2/27/13 Italy, bonds, housing

Sorry, no random thoughts today…but you get a nice song!

From the Friars Club Encyclopedia of Jokes: Patient: Doctor, I think I need glasses. Teller: You certainly do. This is a bank.

TB’s Song of the Day: Just heard this song Elvis recorded. Appropriate as you work on your taxes:

(Words & music by Wayne – Weisman)

He’s your uncle not your dad, he’s the best friend you ever had
So come on dig, dig, dig in until it hurts
Just remember Pearl Harbor

(The Alamo and nothing could be worse)

He’s your favorite relative and he needs a lot to live
So just bring, bring, bring everything until you bleed

(And he’ll send back what he don’t need)

If your not in form ten-forty’s your salvation
By deprivation of temptation

(Dark and blondes I hear are not deductible)

Oh say can you see if there’s anything left for me
When he calls you as he may do
Don’t be frightened red white and blue
Just be thankful you don’t live in Leningrad
He’s your uncle, not your dad

If your honest you don’t have to shake and shiver
The food is lousy up the river

(It’s give and take and he does all the taking)

Oh say can you see if there’s anything left for me
Life has two things you can’t subtract

(Death and taxes to be exact)

So just pa-pa-patriotically declare
He’s your uncle, he’s your uncle, not your dad

Bloomberg Quote of the Day: “Our work is the presentation of our capabilities.”   – Edward Gibbon

Bloomberg Top Stories:

*Pending Sales of U.S. Homes Rise More than Economists Reckoned: +4.5% vs -1.9%

*Orders for U.S. Durable Goods Excluding Transport Rise the Most in a Year – just in time to get slammed by the idiotic sequestration.

*Stocks Climb Along With Euro, Italian 10-Year Bonds While Treasuries Gain

*Monti Government Said to Weigh Delaying $1.5 Billion Monte Paschi Bailout

*Gross Says Corporate Bonds Are Irrationally Priced as Economic Risks Rise – !!!

*Wall Street Junk Kings Hurry to Sell High-Yield Debt Poised to Lose Value

*Bond Cliff Beckons as Sales Drop to Slowest Pace Since ‘08

*Contagion Alive and Kicking as Italy Vote Rattles European Bond Market

*First Solar Seeks to Avoid Losing Ground After Revenue Backlog Slips 15%

*Gold Puts Touch Record High on Speculation Fed Will Curb Stimulus – someday!

*Canada Losing Debt Halo as Housing Built for Bull Market Peaks With Carney

*Obama Plans to Meet Friday With Lawmakers on Sequestration, McConnell Says

*Bersani’s Coalition Appeal Rejected by Grillo as Italian Deadlock Deepens

Yesterday’s ‘dead cat bounce of less than half of Monday’s loss increases the possibility that we have passed  inflection point, time will tell…it always does!

Total NYSE total volume was steady at 3.92B shares vs 3.81B vs vs 3.41B vs 4.26B and 4.2B (highest of 2013 by about 400M shares); and while the  Dow rose 116 points, about 0.8% it was just half of Monday’s selloff – a sign of weakness not strength! The case still holds true: high volume on down days, low volume on rallies!?! Real NYSE volume however DROPPED to 772M shares vs 819M vs 683M from 800+ for two straight sessions –  this has not occurred since 9/13-14! Ave vol. 12 mos. 747M, ytd 705M. There have been just seven 800+M shares in 2013. The last thing you want to see is high volume on market declines!

