Bloomberg Top Stories:
*China Lowers Interest Rates for First Time Since July 2012 to Boost Growth – weakness!
*Stocks Extend Gains After China Rate Cut as Euro Falls on Draghi Comments – tell me more…
*Citigroup Said to Be Ejected From ECB’s Foreign-Exchange Group After Fine – thieves!
*Multibank Settlement Said to Be Sought by U.S. in Criminal Forex Probes – not enough!
*Obama Shows Limits of His Executive Power by Using It on Immigration Order – and he should!
*Basel Regulator Seen Toughening ABS Capital Rules Over Banks’ Objections – raise them!
*Biden Visits Kiev as NATO Says Russia Bringing Heavy Weapons Into Ukraine–one word:NYET!
*Malaysia Ends Fuel Subsidies as Cheaper Oil Obviates Decades-Old Policy – do it here too!
*Mandated U.S. Defense Cuts Stir Republican Congress Confronting New Budget – millions for…
*China’s Latest Revolution Calls for $2 Trillion Great Leap in Clean Energy – we should too!
*RBD to Shutter Wealth-Management Business in Caribbean Amid Restructuring
*Iran Nuclear Talks (sic) Near Deadline as Diplomats (sic) Say Overtime May Be Needed – DUH!
*Retail Stocks Regain Worldwide Favor Over Energy Shares – oh please! Seasonal, idiots!
*Yes, My Dear Sophia, There Is a Mr. Uber and He’s in Timeout – no clue about treating clients!
*Apple Designer Moves Beer From Man Cave Into Kitchen With Chic Dispenser – just 250 euros!
Thursday’s Market Summary
Happy Options Expiry! Hope it is good for you! Yesterday’s boring, somewhat low volume session, provided not clues to today: Down sharply on the open, then came back ‘slowly‘ the rest of the session closing from +0.2% (Dow/S&P) to +1.1% (Russell 2000), Dow Transports, and the two Nasdaq’s +0.5%+. Only loser was Dow Utilities but just off 0.2%. A/D’s and Breadth were pretty strong, while new highs were slightly higher and new lows gave up a bit – nothing to see here! As for the S&P VIX, while it closed at 13.58 -.38, and still bearish the session high was 15.74! That is bearish, but they then reversed it closing at the session low. Not that unusual pre-expiry.
Total NYSE Volume slipped to 3.1B shares, lowest in more than a week, vs 3.4B vs 3.41B vs 3.13B vs 3.2B vs 3.46B. Average volume since 9/30 is about 3.6B shares and slipping, or about 600M more than the 12-month average. Shares traded on the NYSE floor – affectionately referred to by TB as REAL volume also posted the lowest in 8 sessions at a weak 662M shares vs 738M vs 731 vs 694M vs 705M. For comparison purposes, for the prior 12 months it is a historically weak 712M shares…but since 10/1: 819B shares and slipping – including that HUGE 1.22B share day – highest since 9/19, followed by two more 1B plus days leading to options expiry!. The lowest was 10/6’s 696M share session. April 30 – September 30 we had just SEVEN 800M shares…since 10/1: 16, and FIVE 900M+ days.
A/D’s were pretty strong: NYSE: +1.9x vs -1.6x vs +1.6x vs -1.3x vs +1.1x; Nasdaq -2.6x! vs +1.5x vs -1.9x vs -1.1x vs -2x. Breadth was even better:: NYSE +2.1x vs -1.6x vs +2x vs 1:1 vs +1.5x; Nasdaq +2.8x! vs -2.2x! vs +2x vs -1.7x vs +1.4x. New 52 Week Highs were slightly higher at 173 vs 135 (weak) vs 304 vs 242 vs 207 – their range for the year is 39-612!!! New Lows were lower at 104 vs 141 vs 117 vs 115 vs 127 vs 146. The 2014 range is 24-1043!!! S&P VIX traded very bearish with a high of 15.74! It then closed at the session low of 13.58 -.35 stukk very bearlike. This is its 18th sub-15 close since peaking on 10/15. Heading back toward those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!)? You decide. The average of the past 12 months is 13.99, with a low of 10.28!…high close of 26.25 on 10/15/14! Put protection is getting expensive again.
U.S. bond market closed higher as it continues its oscillations. The recent 12 month low yields (10’s 2.09%; 30’s 2.87%; and long TIP 0.83%), 10’s closed at 2.34% +1/8; 30’s 3.05% +7/16, and the long TIP 1.04% +3/4. No inflation concerns! Overnight little changed and off session highs: 10’s 2.34% –; 30’s 3.05% +1/8; and long TIP 1.02% +7/16.
Libor update: 0.231% 3 mos.; 0.325% 6 mos., both steady and just above new record lows! The Fed Funds rate has averaged 0.09% and is steady at 0.09-0.10%. T-Bills: 0.3%, one-month, 0.00%! 3 mos, 0.12% one year.
Foreign bond yields LOWER – across the board! (Benchmark is 10yr): Germany 0.78% -2; UK 2.07% -3; France 1.11% -2; Italy 2.34% -6!; Spain 2.03% -6!; Portugal 3.02% -9!!!; Greece 8.00% -5 – can it break 8% again? Stay tuned! 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.45% -1.
