5/27/13…the future of America? …the world?

From The Friars Club Encyclopedia of Jokes: “Here lies the body of Harry Hershfield. If not, notify Ginsberg and Co. undertakers, at once.”  – suggestion for his own epitaph.

Bloomberg Quote of the Day: “Cock your hat – angles are attitude.” – Frank Sinatra

Bloomberg Top Stories:

*Bank Bailout Deal Struck in Marathon EU Talks Decrees Creditor Writedowns

*European Bonds Advance While Yen Weakens as Commodities, U.S. Futures Rise

*U.K. First Quarter Disposable Income Plunges as Deeper 2008 Slump Recorded – !!!

*Junk Bonds Drop Below Par With Asia Borrowers Suffering From China Crunch

*Yellen Oddsmaking Defies Jinx of Fed’s No. 2 Never Elevated in 100 Years

*Shale Gas Fields in U.K. Estimated to Hold Five Decades of Energy Supplies

*Citigroup Opens in Iraq as War-Torn Country Plans $1 Trillion in Spending

*Record Joblessness Prompts EU Pledge of Immediate Action for a Second Year – hello?

*Libor Time Machines Built by Economists to Show How Rigging Hurt Investors

*Gays Win While Blacks Lose Ground in Historic June as U.S. Supreme Court – Justice?

*Obama Administration Moves to Ease Tensions With Russia Over Snowden Fate

 

Ah, a second up day…and what an up day it was! Not in magnitude which was mixed with Dow Utilities rising 1.4% for honors on the downward revised Q2 Final GDP report (a weak 1.8% from 2.4% – a sick recovery!) and the others up from 0.8% to1% – except the Russell 2000 small cap which rose just 0.3% – this index is most sensitive to the economy! So stocks rallied…bonds rallied  – kind of – while gold took a shellacking closing $45 lower at a low not seen in well over five years: $1229.80 – actually was nearly $9 lower intraday! TB puts the blame on the speculative driven gold ETF’s which can also serve as a hedge for producers! Meanwhile Crude traded in a $2 range but closed pennies higher.   It took off like a rocked at the open then looked like a seismograph for the rest of the session – climbing erratically with a ‘double top’ on the Dow 45 minutes before the close then a final thrust to 14812 and a steady decline into the close at 14760 – pennies below the burst on the open. That tells us something…not that it was news but it was once again high frequency trading…good luck, boys and girls!

The Nasdaq 100 rose 24 points (+1%) by 4.8:1 but look at this: SEVEN stocks led by the beaten up MSFT (+5.2) gained more than one point for a combined total of 16 of those points. AAPL? Don’t ask! It was the only member losing more than one point – a shocking 3.7 – this from the stock who provided most of the S&P gains in 2011 and the first three quarters of 2012 before falling from grace.

How about NYSE Financials? They, the BIG LOSERS of the past week rose 0.9%…2.7% in two sessions but remain weak…they the leaders of the rally – and they did it without paying shareholders dividends (USB and WFC excepted but are both still below 3% – used to be 4-5% required by investors): BAC +0.7% vs +3% vs -3.1% (and remains well below $13!); C +1.3% vs +3.4%; JPM +0.8% vs 2.3%; The one steady factor is and has been US Bank: flat vs +1.3% which has had four down days – all slight – in the past eight sessions and over that period is up 2.7% closing at a new 52 week high yesterday. Contrast to the next best WFC +1.8% then JPM -1.2%.

Yesterday’s volume for NYSE listed stocks declined again and is BELOW average at 3.54B shares vs 3.63B shares from 4.7B –  two low volume ‘up’ sessions per usual! Compare to the prior three days of 5B shares and for the prior four days, 4.64B shares  – all of it on BIG DOWN VOLUME!!! Floor traded volume declined to a still above average 774M shares and has averaged 1.13B shares over the past four sessions from 1.35B shares on Tuesday – contrast to the 12-month average of 728M shares.

Bonds rose modestly considering the GDP and mortgage application weakness – hint: higher rates mean less buying and re-fi’ing…but then you knew that, right? TIPS benefited to but remain the weakest link. One positive: Mortgage REITS – along with bonds appear to have ‘bottomed’ but emerging market and junk bonds are suffering…quality is the issue! Hmmm, the BRICS are now trading like, well, bricks!

All equity indices still have a huge negative month (off 3-5%)…have given up more than half their quarter to date returns and more than a third of year to date returns…with just TWO trading days left until Quarter end!!! Do you wish you had sold in May? Cash may no longer be king…but a prince?

