5/3/13…do you believe in magic?

From the Friar’s Club Encyclopedia of Jokes: “If nobody ever said anything unless he knew what he was talking about, a ghastly hush would descend upon earth.” – Alan Herbert…instead the decibel level is off the charts!

Bloomberg Quote of the Day: “I’m going to speak my mind because I have nothing to lose.” – S.I. Hayakawa…the same can be said for TB!

U.S. Non-Farm Payrolls rose by 165,000 vs median forecast of 140,000. Private payrolls rose by 176,000 while Government cut another 11,000 (this is insane!). Revisions to February and March added 114k jobs. Now look: Factory Jobs were unchanged, Construction FELL 6,000. Where did the gains come from? Sevices!!! These were not high paying jobs, most likely minimum wage! Average Hourly Earnings rose by a weak 0.2%!

The Unemployment Rate declined to 7.5% vs 7.6%: recall last month the Labor Force declined by 496k! This week it rose by just 210k but ‘Household Employment’ which declined by 206K last month ROSE by 293k – do you believe that? Besides Household employment is a joke since you don’t even have to be paid or can ‘work’ on a computer for just ONE hour a week! Why do we bother with this nonsense? Because over time – not month to month – it does align with the establishment survey. Now look at REAL unemployment: Augmented (discouraged workers) 11.2% vs 11.4%!; now add in part-time for economic reasons and you get 13.9% vs 13.8% +0.1%!!!  

Market Reaction: Bonds did a swan dive and are still falling with 10’s now at 1.70% -11/16; 30’s 2.91% -1-13/16; 30 yr TIP 0.50%! -1-13/16. Gold weaker, Crude rallying. Stocks went from about unchanged in futures to solid gains and are opening strong: Dow +150; Dow Transports +110; SPX +18!; Composite +35! After they analyze the data will it hold? Depends what the High Freaks want to do with it!  

Bloomberg Top Stories:

*Longest Euro Region Recession Poised to Deepen as Unemployment Hits Record – !!!

*Payrolls in U.S. Increased by 165,000 as Unemployment Rate Declines to 7.5%

*U.S. Stock Index Futures Jump as Job-Growth Data Top Economists’ Forecasts

*RBS Executives See Government Cutting Stake Even as Operating Profit Drops

*Copper Leads Metals Higher as Dollar Slips; Spanish, Italian Bonds Climb

*BNP Paribas Quarterly Profit Declines Less Than Estimated to $2.06 Billion

*Euro Advances After Notwotny Says ECB Negative Rate Signs Over Interpreted –

*India Lowers Benchmark Rate Third Time in a Row to Extend Sole BRIC Easing

*ECB Faces Some Resistance to 2015 Start for EU Bank Bail-In Plans

*Buffett Bets on Commercial Insurance Big Time After Luring AIG Executives

*Fusion Scientists See Looming Breakthrough Where Obama Shows No Enthusiasm – the U.S. has opposed fusion since that is how bombs are made but look what happened since!

*Boston Suspects Said to Initially Plan Attack on City’s July 4 Festivities

Wow! A big rally, but generally just inside days (lower high and higher low than Wednesday’s big selloff)…still stronger than I would have expected and negates my comment about Tuesday being ‘one-day wonder,’ Especially now that we got payrolls and they were better than expected…as if that matters. Let’s see how the session ends today. Still, everything is up to the ‘high freaks’ as it will go where THEY want it to!

The Russell 2000 small cap is making quite a reputation for being the best/worst performer on alternate days. It rose 1.7% but fell 2.3% on Wednesday! The other one, Dow Transports rose 1% yesterday but only after being off 2.3% Wednesday and has not confirmed the Dow 30 or S&P 500’s gains this year! Both Nasdaq Indices were up 1.3% vs -0.9%. The Nasdaq 100’s gain was vs -0.5% vs +0.7% It gained 38 points, 22 were in Apple (+5), MSFT (+3), GILD/FB/ORCL/GOOG all +2; and five others at 1+ each. Still smacks of high freaks trading (if you want to call it that!)

