8/22/13…don’t blame it on the Fed – this time!

From The Friars Club Encyclopedia of Jokes: “I wouldn’t mind being the last man on earth – just to see if all of those girls were telling me the truth.” – Ronnie Shakes

Bloomberg Quote of the Day: “Do not take life too seriously. You will never get out of it alive.” – Elbert Hubbard

Bloomberg Top Stories:

*Stocks in Europe End Three-Day Slide as Metals Gain on Manufacturing Data

*China Manufacturing Index Strengthens as European Recovery Builds Momentum

*Options Market Suffers Biggest Disruption Since May on Trading Gone Awry – again!

*Yellen Reach Spans Globe From London to Shanghai Except Obama White House

*EU Said to Weigh Limits on Using Same Collateral in Chained Transactions

*Abercrombie & Fitch Plunges After Profit Trails Estimates on Fewer Visits

*India’s Central Bank Flags Need for Stability as Rupee Drops on Fed Easing

*Inflation Incredibility Soars to Record as Bonds Tumble in Argentina

 *Proving CEOs Overpaid for Luck Helped Economist Bertrand Stir Pay Backlash

*Momentum Grows for Mubarak Release That Would Raise New Tensions in Egypt – !!!

*Republicans Know It’s Not About Money in Winning Debt Showdown With Obama

Another low-volume down day…but it was all over the lot…until the Fed minutes came out…a few minutes to digest and then it was down and downer. The Dow closed well not only below 15k but at 14897 -105…and that was off the low of 14880 – lowest since July 3…oh and the VIX hit 16.56…also highest since July 3…coincidence? Advance/Declines and Breadth were both solidly negative while new highs stagnated and new lows dropped but to a still high 205!

All of the indices were off from 0.4% to 0.7% EXCEPT Dow Utilities which plunged 1.1%! The subset NYSE Financials fell 0.9% vs up 1.5%! Once again, NYSE Volume nearly unchanged for a third session at a weak 2.92B shares vs 2.97B vs 2.88B. Real NYSE Volume rose slightly a still weak 657M shares vs 619M shares from an ‘average of late’ 670M. Contrast to Friday’s strong 835M (average since 6/30 is 674M shares!).

The Nasdaq 100 lost 11 points with 3:1 declining. Six members lost more than one index point: CMCSA -1.6; INTC/SALS -1.5; EBAY/CSCO -1.2; AMZN -1. Apple was the only member to gain a point: +1.1 vs -5.6!!! vs +4.5 vs 3.5 vs +7.5 vs +18.5!!! vs +10.8!!! vs -5.5 vs -3.3! Advance/Declines and Breadth were both negative and have been positive just once in five days! New 52 week Highs were steady at a weak 88 vs  80 vs 72 vs 72 vs 62 vs 229 (this is an across-the-bow warning!),while New Lows plunged but to a still high 205 vs 339 vs 579!!! vs  431 vs 510 vs 312 vs 262 vs 104. The VIX not only soared but closed at 15.94 +1.03, only its second close above 15 since July 3!!! But the range was the story: 14.67-16.56 – HUGE!!! It is way above the 40/50 day (14.00/14.81) and the 200 day (14.67)…all declining.

…here’s the book:

* Dow 30 –0.7% vs -0.1% vs -0.5% vs -0.2% vs -1.5%!!!; Dow Transports -0.6% vs +0.9% vs -0.7% vs +0.6% vs -1.1% vs -1%; Russell 2000 +-0.7% vs +0.4% vs -1.1%!!! vs -0.3% vs -1.5%; Dow Utilities -1.1%! vs +0.6% vs -0.9% vs -1.1%!!! vs -1.3%!!!; S&P 500 -0.6% vs +0.4% vs -0.6% vs -0.3% vs -1.4%; Nasdaq Composite -0.4% vs +0.4% vs -0.1% vs -1.7% vs -0.4%; NDQ 100 -0.4% vs +0.7% vs -0.1% vs -0.1% vs -1.7%.

*NYSE Volume slipped to a weak 2.92B shares vs 2.97B vs 2.88B vs 3.14B vs 3.42B vs 2.88B (2.52B is 4th weakest of 20131.96B is the low). REAL NYSE Volume rose but only to a very weak 657M shares vs 619M vs 670M vs 835M vs 716M vs 588M (482M on 7/3 in a shortened trading session is the low). The 12-month average is 717M shares. The range since 6/28’s 1.75B share day, excluding the four sessions above 800M, is 482M-798M shares. The average since 6/28 is just 673M shares, ranging from 482M to 906M. There have been just SEVEN 1B+ share sessions! There have been 31 800M+ shares in 2013: 12 up, 17 down, and two mixed, but on trades of less than that 93 have been up and 43 down …the down days are beginning to steadily increase! There have been 33 mixed sessions.

*New 52 week highs have ranged from 33-864. They barely budged to a weak 88 vs 80 vs 72 vs 72 vs 62 vs 229. New lows declined but to a still high 205 vs 339 vs 579!!! vs 431 vs 510! vs 313 vs 262 vs 104 – 27 is the recent low.

