellis Island and onto the streets of New York. A fellow immigrant and a very successful garment merchant realized they would need a place to put their meager earnings and savings. Perhaps to convey an image of governmental security or even an implied guarantee, he named his enterprise, “The Bank of the United Sates”. As previously noted, when it went under it had over 400,000 depositors. They all began to scramble for money anywhere which tended to strain the other banks. The large New York garment industry was pushed to the edge and merchants desperately sought credit. Lines began to form at other banks. Soon the nation was sinking into the Depression. To celebrate meet a couple of auditors at the Olde TARP Trust Lounge. Have a few perfect Rob Roys and explain that these days’ surprises are federally reserved for things like birthdays - not economic events. Crises, like dinosaurs, are now ancient history. Then have several more sips. The stock market slumbered its way to another 180 point gain. The impetus was the European Summit. Hope Is Enough – At Least For Friday – The European Summit worked all night Thursday, and came up with a treaty….er….plan….er….agreement. The markets reacted with a celebration that looked a lot more like a sigh of relief. Most European markets regained about 80% of what they had lost in Thursday’s selloff. A few got all of it back. The credit markets looked a little uncertain about how to evaluate the result. Yields on the more vulnerable sovereigns initially rose, suggesting disappointment in the summit results. As the trading session progressed, the yields moved back down to the levels pre-summit. Traders couldn’t decide if that was a vote of approval or a simple return to “Go” to evaluate further. The philosophic consensus seemed to be that Merkozy had told the delegates that some sort of “agreement” had to be evident at wrap-up. Lacking that, nervous markets might turn into panicky markets. So, as they filed out, each delegate gave the requisite thumbs up with rather sketchy details. The media pundits trumpeted that a “Lehman moment” had been averted, but offered no details on how things had been achieved. Traders, at least those that we chatted with, thought there was less here than met the eye. They said they’d rather wait to see how things played out as the upcoming week moves on. It could get interesting with the FOMC and Quadruple Witch here in the U.S. and national reassessments in Europe. Stay tuned! Cashin’s Comments Monday, December 12, 2011 Page 2 The Week Ahead – Based upon published data, the watercooler wizards are guessing that this week’s calendar may look something like this: Monday: (1:00) (2:00) Tuesday: (7:30) (10:00) (1:00) (2:15) Wednesday: (7:00) (8:30) Thursday: (8:30) (9:00) (9:15) Friday: (10:00) (1:00) (8:30) President & Iraqi PM Meet Three Year Treasury Auction Treasury Budget Deficit OPEC Report Chain Store Surveys NFIB Index Business Invent. JOLTS Survey IBD Survey Ten Year Treasury Auction FOMC Statement OPEC Meeting Mtge Apps. Import Prices Export Prices Initial Claims PPI PPI (Core) New York (Empire) Fed Index Current Account Treasury Intl Cap Flows Ind. Prod. Cap. Util. Philly Fed Five Year TIPs Auction CPI CPI (Core) -$140B N.A 0.8% N.A. N.A. 1.0% 0.6% +8K 0.2% 0.2% -$106B 0.2% 77.6% 5.0 -0.1% 0.2% Cocktail Napkin Charting - The napkins see support in the S&P at 1243/1247 then 1236/1240 and 1237/1231. Resistance looks like 1264/1268 then 1273/1277 and 1282/1286. Overnight - Markets are still trying to assess the “fiscal compact” agreement. There is some pullback in Europe, as Ireland, Hungary and the Czech Republic are now saying “wait a minute” after their original agreement. A good sign for the compact was that Italy was able to auction off some one year notes at a slightly lower rate than last time and to some decent demand. My concern, and one shared by many traders is that they still have not set up a “fire department”. That means there is no plan or ready mechanism to quell any crisis that might spring up. That’s a risky posture. Consensus - Europe still driving the bus but I think traders on both sides of the pond would like to tiptoe through the session. Expiration week deals another wild card. Watch newstickers and stay very nimble. Trivia Corner Answer - Simon started with just seven pies. Eileen bought four; Maureen bought two and Janet bought one. Today's Question - "Where's Santa when you need him." - Little Dick and Jane went to the neighborhood five and dime to get a Christmas present for mom. Dick saw a shiny comb and took it to the register with all his money. "Sorry little boy", said the cashier. "You are 24 cents short!" Jane smiled a sibling grin, grabbed the comb and put it, along with all her money on the counter. "Sorry, little girl", said the cashier, "but you are 2 cents short." After an exchange of ugly faces, they agreed to pool their money. However, the cashier told them that they still didn't have enough. How much did Dick have? Jane...? and how much was the comb? (No taxes involved.) Opinions expressed herein are subject to change without notice and may differ or be contrary to the opinions or recommendations of UBS Wealth Management Research, UBS Investment Research or the opinions expressed by other business areas or groups of UBS as a result of using different assumptions and criteria. Full details of UBS Wealth Management Research and / or UBS Investment Research, if any, are available on request. Any prices or quotations contained herein are indicative only and do not constitute an offer to buy or sell any securities at any given price. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness, reliability or appropriateness of the information, methodology and any derived price contained within this material. The securities and related financial instruments described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. UBS AG or any of its affiliates (“UBS”), its directors, officers and employees or clients may have or have had interests or long or short positions in the securities or related financial instruments referred to herein, and may at any time make purchases and/or sales in them as principal or agent. UBS may provide investment banking and other services to and/or serve as directors of the companies referred to in this material. Neither UBS its directors, employees or agents accept any liability for any loss or damage arising out of the use of all or any part of these materials. This material is distributed in the following jurisdictions by: United Kingdom: UBS Limited, a subsidiary of UBS AG, to persons who are market counterparties or intermediate customers (as detailed in the FSA Rules) and is only available to such persons. The information contained herein does not apply to, and should not be relied upon by, private customers. Switzerland: UBS AG to institutional investors only. Italy: Giubergia UBS SIM SpA, an associate of UBS SA, in Milan. US: UBS Securities LLC or UBS Financial Services Inc., subsidiaries of UBS AG, or solely to US institutional investors by UBS AG or a subsidiary or affiliate thereof that is not registered as a US broker-dealer (a "non-US affiliate"). Transactions resulting from materials distributed by a non-US affiliate must be effected through UBS Securities LLC or UBS Financial Services Inc. Canada: UBS Securities Canada Inc., a subsidiary of UBS AG and a member of the principal Canadian stock exchanges & CIPF. Japan: UBS Securities Japan Ltd, to institutional investors only. Hong Kong: UBS Securities Asia Limited. Singapore: UBS Securities Singapore Pte. Ltd. Australia: UBS Capital Markets Australia Ltd and UBS Securities Australia Ltd. For additional information or trade execution please contact your local sales or trading contact. ©2011 UBS Financial Services Inc. All Rights Reserved. Member SIPC. UBS Financial Services Inc. is a subsidiary of UBS AG.