Bloomberg Top Stories:
*Initial Jobless Claims in U.S. Declined Last Week to Match a Four-Year Low
*Wholesale Prices in U.S. Rose by Most in Five Months on Higher Fuel Costs – what inflation?
*New York Area Manufacturing Expanded in March by the Most Since June 2010
*Marchionne Received $19M for Running Flat Last Year – he is CEO of Fiat…sweet deal, no?
*Auto Dealers in U.S. Surviving ’08 Debacle Live to See Record Sales – far fewer of them!
*New Bonds Signalling $2.6 Billion Payment on Greece’s Credit-Default Swaps
*Private Equity Profits on Line as Obama Urges Study of Interest Tax Break – i.e. Carlyle Group!
*IPhone is Cannibalizing Camer Market From Canon, Sony – if you only owned one stock: AAPL!
*Apple Plays Whac-A-Mole to Ban rule Breakers From Popping Up in App Store
*Sarkozy Seeks to Outdo Hollande as Taxing Rich Becomes French Ballot Theme – here soon?
*Afghanistan Taliban Says It’s Suspending Preliminary Peace Talks With U.S. – get out NOW!
*New York Legislature Approves Pension Bill Raising Retirement Age for Some
Volume rose slightly to 4.45B shares vs 4.35B. The selloff began two week ago on a 4.16B share session. The Dow hit a slightly new high of 13221 but had to settle for a 13194 close but easily beat Tuesday’s 13180 rally high NYSE stocks executed on the Big Board however slipped as retail was not present today, only flash traders and remains below the 1B mark at 853M shares vs 907 shares, about 150M below average. Two week ago Wednesday’s was the highest of 2012, 1.11B shares. Since 11/1 there have been just seven 1B share days…only two in 2012! Since 2/6 there have been FIVE sessions less than 700M shares. 83 of the last 89 sessions have now been less than 1B! Can you spell a lack of liquidity? Advance/Declines were negative: -2.8x vs +4.2x vs -1.2x vs +2.3x vs +3.9x on NYSE and -2.2x vs +3x vs -1.3x vs +2.6x vs +2.6x on Nasdaq. Breadth was slightly negative: -1.3x vs +12.6x! vs -1.7x vs +1.8x vs +5.8x on NYSE and -1.3x vs +6.2x!! vs -1.6x vs +2.5x vs +2.7x on Nasdaq. New 52 week highs were slightly lower at 326 vs 386, while new lows climbed to 44 vs 28. The ratio is now +7x vs +14x. The S&P VIX, rose .51 to 15.31 one day after its lowest level in nearly five years (7/16/07). This after climbing to 20.87 on 3/6, highest since 2/10 while gapping up for two straight sessions. TB is now convinced that all that you are seeing is due to Friday’s options expiry – the first quadruple witching of 2912!!! Extreme caution advised since we seem to think all of the world’s problems have been solved! Wrong!
Here are the results of the last five sessions: Dow +0.1% vs +1.7% vs +0.3% vs +0.1% vs +0.6%x; Transports -1.4% vs +2.1% vs -0.3% vs +0.3% vs +1.4%; Dow Utilities -1.4% vs +0.3% vs +1.1% vs +0.4% vs +0.2%; S&P 500 -0.1% vs +1.8% vs flat vs +0.4% vs +1%; Nasdaq Composite FLAT vs +1.9% vs -0.2% vs +0.6% vs +0.9%; Nasdaq 100 UP 0.4% vs +1.9% vs flat vs +0.4% vs +1.3X; Russell 2000 -0.9% vs +2.1% vs -0.3% vs +1.3% vs +1.3x; NYSE Financials -0.1%? vs +3.3%??? vs -0.3% vs +0.3% vs +1.4%. NYSE Financial Leaders: BAC +4.1%! vs +6.3%!!! vs -0.8% vs -0.1% vs +0.5% vs +4% vs -3.3% vs -2%; RF (Regions Bank) +6.9%; C DOWN 3.4% vs +6.3%!!! vs +0.5% vs +0.6%; GE +1% vs +2.4%; JPM +0.4% – that’s all???
