6/13/13….many happy returns? includes total returns (sorry this is so late)

From the Friar’s Club Encyclopedia of Jokes: “Failure has gone to his head.” – Wilson Mizner, about a bankrupt businessman who remained incorrigibly optimisitic, and…

 “He’s never been very successful. When opportunity knocks he complains about the noise.” – unattributed…but true.

 Bloomberg Quote of the Day: “I am still learning.” – Michelangelo …he is, are you???

Bloomberg Top Stories:

*Stocks Slump to Seven-Week Low on World Bank Forecast Cut; Yen Strengthens

*RBS Slides on Hester Resignation as 2,000 Investment-Bank Job Cuts Planned

*JPMorgan to Barclays Ushering Bond Buyers to Stocks on Fed Exit Concerns

*Brazil to Indonesia Fight Capital Outflows as Emerging-Markets Assets Slide

*Spain’s Recession Seen Ending by Next Year as Demands for Austerity Ease

*Fed Taper Danger Stalks World Markets Fearful of Fallout

 *Britain is Urged by EU to Probe Currency Manipulation After Libor Rigging – !!!

*Boeing Strains Loyalists Patience as Airbus A350 Performs Maiden Flight

*JPMorgan’s $ 40 Billion FDI Call Signals Peso Bond Rebound – or not?

*Rapes at Occidental College Punished by Book Report After Brief Suspension – !!!

*Snowden is Backed by Protest Groups Amid Risks he Breached Hong Kong Law

*Kerry, Hagel Said to Attend White House Talks on U.S. Aid to Syria Rebels

To the moon, Alice…the moon! Stocks tanked again for a second day…almost identical to Tuesday with horrible A/D’s and Breadth for a second day and  at huge jump in the VIX to 18.59 +1.52, closing near the session high. New 52 week highs were stable but new low surged from a high 363 to a very high 507!!! This on a slight drop and slightly below average volume…it appears concerns over what the Fed will do next week are the culprit…that and the High Freaks of course! Speculation is key, driven by high frequency trades.

Whereas on Tuesday all indices were off by 0.7% (Utilities) to 1.6% (NYSE Financials), yesterday, they were all off almost the same amount: 0.7% (Transports) to 1.1% for the two Nasdaq indices. This reporter is always concerned when the changes are nearly identical…programs? Whatever! aided by an outraged Jamie Dimon speaking at a Morgan Stanley conference). So were bonds most of the session before posting a rebound in the afternoon, commodities (Gold off $9 but intraday low was worst since 5/23; Crude -.39 but the $94.04 intraday low negated the rally),

Advance/Declines and Breadth were very negative New 52 week highs were halved while new lows more than doubled! Volatility (S&P VIX) rose sharply in a wide range of 16-17.14 after gapping up on the open and closing a gap from three days ago!

The Nasdaq 100 fell 1% or 30.6 with just 14 members up and 83 down! 9 stocks led by MSFT -4.5 vs -1.4; GOOG -2.5 vs +2.5; AMZN -2.5; ORCL -2 and five others including AAPL lost more than 1 index point. Tech is treacherous and blowing with the wind.

So let’s see what else happened:

* Dow 30 -0.8% vs -0.8% vs -0.1% vs +1.4%! vs +0.5% vs -1.4%! vs -0.5% vs +0.9% vs -1.4%!!!; Dow Transports -0.7% vs -1% vs -0.3% vs +2.4%!!! vs +1% vs -1.9%! vs -0.5% vs flat vs -0.8% vs +0.2% vs -1.1%; Russell 2000 -0.9% vs -1.1% vs +0.5% vs +0.8% vs +1.2% vs -1.4%! vs -0.8% vs +0.7% vs -1% vs +0.6% vs -1%; Dow Utilities -0.9%!!! vs -0.7% vs -0.3% vs +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 7.7% over the past 14 sessions, and since posting a near record high on 4/30, have plunged 12.6%!!!; S&P 500 -0.8% vs -1% vs flat vs +1.3%! vs +0.9% vs -1.4%! vs -0.6% vs +0.6% vs -1.4%!; Nasdaq Composite -1.1%! vs -1.1%! vs +0.1% vs +1.3% vs +0.7% vs -1.3%! vs -0.6% vs +0.3% vs -1%; NDQ 100 -1.1%! vs -1%! vs flat vs +1.4% vs +0.5% vs -1.2%! vs -0.6% vs +0.3% vs -1%!

