7/8/13…a payrolls Friday to remember…or forget!!!

From The Friars Club Encyclopedia of Jokes: “I had general anesthesia. That’s so weird. You go to sleep in one room and then you wake up hours later in a totally different room. Just like college.” – Ross Shafer

TB’s Quote of the Day: “We are a nation of freaks. We elected a black president with Hussein as his middle name…who beat a white woman…and then a Mormon for the presidency.  No other democracy functions this way as there is no plurality.” – Tom Friedman on Meet the Press Sunday

Bloomberg Quotes of the Day: “Have patience. All things are difficult before they become easy.” – Saadi…like falling off a bike…or they become impossible?  

Bloomberg Top Stories:

*Stocks in Europe Advance as Bonds Rise While Rupee Weakens to Record Low – !!!

*ISS Backs Michael Dell’s $24.4 Billion Leveraged Buyout of Computer Maker

*Greece Lumbers Towards Next Payout Possibility Tied to Additional Reforms

*China’s Cash Squeeze Seen Blowing Vietnam-Sized Hole in ’13 Credit Growth – !!!

*Dollar Dominates Amid Fed Taper Talk as Europe to Japan Embrace Stimulus

*SAC Founder Cohen Said to Remain Under U.S. Probe Even If Deadline Missed – Ha!

*Osborne Said Ready to Endorse U.K. Panel’s Call to Jail Reckless Bankers – ya, sure!

*Quebec Oil-Train Disaster Spurs Renewed Railroad-Versus-Pipelines Debate

*German Industrial Output Declined More Than Economists Predicted in May

*S&P to Argue Puffery Defense in First Courtroom Test of U.S. Ratings Split – oh God!

*Dozens of Egyptians Killed as Islamists Clash With Army Amid Deepening Crisis – sad!

*Asiana Pilots Probed Over Slow Reaction as Jet Stalled Before Fatal Crash – !!!

*Egyptian Chaos Gives Rise to New Power as Salafist Nour Party Takes Stage

*Spitzer to Run for NYC Comptroller Five Years After Prostitute Scandal – good for him!

This week’s economic calendar is fairly light. The highlight of the week will be the June PPI (Friday). We will also get May Consumer Credit (Monday), May Wholesale Trade and May Job Openings (Tuesday), June Treasury Budget (Wednesday), June Import & Export Prices (Thursday) and July Preliminary Consumer Sentiment (Friday). In addition, the Federal Reserve will release the minutes to the June 18th – 19th FOMC Meeting on Wednesday. Courtesy of Economics

 

TB will give you this: it was a rally day!…but, most indices were up by the same amount of about 1% (Transports +1.5%; Russell 2000 +1.4%, NYSE Financials +1.3%. Bringing up ther rear was the Nasdaq 100 +0.7% (the Composite was up 1%!). The only loser was Dow Utilities -0.5%…’only’  except for bonds which were thoroughly beaten up and Gold which lost a startling $39 to close at just $1212…obliterating four days of rally! Meanwhile Crude is soaring and hit a high of $103.68, highest since May 3, 2012 then closed at a rally high of $103.22 +$1.98 – must be a strong economy…must be something TB is missing!…or is it Middle East concerns? You pick ‘em.

Volume rose only slightly to 2.63B shares from 1.96B – the 2013 low! Shares traded on the floor of the NYSE also rose from their 2013 low of 482M to a weak 625M shares – the average for the week was just 634M shares…Contrast to the three week average of a strong 910M shares and the 12-month m/a of 721M shares!

New 52 Week Highs surged to a solid 531M BUT New Lows doubled to an also solid 128!!! Advance/Declines were positive but not impressive while VIX volatility plunged by 8% to 14.86 – lowest since May 31.

What does all this suggest? That you can do anything you want on a day that is absent real investors…IF you have the money as the high frequency traders do…you didn’t honestly believe money managers were in there buying did you? If so, shame on you!