Here you go…:

* Dow 30 +1% vs +0.7% vs -0.9% vs +0.3% vs -2.3% vs -1.4%; Dow Transports +0.8% vs +1.9%!!! vs -2%!!! vs -0.5% vs -2.2%!!! vs -1.2% vs +1%; Russell 2000 +0.3% vs +1.1%! vs -1.3%! vs +0.3% vs -2.6%!!! vs -1.4%! vs +1.2%!; Dow Utilities +1.4%!!! vs +1.1%! vs -0.2% vs +1.3%!!! vs -2%! vs -2.3%!!!; S&P 500 +1% vs +1% vs -1.2% vs +0.3% vs -2.5%!!! vs -1.4%!; Nasdaq Composite +0.9% vs +0.8% vs -1.1% vs -0.2% vs -2.3%!!! vs -1.1%!; NDQ 100 +1% vs +0.6% vs  -1% vs -0.4% vs -2.3% vs -1.2%!

*NYSE Volume slipped again and is at a below average 3.54B shares vs 3.63B shares from 4.7B vs  5.51B vs 4.84B vs 3.54B vs 3.1B vs 3.08B vs 2.91B (2nd lowest of 2013, 2.75B is the 2013 low). REAL NYSE Volume also declined but to a still well above average 794M shares vs 810M vs 968M vs 2.01B vs 1.07B vs 646M shares vs 679M (595M is lowest since 5/24). The 12-month average is inching up to 729M shares. The range since 2/11 is 558M to 2.01B eclipsing the 1.825B on 3/15’s options expiry. There have been just SIX 1B+ share sessions! There have been 24 800M+ shares in 2013 – 8 up, 16 down, but on trades of less than that 83 have been up and 31 down…there have been 22 mixed sessions.

*New 52 week highs have ranged from 65-864. They too inched higher but to a weak 165 vs 122 vs 76 vs 98 vs 65 vs 257 vs 345. New lows were halved but to a solid 137 vs 248 vs 715!!! vs 438 vs 550 vs 143 vs 104 vs 62!!!. Recent range was 49-715.

  1. Advance/Declines were modestly positive for a second day: +3.1x vs +4x! vs -6.5x! vs 1:1 vs -17.5x!!! vs -5.6x! (recent range -17.5x to +4.4x) on NYSE and +1.2x vs +2.5x! vs -3.3x!!! vs +1.5x vs -2.6x vs +2.3x vs +1.8x (recent -3.5x to +3x). Breadth was similar: +2.8x vs +6.6x! vs -10x!!! vs -1.1x vs -18.6x!!! vs -11x!!! vs +3.8x!(recent -18.6x!!! to +6.4x!!!) on NYSE and +2.7x vs +2.6x vs -2.6x vs -1.1x vs -11x vs -2.2x vs +3.1x vs +2.6x vs -2.3x (recent -12.8x to +6.2x)  
  2. NYSE Financials rose by 0.9% vs +1.8% vs -1.4% vs +0.1% vs -2.7% vs -1.6% vs 0.7%; Brokers +0.4% vs +1.5% vs -1% vs +0.2% vs -1.9% vs -0.9% vs +1% vs +2%; KBW Banks +0.9%! vs +2.2%! vs -1.6%! vs +0.3% vs -1% vs -0.9%; Nasdaq Banks +0.2% vs +1.7%! vs -0.4% vs +0.9%! vs -0.5% vs -0.8% vs +1%. BofA 2nd most active: +0.7% vs +3%!!! vs -3.1%!!! vs -1.6% vs -2.3% vs -0.6%…. remains well BELOW $13 for a 4th day at $12.76 +.09. Last time below $13 was on 5/9 with a high of $13.83 on 5/30! It is now down 3.8% over the last six sessions….look at the others: JPM +0.8% vs +2.3% vs -5.9%! vs -4%; C +1.3% vs +3.4% vs -9.2%!!! vs -6.3!!!; USB flat vs +0.6% vs +2.3% vs flat vs +0.6%!; WFC +1.8% v +1.2% vs -2.5% vs +0.7%:  GS -1%! vs +1.5% vs -7.1%!!! vs -6%!; MS -0.6% vs +2.6% vs -2% vs -1%; UBS +0.6% vs +2.3% vs -1.5% vs -6.4%! – not even a dead cat bounce!!! The broker ‘banks’ (that’s what they are – broke’er) are still getting slammed: past nine sessions: GS -8%!; MS -4.3%!; UBS -2.8%. Told you financials were a bubble… Banks in trouble EXCEPT USBank – I don’t own it but dividend like WFC is improving!   
  3. Volatility (S&P VIX) plunged for a second session but remains elevated, falling sharply to 17.21 -1.26 vs 18.47 vs 20.11. 6/25’s session high of 21.91 highest since 12/31/12!!! The range since 4/12 is 11.99 (multi year low) to 21.92, way the 40/50 day (15.21/15.07) and the 200 day (15.03)…ytd the range is 11.05 (3/14) to 21.92 (6/24) – 12 mo. ave 15.39!