*NYSE Volume slipped to a slightly below average 3.21B shares vs 3.41B vs 2.95B (lowest level in 10 sessions) vs 3.37B 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 was stable at a  still below average 692M shares vs 689M vs  595M (lowest since 5/24) vs 729M 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. The 12-month average is just 720M 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 29 down…there have been 22 mixed sessions.

*New 52 week highs have ranged from 74-864. They were stable at 140 vs 141 vs 278 vs 227 vs 103 vs 74!!! vs 235 vs 234 vs 221 vs 300 vs 175 vs 517 vs 138!!! vs 811. New lows however rose 50% a day after nearly doubling to 507!!! (a new rally high) vs 363!!! vs 143 vs 50 vs 95 vs 125 vs 182 vs 325 vs 290 vs 108 vs 191 vs 79 vs 49 (recent range 29-507).

  1. Advance/Declines were very negative for a second day: -4.2x! vs -6.4x! vs -1.2x vs +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 -2.3x vs -2.8x vs +1.8x vs +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: -3.8x vs -4.4x! vs -1.1x vs +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 -3.2x vs -3.6x! +1.3x vs +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 were off 1% vs -1.6% vs flat vs +1.3% vs +1.1% vs 1.8%!!! vs -0.4% vs +0.3% vs -1.7%!!! Brokers -0.8% vs -1.6%; KBW Banks -1.1% vs -1.7%; Nasdaq Banks -0.8% vs -1.1%. BofA declined for a 3rd day by 1% vs -1.4% vs 0.6% vs +1.4% vs +0.8% vs -2%!!! vs -0.7% vs -0.8% vs -1.1%! vs +3.3%??? vs +1.5%??? to $13.06 -.06 BUT intraday low was $12.97…first time it has traded BELOW $13 since 4/11/11. C -1% vs -3.8%! % vs +2.1%…only other financial mover. But: JPM -0.6% vs -1.6%; WFC -1%! vs -1.4%; USB flat vs -0.5%; GS -0.9% vs -2.5%! MS -2%! vs -3.9%!!!; UBS -1.8% vs -2% – the sector had their rally highs within the past three days…a warning!
  3. Volatility (S&P VIX) rose sharply for a 2nd day taking out the recent high set just 3 days ago of 18.51 and replacing it with 18.60, not seen since 2/25…and traded in a broad range of 16.43-18.60, a day after closing a gap created two days prior, before closing at 18.59 +1.52! (17th day above 13 since May 2). The range since 4/12 is now 11.99 (multi year low) to 18.60, and it remains  above the 40/50 day (14.25/14.10) and the 200 day (14.96)…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.10!

 Global equities are being SLAMMED – Japan off 6.4%!!!; UK -0.8% vs +0.2% vs -1.7%! vs +0.5% vs +0.2% vs -1.4%!; France -0.6% vs +0.5% vs -2%!!! vs +0.5% vs +0.5% vs -1.2%!; Germany -1.4%!!! vs -0.1% vs -1.7% vs +1.2% vs +0.7% vs +0.4% vs -1.1%!; Japan -6.4%!!! vs -0.2% vs -1.5% vs +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 -2.2%!!! vs closed vs -1.2%! vs +0.2% vs -1.1%! vs -1% vs -0.5% vs -0.4% vs -0.3% vs -1.6%!!!; Korea -1.4%! vs -0.6% vs -0.6% vs +0.5% -1.8%!!! vs -1.5%!!! vs -1.3%; India -1.1% vs -0.5% vs -1.5%! vs +0.1% vs -0.5% vs -0.3% vs +0.1% vs -0.3% vs -0.8% vs -2.3%!!! U.S. stock futures modestly lower (?) and back to a narrow trading range…no conviction: DOW -28; SPX -4.20; NDQ -5.75 – why not more? Dunno.

 Bonds were blasted again yesterday on Fed fears even as stocks were thoroughly trashed for a second straight day but are modestly higher overnight – so what! 10 yr Treasury 2.20% +1/4 (recent range now 2.24% to 1.63%!!!), and the 30 yr’s 3.37%!!! to 2.82%, now 3.35% +7/16. The long TIP was destroyed yesterday and while up overnight has recovered less than half of yesterday’s loss! Currently 1.17% +3/4 – it has lost more than TWENTY points since May 2nd! – still the weakest link since a new (record?) low of 0.36% on 4/5. Since the Bernanke announcement on May 7th the high yield has gone from 0.82% set on 5/22 to 1.22%! Libor update: 0.273% 3 mos., 0.415% 6 mos. Foreign bond yields mixed with Portugal falling the most but Greece continuing mostly lower after being slammed two days ago and continue to be highly volatile!: Germany 1.57% -1; UK 2.15% +1; France 2.17% -2, Italy 4.33% -5; Spain 4.55% -6; Portugal 6.34% +3; Greece 10% vs -10 vs 9.94% vs 10.27%!!! 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% -the rally is over! Recent range 7.94% to 12.57%.   

