7/30/12…Rocky Mountain High

From Keep Calm and Carry On: “Worry often gives a small thing a big shadow.” – Swedish proverb

Bloomberg Quote of the Day: “I have learned that to be with those I like is enough.” – Walt Whitman. Sage advice from a great poet!

This week’s economic calendar is quite crowded and has a number of important indicators. The highlight of the week will be the July Employment Situation Report (Friday). We will also get June Personal Income, the Q2 Employment Cost Index, the May Case-Shiller Home Price Index, the July ISM Chicago Survey, and July Consumer Confidence (all on Tuesday), the July ADP Employment Report, the July ISM Manufacturing Survey, June Construction Spending, and July Motor Vehicle Sales (all on Wednesday), June Factory Orders (Thursday), and the July ISM Non-Manufacturing Survey (Friday). In addition, the FOMC will be holding a two-day meeting on Tuesday and Wednesday. Courtesy of Steve Wood, Insight Economics, Walnut Creek, CA.

Today’s data section is updated to include both Thursday and Friday in the history.

Two straight ‘up’ days AND on big volume. Should you be a buyer? Not if you are TB. You decide if this is for you. Volume was 4.28B shares vs 4.3B vs 3.67B shares. The range since 7/29’s Since the QE surge of 4.56B (above average) the range has now been extended to 2.06B-4.28B shares. NYSE stocks executed without the aid of the ETN market also rose sharply to 913M vs 898M vs 784M from 808M!  Now 4 of the last 19 sessions have surpassed 800M shares. The average for 2012 is just 811M shares and since 6/29 just 737M shares, levels not seen since week ended 12/30/11! 49 of the last 80 sessions have been less than 800M shares. Since 2/29 there have been just 18 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B (4.85B including ETNs) and just 16 have been above 900M – 933M is 12 month average. Since 11/1 there have been just 15, 1B share days…11 in 2012! Since 2/6 there have been 15 sessions less than 700M shares. 162 of the last 184 sessions have been less than the 12 mo ave (89%)!

Advance/Declines have been positive for the last three sessions. Here are last five: +5x! vs +2.7x vs +1.1x vs -2.9x vs -3.2x on NYSE and +3.3x vs +2.1x vs +1.4x vs -2.6x vs -3.9x! on Nasdaq. Breadth was very strong BUT only on NYSE!!! +9x!!! vs +2.9x vs -1.1x vs -3.8x! vs -2x on NYSE and 1.8x vs +2.9x vs +1.3x vs -3.3x vs -4.3x! on Nasdaq. New 52 week highs jumped to 368 vs 255 vs  at 143 (7/3’s 504 is the high), while new lows plunged to 91 vs 161 vs 172 vs 229! The ratio is +4x vs +1.6x vs -1.2x. This from the highs in the rally of +14x and +20x. The S&P VIX declined to 16.70 -0.83 vs 17.58 vs 19.31. Last Tuesdays 20.47 was hjghest since June 15th. A week earlier it closed at 15.45, lowest since 3/26 – the low for this year!

Here are the results of last 5 sessions: Dow +1.5% vs +1.7% vs +0.5% vs -0.8% vs -0.8%; Transports +2.4% vs +1.5% vs -0.4% vs -1.2% vs -1.2%;Dow Utilities +1% vs +1.8%!!! vs -0.2% vs -0.8% vs -0.7%; S&P 500 +1.9% vs +1.7% vs flat vs -0.9% vs -0.9%; Nasdaq Composite +2.2%! vs +1.4% vs +1.7% vs -0.3% vs -0.9%; Nasdaq 100 +2.4%! vs +1.4% vs -0.7% vs -0.9% vs -1.1%; Russell 2000 +2.4%! vs +1% vs +0.2% vs -1.4% vs -1.6%!; NYSE Financials +2.4%! vs +2%! vs +0.4% vs -0.8% vs -1.3% (KBW Banks +1.5% vs +1.7% vs +0.4% vs flat vs -0.9%; Nasdaq Banks +1.5% vs +0.8% vs +0.3% vs -0.2% vs -1.3%!). NYSE Financial Leaders: BAC +2%! vs +1.4% vs .+0.4% vs -0.7% vs +0.3%? vs -2.6%! vs -3.6%!!! vs -4.9%!!!; GE +1.8% vs +2.8%! vs +0.2% vs -0.6% vs +1.1%! vs +0.3%; F -0.1% vs +0.5% vs -1% vs -1.2%. Not leaders, but… JPM +3%!!! vs +1.8% vs +1.3% vs +0.8% vs +1.4%; C +3.9%! vs +1.9% vs +2.2% vs -0.4% vs -2.3%!!; WFC +1.1% vs +1.9% vs +1.4% vs -0.6% vs -1.1%; USB +1% vs +0.9% vs -0.5% vs +0.1% vs -0.6%; GS +3.7%!!! vs +2.2%! vs +1.6% vs +1.4% vs -1.1%; MS +3.8% vs +0.3% vs +2.7% vs -0.2% vs -1.1% vs -3.2% vs -5.3%! MS is a DOG!!!

