Jan

9

1. Those who have read "how I formed my views on politics" by A. J Nock wil be amazed that there is a resonance in what he wrote that boggles. He started at the Wigwam where, the day before elections, the voters couldn't never get through Marching through Georgia because they were too far gone from bribes of commestibles and drink. He then went to Washington with CJ, " he will never see his likes again". In the middle of the halls of congress, he saw a hundred congressman and senators, slapping their hands in worshipful attention as a drunken, florid man did a hoedown, spinning around like a teetotum or dervish. CJ told him that the spinner held the most important job in Washington, the only job that anyone wanted. He was secretary of interior and gave away all the lands. Nock tried to get away from the spinner, but couldn't as he saw a remnantful man

My goodness, 100 years later, the secretary of the interior is having lunch with all the flexerages almost every day before the 6 week meetings where they announce their sales and purchases. The chair of the interior is constantly talking to the heads of the flexerages and their advisers every day by phone before the sales. The former board members of the interior are having lunch in the executive dining room with all their former colleagues who now vote on the sales every day before they go back to their jobs as 8 figure a year consultants on what their former colleagues are planning to do. The chair of the interior is the nephew of the former chair of the interior, and the two prior chairs of the interior were formerly the heads of the flexerages. On another front, one has had the occasion to be very good friends with the heads of several Exchanges. It used to be a den of wolves and a bottle of vipers there with each one attempting to get his head to the top to strike you. But they told me that on occasion they had to remove a member or two from privileges, either because he was so blatant in kiting orders from the public, and doing bad things to them, or because he was such a bad trader that he was about to go bankrupt. Two of those people mentioned have become chairs of the Interior or the predecessors to the Princeton Chair.

That subsequent Chair is a master of announcing his sales on the mornings of big purchases by his best friends in the flexerages. In a jury trial, if a defendant were to say that he spoke 100 times with his co-defendant who pleaded guilty to the crime, he would be immediately convicted by the jury because they would believe he was guilty also. Yet all the chairs of the supposedly public spirited entities mentioned above are best friends, former heads, and constantly talking to their former employees and colleagues. "Would you ever do anything to help your friends at the expense of the public, they might be asked" and they would say with a straight face, that they's taken trillions and will continue to take trillions to bail out and help out by purchasing lands from their former employees. Nock would laugh. Patrick O' Brian would write a novel Reverse of the Medal about it.

Amazingly, the small businesses, the millions of them that are not headed by the flexerages cronies are not hiring. Indeed their key people are not looking for work any more. But the flexerages and the departments related to the Interior are still hiring at the 100,000 a month level. Tell me that Nock would not be smiling and wishing that CJ could see it all. And that Nordeau would not see a sinking ship to be.

2.  The first week of the year is through. Here are some moves:              
                 

Market          End of year     Current

S&P               1258             1271

Bond 30 yr    122 1/8         121.0

Bond 10 yr    120 1/2        120 2/3

Crude             91                  88

Gold              1421              1370

value of dlr   0 . 81           0. 83

per 100 Yen

value of Euro $1.33           $1.29

DAX               6927            6928

Eurostox       2794            2807

Silver              31              28.6

Corn             6.29              5.95

Wheat         7.94               7.74

Soybeans    14.03            13.65

Will someone forecast to what extent they believe that these moves in
the first week will be reversed by the end of the year? To what extent
have moves like these in the first week of other years waxed or waned?

Steve Ellison writes: 

During the 28 full years of S&P 500 futures trading from 1983 to 2010, the futures declined over the first five trading days of the year 11 times. Subsequent to these declines, the futures were up from the close on day 5 to the end of the year 8 times.

After the 17 advances during the first five trading days of the year, the futures were up from the close on day 5 to the end of the year 12 times.

A regression of the results in the first five trading days with the results the rest of the year shows an insignificant positive correlation with R square 0.015, t=0.62, and N=28.

Sam Marx writes:

Bunching the years together and treating all of them equally, and drawing conclusions is I believe incorrect.

For example, I believe where the year is in the Presidential cycle has been shown to have an effect on that year's performance.

Better statistical results perhaps could be drawn by grouping the years based where it was in the Presidential cycle and then doing the analysis.
 


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