Read ‘em and weep:

* Dow 30 +1.3% vs +0.4% vs -0.3% vs +0.4% vs -0.8% vs +0.8% vs +1%; Dow Transports +1.5%! vs 0.3% vs 0.5% vs +1.1% vs -0.4% vs +0.8% vs +0.8%; Russell 2000 +1.4%! vs +0.2% vs flat vs +1.3% vs -0.3% vs +1.1% vs +0.3% vs +1.1%; Dow Utilities -0.5%! vs -0.2% vs +0.1% vs -1.3% vs +0.6% vs -1.3%!!! vs +1.4%; S&P 500 +1% vs +0.1% vs -0.1% vs +0.5% vs -0.4% vs +0.6% vs +1%; Nasdaq Composite +1% vs +0.3% vs flat vs +0.9% vs flat vs +0.8% vs +0.9%; NDQ 100 +0.7% vs +0.2% vs +0.1% vs +0.6% vs +0.1% vs +0.5% vs +1%.

*NYSE Volume didn’t even bounce off the new 2013 LOW to just 2.63B shares vs  1.96B vs 325B vs 3.08B vs 4.4B vs 3.31B vs 3.54B (1.96B is the lowest of 2013). REAL NYSE Volume rose only slightly to a weak 625M shares from 482M – a new 2013 low vs 717M vs 714M vs 1.75B vs 738M vs794M. The average for the week was just 634M shares…Contrast to the three week average of a strong 910M shares and the 12-month m/a of 721M shares! The range for 2013 is 482M to 2.01B. There have been just SEVEN 1B+ share sessions! There have been 25 800M+ shares in 2013 – 8 up, 17 down, but on trades of less than that 86 have been up and 31 down…there have been 24 mixed sessions.

*New 52 week highs have ranged from 33-864. They nearly tripled on Friday to 531 vs 165 vs 305 vs 423 vs 251 vs 234 vs 165. New lows however doubled to 128 vs 64 vs 61 vs 33 (a new recent low!) vs 87 vs 92

  1. Advance/Declines were positive: +1.3X vs -1.5% vs -1.6x vs +2.5x vs +1.1x vs +4.3x (recent range -17.5x to +4.4x) on NYSE and +2.8x vs -1.1x vs +2.4x vs +1.1x vs +3.5x! (recent -3.5x to +3x). Breadth was similar: +1.8x vs -1.6x vs +2.3x vs -1.3x vs +2.8x vs +6.6x!(recent -18.6x!!! to +6.4x!!!) on NYSE and +2.4x vs +1.4x vs -1.2x vs +2.1x vs -1.1x vs +2.7x vs +2.6x (recent -12.8x to +6.2x)  
  2. NYSE Financials rose sharply by +1.3%! vs -0.3% vs -0.2% vs +0.7% vs -0.5% vs +1.1% vs +0.9%; Brokers +2.4%! vs +0.2% vs -0.2% vs +1.7% vs -0.7% vs +0.9% vs +0.4%; KBW Banks +2.6% vs flat vs +0.6% vs +0.9% vs -0.1% vs +0.9% vs +1.1%; Nasdaq Banks +2.4% vs +0.3% vs +0.7% vs +1.7% vs +0.2% vs +1.7%! vs -0.4%. BofA was the most active: +1.8% vs -0.5% vs -0.2% vs +0.5% vs +0.7% vs +3%!!! vs -3.1%!!!…finally back ABOVE $13 at $13.06 +.23. It is still down 1.5% since 6/18.
  3. Volatility (S&P VIX) declined sharply and is finally below 15 again and the close of  14.89 -.31 is the lowest since May 31! 6/25’s session high of 21.91 was highest since 12/31/12!!! The range since 4/12 is 11.99 (multi year low) to 21.92, It is now below the 40/50 day (15.68/15.21) and the 200 day (15.06)!!!…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

