6/10/13…how do you plug a leak?

From the Friar’s Club Encyclopedia of Jokes: “We would have broken up except for the children. Who were the children? Well, she and I were” – Mort Sahl

“An extravagance is anything you buy that if of no use to your spouse.” 

Bloomberg Quote of the Day: “You cannot open a book without learning something.” -Confucius

This week’s economic calendar has a few important indicators. The highlight of the week will be the May Retail Sales (Thursday) and May PPI (Friday).

We will also get April Wholesale Trade and April Job Openings (Tuesday), May Treasury Budget (Wednesday), May Import & Export Prices and April Business Inventories (Thursday), Q1 Current Account, May Industrial Production and May Preliminary Consumer Sentiment (Friday).

Labor market trends are slowly improving with moderate gains in nonfarm payroll employment, even though unemployment rate rose as participation rate inched up.  However, manufacturing activity, real consumer spending growth, motor vehicle sales are weakening compared to Q1 which indicate lower GDP growth for the current quarter.  Meanwhile, consumer confidence, factory orders, and construction spending rose. Inflation remains subdued. Courtesy of Economic Advisory Service.

Bloomberg Top Stories:

*No Inflation as U.S. Yields Increase Undermines Point-of-No-Return Outlook – first time since 2009 that yields are rising at the same time inflation is slowing!!! Go figure!

*Stocks in U.S. Advance on Japan’s Economic Growth, S&P Outlook for America

*American Expansion Lasting Longer Than Most as Muted Growth Deters Excess – ???

*Japan Revisits First-Quarter GDP Growth to 4.1% in Boost for Abe Campaign

*Britain Fights EU Short-Selling Powers in Wake of Defeat on Banker Bonuses

*Apple Seen ending Product Funk With Revamp of Software That Powers iPhones

*Londoners Forced to Rent Attracting Global Apartment Investment

*La Dolce Vita Eludes Italian Students as Colleges Produce the Unemployable L

*Ex-CIA Worker Reportedly in Hong Kong Poses Extradition Choice for China

 

Another rally…or should we say another low volume rally where the proportion of gain was not matched by the volume…per usual! This, just a day after BOTH the Dow and S&P 500 traded below their 40 and 50 day moving averages and closed slightly above, Dow Transports took honors with a 2.4% gain with the Russell 2000 small cap (?) and Dow Utilities bringing up the rear  with just 0.8% gains…understandable for Utilities but small caps??? Dow Utilities remain above their miserable 200 day moving average following their 11.3% plunge from the April 30th  high! Advance/Declines and breadth were tepidly positive.  Volatility (S&P VIX) remains elevated by declined to 15.14 with a range of 14.96-16.21, taking off some of the pressure and with options expiry 2 weeks away. No fear!

The Nasdaq 100 rose by 1.3% vs +0.5% vs -1.2%. Up 40.6 points with 9 stocks gaining more than one point for a total of 23 points with 7:1 advanciing and led by MSFT +5.1; AMZN/GOOG +3.5; AAPL +2.8; GILD/ORCL +2, and the only big loser was QCOM -1.3.  The leadership changes on a daily basis making this a tough year for tech and very volatile.

So let’s see what else happened:

* Dow 30 +1.4%! vs +0.5% vs -1.4%! vs -0.5% vs +0.9% vs -1.4%!!!; Dow Transports +2.4%!!! vs +1% vs -1.9%! vs -0.5% vs flat vs -0.8% vs +0.2% vs -1.1%; Russell 2000 +0.8% vs +1.2% vs -1.4%! vs -0.8% vs +0.7% vs -1% vs +0.6% vs -1%; Dow Utilities +0.8% vs +1.3% vs -0.9% vs -0.3% vs +0.1% vs -0.6% vs flat vs -1.5%!!! vs -1.4%!!! – now down 5.8% over the past 11 sessions, and since posting a near record high on 4/30, have plunged 10.7%!!!; S&P 500 +1.3%! vs +0.9% vs -1.4%! vs -0.6% vs +0.6% vs -1.4%!; Nasdaq Composite +1.3% vs +0.7% vs -1.3%! vs -0.6% vs +0.3% vs -1%; NDQ 100 +1.4% vs +0.5% vs -1.2%! vs -0.6% vs +0.3% vs -1%!

*NYSE Volume declined on the rally to a slightly below average 3.37B shares vs 3.48B  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 declined sharply to an average 729M shares vs 800M 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. For the week the average was a strong 787M but results were mixed, i.e. no clear treand! 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. May 31st 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 79 have been up and 27 down…there have been 21 mixed sessions.

