Quote of the Day from the Friars Club Encyclopedia of Jokes: “Americans are getting stronger. Twenty years ago it took two people to carry ten dollars’ worth of groceries. Today, a five-year-old can do it.” – Henny Youngman
Bloomberg Quote of the Day: “The ultimate inspiration is the deadline.” – Nolan Bushnell
Bloomberg Top Stories:
*Russia Economic Pain Worsens as Central Bank Attempts to Stem Ruble Losses
*European Shares Advance (slightly) With Italian Bonds, Crude Oil While Euro Weakens
*Osborne Says U.K. Borrowing to Be Higher Than Forecast, Deficit Is Too Big- !!!
*Hedge Funds Urged to Outperform Benchmarks Before Charging Incentive Fees-DUH!
*ADP Says U.S. Companies Added 208,000 Jobs in November, Missing Estimates – !!!
*U.K. Will Boost Real Estate Tax for Richest Buyers While Rest to Pay Less – just the opposite of NYC’s condo tax which is appalling!
*Wall Street Called Out by Regulators for Dragging Its Feet on Swaps Rule – Finally!
*Even U.S. Lawmakers Don’t Like the Tax Break Package They’re Ready to Pass – Veto!
*Ukraine Premier Yatsenyuk Roils Bonds With False Alarm on Nuclear Accident – !!!
*Oil Price Plunge Leads Unexpected Hand to Crisis-Ravaged Southern Europe – for now
*Takata Poised for Clash in Congress After Rejecting U.S. Air-Bag Recall
*Mother, Baby Dying in Malaysian Crash Shows Global Spread of Airbag Crisis – !!!
*Tesla Model S Electric Car Beats Out Porsche in Owner-Satisfaction Survey –US made!
*Brazil’s Levy Casting Shadow Over Central Bank Sways Traders on Rate Boost
*Tumbling Gas Prices Seen lifting U.S. Auto Sales in December – doesn’t it always? Sad!
*Top Independent Advisor Who Once Lived on Credit Now Manages $3.5 Billion
Tuesday’s Market Summary
Round and round she goes, where she stops, nobody knows.” – except the flash boys, right? Moe confusion: Monday’s goat wsa Dow Transports, -2.7%! Yesterday, it took honors BUT up 1.2% – you do the math! Next was the Russell 2000 small cap, up 1.1% but again vs down 1.6%. Two steps back, one forward? Of course, these are things you will never hear on CNBC, right? Next best was those ever-loving Dow Utilities +0.7%, following a 0.1% gain and the only index in the black on Monday! The rest were up 0.4-0.6% with only the Dow 30 netting a positive: +0.6% vs -0.3%; S&P 500 broke even, while the rest had a net loss of +/- 0.5%. Is that any way to run an airline? No way! Volume dropped by 500M shares to an ‘average’ 3.6B shares; A/D’s and Breadth were positive but again, only about half the negatives of Monday; New 52 week highs were slightly lower at 197 while new lows plunged to a still strong 253! The VIX declined sharply but just to 12.97 – on the cusp again with a range of 12.90-14.17!
Total NYSE Volume came back to earth at 3.64B shares from 4.14B vs 2.5B vs 2.73B vs 3.36B. Average volume since 9/30 is about 3.6B shares or about 600M more than the 12-month average. Shares traded on the NYSE floor (aka REAL) also declined but to a solid 809M shares vs 877M vs 649M shares (lowest since 11/11 and unusual for a monthend) vs 700M vs 846M – the ONLY 800+ session of Nov. – vs 707M vs 1.04B, highest since 10/31. For comparison purposes, for the prior 12 months it is a historically weak 717M shares…but since 10/1: 816B shares – 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 11/1’s 619M share session. April 30 – September 30 we had just SEVEN 800M shares…since 10/1: now at 18 – just one in Nov, and FIVE 900M+ days. Now two 800M days for Dec.
A/D’s were positive but not like Monday’s negatives: NYSE: +2x vs -3.5x vs -1.6x vs +1.6x vs +1.2x; Nasdaq +2.1x vs -3.5x vs -2x vs +1.6x vs 1:1 vs +2.4x. Breadth was less positive: NYSE +1.3x vs -3.8x!!! vs -2.4x vs +1.3x vs -1.1x; Nasdaq +2.1x vs -4.7x!!! vs -1.1x vs +2.2x vs +1.1x vs +3.1x! New 52 Week Highs were little changed at 197 vs 201! vs 515! vs 321 vs 296 – their range for the year is 39-612!!! New Lows declined but to a still bearish 253 vs 447!!! vs 276 vs 84 vs 80. The 2014 range is 24-1043!!! S&P VIX ranged from 12.90-14.17, before closing at 12.97 -1.32! Just when you thought those ’12’ handles were gone too! This 7 days after hitting a very bearish 15.74, highest since 11/4! Now in reach of those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!). The average of the past 12 months is 14.00, with a low of 10.28!…high close of 26.25 on 10/15/14! Friday is the payrolls report and a lot of data in between!
U.S. bond market closed VERY WEAK for a 2nd day, more than reversing Friday’s STRONG session?!? The recent 12 month low yields (10’s 2.09%; 30’s 2.87%; and long TIP 0.83%), 10’s closed at 2.29% -1/2; 30’s 3.01%! -15/16, and the long TIP 1.01%!!! -1-1/4! Overnight little changed but gaining traction : 10’s 2.29% +1/16; 30’s 3.00% +1/4; and long TIP 1.00% +3/8.