Global equity markets little changed and mixed, India hit: FTSE -0.1% vs +0.4%+0.8% vs -0.1% vs -0.1%; CAC40 +0.1% vs +0.8% vs +1.1% vs -0.1% vs +0.1%; DAX +0.3% vs +1.3%! vs +1% vs +0.1% vs +0.2%; Nikkei +0.7% vs +1.5%! vs +0.1% vs -0.4% vs +1.7%; Hang Seng +0.2% vs -0.2% vs +1% vs +0.2% vs +0.9%; Korean KOSPI -0.1% vs +1%! vs +1.1%! vs -0.8% vs +0.9%; Indian Sensex -1.4%!!! vs +0.6% vs +1.3% vs -0.4% vs +2.1%. U.S. stock futures up: DOW +25; SPX +3.50; NDQ +9. Bonds still bleeding: 10’s and 30‘s well above 2% and 3% respectively: 10 yr 2.32% -7/16. RECORD low 9/23 of 1.6855%; 30 yr 3.45% -7/8; Long TIP 0.93% -5/8, on 2/27 it bottomed out at 0.70% – 6.2% LOSS!!! It was 0.57% at high. The 5 yr TIP yields MINUS 1.28%; 10 yr -0.09% vs -0.18. Bills 0.08% 1 month; 0.07% 3 months, 6 months 0.15%. Reverse Repo 0.26%. 3 mo. Libor 0.47%, and 0.74%, stable.
Gold closed below $1700 for a third straight session plunging $51.30 to $1642.90 or nearly $78 in two sessions!…now way below the 200 day m/a! A week ago Tuesday’s $1792.70 intraday high, not seen since 11/16! It had been above $1600 since Jan. 31, and is now $1646.30 +$3.40, barely budging. The record high is $1923.70, a buying climax on 9/6. Res is now $1681, the 200 day and $1702, the 50 day, then $1721, the 40 day, peaking! Major support is $1652, the 1/25/13 low! Crude also slammed to $105.43 -$1.28! It is now $106.04 +.61, with support at the 40 day (102.62), the 50 day (102.34), and major support at $94.97, the 200 day, all rising. Resistance remains at $110.
Where to begin…how can you have a rally like yesterday with every index strong, put in new recovery highs on the Dow, THEN hit another high today and then close up just 0.1%. The S&P 500 was off 0.1% the Nasdaq was flat and all other indices were down except the NDQ 100 which was up 0.4% – it would have been negative too except for Apple (AAPL) adding 18 points – instead it would have been down 8 points! Likewise the Composite! Taking out American Express (AXP) from the Dow would have produced just a 2 point gain! AAPL is also in the cap weighted S&P 500 so it too would have been down. This is not the kind of action you want or expect following a breakout rally!
As for the sustainability of the rally, note that no two consecutive bull markets have ever been led by the SAME sector. In the last one, it was Financials. What is the best performing sector ytd? NYSE Financials +17.1%…KBW Bank Stock Index +22.2%!!! (Nasdaq Computers are actually up 21.8% but you then need to back out Apple!). DOW +8%; Dow Transports +3.2%; Dow Utilities -2.1%; S&P 500 +10.9%; Nasdaq Composite +16.7%l NDQ 100 +18.9%; Russell 2000 +11.1% (note this is the weakest of the industrials…IF recovery is real you would expect it to be on top!?!
We also get a different picture if we look at 12 months: DOW +11.3%; Trans +3.2% UTILITIES +12.5%!!!; S&P +8.9%; Composite +14%; NDQ 100 +19.9%; Russell 2000 +4.1%. Wait what about Financials? -6.2%!!! KBW Banks -6.9%. Others: Oil Services -11.1% (but +13.5% ytd) despite Crude over $100, and Gold -13.2% (-1.9% ytd) despite continuation of the EU financial crisis.
One other point…how hard is it to move the Financial index when some of the main components are trading for less than $10 (think BofA and Citi!)? Oh, and WSJ article questions if stress tests were tough enough…probably not!