*New 52 week highs have ranged from 74-864. They doubled to an average 227 vs 103 vs 74!!! vs 235 vs 234 vs 221 vs 300 vs 175 vs 517 vs 138!!! vs 811. New lows were halved to 50 vs 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 only modestly positive? +2.2x vs –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 +1.9x vs +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: +2.7x vs +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 +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 1.3% vs +1.1% vs 1.8%!!! vs -0.4% vs +0.3% vs -1.7%!!! BofA rose sharply for the 3rd time in 7 sessions by +1.4% vs +0.8% vs -2%!!! vs -0.7% vs -0.8% vs -1.1%! vs +3.3%??? vs +1.5%??? to $13.38 +.15…20th day above $13 since 4/11/11. Brokers +3.3%!!! vs +2.1% vs -2.3%! vs flat vs -0.9% vs -1.4%; KBW Banks +1.6% vs +1.2% vs -1.4%! vs -1% vs flat vs -1.7%; Nasdaq Banks +0.7% vs +0.9% vs -1.2%! vs -0.7% vs +0.6% vs -1.2%. GE +2.1%!
  3. Volatility (S&P VIX) plunged a day after another high of 18.51 intraday, not seen since 2/25!!! before closing at 15.14 -1.49!!! –  (14th day above 13 since May 2). The range since 4/12 is 11.99 (multi year low) to 18.51, and it remains  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 higher led by JAPAN and Germany!; UK +0.1% vs +0.5% vs +0.2% vs -1.4%!; France +0.2% vs +0.5% vs +0.5% vs -1.2%!; Germany +1.2%!!! vs +0.7% vs +0.4% vs -1.1%!; Japan +4.9%!!! vs -0.2% vs -0.9% vs -3.8%!!! vs +2.1% vs -3.7%!!! vs +1.4% vs -5.2%!!!; Hang Seng +0.2% vs -1.2%! vs -1.1%! vs -1% vs -0.5% vs -0.4% vs -0.3% vs -1.6%!!!; Korea +0.5% vs -1.8%!!! vs -1.5%!!! vs -1.3%; India +0.1% vs -0.5% vs -0.3% vs +0.1% vs -0.3% vs -0.8% vs -2.3%!!! U.S. stock futures higher: DOW +72; SPX +9.30; NDQ +13.50. Stock market opened and Dow quickly rose 50 points then reversed field turning down slightly. Transports off 28! Other indices little changed…go figure.

Bonds closed weaker Friday on the stock market rally…such is the fate of downtrodden treasuries…worse they are off again overnight…BOTH 10’s and 30’s breaking down yet again!!! 10 yr Treasury 2.22% -3/8 (recent range now 2.22% to 1.63%!!!), and the 30 yr, now  3.37% to 2.82%!!!, now 3.37% -9/16!!! The long TIP has broken down yet again setting another new high of 1.07% vs 1%, set o/n!!! Currently 1.07% -1/2 – 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 1.07%! Libor update: 0.274% 3 mos., 0.411% 6 mos. Foreign bond yields higher after being trashed on Friday!!! Germany 1.58% +3; UK 2.12% +3; France 2.12% +6!!!, Italy 4.26% +8; Spain 4.54% +2; Portugal 6.02% -2; Greece 9.30% +8 vs 9.28% 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 0.83% -1.  

 Gold closed sharply lower to end a week that included a rare string of three straight ‘inside; days! It closed Below $1400 again after just one day above following 2 days below at $1383.00 -$21.20! 5/30’s intraday high was $1417.70, highest since 5/15.  It has been down 13 of the last 20 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: $1419-1450 – it gets close, then fails!! Overnight $1379.00 -$4.00. Crude closed solidly higher for a 2nd day at $96.03 +$1.27 – highest close since 5/20, and well above the 40/50 day again…four 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. Support at  the 40/50 day (93.30-93.59).  The rally high is $97.11 set 5/20, nearing a 12 month high! Overnight $94.47 -.56. 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:

The ex-CIA doc leaker may offend you but to TB not as much as the two intelligence committee chairmen, Dianne Feinstein (D) and Mike Rogers (R). Feinstein’s defense of General Clapper’s testimony was pathetically reminiscent of Bill Clinton’s  ‘it depends on what the meaning of ‘is’ is’…the question which was played was clear as a bell and from the body language of Clapper he was at the least misleading. No problem for Dianne though…he just misunderstood it. Bullshit!

Then she compounded the error by saying the leaker should have come to the committee…reread the prior paragraph…we are in trouble.

While not condoning the leaker’s, a former CIA operative, actions, as it is possible he didn’t have all the facts correct, the actions of the two committee chairman is exactly what the founding fathers feared most: we know what’s best for the country, so trust us.

As if there aren’t enough problems and discord in the nation’s Capitol it is a sad day when two elected officials of opposing parties can agree on something that is in direct conflict to their responsibilities. Now we know why Boehner hasn’t removed Bachmann from the committee for cause…disgusting!

The shootings over the weekend in Santa Monica where TB grew up…and he, along with Arnold Schwarzenegger attended Santa Monica College once again question the stranglehold the NRA has on this country. It is self-serving to promote more guns as making us safer and an outright falsehood as we should already be the safest country in the world…instead we are number one in gun deaths.

Like Shady Hook and Columbine, these things don’t happen in peaceful Santa Monica…or at least people don’t think so, until they do…and are doing so with increasing frequency. We are a very sick society that is run by big business and nothing proves that more than the NRA, mouthpiece Wayne LaPierre,  and their powerful gun lobby, supported by the gun manufacturers. Wake up, America, before it is your family that is touched by gun violence.

Have a great and prosperous week…just don’t get taken for a ride!

TB

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