8/29/11…after the storm

This week’s economic calendar is quite full, and quite full of important indicators. The highlight of the week will be the August Employment Situation Report (Friday). We will also get July Personal Income and July Pending Home Sales (Monday), the June Case-Shiller Home Price Index and August Consumer Confidence (Tuesday), the ADP National Employment Report, the Chicago Purchasing Managers Index, and July Factory Orders (Wednesday), and revisions to Q2 Productivity & Costs, the August ISM Manufacturing Survey, July Construction Spending, and August Motor Vehicle Sales (Thursday). In addition to the economic data, the Federal Reserve will release the minutes to the August 9th FOMC meeting (Tuesday). Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA.


Bloomberg Top Stories:


*Stocks Rise, U.S. Futures Advance on Bernanke Outlook (?); Franc Slides

*Dollar Undervalued in Purchasing Power Parity as Investors Seek Shelter From S&P

*Wall Street to Open as Goldman Sachs Sheds Sandbags After Hurricane Irene

*Wall Street Haunted by Loss Cuts Risk, Trading Costs Soar – low volume bites!

*Central Bankers Urge Governments to Keep Global Economic Expansion Intact

*Greek Stocks Head for Biggest Advance in 20 Years as Banks Plan to Merge – huh?

*Long Bond Shows No Double Dip in Yield Curve Five Times Average Since 1981

*Hurricane Irene’s Estimated Cost for Insurers Is Reduced to $2.6 Billion

*Dust Bowl in Texas Means Cotton Bottoming With Rick Perry Praying for Rain

*U.S. Stocks, ‘Massively Undervalued’ as Gold Gets Bubbly – so they say

*Big Banks Bet Crude Oil Prices Would Fall in 2008 Run-Up, Leaked Data Show

*Bernanke Turns Timid In Krugman View of Princeton Colleagues Eyeing Japan

*Rebels Advance on Sirte Amid Protests Over Inclusion of Former Qadaffi Men

*Amtrak Cancels Service Between Boston, Philadelphia in Hurricane Aftermath


Volume dropped sharply to 4.26 billion shares from 5.07b, as traders listened to Bernanke then head for high ground…nothing to see here. Big Board volume dipped slightly to 1.19B vs 1.2B shares – its range for the entire week and lowest since 7/28 and making six days near lows since 8/1! BAC was more than 1/3 of total NYSE volume! Advance/Declines ran +5:1 vs -3.3:1 vs +2.3:1 vs +5.5:1 vs -1.2:1 on NYSE and +4:1 vs -4:1 vs +2:1 vs +4.8:1 vs -1.2:1 on Nasdaq while Breadth was +9.5x vs -3.1x vs +3.4x vs +4.4x vs -1.2x on NYSE and +8x vs -9x vs +2.6x vs +6.2x vs -1.3x on Nasdaq. That is five days of sheer hell! New 52 week highs rose slightly to 25 from 22, while new lows surged sharply higher to 228 from 129!!! – and on an UP day???, the high was 616 last Friday! So once again we have a low volume rally but the highs/lows tell the real story…if you care to take the time to read them. The ratio is remains highly negative and has been for weeks. The VIX plunged again to 35.59 – 4.17, after closing sharply higher Thursday at 39.76, just off the intra-day high of 40.14, vs 35.90. 48 was the selloff high, not seen since 5/21/10: 48.20!


Note that while all indices were positive for the week, only the Dow closed up for the two week period – barely…this is just like the euphoria when weekly jobless claims fell below 400,000 and it was viewed as a trend…it lasted one week and has been above 400k for the last two weeks! Dow +1.2% vs -1.5% vs +1.3% vs +3% vs +0.3% vs -1.6% vs -3.7%; Transports +2.7% vs -1.9% vs +1.4% vs +3.3% vs +0.1% vs -1.8% vs -6.3%; S&P 500 +1.5% vs -1.6% vs +1.3% vs +3.4% vs flat vs -1.5% vs -4.5%; Nasdaq Comp +2.5% vs -2% vs +0.9% vs +4.3% vs +0.2% vs -1.6% vs -5.2%; 100 +2.6% vs -1.7% vs +0.7% vs +4.1% vs +0.3% vs -1.7% vs -5.0%; Russell 2000 +2.6% vs -2.6% vs +1.4% vs +4.9% vs -0.1% vs -1.6% vs -5.9%. Will spare you the ytd, qtd, and month to date numbers as they are still sickening.


