3/20/13…is it Cyprus or Cypress???

From the Friars Club Encyclopedia of Jokes: “Every man has a right to his opinion, provided it agrees with ours.” – Josh Billings

Bloomberg Quote of the Day: “All the arts we practice are apprenticeship. The big art is life.” – M.C. Richards

Bloomberg Top Stories:

*U.K. 2013 Growth Forecast Cut in Half on Risks From Europe, Osborne Says

*Cyprus Tests Europe Resolve After Lawmakers Reject Unprecedented Bank Levy

*Stocks in Europe Rise as Bonds Climb on Cyprus Options; Commodities Gain

*Cameron Evokes Black Wednesday With Soros as Pound Weakens 7% This Year – !!!

*Deutsche Bank Cuts Profit After 33% Jump in Legal Costs on Rash of Probes – !!!

*Fink of BlackRock Sees 20% Gain in U.S. Stocks With No Setback From Cyprus – ???

*Dollar Beating Mark-Mirroring Franc Reveals U.S. Renaissance – in what? Safety?

*Banks in Spain Cut Lines to Developers as 50% of Industry Dies – Mortgages

FedEX Q3 Adjusted EPS $1.23 vs Est. $1.38; Year Forecast Cut – hmmm

*Iran’s UN Envoy Sees Possibility of Breakthrough in Nuclear Negotiations

*Obama in Israel Seeking Sderot Momment With Initial Visit as U.S. President

*Syrian Claim of Rebels’ Chemical Weapons Use Lacking Evidence, U.S. Says

  

Ah, yes, another down day. Not much mind you. The Dow was flat, ok up 4 points, but the S&P fell 0.2%, the two Nasdaq indices fell 0.2-0.3%, the Russell 2000 was -0.5%, and NYSE Financials were the big loser at -0.7%. The bright spot if there was one was Dow Utilities +0.4%. Advance/declines and breadth were negative for a third day, new 52 week highs were higher – as were new lows, and the S&P Volatility (VIX) rose 7.6% one day after it ‘gapped up’ huge on the open and traded in a range of 12.57-13.64 following two days at the lowest levels in nearly five years. It is now back to 14.38 above the 40/50 day moving averages at the highest since March 6th!

Bonds continued to rally on Cyprus (does this tell you anything when an ant can move a mountain?), and Gold traded to $1615, highest since Feb. 27th! Crude took another dive, losing $1.58 to close at $92.16. Whew!

FOMC meeting today.

NYSE Volume rose again after plunging Monday following Friday’s options expiry  (as usual since the only two days where we have high volume are options expiry and possibly monthend). It was 3.74B shares vs 3.15B vs 4.93B (2013 high) vs 3.43B vs 3.03B vs 3.22B vs 2.98B vs 3.64B vs 3.62B vs 3.67B vs 3.57B vs 3.38B vs 3.76B vs 3.53B. Real NYSE volume also rose to an average 731M shares vs 676M vs 1.825B (new 12-month high!!!) vs 676M vs 585M (lowest since 2/11’s 497M shares). Since 3/1 the range has been a weak 585M to 763M shares plus Friday’s 1.83B shares, beaten only by  12/21’s 12 mo. high of 1.88B shares). Note that Friday was the only day since 2/28 to register over 1B shares with no other sessions reaching anywhere near 800M, which occurred just once last week while the average volume since 2/15 is a weak 732M shares!!! Ave vol. 12 mos. 742M, ytd 727M. There have been just NINE 800+M shares in 2013.

.

  1. new 52 week highs which have ranged from 121-709, rose to 328 vs 282 vs 584 vs 652 vs 410 vs 413 vs 560 vs 630. New lows rose to 50 vs 42 vs 64vs 50 vs 42 vs 36 vs 26 vs 24 vs 64 vs 73 vs 98.
  2. Advance/Declines were negative for a 3rd day at -1.3x vs -1.5x vs -1.1x vs +2x vs +1.3x on NYSE and -1.4x vs -1.9x vs -1.3x vs +2.1x vs +1.3x on Nasdaq. Breadth was similar at -1.6x vs -2.6x! vs -1.1x vs +2.8x vs +1.2x on NYSE and -1.8x vs -2.3x! vs -2x vs +1.9x vs +1.1x on Nasdaq.
  3. The Dow was flat after trading up in the overnight session then turning negative just before the opening. The only winner was Dow Utilities +0.4%. ‘nuf said.
  4. NYSE Financials fell by 0.7%, and were the big loser for a 2nd day vs -1.1% most of the loss due to brokers. Compare to flat vs +0.9% vs +0.2% vs -0.7% vs +0.6%. NYSE Brokers -0.7% vs -1.1% vs -0.2% vs flat vs +1.1%. BofA still most active – natch –  +1% vs -0.1% vs +3.8% vs +0.4% vs +1.4% vs -1.2% vs +0.7% vs +1.6% – the range is $11.11, on 12/17 to $12.57 on 3/15. Note: 11 cents is a 1% change!!!  Citi fell by 1.1% vs -2.2%! JPM wasn’t a most active but fell 0.7% and is now -3.5% in three sessions from its 12 month high of $51 on 3/14!
  5. Lastly volatility (S&P VIX), which gapped up on the open Monday(from a multi-year low!!!) by 2.2 points, rose another 1.02 yesterday to close at 14.38, a 7.6% gain AND intraday the high was 16.23! That is up 22% increase ion 2 days!!! When something like this can occur because of a mouse like Cyprus one has to wonder. But recall the financial collapse began with Iceland, spread to Ireland, then to the Euro countries and the U.S. and ultimately to Greece…now Cyprus??? Is this really a good time to be bullish on stocks???