  1. Advance/Declines were negative for the fourth time in five days: -2.7x vs +3.2x vs -4.3x vs -1.9x vs -5.5x!!! (recent range -17.5x to +4.4x) on NYSE and -2.1x vs +2.8x vs -2.3x vs -1.2x vs -4.3x!!! (recent -3.5x to +3x). Breadth was worse: -3.7x! vs +3.1x vs -5.8x!!! vs -1.9x vs -2.9x (recent -18.6x!!! to +6.9x!!!) on NYSE and -2.5x vs +4.2x vs -2.6x vs -1.1x vs -7.7x!!! (recent -12.8x to +6.2x)  
  2. NYSE Financials declined by 0.9% vs  +1.5% vs -1.4%! vs -0.1% vs -1.3%!. BofA was most active rising 0.4% vs +1% vs -1.4%!!! vs +0.7% vs -1.3%, closing at $14.34 +.05. It has been weak since hitting $15.03 – 20 days ago – highest since Jan. 14 and major res. Brokers -0.7% vs +1.4% vs -0.9% vs +0.3% vs -2%; KBW Banks -0.7% vs +1% vs -1.3%! vs -0.3% vs -1.2%; Nasdaq Banks -0.9% vs +1.4% vs -0.8% vs +0.2% vs -1.1%.   
  3. Volatility (S&P VIX) exploded again and the range soared to 14.67-16.56 and closed at 15.94, both highest since July 3rd. Note the recent low of 11.84, the recent range is now 11.83-15.25 taking out 7/31’s high of 14.14! VIX peaked at 20.49, plunged to 18.90 on June options expiry then closed at 20.11 on 6/24 and HAD been down below 14 since! 6/24’s session high of 21.91 was highest since 12/31/12 (22.72)!!! The range since April ‘12 is 11.05 (multi-year low on 3/14/13) to 21.90. It is above the 40 day (14.00), the 200 day (14.67) and the 50 day (14.81)…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

European stocks strong, Asia mixed, India strong…finally! UK +0.9% vs -0.5% vs -0.6% vs -0.5% vs flat; France +1.1%! vs flat vs -1.3%! vs -0.8% vs +0.1%; Germany +1.1%! vs -0.1% vs -1%! vs -0.3% vs -0.4%; Japan -0.4% vs +0.2% vs -2.6%!!! vs +0.8% vs -0.8%; Hang Seng +0.4% vs -0.7% vs -2.2%!!! vs -0.2% vs -0.1%; Korea -1%! vs closed vs -1.6%! vs -0.1% vs -0.2%; India UP 2.3%!!! vs -1.9%!!! vs -0.3% vs -1.6%!!!! vs -4%!!!. U.S. equity futures higher with the DOW in a 100 point trading range: DOW +45; SPX +7.30; NDQ +18.50!!!

Bonds were modestly weaker yesterday until the release of the Fed minutes then started slipping again and are weaker overnight: 10 yr Treasury 2.92% -3/32 (recent range NOW 2.92% to 1.63%!!!), and the 30 yr range NOW 2.67% to 3.92%, currently 3.92% -1/32. The long TIP is 1.63% -3/16 The (record?) low of 0.36% was set on 4/5. Today’s high yield: 1.63%! Libor update: 0.262% 3 mos, 0.397% 6 mos, steady. Both remain near the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields higher across the board for a 2nd day! Germany 1.93% +6; UK 2.73% +3; France 2.48% +5, Italy 4.37% +1; Spain 4.51% +1; Portugal 6.47% +15!!!; Greece 10.03%!!! +11 vs 9.83% vs 9.75% vs 9.58% vs 9.45% vs 9.46% vs 9.54%. Look at some of its recent big moves: 10.03% +11; 9.75% +24!; 9.64% -18; 9.81% -10; 10.02% +19; 9.95% +17; 9.86% -13; 10.02% -16; 10.27% -1; 10.33% -25!; 10.85% +28!; 10.54% +40!!!; 10.85% -37!!!. Recent range: 8.04% to 12.57%. Japan 0.74% +2.

Gold closed lower at $1366.40 -$6.20 three days after a high of $1384.10, highest since 6/18. Last Wednesday’s session low was $1271.80 – lowest since 7/17! 6/27’s intraday low was $1179.40 – lowest since at least 2011 and now critical support. $1300 is psychological support, and it is above both the 40 day $1296 and the 50 day $1307. The 200 day is a distant $1524!!! Overnight it is slightly weaker at $1367.50 -$2.60. Crude closed sharply lower again at $103.85 with a session low of $103.50. It took out support which is now resistance the 40 day m/a’s (104.58, with support now at the 50 day (102.96). The 200 day ($94.89) is distant support. It also took out $104.21-36 – a triple bottom from 7/10-7/12. 4/18’s low of $85.61 was lowest since 12/11! Major Res is the high of $108.93 on 7/19! The range is $85.61-$109.32 since March 1, 2012. It is slightly higher overnight at $104.22 +.37, with a session low of $103.53.

 

 

Some random thoughts:

When Ben Bernanke studied the causes of the Great Depression he came to the unmistakable conclusion that the Fed caused the severity and length of it. They did this by maintaining a tight policy judging the economy by the stock market – where gains were strictly due to speculation and gave them a misguided view of economic strength (that shouldn’t be hard to understand in light of what we are seeing today as they consider ‘tapering’ due to economic strength even as the wealth gap explodes and people are forced to take one or more part-time (no benefits) jobs. So TB predicts that IF they in fact begin to taper next month as the minutes of the July meeting suggest…things will worsen yet again…and the culprit is the extremists who control the GOP-led Congress.

Like Don Quixote chasing and jousting with windmills they continue to pursue a budget that is out of control…ready to turn us into the next Greece…when their facts (like all their other facts) are either erroneous or distorted…and you thought ‘disinformation’ ended with the fall of the Soviet Union – ha!

Do you think the budget deficit is higher or lower than in 2007? If you said higher, like most people you would be wrong…it is lower…much lower…but tell that to the GOP. Given their ‘heads’ they will lower it even further while destroying the economy and like the 1930’s Fed drive us into what will be at best a deep recession…no ‘D’ word for TB!

Meanwhile, Grover Norquist…who has no soul or conscience…continues to enrich himself on his idiotic pledge he got the GOP to sign and now we all must pay for it, except the wealthy of course…they pay for nothing…thanks to an incredibly lax tax code. Is this a great country or what?

Have a great day!

 

TB

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