Overnight global equities are rallying led by Korea and India, UK closed. FTSE closed vs -1.1% vs -0.4% vs +0.8% vs +0.5% vs +2.3% vs -1.5% vs -2.7%; CAC 40 +1.6% vs -1.7% vs +0.3% vs +1.3% vs +1% vs +2.3% vs -1.6% vs -3%; DAX +1.2% vs -2.2% vs -0.1% vs +2.4% vs +07% vs +1.3% vs -2.7% vs -3.8%!!!; Nikkei +0.6% vs +0.3% vs +1.5% vs -1.1% vs +1.2% vs -1% vs -2.5% vs -1.3%; Hang Seng +1.4% vs -0.9% vs +1.5% vs -2.1% vs +2% vs +0.5% vs -3.1% vs -1.3%; Korean KOSPI +2.8%!!! vs +0.8% vs +0.6% vs -1.2% vs +3.9% vs -2% vs -6.2%!!! vs -1.7%; Indian Sensex +3.6%!!! vs -1.8% vs -0.9% vs -1.3% vs +1% vs +1.2% vs -2% vs -2.2%. U.S. futures rallying too: DOW +88; SPX +12.90; NDQ +18.75. Gold rallying for a second session after plunging from the big record high of $1917.90 set last Monday. It is currently $1822.30 +$25. Crude is up but was the only commodity that didn’t rally on Friday and is now $86.20 +.83. First resistance is at $90, then $92-95. Bonds are rallying for a second day after Wednesday thrashing: 30 year 3.54% +1-1/8;10 yr 2.18% +7/16.


… it was an UP day…stocks rallied, bonds rallied, commodities including Gold rallied, only Crude failed to join, closing flat. My, my, that is some Fed Chairman who can do all that…or did he simply confuse them…razzle-dazzle ‘em.


But just what WAS the razzle-dazzle:

*nothing new to report

*easing might be extended throughout 2013 from mid-year previous

*economy doesn’t need a QE3

*now here is an interesting one: the September FOMC meeting will be extended to two days from one to give them time to discuss strategies…hmmm that doesn’t sound confident to TB. Oh and get this: there will be no statement issued following the meeting! Oh yeah, that sounds like a good reason to rally stocks…so long as the sellers are heading out the door! You NEVER short a thin market and especially with a world class hurricane beating down on you.


Other than that, there was nothing to report but TB is still shaking his head that the meeting is being extended by a day but there will be nothing to report??? Oh well, Obama will have his jobs plan…is it the fourth or fifth one?…on Sept. 5th.


Market is starting out to the upside…at least futures are…so let’s all lay low and see if we get a relief rally on Irene’s demise…or not…


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


While most of the country was enjoying the weather over the weekend it was not so on the eastern seaboard and inland. All of our hearts go out to those affected. The nice thing about an earthquake is you don’t know when or where it will strike so the only thing you have to do is have some emergency supplies…same with a tornado, but with a hurricane you have to endure so much stress and pain. Also, this time it hit a large area not generally affected by hurricanes so you had a lot of ‘newbies’ and some fools who had to go see firsthand, not knowing what it is like. TB was in one hurricane, which by the time it hit him in the Cayman Islands had been downgraded to a tropical storm…still it did a lot of damage on an island whose highest point is 80 feet above sea level…and we were staying in a condo on the beach. Still remember having to scream to hear each other as the wind howled all night.


Last night heard FEMA was diverting some of the funds from the other emergencies to the hurricane. Do you recall the brilliant GOP ‘leader’ Eric Cantor saying during the debt ceiling talks, that if there is an emergency it would reduce spending in other areas of the budget. God that is so brilliant…we have a weak economy and balancing the budget at this time is the answer to getting the private sector to create more jobs…why didn’t anyone suggest getting out of Iraq and Afghanistan and bringing troops home from Korea…NOW??? Oh yes, and despite Libya going the right way, John McCain accused Obama from ‘leading from the rear’ – it is precisely the Bush approach to ‘leading’ that has increased our problems…instead we did it in a way that accomplished the objective…don’t you always need an objective in a war…and an exit strategy? Apparently not to the GOP.


Have a great day!




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