6/7/13…another payrolls Friday

Bloomberg Quote of the Day: “Flying is learning how to throw yourself at the ground and miss.” – Douglas Adams

Bloomberg Top Stories:

*Payrolls in U.S. Increased 175,000 in May as Unemployment Climbed to 7.6% – !!!

*Stocks in U.S. Jump After Companies Add More Jobs Than Economists Forecast

*Japan’s Public Pension Fund Cutting Domestic Bond Purchase Program – !!!

*Gross Says Jobs Report Signals Fed Won’t Tamper With Bond Purchase Program – talking from position but he’s also correct! …on one month’s numbers?

*German Industrial Output Unexpectedly Jumps Most in a Year on Construction -1

*Canada Posts Biggest Job Gain in a Decade After Construction Work Expands – ?

*Google is Seen Scaling Down Wallet Application Spurned by Consumers

*Brazil Banks Prove Better at Home Than Goldman in Contest Cohn Appreciates

*Republicans Trying to Pink-Slip Obama’s Choices for Appeals Court in D.C.

*U.S. Defends Secret Data-Collection as Legal Tool in Fight Against Terror L

*’No Child Left Behind’ U.S. School Law Reopens Partisan Divide in Congress  

 

U.S. Non-Farm Payrolls rose by 175k in May vs 163k estimate. Private payrolls increased by 178k while government lost another 3k. March was revised up by 4k but April lowered by 16k! Factories LOST 8k jobs while Construction rose by 7k.

 The Unemployment Rate rose to 7.6% +0.1% but only due to rounding (7.555% vs 7.51%. Unemployed and discouraged steady at 8.0%; add marginally attached 8.8% -0.1%; add part-time for economic reasons 13.8% -0.1%. Household employment rose by 319k but the participation rate barely budged to 63.4% +0.1%. Average Hourly Earnings increased by just 2% from a year ago. Workweek was unchanged at 34.5 hours while Manufacturing rose to 40.8 hours up just 0.1.

 Market Reaction: stocks rose on the news but remain weak while bonds – especially TIPS were crushed with the long TIP hitting a new high of 1.03%! Not good! Gold, which closed above $1400 yesterday is being crushed again and is now $1388 while Crude which gained yesterday is lower at $94.48.

 

Call it snatching victory (sic) from the jaws of defeat. Only a rally in the final 15 minutes prevented the Dow Industrials from closing below 15k for a 2nd day, while the S&P 500 which broke 1600 (1598), had a steady rise to close at 1622.  Both traded below BOTH their 40 and 50 day moving averages and closed just slightly above, while Dow Transports closed well below both for a second straight day. Still all of the gains since May 3rd have been eradicated. Meanwhile, Dow Utilities rose 1.3% to close above their miserable 200 day moving average following their 11.3% plunge from the April 30th  high! Also, the tone of the market, lack of enthusiasm, rapid increase in volatility (S&P VIX has risen from 12.45 to 17.50 just since 5/17, but dropped back slightly to 16.63 yesterday), and more failures by high frequency traders to stabilize and in fact exacerbate declines…makes this market treacherous. Don’t believe TB but at least listen to Marc Faber, Bridgewater’s Ray Dalio, or Jeremy Grantham (made the correct call in 1999 and lost 25% of his accounts as the markets continued to accelerate…until they didn’t!). Regardless of those who use those cute definitions of ‘cheap’ such as historical p/e’s which of course are not overvalued in a time of record…but flattening or worse earnings, but using the ten-year historical averages favored by Robert Schiller are anything but cheap! One hiccup and even the perceived cheap becomes rich! Look before you leap…don’t you at least wish you had bought some ‘cheap’ puts back in mid-May? Nah…needless worry that will cut into our enormous profits, right?  Volume was fairly steady at average levels while A/D’s and Breadth were decidedly negative…especially the latter!

The Nasdaq 100 rose just 0.5%! vs -1.2%. Up 13 points but nearly 12 were due to just 7 stocks which rose by 1 or more points led by AMGEN/RGEN +1.8. But there where two huge losers: AAPL -5.4%!!! vs -3.4!, and ORCL -3.1% – tied to CEO/founder Larry Ellison’s plunging popularity on his commercialization of the America’s Cup?. This continutes to be a tough year for tech and very volatile.

So let’s see what else happened:

* Dow 30 +0.5%? vs -1.4%! (-217, close near low at 14,960, 1st close below 15k since 5/6), vs -0.5% vs +0.9% vs -1.4%!!! (range 276 points, loss 208!!!); Dow Transports +1% vs -1.9%! vs -0.5% vs flat vs -0.8% vs +0.2% vs -1.1%; Russell 2000 +1.2% vs -1.4%! vs -0.8% vs +0.7% vs -1% vs +0.6% vs -1%; Dow Utilities +1.3% vs -0.9% vs -0.3% vs +0.1% vs -0.6% vs flat vs -1.5%!!! vs -1.4%!!! – now down 6.6% over the past 10 sessions, and since posting a near record high on 4/30, have plunged 11.5%!!!; S&P 500 +0.9% vs -1.4%! vs -0.6% vs +0.6% vs -1.4%!; Nasdaq Composite +0.7% vs -1.3%! vs -0.6% vs +0.3% vs -1%; NDQ 100 +0.5% vs -1.2%! vs -0.6% vs +0.3% vs -1%!.

*NYSE Volume decline slightly to an average 3.48B shares vs 3.62B vs 3.6B vs 3.94B vs 3.91B vs 3.47B vs 3.56B vs 3.43B vs 2.75B (2013 low).  REAL NYSE Volume rose to a solid 800M shares vs 740M vs 787M vs 880M vs 1.35B (highest since 3/15 and 2nd highest of the year!) vs 711 shares vs 722M vs 734M vs 587M. The 12-month average is just 721M 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. Last Friday was only the fourth day this year to register over 1B shares! There have now been just 20 800M+ shares in 2013 – 7 up, 13 down, but on trades of less than that 78 have been up and 27 down…there have been 21 mixed sessions.

