5/17/13…Babylon revisited

From the Friar’s Club Encyclopedia of Jokes: “It’s going to be fun to see how long the meek can keep the earth after they inherit it.” – Kim Hubbard

Bloomberg Quote of the Day: “Go on failing. Go on. Only next time try to fail better.” – Samuel Beckett  

Bloomberg Top Stories:

*Car Sales in Europe Climb After 19-Month Decline With Germany Rebounding

*Dollar Index Advances With U.S. Stock-Index Futures as Gold, Aussie Drop

*Japan Becomes Most Favored Nation in Investor Poll Reflecting Abe Optimism

*MacDonald’s Seen Overhauling Menu in U.S. With 145 Choices Slowing Service

*Oil Price-Fix Probe Widens as Finland’s Neste Helps European Union Inquirty – !!!

*Russia’s Economy Expands at the Weakest Pace Since ’09 as Investments Cool

*Tesla Plans to Raise $1.08 Billion to Repay Its U.S. Loan Early

*Euro Stocks Seen Rising on Stimulus Even as Profits Fall – get it? It’s about p/e’s!

*Oberhelman Enriched by Performance at Caterpillar While Worker Pay Stalls

*Ousted Acting IRS Chief Facing Lawmakers’ Grilling in Tax-Agency Scandal

*Obamacare Sees Switzerland Proving Mandatory-Private System Works – So?? GOP!

*Bipartisan (sic) U.S. House Negotiators Produce Tentative Immigration Proposal

A ‘minor’ setback? Who knows but the string of weak economic data, accompanied by weak earnings at WalMart…aren’t earnings what determine whether the p/e multiple is too high or too low, caused stocks to turn down, then up them down and close just off the lows. Nevermind though, we had another record high on the Dow and the S&P 500  was just bdlow its highs – lovely! NYSE Volume slipped  to 3.47B shares vs 3.66B but remains near normal. Average is the ‘new normal.’ But if it turns on you and that could happen this week, where will the support be? Could we see another ‘flash crash’? Today is options expiry in a market that is dominated by high frequency traders – not institutional buyers…their only role in this has been to be paralyzed against selling to avoid being left behind (note that even the selloffs of late are minor and not on large volume…that could change – quickly! Again Dow Transports fell (-0.8% vs +0.8% vs +1.9%), but worst was Dow Utilities -0.9% vs +0.7%, while the Dow fell 0.3% and S&P 0.5%…Russell 2000 small cap was -0.3% vs  +0.3% vs +1.3%. The two Nasdaq indices were down 0.1-0.2%. Look at this on the NDQ 100: Wednesday’s leader GOOG shed 2.8 while APPL; which lost 12 on Wednesday gained back 4.5 index points. Average. Today is options expiry and the VIX rose .26 to 13.07, its third, albeit slight increase in a row.

So let’s see what else happened:

*Dow Transports -0.8% vs +0.8% vs +1.9% vs -0.5% vs -1.1%; Russell 2000 -0.3% vs +0.3% vs +1.3%! vs -0.1% vs -0.4%; Dow Utilities -0.9% vs +0.7% vs +0.5% vs -0.6% vs -1.5%; S&P 500 -0.5% vs +0.5% vs +1% vs flat vs -0.4%; Nasdaq Composite -0.2% vs +0.3% vs +0.9% vs +0.1% vs -0.1%, NDQ 100 -0.3% vs +0.2% vs +0.5% vs flat vs -0.2% vs +0.5%, Dow 30 -0.3% vs +0.4% vs +0.8% vs -0.2% vs -0.2%.

*NYSE Volume slipped to a still average 3.47B shares vs 3.66B vs 3.43B vs 2.86B (low for the year) vs 3.49B. REAL NYSE Volume also slipped to a below average 679M vs 738M vs 700M vs 594M (lowest since 4/8) vs 670M vs 727M (highest since 4/30). Recent highs were 975M (selloff) to 887M (rally). The average last week was a weak 720M shares vs 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 727M 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, but on trades of less than that 75 have been up and just 22 down…there have been 20 mixed sessions…hint: low volume rallies!!! …and lately low volume selloffs.

  1. new 52 week highs have now ranged from 100-864. They slipped back to 640 vs 864! vs 793 vs 462 vs 613. New lows however rose sharply again to 95 vs 66 vs 38 vs 39 vs 37 (recent range 29-237).
  2. Advance/Declines were slightly negative: -1.5x vs +1.2x vs +2.1x vs -1.5x vs -1.8x (recent range -7.1x to +4.4x) on NYSE and -1.3x vs +1.3x vs +2.3x vs -1.2x vs -1.5x (recent -3.5x to +3x). Breadth was similar: -2.3x vs +2x vs +3.3x vs -1.4x vs -1.9x (recent -10.5x to +6.4x!!!) on NYSE and -1.1x vs +1.8x vs +2.4x vs +1.2x vs -1.1x (recent -12.8x to +6.2x)  
  3. NYSE Financials fell 0.8% vs +0.7% vs +0.9% vs 0.3% vs -0.8%. BofA fell by 0.7% vs +0.8% to $13.35 -.09, now there are five $13 plus days since 4/11/11!
  4. Volatility (S&P VIX) rose modestly for a third day to 13.07 +.26 (first time above 13 since May  2), most likely due to today’s options expiration! The range since 4/12 11.99 (multi year low) to 18.20, and it is below the 40/50 day (13.37/13.61) and the 200 day (15.05)…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.10!

