7/10/13…FLASH! Interest Rates DO matter…well, duh!

From The Friars Club Encyclopedia of Jokes: “When a man brings a woman flowers for no reason, there’s a reason.” – Molly McGee

Bloomberg Quotes of the Day: “Endurance is patience concentrated.”

Mortgage Bankers Assn. Weekly Survey is out and it isn’t pretty:

Mortgage applications fell by 4% and are now below the 13 wk ave and 33.3% below a year ago! The Purchase Index declined by 3.1% and but is still 4.7% above a year ago. The Refi Index fell by 3.1% and is now down by 43.8% from a year ago!!! THINK!!! The 30 yr Mortgage Rate rose by 10 basis points to 4.68%; 15 yr 3.76% also up 10 bp’s.

 You don’t think the bond market swoon has anything to do with this, do you?Nah! Yet, bonds are off slightly overnight while stocks are moderately higher, ex-Transports which soared yesterday and Utilities…natch!

 Bloomberg Top Stories:

 *U.S. Banks Seen Freezing Payouts for Years as Harsher Leverage Rules Loom – we will all pay for ‘the sins of our fathers’ …er…the CEO’s while they continue to collect!

*Moody’s Raises U.K. Bank Outlook on Lower Impairments, More Profitablility

*REITS Slumping 19% Are Fueling Worst Bond Market Losses in U.S.  Since 1994 – !!!

*Yen Rallies as Dollar Weakens Before Fed Minutes; Commodities Extend Gains

*China’s Trade Unexpectedly Shrinks as Slowing Credit Growth Pressuring Li

*Euro Cracks Emerge in Interest-Rate Swaps as Draghi Wades Into Growth Wars

*Barnier Unveils Bank Rescue Plan for Europe in Face of German Opposition

*UBS Leapfrogs Bank of America to Top Scorpio Global Wealth Manager Ranking

*Apple Found to Violate Antitrust Law on E-Books, Will Face Damages Trial

*Bankia Fraud Prosecutors Ask for Christine Lagarde to Be Called as Witness – hmmm

*OPEC Sees U.S. Shale Boom Eroding Demand for Its Crude as Early as 2014 – !!!

*Treaty Disputes Roiled by Bias Charges Amid Perceived Arbitrator Conflicts

*Egyptian Premier E-Beblawi to Begin Cabinet Talks Amid Post-Mursi Turmoil

*North Dakota Oil Transport Risks Revealed in Quebec’s Deadly Train Blast – DUH!!!

 It was a ‘something’ kind of day. Nothing much to write home about…except Dow Transports which soared 2.3% – 142 point gain led by FDX +23.6; ALK +21.7; UNP +17.2; KSU +13.3 – those four represent HALF the gain but most gained much more than one index point and all 20 advanced! The rest of the indices were up from 0.5% (Dow) to 0.7% (S&P) – heck Dow Utilities were up 0.6%! That’s the same as the plodding along Nasdaq indices. The NDQ 100 had just six stocks, led by Apple with 5.7 points making up 12 of the 18 points gained. Oh, almost forgot. Russell 2000 was +0.9% and NYSE Financials +0.8% – thanks to a 1.3% gain in Brokers. Volume however was tepid at 3.14B shares vs. 3.3B – all about average. Advance/Declines and Breadth were solid on NYSE Stocks, Nasdaq not so much. New 520 week highs slipped to a still strong 606 from 669. while new lows were more than halved to 70 from 180. The VIX declined again to 14.35 -.43…a little stronger. Gold rallied, Crude spiked then closed just slightly higher and bonds held Monday’s gains…can’t ask for much more than that these days.

Here you go:

* Dow 30 +0.5% vs +0.6% vs +1.3% vs +0.4% vs -0.3%; Dow Transports +2.3%!!! vs +0.1% vs +1.5%! vs 0.3% vs 0.5% vs +1.1%; Russell 2000 +0.9% vs 0.4% vs +1.4%! vs +0.2% vs flat vs +1.3%; Dow Utilities +0.6% vs +1.3% vs -0.5% vs -0.2% vs +0.1% vs -1.3%; S&P 500 +0.7% vs +0.5% vs +1% vs +0.1% vs -0.1% vs +0.5%; Nasdaq Composite +0.6% vs +0.2% vs +1% vs +0.3% vs flat vs +0.9%; NDQ 100 +0.6% vs +0.1% vs +0.7% vs +0.2% vs +0.1% vs +0.6%.

*NYSE Volume barely budged remaining at an average 3.14B shares vs 3.3B vs 2.63B vs 2.63B (1.96B is the lowest of 2013). REAL NYSE Volume fell back to a below average 692M shares from a strong 905M shares vs 625M vs 482M – a new 2013 low. The 12-month average is 723M shares! The range for 2013 is 482M to 2.01B. There have been just SEVEN 1B+ share sessions! There have been 26 800M+ shares in 2013 – 9 up, 17 down, but on trades of less than that 87 have been up and 31 down…there have been 24 mixed sessions.

*New 52 week highs have ranged from 33-864. They slipped to a still strong 606 after tripling on Friday to 669 vs 531 vs 165 vs 305 vs 423 vs 251 vs 234 vs 165. New lows were more than halved to 70 vs 180 vs 128 vs 64 vs 61 vs 33 (a new recent low!).