Libor update: 0.235% 3 mos.; 0.329% 6 mos. – and still near their new record lows! The Fed Funds rate has averaged 0.09% and is currently 0.11-0.13% – a 9-month high. T-Bills: 0.02% one-month, 0.02%! 3 mos, 0.12% one year.
Foreign bond yields little changed and mixed with PIIGS lower (Benchmark is 10yr): Germany 0.75% +1; UK 1.98% +1; France 1.02% -1; Italy 1.98%! -3; Spain 1.82% -3; Portugal 2.76% -3; Greece 7.56%! -3 – wow what an ‘E’ ticket ride! 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.43% +2.
Gold had an ‘inside’ session but don’t let that fool you as the prior two sessions wer so wide. It closed at $1199.40 -$18.70 – still holding on to Monday’s HUGE ‘key reversal’ that had a high of $1220.40 that almost closed a gap going back to 10/28 ($1226.40), and only the 2nd time above the 40/50 day since 10/21! 11/7’s low was $1130.40, a new 12-month low!). The last 24 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/Sup is at $1200 (psych), then the 40 day at $1202, the 50 day $1204, then the 200 day at $1274. The 12-month high is $1392.60 on 3/17, highest high since 9/4/13. 11/7’s low was $1130.40! Overnight little changed at $1202.80 +$3.40. There have now been just 8 highs above $1200 since 10/31. Silver still holding in mid-$16’s. Wednesday’s high close was $16.61! 12/1’s low was $14.12, more than a five year low. CRAZY and crazy if you think you can outguess it…not another ‘Libor’?
Crude closed slightly lower at $66.88 -$2.12, also in an ‘inside session’ bit like gold the ranges have been huge. Yesterday’s was $69.62-$73.64 – 4 handles??? Monday’s low was $63.72 – a new five year plus low (6/2010)! Friday’s session high was $77.83. 10/25’s high was $84.83. There have been 43!!! 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 ($78.86!), then the 50 day ($81.44!), and lastly the 200 day (95.80!), all increasing their rate of decline! A failure here could take us to $59!!! The recent range is now $63.72-$112.24 since 3/1/12. Overnight it is quiet and is currently $67.10 +.21. Note that following the financial crisis it traded down to $32.40 on 12/31/08 from a high of $147.27 just three months earlier (-78%!!!).
Global equities mostly higher, UK, Hong Kong lower: UK -0.3% vs +1.2% vs -0.9% vs -0.2% vs +0.2%; France – vs +0.3% vs –0.3% vs -0.3% vs -0.1% vs +1.4%; Germany +0.3% vs -0.2% vs -0.1% vs +0.6% vs +1.4%; Japan +0.3% vs +0.4% vs +0.8% vs +1.2% vs -0.1%; Hang Seng -1%! vs +1.2% vs -2.6%!!! vs -0.1% vs +1.2%; Korea +0.2% vs – vs -0.8% vs -0.1% vs –; India – vs -0.4% vs -0.5% vs +0.9% vs +0.2%. U.S. equity futures little changed: DOW — (range 38); SPX +0.30 (4!); NDQ +0.30 (4!!!).
Some random thoughts:
…TB has mentioned this in the past but there is trouble at the N.Y. Fed…and it is self-inflicted (again). First, there was the scandal during the crisis when then Chairman Stephen Friedman (2008-09 and ‘forced’ to resign after buying GS stock as the Fed was considering making them a ‘bank’ – which they aren’t and never will be!), nothing happened to him (unlike Martha Stewart), and his resignation claimed it was due to still being on the GS Board! Unconscionable.
Then, a man TB knows and respects, Bill Dudley, became President of the N.Y. Fed. He is not of the GS ‘cut’ – although he was their U.S. Government Economist. But recent new prompted TB to write him (which was never acknowledged) over the MF-Global debacle in which MF, a primary dealer of the Fed, under control of Jon Corzine, was not audited or even monitored as the Fed ‘no longer does this’. How in hell can they do that? Could any investment firm deal with another without knowing their financial condition?
It fell on Corzine, but the former GS CEO, former Senator, and former Governor, was not held accountable for allowing customer funds to be misappropriated (borrowed) to inflate the firm’s capital position.
Recently, we heard of a Fed examiner ensconced in GS headquarters as part of a team (Carmen Segurra), saw that violations were being swept under the rug by her supervisors and for the remainder of her seven month tenure at the Fed (after which she was fired, despite being a whistleblower!), The way the Fed is dragging its feet on this investigation and the summary firing of Segurra has caused TB to lose faith in Bill Dudley: is he merely not up for the job or just another part of the GS ‘revolving door’?
A huge investigation is going on of not just the NY Fed but San Francisco and others (who probably were all clean). It was finally reported on PBS last night. What appalls TB is the failure of Dudley to do something to investigate (Segurra had made ‘illegal’ tapes of meetings with her superiors in which they vigorously defended GS. There is now a move to make at least the President of the NY Fed a government appointed position, which could also be extended to the other branches. This, in an institution that has fought long and hard to maintain its independence from the government – which in theory is the correct method.
See how easily TB can be distracted from what he planned to report this week?
Have a great and prosperous day!
TB
Traderbill's Financial Markets Weblog 