From The Friars Club Encyclopedia of Jokes: “A large part of altruism, even when it is perfectly honest, is grounded upon the fact that it is uncomfortable to have unhappy people about.” – H.L. Mencken
Bloomberg Quotes of the Day: “Lost time is never found again.” – Benjamin Franklin
This week’s economic calendar is full of important indicators. The highlight of the week will be the June Retail Sales (Monday) and June CPI (Tuesday). We will also get July Empire State Manufacturing and May Business Inventories (Monday), June Industrial Production (Tuesday), June Housing Starts (Wednesday), July Philadelphia Fed Survey, and June Leading Indicators (Thursday). Courtesy of Economic Advisory Service
Bloomberg Top Stories:
*Corporate Spending Poised to Surge Offsetting Some U.S. Sequestration Cuts
*S&P 500 Futures Pare Gains With Stocks as Commodities Fall; Dollar Climbs
*China’s GDP Growth Slows for Second Quarter With Risk of Further Weakening
*Bernanke Boom Signaled by Surging Yields forcing Investors to Recalculate
*Asia’s Loan Renaissance Keeps Takeover Machine Going as Bond Sales Slump – !!!
*No Liberte for French Sunday Store openings Even With Record Joblessness
*Greeks Waiting Tables With 27% Unemployment See Recovery Remaining Elusive
*Reid-McConnell Battles Over Nominees Risk Spilling Into Debt Debate – this has got to stop! Judicial appointments understandable but to not all filling department vacancies?
*Muslim Brotherhood Urges Battles for Mursi as Egypt’s Cabinet Takes Shape
*George Zimmerman’s Acquital Spurs Talk of Family Lawsuits, U.S. Charges – just like the O.J. trial in reverse. Civil suit ruined him. Jury didn’t convict Z due to charges and punishment being excessive, but: if he hadn’t played cop, all would have been well!
A mediocre – at best – Friday. Volume was ‘punk’ at 2.07B shares vs an average 3.43B shares on Thursday….worse floor-traded shares slumped to 681M from 742M, back below average (722M). Would have been an ‘up’ day if not for the 0.6% decline in Transports (35 points but looks: UPS -29!; FDX -12, LSTR/JBHT/CHRW all losing more than 6 points!!!). Dow was FLAT while unloved Dow Utilities gained 0.4%! The two Nasdaq indices were ‘best’ at +0.6% while the Russell 2000 was up just 0.5%!
Advance/Declines and Breadth were only slightly positive but new 52 week highs rose to 574 while new lows were stagnant at 32. Still, the VIX declined yet again to close at 13.84 -.17, lowest since 5/22 and with a range of 13.74-14.01! 40/50/200 all between 15.86 and 15.06!!! Becoming complacent again?…or…
NDQ 100 redux: +19.6 vs +59, by 3:1 and look at the index point movers: AMZN +2.9 vs +2.8; ALXN +2.2; GILD +1.7; REGN +1.4; EBAY +1.2…AMZN only repeater! Losers were led by AAPL -1.2 vs +5.3 vs +5.7 vs -1.1 vs -1.9; ORCL -1.8 vs +2.6 vs -1.1. Note that the daily rotation continues while Apple and Oracle confuse the issue.
Here you go:
* Dow 30 FLAT vs +1.1% vs -0.1% vs +0.5% vs +0.6% vs +1.3%; Dow Transports DOWN +0.6%!!! vs +1.2% vs -0.7% vs +2.3%!!! vs +0.1% vs +1.5%; Russell 2000 +0.5% vs +1.3% vs +0.2% vs +0.9% vs 0.4% vs +1.4%; Dow Utilities UP 0.4%!!! vs +1.7%!!! vs +0.4% vs +0.6% vs +1.3% vs -0.5%; S&P 500 +0.3% vs +1.4% vs flat vs +0.7% vs +0.5% vs +1%; Nasdaq Composite +0.6% vs +1.6% vs +0.5% vs +0.6% vs +0.2% vs +1%; NDQ 100 +0.6% vs +2%!!! vs +0.6% vs +0.6% vs +0.1% vs +0.7%.