Global stocks strong (Thursday unavailable but all were up): FTSE +0.6% vs n/a vs +0.2% vs -0.1% vs -2%!; CAC 40 +0.6% vs n/a vs +0.7% vs -0.1% vs -2.2%!; DAX +0.9% vs n/a vs +0.5% vs -0.2% vs -2%!;Nikkei +0.8% vs n/a vs -1.4%! vs -0.2% vs -1.9%; Hang Seng +1.6% vs n/a vs -0.1% vs -0.8% vs -3%!!!; Korean KOSPI +0.8% vs n/a vs -1.4% vs +0.3% vs -1.8%!;Indian Sensex +1.8%! vs n/a vs -0.4% vs +0.2% vs -1.6%. U.S. stock futures lower, except NDQ but all were sharply lower earlier: DOW -18; SPX -2.80; NDQ  +1.75 from -8!!!

Bonds are up after being hammered for two sessions:10 yr 1.54% +1/32 – record low of 1.40%; 30 yr 2.62% +1/4. Long TIP 0.38%. 0.28% also a record low!The 5 yr TIP yields -1.17%; 10 yr -0.62%.Bills 0.07% 1 month; 0.10% 3 months; 0.14% 6 months. Reverse Repo 0.24%. 3 mo. Libor 0.44% vs 0.45%!!!, and 6 mo. 0.73% – still trying to go lower! European problem sovereign 10 years, Germany-benchmark (bunds like UST were slammed last two sessions, but look at Italy, Spain and Portugal!): 1.38% -2 bp’s; Italy 6.00% +8; Spain 6.52% -14; Greece 24.50% -134!!!; Portugal 10.84% -5; Ireland 5.84% -5.

Gold holding above $1600 but little changed last two sessions after 13 days below, closing 162.70 +$2.90 vs 1619.80 +$7.10. 7/12’s intraday low of $1547.60 was lowest since June 1. The hit is $146 since 2/28! 2/28’s $1792.70 intraday high not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. SUP is $1601, the 40 day and $1597, crossed and now rising, then $1666, the 200 day. 5/2’s o/n low of $1526.70 was lowest since 12/29! Currently $1621.80 -0.90. Crude also barely budged last two sessions closing at $90.13 +.74 vs $89.39 +.42…zzzz. SUP at the 40 day (85.15), and the 50 day (86.03), RES at the 200 day (96.49), 40/50 converging. First RES/SUP is $89.17, the 11/1/11 low, then $92.52-54, the lows of 12/16-12/17, a prior double bottom.

IGNORE the headline numbers! THIS is a very thin, rally. While Dow Industrials and the S&P 500 closed at their highest since May 4th,  the two Nasdaq indices only reached the level of 7/19 with two higher closes since 5/4! Worse the Russell 2000 had its THIRD lower high AND Dow Transports had their FOURTH! CAUTION advised!

The selloff in bonds of the past two days should be of no concern…directly attributable to the rally in stocks…nothing more – or less! As for commodities however, both gold and crude have taken out levels that should cause a continuation of the rally from the recent lows…instead both are just limping along! It’s going to be a long, hot, boring summer…and now less than 100 days to the election…with no great choices!

All eyes are, and should be on Friday’s July payrolls…most likely not pretty!

. . .  – – –  . . . (SOS!)  . . .   – – –  . . .  (SOS!) . . .   – – –  . . .  (SOS!) . . .   – – –  . . .  (SOS!)

…did you ever look forward to an event only to be disappointed? Well, that was not the case for TB, despite the way the trip to Jackson Hole started. Today will be a summary of the trip, with specifics for the conference the next few days.

It started off badly! After getting to the airport parking lot early on Thursday, TB boarded the shuttle and immediately realized he didn’t have his cell phone. The driver took him back and he searched the car…seats, floor, under seats…nothing. Had wife’s car and due to it being 4:30am wasn’t thinking clearly. Plane left on time and thanks to some friendly people was able to call wife on their cells (more below). It wasn’t at home. By the time TB landed in Denver, daughter had gone to the car and saw that it was inside a cubby in the dash…aarrgghh!! More friendly people with cells.