*New 52 week highs have ranged from 74-864. They rose to 103 vs 74!!! vs 235 vs 234 vs 221 vs 300 vs 175 vs 517 vs 138!!! vs 811. New lows declined again to 95 vs 125 vs 182 vs 325 vs 290 vs 108 vs 191 vs 79 vs 49 (recent range 29-290).

  1. Advance/Declines were solidly positive, but…-3.6x vs  -4.3x!!! vs -1.7x vs -1.2x vs -5.5x! vs +1.3x vs -3.8x!!! (recent range -7.1x to +4.4x) on NYSE and +2.4x vs -3.4x! vs -2.1x vs +1.4x vs -2.6x! vs +2x vs -2.3x vs +2.4x vs +1.1% vs +1.1x vs -2.9x! vs +1.2x vs -3.3x! (recent -3.5x to +3x). Breadth was similar: +5.3x! vs -4.3x!!! vs -2.2x vs +1.3x vs -6.8x!!! vs +2x vs -1.7x vs +1.8x vs -1.5x (recent -10.5x to +6.4x!!!) on NYSE and +2.6x vs -4.9x!!! vs -2x vs +1.2x vs -3.8x!!! vs +3.5x vs -1.6x vs +2.5x (recent -12.8x to +6.2x)  
  2. NYSE Financials rose by 1.1% vs 1.8%!!! vs 0.4% vs +0.3% vs -1.7%!!!. BofA rose for the first time in 5 sessions by +0.8% vs -2%!!! vs -0.7% vs -0.8% vs -1.1%! vs +3.3%??? vs +1.5%??? to $13.20 +11…19th day above $13 since 4/11/11. Brokers +2.1% vs -2.3%! vs flat vs -0.9% vs -1.4%; KBW Banks +1.2% vs -1.4%! vs -1% vs flat vs -1.7%; Nasdaq Banks +0.9% vs -1.2%! vs -0.7% vs +0.6% vs -1.2%.
  3. Volatility (S&P VIX) hit another high of 18.51 intraday, not seen sicne 2/25!!! before closing at 16.63 -.87 – from 17.50, highest since 4/18!!! (13th day above 13 since May 2). The range since 4/12 is 11.99 (multi year low) to 18.51, and it is now well above the 40/50 day (13.88/13.78) and the 200 day (14.91)…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.10!

Global equities mixed with Asia weaker…look at Japan lately!; UK +0.5% vs +0.2% vs -1.4%!; France +0.5% vs +0.5% vs -1.2%!; Germany +0.7% vs +0.4% vs -1.1%!; Japan -0.2% vs -0.9% vs -3.8%!!! vs +2.1% vs -3.7%!!! vs +1.4% vs -5.2%!!!; Hang Seng -1.2%! vs -1.1%! vs -1% vs -0.5% vs -0.4% vs -0.3% vs -1.6%!!!; Korea -1.8%!!! vs -1.5%!!! vs -1.3%; India -0.5% vs -0.3% vs +0.1% vs -0.3% vs -0.8% vs -2.3%!!! U.S. stock futures slightly higher in a narrow trading range  –  caution!: DOW +48; SPX +7.50; NDQ +9.25 – all about the same as this time yesterday!

Bonds were slightly better yesterday but are lower overnight: 10 yr Treasury 2.13% -7/16 (recent range now 2.17% to 1.63%!!!), and the 30 yr’s 3.33% to 2.82%!!!, now 3.30% -15/16. The long TIP has broken down yet again setting another new high of 1.03% vs 1%, set Monday!!! Currently 1.03% -1-13/16- still the weakest link since a new (record?) low of 0.36% on 4/5. Since the Bernanke announcement on the 7th the high yield has gone from 0.82% set on 5/22 to 1.03%! Libor update: 0.275% 3 mos., 0.410% 6 mos. Foreign bond yields mixed: Germany 1.53% +1; UK 2.03% +1; France 2.13% +2, Italy 4.28% -8; Spain 4.28% -8; Portugal 6.20% +22; Greece 9.28%! +10 vs 9.00% vs 9.05% vs 8.83% vs 9.11% vs 9.20%!!! vs 8.80% vs 8.54% vs 8.39% vs 8.63% vs 8.54% vs 7.98% vs 7.97% vs 7.94% vs 7.96% vs 8.47% – it has broken down from the rally! Recent range 7.94% to 12.57%. Japan 0.84% +2.  

Gold closed strong yesterday breaking a string of three straight ‘inside days – RARE! It closed above $1400 after 2 days below at $1415.80 +$17.30! 5/30’s intraday high was $1417.70, highest since 5/15.  It has been down 12 of the last 19 sessions following 5/20’s intraday low of $1338, lowest since 4/18. 5/10’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 at the 40 day/50 day: $1423-1454 – still falling rapidly! Overnight it is crushed again at $1382.50 -$28.40 – ouch! Crude closed solidly higher at $94.76 +$1.02, sasfely above the 40/50 day again…three days after putting in an intraday low of $91.26 – lowest since 5/2! It remains above the 200 day with just one day below since 5/1, making it major support at $92.28. It is between the 40/50 day (93.23-93.60), 7 days after a high of $95.92 – highest since 5/22!  The rally high is $97.11 set 5/20, nearing a 12 month high! Overnight $94.34 +.60. 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:

Can stocks hold up until the end of the quarter? …till options expiry on the 21st? All TB knows is that it isn’t safe for man nor beast to speculate on this market now – seriously, you can’t call it investing!

Have fun weekend!

TB

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