So let’s see what else happened:

*Dow Transports +1% vs -2.3%!!!; Russell 2000 +1.7% vs -2.3%; Dow Utilities -0.2%! vs -1%! S&P 500 +0.9% vs -0.9%; Nasdaq Composite +1.3% vs -0.9%, NDQ 100 +1.3% vs .-0.5%!, NYSE Financials +1% vs -1%!. Dow 30 +0.9% vs -0.9%.

*NYSE Volume was slightly lower again at 3.4B shares (on a big rally?) vs 3.5B shares vs 3.67B vs 2.88B shares (weakest in 16 sessions!!!). REAL NYSE Volume fell sharply again to 643M shares vs 697M vs 887M vs 599M shares (lowest since 4/8). Recent  range is 975M (selloff) to 887M (rally). The average so far this week is a weak 713M shares and last week was just 687M vs 859M vs 689M!!! The last options expiry came in at a solid but not great 914M shares. The 12-month average is just 733M shares. The range since 2/11 is 558M to 1.825B on 3/15’s options expiry and a near 12 month high, second only to 12/21’s 1.88B shares. Note that 3/15’s (options expiry) was the only day since 2/28 to register over 1B shares! There have been just fifteen 800+M shares in 2013 – just 4 up, 11 down, and on trades of less than that 70 have been up and just 19 down…there have been 19 mixed sessions…do you see why volume matters???

  1. new 52 week highs have ranged from 121-709, rose to 411 vs 386 vs 486 vs 418 vs 267 vs  495 vs 400 vs 400 vs 237 vs 228 vs 106 vs 100. New lows dipped to 50 vs 61 vs 42 vs 29 vs 40 vs 34 vs 48 vs 43 vs 96 vs 82 vs 159 vs 237 vs 120 vs 197.
  2. Advance/Declines were positive: +3.1x vs -2.6x vs +2x vs +2.8x vs -1.4x vs  +1.8x vs +1.9x vs +4x vs +1.4x vs +2.6x vs -1.2x vs -3.5x vs +4.4x vs -7.1x on NYSE and +3x vs -3.5x! vs +1.5x +2.1x vs -1.6x vs +1.7x vs +1.3x vs +3.4x 0.7% vs +1.5% vs +0.3% vs +1.3% vs  -0.8% vs -1.8%! Breadth was positive but not so much: +3.1x vs -4.5x!!! vs +1.6x vs +3.4x vs -1.8x vs +2.2x vs +2.1x vs +3.9x vs +1.6x vs +2.3x vs -1.3x vs -10.5x!!! vs +6.4x vs -7.2x vs -2.2x on NYSE and +2.9x vs -2.7x vs +1.9x vs +2.3x vs -1.1x vs +1.8x vs +1.5x vs +3x vs +2.5x vs +2.3x vs -3x! vs -5.2x vs +6.2x vs -12.8x!!! vs -1.4x .  
  3. NYSE Financials rose by 1% vs  1% vs +0.7% vs -0.1% vs +0.5%. BofA only ‘most active’ financial rose just 0.4% to $12.19 +.05 vs -1.8% vs -0.6% vs -0.3% vs +0.2% vs +2% vs +3% vs +0.5%.
  4. Volatility (S&P VIX) declined nearly offsetting Wednesday sharp rise to 13.59 -.90 vs 14.49, with a range of 13.58-14.48 – will they see through the ‘faux’ payrolls numbers today? The range for the last two weeks is 12.06 (multi year low) to 18.20, and it is now back above the 40/50 day (13.49/13.85) but still below the 200 day (15.26)…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.43!!!