Gold closed higher at $1392.00 +$15. Tuesday’s session low was $1364.50, lowest since 5/23. It has closed above $1400 just one of the past SIX sessions! 5/30’s intraday high was $1417.70, highest since 5/15.  It has been down 13 of the last 23 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: $1416-1437 – stablilizing. Overnight it is weaker at $1382.10 -$9.80. Crude closed slightly higher at $95.88 +.50 –  3 days after the highest close since 5/20 ($96.03), but remains well above the 40/50 day …6 days after putting in an intraday low of $91.26 – lowest since 5/2! It remains well above the 200 day ($92.26) with just one day below since 5/1, making it major support. First support at the 40/50 day (93.75-93.58 – now crossed!).  The rally high is $97.11 set 5/20, nearing a 12 month high! Overnight $95.46 -.42. 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:

 

While the selloff in bonds began on May Day which ended a rally from June 2007 (with 10’s starting at 5.295% and rallying to 2.10% before selling off beginning 12/18/08-6/10/09 – which whipsawed panicked investors to 3.95%, before bottoming at a record 1.388% on 7/24/12; 5.40% to 2.52% on 30’s, then back to 4.763%, then back to 2.45% on 7/24/12.Bernanke’s speech to the Fed on May 7th (low yield on the 30 yr was 2.82% on 5/2!), which triggered a selloff in bonds and a short-lived rally in stocks (which has now been negated), the 10 and 30 yr treasuries have taken out two key support levels (10:s  2.06%; 30’s 3.26% –  both from 3/11 and 3.32% – 5/28), 10’s yesterday hit 2.24% and 30’s 3.38% –  now critical if broached next support is 2.38%  and 3.48% respectively set on March 19, 2012! That could ruin your entire quarter! The recent LOW yields were set on July 25, 2012 at 1.40% and 2.45% respectively. Look at the changes in price:

Price and Change since

6/12/07 active tsy:                     10 yr (4.50% 5/17)       30 yr (5% 5/37)

6/12/07-12/18/08                       93.93-119.13,+26.8%     100 – 149.78,+49.8%       

12/18/08-6/10/09                       119.13-105.44,-11.5%    149.78-103.56,-31.1%.     

6/10/09-7/24/12                         105.44-118.75,+12.6%  103.56-151.82,+46.7%    

7/24/12-5/2/13                            118.75-116.13,   -2.1%     151.82-142.50, -6.2%

5/2/13-6/13/13                             116.13-114.07,  -1.7%     142.50-131.37, -7.8%

6/12/07-7/24/12                        93.93-118.75,+26.4%   100 – 151.82, +51.8%     

7/24/12-6/12/13                         151.82-114.25, -24.7%! 151.82-131.38,-14.4%!                            

6/12/07-6/12/13                            93.93-114.25,+21.6%  100 – 131.38, +31.8%    

‘Generic’ Total Return*             (7.675% annual)           (9.527% annual)         

*includes interest and reinvestment of interest. Overstated because it assumes ‘rolling’ in EACH auction. This is due to high coupons (sic) being reinvested well below original yields. Only protection against this is zero’s. If purchased instead total return would be:

UST Strip 5/15/17: 58.801-96.574 = +64.2% (10.4% annualized!)

UST Strip 5/15/37: 24.980-43.815 = +75.4% (11.9% annualized!)

Caveat: unless purchased in a tax-deferred or tax-exempt account phantom income would occur resulting in tax liabilities. Also they experienced huge volatility with the middle three years not performing much and many people, this writer included, dumped them and other long bonds in the first half of 2008 and realized too late that we missed an opportunity. The premiums on the coupon bonds speak volumes!

 

Attention stock geeks! Think you can do better? Five year annualized returns:

S&P 500 7.42% (with dividends reinvested in the index)

Dow 30 9.06%

Dow Transports 6.92%

Dow Utilities 2.79%

Nasdaq Composite 9.96%

Nasdaq 100 11.2%

Russell 2000 small cap 9.02%

NYSE Financials -1.92%

Note: this is from 6/30/08-5/31/13…but mtd returns are negative on all indices so it is really lower!

 

Have a great day and don’t let the moron’s get you down!

TB

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