  1. Advance/Declines were modestly positive: +2.8x vs +1.4x vs +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 +1.6x vs +1.3x vs  +2.8x vs -1.1x vs +2.4x vs +1.1x vs +3.5x! (recent -3.5x to +3x). Breadth was better on the NYSE: +3.4x! vs +1.7x vs +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 +1.2x vs +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 by +0.6% vs +1.3%! vs -0.3% vs -0.2% vs +0.7%; Brokers +1.3% vs +0.3% vs +2.4%! vs +0.2% vs -0.2% vs +1.7%; KBW Banks +0.4% vs +0.6% vs +2.6% vs flat vs +0.6% vs +0.9%; Nasdaq Banks +0.4% vs +0.1% vs +2.4% vs +0.3% vs +0.7% vs +1.7%. BofA was 2nd most active again: +1.9% vs +1.7% vs +1.8% vs -0.5% vs -0.2% vs +0.5% vs +0.7% vs +3%!!! vs -3.1%!!!…well above $13 now at $13.53 +.25.
  3. Volatility (S&P VIX) declined for a third straight day below 15 and the close of 14.35 -.43 is the lowest since May 24! 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 well below the 40/50 day (15.72/15.24) and the 200 day (15.06)!!!…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global equities weaker, ex-China: UK -0.6% vs +0.8% vs +0.8% vs +0.3% vs +2.7%!!! vs -1.7%!; France -0.7% vs +0.6% vs +1.7%! vs +0.1% vs +2.2%! vs -1.8%!; Germany -0.5% vs +0.9% vs +2.3%!!! vs +0.1% vs +1.9% vs -1.7%! vs -1.2%!!!; Japan -0.4% vs +2.6%!!! vs -1.4%! vs +2.1%! vs -0.3%! vs -0.3% vs +1.8%!!! vs +1.3%; Hang Seng UP 1.1%!!! vs +0.5% vs -1.3%! vs +1.9% vs +1.6% vs -2.5%!!! vs -0.7% vs +1.8%; Korea -0.3% vs +0.7% vs -0.9% vs -0.3% vs +0.8% vs -1.6%!; India -0.8% vs +0.6% vs +0.4% vs +1.2% vs -1.5%. U.S. equity futures little changed in the third straight session with a very narrow range: DOW -3; SPX -1.90; NDQ -2.50…big yawn!

Bonds oscillated by less than 1/8 but managed to hold their gains from Monday – still near levels not seen since August 2011!!!…following suit overnight. The 30 yr TIP closed weaker however at 1.39%: 10 yr Treasury 2.64% -1/64 (recent range 2.74% to 1.63%!!!), and the 30 yr range of 2.82% to 3.71%, currently 3.64% +1/16. The long TIP is now 1.38% +1/8 – and remains the weakest link since the (record?) low of 0.36% on 4/5. Recent high 1.53%! Libor update: 0.269% 3 mos, 0.408% 6 mos, still slipping and remains close to the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields slightly lower except for the PIGS: Germany  1.64% -2; UK 2.41% -3; France 2.22% -1, Italy 4.47% +7!; Spain 4.82% +11!; Portugal 6.62% +8!; Greece 10.85% +28!!! vs 10.52% vs 10.54% +40!!! vs 10.85% -37!!! vs 11.22%. Recent range: 8.04% to 12.57%.  Japan 0.85% -1. Currencies remain a ‘crapshoot’. Overnight Dollar weaker, Yen flying. Got a hunch, bet a bunch?

Gold tacked on another $11 yesterday – get this: the combined bullion in the gold ETF’s was 2450 or so metric tons…it is now 1800 – a 25% decline…and when the ETF’s are being sold the metal has to be sold creating a maelstrom. It is nearing last Thursday’s levels again from Friday’s loss of $39 which pushed it down almost to breaking $1200. It closed yesterday at $1245.90 +$11 but faces resistance from last week at $1257-1259 after bouncing from Friday’s session low of $1206.90– 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: $1345/1369, and way higher, the 200 day – $1587!!!  Overnight it is $1254.60 +$8.70 – o/n high $1256.80 back to Wednesday’s level! Crude closed up slightly but a new rally high of $104.76 overnight yesterday  – highest since 5/3/12, closing at $103.53 +.39. It remains well above the 40/50 day m/a’s (96.25/95.99), while the 200 day ($92.48), 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! It is roaring overnight with a high of $105.33 – highest since 5/2/12!The range is NOW $85.61-$105.33 since June 29, 2012. It is currently at $105.24 +$1.70.

Some random thoughts:

Repeat after me: there IS no global warming…oops, sorry. Meant to say: the Fed is going to flood the market with mortgages! Only, that is, if Bernanke is a vindictive man and trying to get even with Obama for announcing his retirement for him…bad Barrack! But Ben, like Obama (or how a lame duck should act), is concerned with his legacy.

That is a problem as he is getting no credit…he who is the only thing that has kept the economy going by sopping up mortgages. You don’t really think the big banks are writing 4% mortgages and planning to hold them for their life do you? BofA tried that back in the late 70’s and it almost broke…well…broke the bank! No, the banks make the mortgages, collect the origination fees (if any), sell them to FNMA/FHLMC, who in turn sells them to Bernanke. No wonder the FOMC advisory committee has warned of ‘systemic risk’! Now you tell me…is possible systemic risk more important the an assured recession…or worse? Not in TB’s book! Meanwhile Congress and the Administration is MIA!

Have a great day!

TB

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