Bloomberg Quote of the Day: “Do you realize if it weren’t for Edison we’d be watching TB by candlelight?” – Al Boliska…weird but funny! TB
Bloomberg Top Stories:
*European Stocks Rise After Bond Sales; Copper Gains Before U.S. Homes Data – +-+-+-+-
*Widening U.K. Deficit Intensifies Pressure on Osborne’s Austerity
*French Yields Test Hollande’s Pledge to Alter Economic Course
*Wall Street Promoting Junk As Europe Erupts – ya gotta wonder???
*Goldman Sachs, JPMorgan, Morgan Stanley Preparing Job Cuts – when profit is from trading!
*Citi,Goldman, JPMorgan MAY Cut Senior Banking Jobs – Dimon equal to 67Iinv. Bankers!
*Weidmann Rejects as ‘Ridiculous’ Soros Claim bundesbank Ready for Euro End – but is it?
*3M Profit Tops Analyst’s Estimates on Rising U.S. Demand for Auto Supplies – is it lagging?
*Ford, Ford Credit Raiswe to Investment Grade by Fitch on Performance Gains
*Pfizer’s Fortuitous Sale Seen in Credit Swaps
*Oil Inventories Increase to Almost 11-Month High in Survey – but what about gas prices???
*Supreme Court Seems to Favor Lenders on Credit Rating Issue –
*Hollande’s Call to Weaken European Austerity Drive Meets German Resistance – Achtung!!!
*U.S. Social Security to Exhaust Trust Fund in 2035, Earlier Than Projected – yes, but if they weren’t earning ZERO on T-Bills – look how Canada solved it…by allowing corporates!
*California Taxes Go for Pensions, NOT Schools – get used to it…everywhere!
A rout…lowest close on Dow since 4/16, and low since 4/13! Dow 13k? it plunged on open and never even saw 12950 after that! RESISTANCE at 13012 (50 day m/a), 13039 (40 day), then 13131, the 4/17 high…not going to happen. Support you ask? 12710, the 4/10/12 low! Exception to TB’s rule: NYSE stock volume was not that high on a big down day? 3.6B shares vs 3.7B vs Thursday’s 4.17B ahead of options expiry, but selloff was much bigger yesterday. NYSE shares executed on the Big Board however were LOWER, 785M vs 959M (highest since 4/10/12 and the first ABOVE average volume day since April 10! 9 of the last 12 sessions have been less than 800M shares! Since 2/29 there have now been just FOUR ‘average’ days, including 3/16’s high for 2012, but average has fallen to 807M shares. Since 11/1 there have been just eight 1B share days…only three in 2012! Since 2/6 there have been FIVE sessions less than 700M shares. 105 of the last 117 sessions have been less than the 12 month average! Advance/Declines were very negative: -3.8x vs +2x vs -1.4x vs -2.1x vs +3.4x on NYSE and -3.1x vs +1.5x vs -1.7x vs -2.3x vs +3.2xon Nasdaq. Breadth was worse: -5.5x vs +1.1x vs -2x vs -2.4x vs +7.3x! on NYSE and -4.8x vs -1.2x vs -1.6x vs -2.3x vs +5x! on Nasdaq. New 52 week highs fell by nearly ¾ to 58 vs 198 (high was 420 on 3/26), while new lows more than doubled to 164 vs 78! Ratio is NEGATIVE again by about 3x! vs +2.5x vs +1.5x vs 1:1 vs +3.5x vs 1:1. The S&P VIX gapped up on the open to a session high of 20.27, then closed at the low 18.97 but still UP 1.53, high since 4/16. CAUTION!
Here are the results of the last five sessions: Dow -0.8% vs +0.5x vs -0.5% vs -0.6% vs +1.5%; Transports -0.9% vs +0.1% vs -1.4%! vs -0.1% vs +1.4%; Dow Utilities -0.5% vs +.9% vs -0.3% vs -0.2% vs +0.6%; S&P 500 -0.6% vs +0.1% vs -0.6% vs -0.4% vs +1.6% vs -0.1%; Nasdaq Composite +1% vs -0.2% vs -0.8% vs -0.3% +1.8%; Nasdaq 100 -0.8% vs -0.4% vs -1.1% vs -0.3% vs +2%; Russell 2000 -1.5%!!! vs +0.6% vs -0.6% vs -0.9%! vs +1.6%; NYSE Financials -1.1%! vs flat vs -0.4% vs -0.8% vs +1.6%; NYSE Financial Leaders: BAC -2.2% vs -4.7%! vs -1.7% vs flat vs +1.5% vs +1.3% vs -5.3%!!! vs +3.4% vs +3.8% vs -4.4% vs -3.3%, GE -1.5% vs +1.2% vs -3.6%! Citi -1.9% vs -2.8% vs 0.7% vs flat vs +3.2% vs +1.8% vs -3.5% and since peaking at $38.40 on 3/19, it is now off 13.4%!!! Recall this was the bank who proposed in their capital plan to the Fed which was rejected buying back 8 million shares…pullease!!! Stop the insanity!