Gold closed slightly weaker for a 2nd day in an ‘inside session’, without a single print above $1200 leaving Tuesday’s new high of $1204.10 – highest since 10/30, intact. It closed at $1190.90 -$3.00. However, it is still hanging on to Friday’s ‘positive key reversal’ and the 40/50 day are coming down to meet it. 11/7’s low was $1130.40, a new recent low!). The last 17 sessions have had prints below $1200 – first time since 12/31/13 Last close above $1300 was on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! Res is at $1200 (psychological), then the 40 day at $1204, the 50 day $1208, then the 200 day at $1277. The 12-month high is $1392.60 on 3/17, highest high since 9/4/13. $1130.40. 11/7’s low was $1130.40! Overnight, a high of $1207.60! (highest and only the 2nd time over $1200 since 10/31. Silver traded up $16.64, also highest since 10/31, and back from 11/5’s low of $15.12, more than a five year low.
Crude closed up a buck at $75.58 in another unremarkable session. Just five days ago it set a new recent low of $74.07, lowest since 9/17/10!!! 10/25’s high was $84.83. There have been 33!!! handles since peaking at $107.73 on June 13th, highest since 9/19/13. The record high of $147.27 was on 9/30/08, the low since on 12/30/11 is $74.95: $93.60 is the midpoint!!! Recent rally high and close are $110.70 and $110.53 respectively. RES at the 40 day ($82.33!), then the 50 day ($84.43!), and lastly the 200 day (96.84!), all accelerating to the downside! A failure here could take us to $70! The recent range is now $74.07-$112.24 since 3/1/12. Overnight it rallied to $77.83 but has slipped back to $77.31 +$1.46. Bottom yet?
Global equities higher – especially Europe: UK +1% vs -0.6% vs -0.1% vs +0.5% vs -0.1%; France +2.1%!!! vs -1.1%! vs +0.6% vs +0.7% vs –; Germany +2%!!! vs -0.6% vs +0.7% vs +1.2% vs –; Japan +0.3% vs -0.1% vs -0.3% vs +2.2%! vs -3%!!! Hang Seng +0.4% vs -0.1% vs -0.7% vs -1.1%! vs -1.2%! Korea +0.4% vs -0.5% vs – vs +1.2%! vs -0.1%; India +1%! Vs +0.1% vs -0.5% vs -0.1% vs +0.5% vs +0.4%. U.S. equity futures also rallying: DOW +155 (range 164); SPX +20 (23); NDQ +37 (43). Stocks opening in line…oh, wait…it’s options expiration! Rock and roll!
Some random thoughts:
…yesterday listened to a panel of financial bloggers interviewed by Charlie Rose. Pretty interesting comments – too bad I had to turn Charlie down due to a prior commitment…lunch with a friend. All expressed frustration (before they hooked up with a big sponsor), on getting their message out…preaching to the choir! It was an interesting foursome: Josh Brown (Ritholtz); Megan Murphy (Financial Times), Felix Simon (Fusion…kind of counter-culture), and Joe Wiesenthal (Bloomberg – now mostly an editor).
Universally they agreed that ‘content’ is what it once was…in this era of ‘flash traders’ rule, the active traders want what is ‘hot’ that might impact a stock that day…that hour. Thus, rather than blogging, the best way to get your message out (and it better be to the point), is Twitter. TB doesn’t Tweet. All of them said the first thing they do each morning is check it for the breaking stories…Murphy is trying to get the FT to put more emphasis on ‘hot’ news rather than the longer narratives, like Martin Wolf. He is getting old…just two years younger than TB but with as much wisdom.
They also commented on one of TB’s steady themes (we are unable to focus on just one global event at a time). The stock market (most likely due to flash traders) acts on just one main event and gets huge swings in relation to markets in other countries although they too are starting to see increasing volatility. Again, that is simply gambling…Vegas but where you don’t even know the odds. A lot can be learned by watching ‘Texas Hold ‘em’. Where are the regulators? The Fed (banking), the SEC (flash trading and protecting investors), and the lovable FINRA (broker funded organization charged with regulating investment advisors…and now financial advisors…they can’t even determine whether it is better to have an FA that is your ‘fiduciary’ or loyal to his employer…ask John Bogle if you need clarification!).
FINRA is an offshoot from NASD, a big reason why registered investment advisors (RIA’s), opposed letting financial advisors (FA’s) under the umbrella, fearing they would favor the FA’s since most work for them! Paranoid? Consider that SEC Chairwoman Mary Schapiro came to FINRA from NASD which gave her a multi-million ‘kiss off’ bonus (total compensation was $3.3 million a year, send off, including retirement (? she was just there from 2006-09) was $9 million!!! …to insure her loyalty? You decide, but she succeeded former Representative Christopher Cox (R- Orange County), who did nothing to protect investors…finally caving to pressure to limit short-selling, but with too little too late. He also followed William Donaldson, who as chair during the ‘destruction’ of Glass-Steagall, and thus bank regulation had a ‘plan’ to conduct random examinations of the biggest banks (brokers too under the ‘broad’ classification). Cox did not order a single…not one…random exam. Oh and the ‘revolving door’ works well as he became a lawyer for a Bingham, McCutchen specializing in securities law…hmmm.
In 2013, Mary Jo White was made chairwoman…a great federal prosecutor who TB is sure has some great ideas…but can they gain traction when Congress keeps appropriating less for investigative work. What? You think that will change with a total GOP-controlled Congress? It all began with Reagan but while government maybe the problem, de-regulating the financial sector was not the answer!
Soooo…since no one will read this…except perhaps the people mentioned (sorry I couldn’t make it, Charlie), will not impart any more words of wisdom.
Off to Wikipedia to find out what ‘tweet’ means.
Beware of the options demons today then get out of here and enjoy your weekend!