TB’s Quote of the Day: “Wimbledon is a social event, not a sporting event.” – Mark McCormick, What They Don’t Teach You at Harvard Business School…he used this phrase to convince Rolex to sponsor Wimbledon as they were opposed at the time to associating their name with sports. He can be forgiven for that having died before seeing the Men’s Final yesterday when Roger Federer defeated Andy Roddick in the equivalent of six and a half sets, including a stunning 15-14 final set. That feat was only surpassed by the sportsmanship of both men as Federer won his fifth Wimbledon and captured the title for the most majors won at 15. Truly a great accomplishment.
(When TB posted today’s commentary early he proudly told his wife who quipped: “you will end up writing another one…well she was right and here it is. TB)
…at the other end of the spectrum from the above is Alaska Governor Sarah Palin who resigned saying she had “a higher calling” then to serve as a lame duck…this from someone who served just one term as Mayor of and not even a full term as governor…is there a law that prohibits a governor of Alaska from serving two terms? Was the higher calling giving speeches for $100,000. Think how close she came to becoming Vice President and could have potentially become President if something happened to McCain…of course she can now aspire to bypassing that step and going straight for the gold…not!
As for the bad start, that would be the market. Here is the table produced by TB last week and now updated to include the first two days of July…thankfully saved a third by the Fourth:
|
Stock Indices June 30 |
July 2 |
Jun-09 |
Qtr |
YTD |
12 mos. |
|
|
|
|
|
|
|
| Dow Industrials |
-2.0% |
-3.2% |
+8.8% |
-3.8% |
-25.8% |
| Dow Transports |
-2.3% |
-3.5% |
+18.4% |
-8.6% |
-33.5% |
| Dow Utilities |
-2.0% |
1.6% |
+8.4% |
-3.5% |
-31.5% |
| S&P 500 |
-2.5% |
-2.5% |
+13.5% |
+1.8% |
-28.5% |
| Nasdaq Composite |
-2.1% |
0.4% |
+18.3% |
+16.4% |
-20.4% |
| Nasdaq 100 |
-2.1% |
0.0% |
+17.9% |
+21.9% |
-20.7% |
| Russell 2000 |
-2.2% |
-9.3% |
+18.4% |
+1.8% |
-26.5% |
| NYSE Energy |
-3.1% |
-9.6% |
+13.6% |
+3.5% |
-40.6% |
| KBW Bank Stocks |
-1.9% |
-2.5% |
+30.0% |
-16.5% |
-36.2% |
|
Bonds |
|
|
|||
| 5 yr Treasury |
0.6% |
-0.2% |
-0.1% |
-2.3% |
7.8% |
| 10 yr Treasury |
0.2% |
-0.2% |
-6.2% |
-8.7% |
7.4% |
| 30 yr Treasury |
-0- |
0.7% |
-11.5% |
-23.5% |
2.0% |
|
Commodities |
|
|
|
||
| Gold ETF (GLD) |
0.1% |
-5.2% |
1.0% |
5.4% |
-1.6% |
| Crude (Front Contract) |
-4.5% |
1.1% |
1.6% |
1.4% |
-50.0% |
Also of interest were REITS and Oil Services which fell 4.6%, and the KBW Bank Stock Index, down 1.9%. Contrast with the returns for the entire month of June and there is little doubt that next week will be interesting and exciting, particularly since both Nasdaq indices gapped down on the open Thursday.
A lot has been said about Treasury’s being rich, about corporate bonds being cheap but the sad truth is that on any given day…or during the day both sectors can either. A Bloomberg article this morning on problems faced by corporate treasurers points this out. Microsoft in May issued a 30 year bond despite sitting on $25 billion in cash as a precaution due to the recent problems in the credit markets. The $750 million issue was brought to market on May 11 as 5.2% due 6/1/2039 at a slight discount of 99.786 and a spread of 105 basis points over the 30 year treasury!…for a AAA/Aaa rated bond!
Two days later it hit its high price of 103.212 but then look what happened:
5/15 98.962
5/19 101.500
5/27 95.450
6/4 98.480
6/10 93.556
6/16 98.368
On June 29 it was 101.137 and closed Friday at 98.113. TB has 37 years experience in bonds and wouldn’t think of trying to trade that…how can you? The nice thing about bonds is you can easily see the percentage change…from issuance, in two days it rose 3.4% and less than a month earlier was down 9.4%! On a smaller scale the same goes for U.S. treasury’s and especially TIPS! Don’t even ask what one is to make of last Thursday’s big curve steepener. What’s a mother to do???
Overnight activity is what caused this piece to be written…not to mention Wimbledon and Palin. Get this: India is going to issue a record $93 billion of bonds to balance the budget…is that all? We did 50% more than that a week ago alone! Both of the Indian stock measures plunged by nearly 6% as a result of the Rupee taking a nosedive (US investors note that the India Fund trades at a 10% premium to the Net Asset Value). TB bets they will have no problem selling that debt…well maybe but you can bet there will be strong demand from the Chinese, right? As is that isn’t enough, rioting in Xinjiang province has killed 140 taking the Hang Seng down but the two mainland exchanges are up more than 1%. Global stocks are tanking except Korea which you might think would be leading the pack, and U.S. stock futures are tanking in Globex trading…not good. Ah, so buy Gold you say and TB would agree but it fell $8.70 overnight as the miserable dollar strengthened…oh and a report saying the obvious as TB has said indicates that the global glut in oil will drive crude prices down to the $20 range…gee, and Goldman Sachs (who is just a heartbeat away from the government…or less) just saw it at $75. Why don’t all of those strategists just resign…the only one worth his salt is David Rosenberg!
Good luck today and this week…it looks like we are going to need a lot of it!
TB
Trader Bill thinks it is clear to anyone reading these missives that they are merely commentaries…as he sees it…and do not necessarily reflect the views of anyone other than his own. Information is gathered from sources he has found reliable, but no guarantees of accuracy are implied. These are merely observations of events in the marketplace offering in an attempt to offer a non-mainstream viewpoint. Hope you find it useful. Copyright TBD Capital LLC, © July 6, 2009.