Global equities slightly better (look at two day changes…ouch!: FTSE +0.1% vs -1.7%! vs +0.2% vs -0.4% vs -0.4%; CAC40 +0.7% vs -2.3%! vs +0.3% vs -0.7% vs -1.6%; DAX FLAT vs -2.8%!! vs +0.8% vs -0.1% vs -0.9%; Nikkei DOWN 0.8% vs -0.2% vs -0.3% vs -0.8% vs +2.1%!; Hang Seng +0.3% vs -1.8%! vs +0.1% vs +1% vs +1.1%; Korean KOSPI -0.5% vs -0.1% vs -1.3%! vs -0.2% vs +1%; Indian Sensex +0.7% vs -1.6%! -0.7% vs +0.6% vs +0.2%. U.S. stock futures little changed and mixed…compare to yesterday morning: DOW +12 vs -127!!!; SPX -0.70 vs -14.40!; NDQ -7 vs-25.50! Bonds quiet following yesterday’s rally: 10’s well thru 2% and 30’s still closing in on 3%.10 yr 1.94% -5/64, RECORD low 9/23 of 1.6855%; 30 yr 3.09% -3/16; Long TIP 0.70% +1/8. It was 0.57% at high. The 5 yr TIP yields MINUS 1.17%; 10 yr -.32%. Bills 0.04% 1 month; 0.08%; 3 months; 0.16% 6 mos.. Reverse Repo 0.17 – down from 0.25% last week! 3 mo. Libor 0.47%, and 0.73%; steady. European problem sovereign 10 years, Germany-benchmark: 1.68% +4 bp’s; Italy 5.71% +1; Spain 5.86% -8; Greece 20.53% -23; Portugal 10.97% +1; Ireland 6.57% +2.
Gold closed below $1700 for a 29th straight session, -10, making the hit $160 since 2/28, closing $1632.60 -$10.20 – low $1623.60! 2/28’s $1792.70 intraday high was not seen since 11/16! It has been above $1600 since Jan. 31, which remains below major support!!! The record high is $1923.70, a buying climax on 9/6. Res is $1674, the 40 day and $1689, the 50 day, then $1700, the 200 day. It is now $1646.40 +$13.80. Crude closed little changed at $103.11 +.06. 4/10’s low of $100.68 was worst since 2/15/12! It remains below the range of $105-110 which held from to 3/28!!! RES still at the 50 day (104.82), the 40 day (105.09), and major support at $96.01, the 200 day, all but 40 day still rising. It is now $103.92 +.81. $101.08, the April 4 low is still minor support..
Wow…a big down day but on lower volume. Still it was worse than last Thursday’s drop on big volume. The Dow’s session low was 12845, lowest since April 13th and the close of 12927 was lowest since 4/16. Only 3 stocks were up, 27 down: XOM +3, TRV +1, no others of a point or more. WMT led the way down with 22, then UTX -9, IBM/PG -7, CAT/DD/MCD -6, BA -5…ug…ly! Only other lowlight was the Nasdaq 100 with 15 up, 83 down Microsoft -2.3 and five others lost a point or more…there were NO winners of even a point! Russell 2000 small cap was the big loser at -1.5% followed by NYSE Financials -1.1% and Nasdaq Composite -1%. Stocks just opening with Dow up 45.
Don’t stand in front of a moving train…or below a piano falling from a building!…you decide!
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…thank you Mediacom…internet access delayed for two hours, so today will be brief.
First, the hedge fund lowlife’s who channeled money into Madoff’s Ascot Fund. Gabriel Bitran (sounds like a computer term) and his son founded GMB Capital Management and put the money with Madoff. Dad is a professor of Operations Management at MIT’s Sloan School of Business (hopefully fired for this sick scheme!), who claimed he had a computer model that guaranteed results. While small it was growing rapidly and hit $500 million and misled clients with both methodology and by claiming annual returns of 16.2% and 11.7% annualized for their two funds. They were fined $4.8 million…not enough and where is the jail time. Martha…what do you think?
The worst though was Fairfield which channeled its entire $3.2B to Madoff, and received a kickback as one of his feeder funds..plus 2% +20. Egregious doesn’t even begin to tell the story. Or how about Aubrey Hicks who claimed to have a Harvard PhD and has been fined $7.5 million…jail time? Hello? One UK based fund has waived fees to trying to gain back those who lost money with them on Madoff…fool me once…
Is this what investment management has become? Buy an indexed ETF and forget about it…or if in an IRA/401(k) you can use Vanguard…remember…number one reason for using an ETF is tax efficiency…but know what is in it and if index is representative. Also, watch out for companies in several of your ETF’s that reduce diversification.
Many of you read just the last part of these missives…that is the part TB enjoys writing the most but the value is in the first part. The only way you can begin to understand these markets is through comparatives. That is why TB provides at least the last five trading sessions changes…without it you are flying blind. If you are serious about markets, read that part. Also, note he doesn’t tell you what to do…you decide that. Pretty innovative that in a world where egos are rampant and knowledge is scarce and fleeting.
Have a fun day!