7/12/11…payback

Bloomberg Top Stories:

 

*U.S. Stock-Index Futures Trim Early Losses as Euro Rebounds From Day’s Low

*EU Officials Flail About for Solution to Debt Crisis, Revive Buyback Plan

*Italy, Spain Trade Like Junk-Rated Debt as Contagion Spreads – Watch this!

*Greece Won’t Manage to Sell All Assets Required in Aid Plan, Economou Says

*Dodd-Frank Rulings on Risk Make Mortgages Less Profitable: One Year Later

*Oil Supplies Fall for Sixth Week in Survey as Imports Drop – Crude falling?

*Rate-Swap Spreads Soar, Sales Evaporate as Crisis Spreads – Crisis??? Hello!

*Europe’s Debt Overshadows U.S. Budget Standoff, Swaps Show – for now!

*Obama Presses for Grand Bargain on Deficit as Republicans Resist on Taxes

*Murdoch Goes From Party Darling to Pariah in Watershed Moment for Britain

*Afghan President Karzai’s Half Brother Shot Dead by Bodyguard at His Home

   

 

Volume rose to 3.5B shares and despite the low volume resulted in a massive selloff. Big Board volume rose modestly to 829M from 771 million shares, which was the second lowest of the year to 5/27’s 693 million share day. So we had several solid rally days on low volume followed by a huge selloff on only slightly more volume…what does this say about liquidity? Finally the complacent VIX rose sharply to 19.06 before settling up at 18.39…a warning? Worth following with Friday’s options expiration, coming off 15.87 (lowest since April 30th!).

 

Dow Transports fell 1.8% following Friday’s 1.2% decline while the Dow was off 1.2%. S&P 500 and Nasdaq Composite each lost 1.8%, Nasdaq 100 lost 2.0% and the Russell 2000 lost 2.2%. Perhaps we should have heeded the Dow plunging 1.5% shortly after the open Friday following the disaster in payrolls. Advance/Declines ran -6x on the NYSE and -5x on Nasdaq, while Breadth was -26:1 on NYSE and -11:1 on Nasdaq…that is ugly!!!

 

Overnight global stocks have been blasted for a second day on European credit concerns with Spanish and Italian bonds trading like junk. Asia being pounded too with the Nikkei -1.4%, Hang Seng -3.1%, Korean KOSPI -2.2% and Indian SENSEX -1.7%. Dow futures are coming back after falling 165 as the Euro rebounds and are now off just 15?, SPX -4.40; NDQ -5.75. Gold is now $1552.30 +$3.10 while Crude is $94.56 -.57. Bonds rallying in the long endwith the 10 year +5/64 to 2.91! The 30 year is up 9/16 at 4.18% even as we face a week of auctions (3,10,30 yr).

 

…how can we have rallied Friday on the worst payrolls report one could imagine? Not only was there no job growth but April and May were revised down, the workweek shortened and hourly earnings dipped a little. The 9.2% unemployment rate was bad enough but when you include discouraged workers and part-timers it rose to 16.2% from 15.8% back to where it was last December.

 

Then it was European credit concerns yesterday…did they ever go away in the first place. Today after Spain and Italy traded like junk the Euro recovered from its plunge – go figure…Greece is said to not be able to sell the assets it has said it would and we still have no debt ceiling increase – some reason for stocks to rally! Oh and the U.S. Trade Deficit widened by 15% in May to $50.2 billion on the surge in crude oil…which is driven by speculation.

 

You have to wonder…and that is what TB will leave you to do because it isn’t worth trying to define further.

 

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

We have become a nation ruled by the almighty soundbite…doesn’t matter whether it is logical or not…but somebody said it…not necessarily somebody who knows and TB won’t mention any names but a couple start with P and the other with B and they are whipping people into a frenzy and if that is your source of knowledge, may heaven help us.

 

Have a great day!

 

TB

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