Gold plunged another $56 yesterday making the loss $78 in just two sessions! Tekkies are calling for $1500 before it bottoms while some bulls billed as experts see $10,000 – pick one. Crude also hit falling $1.28 to $105.43. Yesterday was a down day…especially for bonds – they are weak again o/n! Look at this: the 10yr fell 1-1/4 to 2.27%; 30 yr off 2-1/2 to 3.40%! That is the highest since 9/2/11!!! If you think that is bad, 30yr TIPS, inflation protection bonds, fell 2-3/16 to 0.90% above the inflation rate – TB felt it was insane to buy these, especially the 1o yr which went from CPI MINUS 140bp’s yesterday to minus 130bp’s today…why would you buy anything at inflation MINUS? Dunno…have to be a real chicken little! Despite the Fed’s insistence that it is on hold till mid-2014, the 30 year is down 7.2% JUST since 2/27…one of the worst routs TB has ever seen!
. . . – – – . . . (SOS)
…the number of movies in the slug now number FIVE…you thought it was a fairy tale…now its a Disney cartoon!
“The sky is falling, the sky is falling,” said Chicken Little to his broker, who replied, “sell sky!”
But the Chicken Little’s yesterday were more afraid that the Fed will keep inflation low and overestimated the strength of the economy the FOMC reported. This is not a major recovery, it will not produce enough good paying jobs…with benefits!!! No, in fact we could be back in recession by yearend…look that up in your Funk & Wagnalls (newbies: that used to be an encyclopedia…next question being: what’s an encyclopedia???).
So what did they do yesterday? Well, they ‘apparently’ sold bonds Tuesday and bought stocks, not retail silly…flash traders! Then today, they did a rethink on stocks and sold MORE bonds. This will set up a great buying opportunity after the thrill is gone, but TB is not biting yet. But why were they bailing out of gold? BECAUSE…problems are solved…Italy even had the best bond auction since last October. You have to wonder…
The Op-Ed piece in yesterday’s WSJ by Greg Smith…late of Goldman Sachs was both gutsy but the wires were buzzing with: wait! He worked there for 12 years and just figured out that they were a massive con?The fact that he was not a partner helps to support Goldman’s contention that he was just a disgruntled employee. Therefore we need more employees and yes, partners to speak out…TB’s waiting. Also, for whatever reason, he made pretty nice considering to Lloyd Blankfein not accusing him of what he did: fraudulently selling clients derivatives. Oh yes, and what did Mr. Smith do? He headed up the derivatives group…yep, the stuff that created the crisis. So why did it take him so long to wise up? Ever hear of F.Y. money? That is when you have made enough to tell your boss to f@*% y&$!!! Clear enough? He must have hit the ‘nut’ with his bonus…you rock, Greg…or do you!
How long has TB and before that Rolling Stone’s Matt Taibbi who accurately labeled them for what they were. By the way TB just saw that he has another Stone piece based on an American Banker (it doesn’t get any more blueblood than that) making some horrible accusations against JPMorgan…you know the bank run by wunderkind Jamie Dimon who has destroyed attempts to regulate properly the banks. There is a whistleblower who refused to sign off on bad credit card loans they were packaging…with improper docs…and in some cases lacking a court judgment – worse in some cases the customer was OWED money by Chase! Dodd-Frank was supposed to encourage whistleblowers…instead the woman has gone to several agencies including bank examiners and the SEC and nothing has been done. This is mortgage foreclosure all over again. Perhaps this explains why the banks, especially JPM and its CEO Dimon fought against it and especially Elizabeth Warren who they defamed!
For an even more damning GS story see NY Times front-page article by Nelson D. Schwartz. Mr. Schwartz says what TB has long said: that the problems with Goldman and other WS firms (including L.F. Rothschild where TB worked while and after it went public, and before its meltdown two years later) began when they went public…you never risk your own capital like you do with others (OPM)…especially when the ‘partners’ become the major beneficiary!
Now JPM passed their stress test but even before the results were in they petitioned the Fed to allow them to raise the dividend, starting yesterday’s financials led rally! See why TB remained a skeptic? Why should financials lead a rally? See, the Fed heard it was leaked so they made the announcement…any idea of who might have done it…J.D. or some of his minions? TB still can’t believe that the only good investigative reporting in this country is coming from Rolling Stone and Vanity Fair!!!
Have a fun day! TB is feeling ill from the above stories…not going to say he told you so, though,
TB
Traderbill's Financial Markets Weblog 