European equities strong Asia weak overnight: UK +0.8% vs +0.3% vs +2.7%!!! vs -1.7%!; France +1.7%! vs +0.1% vs +2.2%! vs -1.8%!; Germany +2.3%!!! vs +0.1% vs +1.9% vs -1.7%! vs -1.2%!!!; Japan -1.4%! vs +2.1%! vs -0.3%! vs -0.3% vs +1.8%!!! vs +1.3%; Hang Seng -1.3%! vs +1.9% vs +1.6% vs -2.5%!!! vs -0.7% vs +1.8%; Korea -0.9% vs -0.3% vs +0.8% vs -1.6%!; India +0.4% vs +1.2% vs -1.5%. U.S. equity futures higher but near midpoint of a very narrow range: DOW +60; SPX +8.40; NDQ +16.50.

Bonds were destroyed Friday…despite an early close, breaking supports and closing at levels not seen since August 2011!!! The 30 yr TIP closed at 1.43%, highest since the 1.46% of 6/21/13…shows you how weak that puppy really is! This on the flawed takeaway from the employment data raising fears again of the Fed backing from the QE’s.…better overnight : 10 yr Treasury 2.68% +1/2 vs 2.74% (recent now range 2.74% to 1.63%!!!), and the 30 yr range of 2.82% to 3.71%, currently 3.66% +7/8 vs 3.71%. The long TIP tanked is trying to recover and is now 1.39% +15/16 vs 1.43% – still the weakest link since the (record?) low of 0.36% on 4/5. Recent high 1.53%! Libor update: 0.269% 3 mos, 0.410% 6 mos, still slipping and remains close to the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields lower – led by Greece: Germany  1.72% —; UK 2.48% +1; France 2.27% -2, Italy 4.38% -4; Spain 4.61% -3; Portugal 6.81% -10; Greece 10.54% +40!!! vs 10.85% -37!!! vs 11.22% vs 11.12% vs 10.76%. Recent range: 8.04% to 12.57%.  Japan 0.87% +2. Currencies have become a ‘crapshoot’.

Gold suffered another huge loss which pushed it down almost to breaking $1200, closing at $1212.70 -$39.20!!!, with a session low of $1206.90 eradicating four days of gains. On Thursday, in Europe, it closed at $1243.40 -$12.30 with a session high of $1267 – contrast to 6/27’s intraday low of $1179.40 – lowest since at least 2011 and now critical support. Major res is the 40 day/50 day: $1366/1377, and way higher, the 200 day – $1593!!!  Overnight it is $1233.10 +$20.40 – o/n high is $1234.90. Crude closed sharply higher for a FOURTH straight session at $103.22 +$1.98, following the ‘key reversal’ of $10.33 in just FOUR sessions??? The session high of $103.68 is highest since 5/3/12!!! The range since May is $91.26 – $103.68 (highest since 5/3/12)! It is well above the 40/50 day m/a’s (95.87/95.56), while the 200 day ($92.36), is distant support. First support is $102.19 – a double top from last week!  4/18’s low of $85.61 was lowest since 12/11! The range is NOW $85.61-$103.68 since June 29, 2012. It is currently at $102.78 -.44 after putting in a new rally high of 104.12!!! Hmmm…

Some random thoughts:

TB cannot recall more misleading comments on the payrolls data from ‘respected’ economists. To recap:

1. The gain of 195,000 new jobs which beat the median estimate of 165,000 was impressive…no? NO!!! Combined April/May revisions added another 70,000 workers and the average for the past four months is near 200k. What’s not to like? Well…