Global equities higher – even Japan this time and leads along with Korea!!! UK +1% vs +1.1% vs -1.3%; France +2%!!! vs +1.4% vs -1.9%; Germany +1.6% vs +1.6% vs -1.2%; Japan +3%!!! vs -1%!!! vs -0.7% vs -1.3%; Hang Seng +0.5% vs +2.4%!!! vs +0.2% vs -2.2%!!!; Korea +2.9%!!! vs +0.2% vs -1% vs -1.3%; India +1.8% vs -0.4% vs +0.5% vs -1.2%. U.S. stock futures higher but trading in a very narrow range: DOW +61; SPX +15; NDQ +14.50

Bonds gained somewhat yesterday and are up a similar amount overnight…note mortgages and REITS stronger but emerging markets and junk are still in the tank. SinceApril 5th the long TIP has still lost 24 points OR 22.5%!!! 10 yr Treasury 2.49% +13/32 (recent range 2.62% to 1.63%!!!), and the 30 yr range is 3.60%!!! to 2.82%, currently 3.54% +5/8. The long TIP is rallying and again well below 1.5%! Currently 1.32% +3/4 – still the weakest link since a new (record?) low of 0.36% on 4/5, 4 mo. ave 0.70%! Since the Bernanke announcement on May 7th the high yield has ranged from 0.82% set on 5/22 to 1.53%! Libor update: 0.274% 3 mos., 0.417% 6 mos, still close to the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields LOWER across the board – especially problem countries – still very volatile: Germany 1.72% -5; UK 2.41% -4; France 2.30% -7, Italy 4.55% -15!!!; Spain 4.85% -20!!!; Portugal 6.39% -17!!!; Greece 10.20% -48!!! vs 10.68%  vs 11.14% from 9.84% last Wednesday!!! Recent range: 8.04% to 12.57%.   

Gold was totally destroyed closing at $1229.80-$45.30 with a session low of $1221 – can’t tell you how many years ago that was seen but well over five! slightly lower at $1275.10 -$2.00 with an incredibly low trading range of just $18.30, a day after a low of $1268.90 – lowest since June 30th, 2010!!! Support? There is no known support as this is panic selling not fundamental! Don’t stand below a falling gold bar! Look at the 40 day/50 day: $1390-1398…both still falling, and the 200 day – $1609!!! Up slightly over night trading in a $20 range: $1231.00 +$1.10. Crude barely budged for a second day closing at $95.49 +.17 with just a $2 range – and $1.56 on Tuesday. The range this month is $91.26-$99.01 – highest since 9/17/12! It is now slightly above the 40/50 day m/a’s (95.20/94.29), while the 200 day ($92.29), remains CRITICAL support. Quiet again overnight at $95.86 +.36 – like watching paint dry. 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:

Our country is a mess…market regulation is a mess…we are a mess! Disgusting for a ‘democracy.’ Yet, we are preaching the virtues of it to the rest of the world but we want them to accept OUR definition of democracy. We are telling this to countries who don’t have the Judeo-Christian common attributes that we had when we went from colonies to The UNITED States of America. Rumsfeld was right on one thing…’democracy is messy.’ He should know because he and Cheney made a mess of Iraq, which led to a stronger and bolder Iran, a war in Afghanistan when we went from getting Bin Laden and Al Qaida to overpowering the Taliban. We had no business there and less now.

Since then we have seen Egypt change, Libya, and now Syria is in play. In each case we didn’t have a clue of how the winners would accept our help and show ‘gratitude.’ We have a terrible track record for supporting democracy. In Cuba, we supported an evil dictator and that led to more popular support for Castro – and it remains a thorn in our side. In Iran, we failed to rein in the Shah and look what happened. You (WE) can’t have it both ways.

We think that all Muslims are the same…like Christians or Jews…yet within each there are broad ranges…minimal in comparison to the Shia and the Sunni’s, which are much farther apart than Catholics and Protestants (which have their own divides even with faiths). But theirs is much stronger and is more reminiscent of the Hatfields and McCoys. Until we fully realize this we will continue to blemish our reputation and our success in changing their governments. Didn’t anyone read Lederer and Burdick’s The Ugly American?  The fundamentalists here are refreshing their knowledge of the book of Revelations and Armageddon. Get the picture? Hope someone in authority does. The future of civilization depends on it.

Oh what the hell…we don’t give a damn about global warming: why should we China and the Middle East don’t care. Besides it would hurt our beloved businesses profits – which of course affect CEO compensation. Their only course of action if we do act is to move production to….China and India…adversely affecting our economy in order to insure their own – short-term – profitability…and of course…bonuses. There aren’t many CEO’s left who are concerned with anything beyond their tenure…usually five years or under…and that is if they do a good job. Right?

Aha! TB is a socialist…bullshit! He is a realist and when a society ignores the majority and the wealth gap grows to where it is…and continually widens…trouble is not far behind. Especially when we have a polarized Congress and Supreme Court…ain’t that a bitch! Greenspan was right: capitalism is not perfect…it is just better than the alternatives.

TB is off to Chicago but will try to do an update tomorrow…back on Monday. Have a great weekend!

TB

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