Global equity markets recovering after being trashed for two sessions, ex-Korea and India: UK +0.3% vs flat vs -0.7% vs -0.6% +0.4%; France +1.2% vs -0.6% vs -1.3% vs -0.9% vs +0.8%; Germany +0.8% vs -0.3% vs -1.1% vs -0.3% vs +1.1%; Japan closed vs +2%!!! vs -2.7%!!! vs +1.5% vs +1.2%; Hang Seng +1% vs -0.2% vs -2% vs -0.4% vs -0.4%; Kospi DOWN 1%! vs +0.5% vs -0.9% vs -0.8% vs +0.1%; India -0.7% vs -1.5%!!! vs -0.7% vs -0.7% vs +1.1% vs -1%. U.S. stock futures higher after opening wea and now near session highs: DOW +65; SPX +8.30; NDQ +21.50!!!

If stocks are up, bonds must be weaker, after being higher on Friday, Monday, Tuesday, but overnight weaker but holding below the old ranges: 10 yr Treasury from 2.06% to 1.85% prior 19 sessions, closed 1.90% +1/2!!!, now 1.94% -3/8, and the 30 yr’s 3.26% to 3.05%, closed 3.13% +1-1/8, now 3.16% -11/16. The long Tip made it to 0.60% +15/16 yesterday but is now back to 0.62% -9/16, the high yield was 0.66%. Libor update: 0.243% 3 mos., 0.448% 6 mos. Foreign bond yields mixed but reversing the two day loss for the problem countries higher, Greece remains weak: Germany 1.39% +4; UK 1.90% +8; Italy 4.61% -10!; Spain 4.96% -6; Portugal 5.87% -23!!!; Greece 11.48% –7, vs 11.21% vs 11.06% vs 10.58% +25 – 72 bp’s in 3 days!!!…still on Cypress bailout…it never ends!

Gold closed higher for a 4th day, above $1600 – first time since 2/28!!! It is still below resistance and way below the 1/17 high of $1699.90. It closed at $1611.30 +$6.70.  2/21/13’s low was $1554.30 – not seen since May 2012! Last time it was below $1500 was Sept. 2011. Overnight it is lower at $1607.30 -$4. Crucial to hold $1600 The total breakdown through the 40/50/200 day m/a’s, has major resistance $1623-1669, with major support at $1600, a double bottom from 8/14-15, also a psychological level. Crude was nailed after Monday’s wild ride yesterday which took it to $91.76 and placing the rally in jeopardy before bouncing and rising to $93.74. It closed Tuesday at $92.16 -$1.58 on an essentially parallel session. The recent low is $89.33, lowest since 12/26, set on March 4. Overnight however it is $93.11 +.95 and still approaching the converging 50 day ($94.37), and 40 day ($94.47)!

Some random thoughts:

Cyprus…a cypress is a tree that is strong and lush. There is also Cypress Point, a beautiful private golf club on the Monterrey peninsula. Cyprus is a disaster. How much money will be left in the banks by foreigners – read Russians – now? Even though the government rejected the deposits tax (despotits?).

In spite of this globally stocks are rallying…this despite the ECB’s threat to shut down all the banks if they refused to do as told. Deadline has passed…now what? It is a lose, lose for their banks as either way there will be (is) a run on them!

When a ‘fly’ like Cyprus impacts the entire global markets it is a problem – a major one! It shows just how unstable the financial system is and were it not for our Fed, there would be utter chaos – not that TB agrees with everything Bernanke & Co. is doing but at least they are attempting to fix the problem, unlike our paralyzed and dysfunctional Congress.

What fools we are. You figure it out!

Have a great day!

TB

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