  1. after several weeks of new highs running from 200-680 (2/19), then plummeting to just 121, lowest since 12/14, they were more than halved again yesterday to a very weak 145 vs 273 vs 214. New lows continue to creep higher at 74 vs 52!
  2. Advance/Declines were modestly positive at +2x vs -3.6x vs +3.1x and +1.5x vs -4.4x vs +2.6x  for the pair after having been only slightly positive throughout the prior rally with just one day above +3.4x: +9.7x on Jan. 2. Ditto for Breadth with a high of +10x, also on Jan. 2. Down days had not been more than -2 on either exchange and were +2.4x vs -9.7x on NYSE and +1.6x vs -4.5x on Nasdaq. Can you spell weak?
  3. The Nasdaq indices had relied on big gains on a few stocks during the prior rally while the movers have been not much more than 50% positive. Yesterday, the two Nasdaq indices and the Russell 2000 were all up about 0.5%. Tuesday, the Nasdaq’s were -1.5% and the Russell -2.1%!
  4. NYSE Financials barely budged yesterday, +0.6%, after the -2.5% ‘worst of the bunch’ loss on Monday!. It had been down over 1% each of the last three sessions. BofA still most active and rose 0.9% yesterday after losing 1.6% Monday, off 7% in three sessions now $11.23 from $11.11, lowest since 12/17, well below the 40/50 day m/a’s for the lowest close this year – from $12.42 high on 2/13: -9.7%! C +0.3%; JPM -0.2%. Caution! GE was a mover too +1.1%
  5. Last but not least volatility (S&P VIX) which had back to back lows going back to 2006 – huge complacency, has risen 52% in four days: 12.13 – 18.99 (with an intraday high Monday of 19.11, highest since 12/31 – highs on 12/30-31 were 22.72 and 22.19 respectively, highest since 6/15, as Congress tried to avoid the ‘fiscal cliff.’ When they acted (sic) it declined to multi year lows??? Congress is coming back from ‘break’ and has only till Friday to avoid sequestration …another last second deal? Most say NO!!! This is far worse then yearend and it is even more contentious between GOP and Dems!!! An increase in VIX is associated with more puts being created than calls!!! Yesterday it fell by 2.12 to a still elevated 16.87 -2.12, -11%. It remains well above the 40/50/200 day m/a’s: 14.04,14.75, and just below the 200 day which is16.89!!!

Only two more days to shop before the Doomsday effect kicks in!

Global equity markets are feebly higher overnight, ex-Japan: UK +0.1% vs -1.3% vs +0.3% vs +0.8% vs -1.6%; France +0.7% vs -1.9% vs +0.4% vs +2.1% vs -1.8%; Germany +0.2% vs -1.5% vs +1.5% vs +1.1% vs -1.8%; Japan -1.3% vs -2.3% vs +2.4% vs +0.7% vs -1.4% vs +0.8% vs -0.3% vs +2.1% vs -1.2% vs +.5% vs -1% vs +1.9%, Hang Seng +0.3% vs -1.3% vs +0.2% vs -0.5% vs -1.7% vs +0.7% vs -1%; Kospi +0.2% vs -0.5% vs -0.5% vs +0.2% vs -0.5% vs +2%; India +0.7% vs -1.6% vs +0.1% vs flat vs -1.6%. U.S. stock futures and the open were weaker but now mixed and little changed following that big reversal Monday on the Italy news: DOW +9; SPX FLAT; NDQ +5. Good luck!!!

Bonds put in a MAJOR RALLY on the stock market reversal and after giving up some ground yesterday are back to the recent low yields which stretched the ranges of the 10 yr Treasury range of from 2.06% to 1.86% last 8 sessions, now 1.86% +3/16, and the 30 yr’s 3.23% to 3.05%, now 3.05% +5/8. The long Tip is steady at 0.52% vs the high of 0.60%. Libor update: 0.244% 3 mos., 0.457% 6 mos. Foreign bond yields all lower ex-Greece but all are coming off big corrections: Germany 1.43 -2; UK 1.94% -2; Italy 4.84% -5; Spain 5.28% -7; Portugal 6.38% -1; Greece 11.13 vs 10.81% +24 (note this one didn’t suffer initially on the Italy news???) Japan 0.66% -2.

Gold rose sharply yesterday narrowing the loss from the 1/17 high of $1699.90 to $76! It closed at $1615.50 +$28.90, -$32 in two sessions and bouncing well above last Thursday’s low of $1554.30 – not seen since May 2012! It has been up for four straight sessions. Overnight however, it is $1606.10 -$9.80.The total breakdown through the 40/50/200 day m/a’s, has major resistance $1656-1668, with support again at $1600, a double bottom from 8/14-15, which is also a  psychological leve. Last time it was below $1500 was Sept. 2011!!! Crude slid again destroying a week ago Monday’s key reversal. It closed at $92.63 -.48 – but not before putting in yet another new low of $91.92, lowest since 12/31, and way below the 40 day ($95.01), AND $93.74, the 50 day.  Overnight it is $92.36 -.27 with support at the 200 day, $90.43.

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