Arriving at Jackson Hole, following beautiful up close and personal views of the Tetons and Jenny Lake, landed and after walking under an elk antler arch…they are all around town too…picked up car at Hertz (trick: if you have a Gold Card, book a compact. TB asked if there were any free upgrades and was given a great Toyota FourRunner with low miles…now he was able to drive without looking like a tourist!).

Drove around town and Visitor Center told TB where the library was so had free use of computer…able to inform clients of problem. Then needed to call home to find status of phone. Saw a resort (The Virginian) which had a convention center…ah…a pay phone (TB had purchased a phone card…actually two as the first one didn’t come out of the machine!). But the pay phones were gone. A man asked me if I needed help and then offered me HIS cellphone to call home. Wife took phone to post office and was told it would be delivered by Saturday morning…cutting it close as they close at 1pm!

Returned the phone and it turned out he was the bartender and so bought a beer and chilled…an eventful morning. Then located the Center for the Arts where the conference was to be held and roamed the town. You can look up at the mountains and ski areas and often see paragliders coming off the top…spectacular!

Then drove out to Teton Village, about 12 miles to The Inn at Jackson (they have two). It too sat right below the mountain – more paragliders…and balloons! If you are going, get this right now: there are NO cheap places to stay in Jackson Hole or surrounds…zip! The Inn looked great on the outside and had pool, spa, sauna, etc. But the rooms were 1960’s and each had a duct near the door…air conditioners set in wardrobe closet…noisy! Also, the floors were WOOD and creaked as well as allowed TB to hear the man upstairs telling his kids repeatedly to keep quiet! Cost for two nights: $440…by the time taxes were added in! Still that was overwhelmed by the beautiful surroundings.

Weather was hot…for JH…about 80 (compare and contrast to Midwest 90’s!). Absolutely beautiful. TB took a drive and went in the park…memo to those 62 and older you can buy a lifetime pass to all National Parks for $10! A huge savings!

Saw incredible beauty and stopped frequently to take pics with Nikon digital. Took the same shots more than once because the colors changed with the time of day and weather…mountain thunder showers, etc. Then a friend was married at the Chapel of the Transfiguration so went there and took pictures with Tetons in background…beautiful!

Near that was Menors Ferry, the first residence built in Jackson Hole and later the General Store, smokehouse, etc. When TB went back the next day to see it saw two Moose bathing across the Snake River…last thing on the bucket list as he had already seen an Osprey nest.

High prices or not Jackson Hole and the Tetons are a MUST SEE!!! While Yosemite is awe-inspiring for the sheer size, this has to be one of the most beautiful places on earth.

Back to cell phones. Years ago TB worked with a guy who refused to wear a watch. An affectation because he said the CEO didn’t wear one…if you want to know the time someone always has a watch…kind of bothersome and selfish to TB.

But TB either asked for or was offered use of cell phones FIVE times and no one would accept any money for it. Think about that…because otherwise TB would have been going nuts since a pay phone has become an endangered species.

Lastly, a word about USPS: TB’s father-in-law had been a postal inspector. TB learned a lot about the post office from him. You cannot believe how helpful people were and how express mail worked efficiently to get the phone to TB on time. The employees were most helpful…even let me use their phone to call home about shipping information!

Forget what you have heard, USPS is not inefficient. The problem is the U.S. Congress which is driving them out of business. Franking privilege cost them $32 million last year and even though the GOP defends the Constitution they have placed ridiculous and impossible constraints on them. First, they required them to fully fund the next 35 years of retiree health payments which requires setting aside $5 billion a year – no private company or other governmental entity (the USPS is actually in the worst place possible, forced to be self-sufficient but under total control of Congress. Secondly, they will not let them cut back to five delivery days and oppose every cost-cutting measure they offer – except cutting employees and distribution points, which in turn makes it harder to compete with FedEx and UPS…hmmm, is there an agenda here? Lastly, they rely on first class mail to make money yet with electronic bill paying that is coming to a screeching halt…even Christmas and birthday cards are off thanks to the Internet. That leaves them with junk mail…and it is the worst kind imaginable…frauds geared at senior citizens and other deceptive advertising. TB believes the postal inspectors ignore this because they need the money! The postal service is going to close down several distribution centers as cost cutting measures. Had this already happened it would have been impossible for TB to get his phone on time (cost was $18.95 which was reasonable!). Also, merchants will be forced to go to the private companies to get two day delivery. Think about it!

Tomorrow: the Global Interdependence Center’s Fourth Annual Rocky Mountain Economic Summit and Retreat.

Have a great day!

TB

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