Global equities higher: UK +0.4% vs -0.1% vs flat vs +0.2% vs +0.5%; France +0.4% vs +0.4% vs –0.1% vs flat vs +1%; Germany +0.3% vs -0.1% vs -0.1% vs +0.3% vs +0.7%; Japan +0.7% vs -0.4% vs +2.3%! vs -0.2% vs +2.9%!; Hang Seng closed vs +0.2% vs +0.5% vs -0.3% vs +0.5%; Korea closed vs +0.8% vs +0.1% vs +1% vs -1.8%; India +0.2% vs +0.2% vs +2.5%!!! vs +0.2% vs +0.7%. U.S. stock futures higher but still in a very narrow trading range session: DOW +50; SPX +6.40; NDQ +11.25!

Bonds rallied sharply even continuing when stocks rose and then closed at highs when stocks lost ground. Overnight no change except 10’s and 30’s which are slightly weaker overnight: 10 yr Treasury 1.89% -1/16 (recent range 2.06% to 1.63%!!!), and the 30 yr’s 3.26% to 2.82%!!!, now 3.11% -5/16. The long TIP is 0.71% -5/16 – still the weakest link since setting a new (record?) low of 0.36% on 4/5. Recent high yield is 0.74% set on 5/14! Libor update: 0.274% 3 mos., 0.419% 6 mos. Foreign bond yields lower across the board for a second day  led by Greece!!! Germany 1.30% -3; UK 1.84% -4; France 1.84% -3, Italy 3.92% -5; Spain 4.21% -7; Portugal 5.18% -3; Greece 7.96% -38!!! Vs 8.47% -13! vs 8.52% -56!!! vs 9.12%!!! -35!!! vs 9.44% vs 9.43% (recent range now 7.96%!!!-12.57%!). Japan 0.85% -1.  

Gold closed lower for a fifth day at $1386.90 -$9.30 with an intraday low of $1368, lowest since 4/17!. Last Friday’s high of $1487.20 was highest since 4/12. 4/16’s intraday low of $1321.50 – was lowest since Sept. ’10. Resistance remains way above at the 40 day/50 day: $1490-1514 – still falling! Overnight it is falling again at $1376.90 -$10.00 with a session low of $1363.60!!! Crude closed higher at $95.16 +.83, 7 days after posting a new rally high of $97.17, nearing a 12 month high! It is well above Sup/Res at the 40 day ($93.59), 50 day ($93.53) and 200 day ($93.71), starting to rise again! Overnight it is $95.86 +.70.  4/18’s low of $85.61 was lowest since 12/11! The range is $85.61-$97.80 since June 29, 2012!!!!

 

Some random thoughts:

Isn’t it amazing how the GOP is making everything political…conspiracies abound. The same people who say the Constitution is their Bible, violate it. Boehner says someone has to go to jail over the IRS scandal…targeting the Tea Party and other ‘conservative’ (sic) groups…it might just show that others were targeted on the other side. The Supreme Court, once again has mucked things up…just as when they awarded the presidency to Bush on political leanings.

I agree with former Justice Sandra Day O’Connor that Citizens United was just plain wrong. Beware of those who want to ‘educate’ us on the Constitution…or at least the way they see it. There was nothing – no thing – that was educational about it or the races, merely a string of negative ads that prevented the candidates – on both sides – from getting their message out. This has become about taking control of America. While both parties are guilty, the overwhelming evidence is against GOP support groups.

Several GOP’ers are claiming that this scandal is worse than Watergate…just as they fought to impeach Clinton…what fools we are…or they think we are.

How about this? Rep. Michele Bachmann, leader of the Tea Party group in the House, even while she is under investigation (and despite her misrepresentations during the campaign citing her Intelligence Committee (another sic) position which she totally misused in a matter that was befitting of ‘Tailgunner’ Joe McCarthy, remains in that post as Boehner shirked his duties), lashed out at Obama as she searched for a broad left-wing conspiracy. That dog won’t hunt and hopefully the investigation will show that while the IRS targeted these groups it was not on any administration authority. If so, it is egregious but let’s wait for the results, not rush to judgement as we are so willing to do.

Have a terrific weekend!

TB

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