5/9/11…life without Citi

This week’s economic calendar is not quite as jammed packed as this week’s was. Nevertheless, there are several important indicators, with an emphasis on inflation. However, the highlight of the week will be April Retail Sales (Thursday). We will also get April Import & Export Prices and March Wholesale Trade (Tuesday), March International Trade and the April Treasury Budget (Wednesday), the April PPI and March Business Inventories (Thursday), and the April CPI and mid-May Consumer Sentiment (Friday).

Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA

Bloomberg Top Stories:

*Commodities Rebound; European Stocks, Greek Bonds Drop After S&P Downgrades

*Greece Joins Belarus as Europe’s Lowest-Rated Country After S&P’ Debt Cut

*Euro Holds Top Spot in Currencies as EU Shows Resolve on Greek Debt

*Hedge Funds Caught in Crud Oil’s ‘Terrifying’ 15% Plunge

*Record Low Rates Fuel 44% Increase in Peso Bond Offerings – viva Mejico!

*’Gush’ of Fuel-Tanker Orders Signaled by Refining Margin

*Treasury Volatility Approaching Four-Year Low as Bonds Rally at End of QE2

*HSBC May Take Three Years to Meet Cost-Reduction Goal After Expenses Surge

*Geithner Will Urge China to Allow Higher Rates

*Goldman Sees Commodities Recovery as Week-Long Rout Wipes Out $99 Billion

(Somebody better look into this…who was doing the selling as it was Goldie that started the rout! Now they are bullish??? TB)

*GE Seeks Relaxed Made-in-U.S. Export Standards, Risking Backlash on Jobs

(…and Obama had Immelt head a commission to help small business? Pullease!)

*Mississippi Crests in Memphis as Flooding Threat Moves South to Refineries  

Friday’s post-payrolls volume was 1.03 billion shares, after surging more than 1% out of the chute and wiping out two straight losing days on average volume it then faded providing only a slightly higher low. The volume continues to tell the story: 34 sessions – with justtwo average volume days, both down. Citi was 512 million of those shares Friday! Today, the 1:10 split takes effect so watch volume for clues.  Advance/Declines and Breadth positive 2:1 (except Nasdaq A/D which was 1.5x – softer as hit has been for past three sessions. New 52 week highs rose to a still weak 218 from 155, way down from the 500-600 range we had been seeing while new lows slipped to 57 from 100. As for the indices: Dow +0.4% vs -1.1% vs -0.7%, Transports +0.3% vs +1.1% vs -1.6% but only due to Crude prices crashing, S&P 500 +0.4% vs -0.9% vs -0.7%, the Nasdaq indices + 0.5% and +0.4% respectively vs -0.5% vs -0.5% and -0.2%, while the Russell 2000 up just 0.5% vs -0.4% vs -1.3%…still down 3.7% in for the week and -4.3% from the 5/2 rally high!  

The Dollar continues its bounce from the low on plunging commodities prices and is above 74 for the second straight day and the first time since 4/26! 74.86 -.04! Monday’s low of 72.83 was the lowest since 7/29/08. The last close above 76 was on March 30th and it had been almost straight down since. Since April 14th the long bond had been in a range of 4.47% to 4.36% but continues to rally and is now 4.30%, despite Friday’s selloff while the 10 year note continues below the old range (3.41% to 3.29%), and is now 3.15%!!! For a fourth straight session T-Bills out to 3 months are effectively at ZERO percent. Gold and Crude had ‘selling climaxes Monday then immediately tumbled and continue to do so. Gold hit a new all-time high of $1577.40 Monday and has now come back up to $11503 +$11.40 after trading down to $1462.50 Thursday, supporting just below the 40 day m/a! Crude has been down SIX straight sessions after also taking out the rally high with a $114.14 print Monday before plunging like Gold did. It fell $3.83 Friday to $94.63 before closing at $87.18, -$2.62! Overnight it has come back $1.81 to $98.99.

European equity markets are weaker again: FTSE -0.9% vs -0.4% vs -1.0%; CAC 40 -1.4% vs +0.1% vs -1.2%; DAX -1.2% vs +0.3% vs -0.6%; Nikkei -0.7% vs 1.5%; Hang Seng +0.8% vs -0.4% vs -0.2%; Korean Kospi -0.4% vs -1.5%; Indian Sensex flat after finally rallying +1.7% Friday vs -1.4% – still since 4/25 it is off 5.3%! U.S. Futures up slightly: Dow +16; SPX +0.70; NDQ +7.25 – dead!

…Citi is dead as a market factor…long live Citi (tongue in cheek),as the long-awaited 1:10 reverse split takes effect today and could have a big impact on volume – a deleterious one.

Not much more to comment on today other than the stupidity of long-term commodities investing…it is difficult enough even for a pro to do it but when people advise you to buy them it is time to run! Invest in what you know…and you don’t know commodities!

. . .  – – –  . . .    . . .  – – –  . . .

Have you ever heard anything so stupid? Who should get credit for killing Bin Laden? For god’s sake folks, it isn’t WHO it is that he is finally gone and in a way he deserved to go. While the GOP initially gave credit to Obama they also plugged Bush which is undeniable, but who also sent more than half of our forces off to Iraq when we could have had the bastard then! But it is Rush Limbaugh who once again showed his stupidity and shameless side by saying Obama should get no credit. Let’s all cut the crap and give it to the SEALS who made it all possible…and they don’t want to even bask in the glory, they have the sense of accomplishment. One former SEAL said that they must have fired 100,000 rounds (by the way the SEALS use more ammo in training than is allotted to the entire Marine Corps), at targets with Bin Laden’s face on it. What the political parties and pundits don’t get is that the SEALS are a TEAM…something that the Congress doesn’t understand and at this point probably never will again. It is disgusting.

Hope you all had wonderful Mother’s Day’s and that the week is good to you.

TB

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