European equities rallying (?), Asia mixed: UK +0.7% vs -0.2% vs +0.7% vs -0.1% vs +0.2%; France +0.7% vs -0.3% vs +0.3% vs flat vs +1%; Germany +0.9% vs +0.4% vs +0.5% vs +0.8% vs +0.4%; Japan -0.8%! vs -0.8% vs -0.4% vs -0.2% vs closed; Hang Seng +0.1% vs -0.3% vs +0.7% vs +0.7% vs +0.2%; Korea +0.4% vs -0.3% vs closed vs +1.2%! vs -0.2%; India DOWN 0.8% vs +1.2%!!! vs closed vs +0.6% vs +0.5%. U.S. stock futures were little changed overnight but surged on U.S.payrolls: DOW +115; SPX +12.40; NDQ +22!!!

Bonds added to their gains yesterday but are being slammed following payrolls – we closed at the low yields: 10 yr Treasury 1.70% vs 1.63% -5/8 (recent range 2.06% to 1.63%!!!), and the 30 yr’s 3.26% to 2.82%!!!, now 2.90% vs 2.82% -1-9/16!!! The long TIP is now 0.49% vs 0.44% -1-3/8 – performing miserable since setting a new (record?) low of 0.36% on 4/5, before backing off to 0.52%! The recent high yield was 0.67% on 3/11! Libor update: 0.237% 3 mos., 0.425% 6 mos. Foreign bond yields mixed – problem countries declining! Germany 1.22% +5; UK 1.68% +6; France 1.79% +1, Italy 3.74% -2; Spain 3.94% -8!; Portugal 5.41% -16!!!; Greece 9.68% -23!!! – incredible – vs 10.09%!!! -56!!! vs 10.64%! vs 10.81% vs 10.92% vs 11.18% vs 11.13% vs 11.05% vs 11.08 vs 11.22% (recent range now 9.68%!!!-12.57%!). Japan 0.55% -1.   

Gold nearly reversed Wednesday’ losses and closed at $1467.60 +$21.40 – but on an inside day!!! Last Friday’s new intraday high was $1484.80, highest since 4/12! Last Tuesday’s intraday low of $1321.50 – was lowest since Sept. ’10. The loss over the two weeks is now back to $75. A week ago Monday’s $149 loss to a 52 week low of $1361.10 was disastrous. Resistance remains way above at the 40 day/50 day: $1529-1540 – still falling! Overnight it put in a new recent high of $1487.20 but sagged following payrolls to $1455.40 and is now $1461.20 -$6.40…trading it is not for the weak of heart! Crude closed sharply higher after two consecutive weak days $93.99 +$2.96 – swings are incredible! Overnight it took out Monday’s intraday high of $94.69, with a $95.66 print, highest since 4/3. It continues to seesaw around Sup/Res at the converging the 40 day ($92.69), 50 day ($92.52) and 200 day ($91.89),!!!. It is now $95.26 +$1.26 – how’s that for volatile!!!  $/18’s low of $85.61 was lowest since 12/11! The range is now $85.61-$97.80 since June 29, 2012!!!!

 

Some random thoughts:

If you do believe in magic you will love today’s payrolls report. Don’t take them at face value…look at the breakdown I posted above and THINK! Much of the increase was in part-time jobs: aka, minimum wage, no benefits. Will this help economic growth? Pullease!!!

Memo to Paul Ryan, Eric Cantor and the rest of the Tea Party: increasingly we see that the data reported by Reinhart & Rogoff is flawed. We are not in danger of becoming bankrupt as a nation (ok, except morally). Meanwhile, they continue to hammer austerity down our throats while Mssrs. Simpson and Bowles remain mum. This is not new: during the Great Depression the Federal Reserve (the heroes today), raised reserve requirements on banks four times which resulted in more loans being called and more unemployment. They did this again and again. As for the unemployment, the belief at the time was that as unemployment rose people would work for less and companies would hire them. They did not. How do I know this? Because Ben Bernanke wrote the study on it! Now do you see why he is so concerned? Last time the Fed was the culprit this time the Federal government…note the loss of another 10,000 government jobs this month. The average has been a loss of 5,000 per month for well over a year…what does this say???

Newspaper article today says suicide rate among baby boomers is rising. The reason: most retirement fears…is this a great country or what???

Have a great weekend and don’t kill yourself, accidentally or otherwise!

TB

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