2 Manufacturers reduced payrolls by 6k workers, and have cut them for the last FOUR months – hint, these are the good paying jobs. Construction added 13k workers, a good thing but what about the sharp increase in mortgage rates that is curtailing lending and re-fi and putting a lid on new construction? Just asking. So where did the job growth come from? Leisure and Hospitality and Retailers…wait…isn’t it summer…don’t they hire college kids for summer jobs? Ya think??? How about fiscal stimulus? Government payrolls fell by 7k (Fed -5k) in June; 12k in May (-17k); ah but April added 11k (+2k) – over the past 12 months government payrolls have fallen by 64k with federal jobs falling by 65k ..in other words boys and girls there IS NO fiscal stimulus…thanks to sequestration! Now look the rest of the economy over the past 12 months: Construction +190k; Manufacturing +29k???; Private Service-Providing +2.12M!!!; Trade +446k; Financial Activities…more good-paying jobs +108k???; Leisure and Hospitality +514k (204k coming from past three months). It can’t get better than that…oh yes it can:

3. The Unemployment Rate was unchanged at 7.6% – it has been +/- .1 from that for at least four straight months…albeit with fanfare from the media when it drops that 0.1%. But worse, if you add in discouraged workers and part-time for economic reasons the unemployment rate stands at 14.6% up from 13.4% in May and get this…15.1% a year ago! The average number of weeks of unemployment is now 35.6% (median 16.3) vs 39.7 weeks (19.4) a year ago – chalk much of that up to expiring emergency benefits. Now look at this: over the past 12 months there have been 1.39M full-time jobs added while part-time decreased by 195k…that’s good news, right? Yes…but…in June there were 240k fewer full-time jobs and 360k more PART-TIME…read: no benefits! Over the past three months…remember those two sharp upward revisions?…there have been just 95k full-time jobs created while part-time rose by 617k!!! No wonder so many people are holding two or more part-time jobs…yet home prices are rising…sharply??? Those who are ‘self-employed’ have a 5.0% unemployment rate (?), down from 5.3% in May but up 0.5% from April and stand right where they were a year ago. Manufacturing unemployment is 6.4% vs 6.8% a year ago…big whoop-de-do! Oh and that ‘hot’ Leisure and Hospitality (the hottest sector)? 10.7% +1.1% since April!!! And up 0.9% from a year ago!!! Boy are WE making progress!!! Drilling down:

4. The Participation Rate of the labor forces which has grown by about 2.5 million workers over the past year stands at 63.5% vs a year ago and vs the 20 year low of 63.3% set in March/April! Household employment increased by 160k – note that this is less than the establishment data – contrast to May when it grew by 319k. You have to understand the formula for a ‘household job’: you have to work for at least one hour a week and it doesn’t have to be a paid job…how valid is that? (over time however, the numbers do come into line but is one hour advertising on EBay to sell your ‘treasures’ a job???). Yep, that’s progress…if you want a Depression!

5. Average Hours worked stand at 34.5 – vs 34.4 a year ago. Manufacturing is 40.9 hours vs 40.6 hrs with overtime running at 3.3 hours…3/3 a year ago and range is 3.2-3.4 hrs. Average hourly earnings rose 0.4% BUT are up just 2.2% from a year ago…chalk that up to part-time vs. full-time.

Not one economist however that TB heard (except in Barron’s commented on the above data correctly and it most likely went over the heads of readers)…the rest must have drunk the Kool-Aid…that is why I detailed it so much. Think about it! Now you know why…on a day following a holiday with an early close for bonds (for a second day) and key traders no where to be seen, we scored those big gains in stocks…marvelous…unless you look at the niggardly volume and realize it was all the high freaks! Wake up, America…your vote and your buying of stocks doesn’t count…nor do fundamentals…nothing except computer generated algorithms…sheesh!

The point is this: neither the Obama administration or the U.S. Congress is serving the people well yet both are secure in their jobs: Obama by virtue of being a lame duck and Congress thanks to redistricting which insures incumbents win while making your vote meaningless…some kind of democracy, eh? Democrazy?

Gee, TB sounds rather…well…irked…peeved…this morning…you bet he is! Especially after reading Barron’s advocating a cut in the income tax rate on the same tired reasons and using meaningless comparisons to other countries.

Read ‘em and weep…for us…for our children and grandchildren,

Now get back to work! Have a great week!

TB

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