*NYSE Volume dropped back to a below average 2.97B shares vs 3.43B shares vs 2.99B vs 3.14B vs 3.3B vs 2.63B vs 2.63B (1.96B is the lowest of 2013). REAL NYSE Volume also fell to a well below average 681M shares vs 752M vs 671M vs 692M vs 905M vs 625M vs 482M – the 2013 low. The 12-month average is 723M shares! The average since 6/30 is just 692M shares ranging from 482M to 906M, 482M being the 2013 low! There have been just SEVEN 1B+ share sessions! There have been 27 800M+ shares in 2013: 10 up, 17 down, but on trades of less than that 87 have been up and 31 down…there have been 26 mixed sessions.
*New 52 week highs have ranged from 33-864. They rose again to 574 vs 484 vs 451 vs 606 vs 669 vs 531 vs 165. New lows barely budged to 32 vs 29 (a new recent low!) vs 60 vs 70 vs 180 vs 64 vs 61 vs 33!
- Advance/Declines were barely positive: +1.1x vs +6.6x! vs +1.1x vs +2.8x vs +1.4x vs +1.3x (recent range -17.5x to +4.4x) on NYSE and +1.2x vs +2.5x vs +1.4x vs +1.6x vs +1.3x vs +2.8x (recent -3.5x to +3x). Breadth was similar: +1.3x vs +6.9x!!! vs -1.2x vs +3.4x! vs +1.7x vs +1.8x vs -1.6x (recent -18.6x!!! to +6.9x!!!) on NYSE and +1.6x vs +4.8x!!! vs +1.3x vs +1.2x vs +2.4x vs +1.4x (recent -12.8x to +6.2x)
- NYSE Financials rose by a weak 0.3% vs +1.5% vs 0.4% vs +0.6% vs +1.3%! vs -0.3%. BofA was 2nd most active again: +1.9%??? vs +1.1% vs -1.2% vs +1.9% vs +1.7% vs +1.8%…$13.76 +.25; WFC +1.7% and just 5 cents off high.
- Volatility (S&P VIX) declined for a sixth straight day below 15 and close of 13.84 -.17, lowest since May 22! 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 modestly better, Japan closed: UK +0.4% vs +0.3% vs +0.6% vs -0.6% vs +0.8%; France +0.4% vs +0.2% vs +0.9% vs -0.7% vs +0.6% vs +1.7%!; Germany +0.2% vs +0.9% vs +1.1%! vs -0.5% vs +0.9% vs +2.3%; Japan closed vs +0.2% vs +0.4% vs -0.4% vs +2.6%!!! vs -1.4% vs +2.1%; Hang Seng +0.1% vs -0.8% vs +2.6% vs +1.1% vs +0.5% vs -1.3% vs +1.9%; Korea +0.3% vs -0.4% vs +2.9%!!! vs -0.3% vs +0.7% vs -0.9%; India +0.4% vs +1.4%!!! vs +2% vs -0.8% vs +0.6% vs +0.4% vs +1.2%. U.S. equity futures modestly higher in yet another very narrow trading range: DOW +26; SPX +1.90; NDQ +5.50.
Bonds closed virtually unchanged Friday ex-30 yr TIP which gained just a 1/4; overnight weaker and falling. 10 yr Treasury 2.63% -3/8 (recent range 2.74% to 1.63%!!!), and the 30 yr range of 2.82% to 3.71%, currently 3.67% -13/16. The long TIP is now 1.42% vs 1.37% -1-1/16 – still the weakest link since the (record?) low of 0.36% on 4/5. Recent high 1.53%! Libor update: 0.268% 3 mos, 0.404% 6 mos, both remain close to the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields little changed, ex Greece and Portugal: Germany 1.58% +2; UK 2.34% +1; France 2.21% +2, Italy 4.49% +1; Spain 4.76% -1; Portugal 7.17% -4; Greece 10.27% -19!!! vs 10.33% -25!!! vs 10.69% vs 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 0.81% -1. Imagine being a Greek bond trader…or a trader who does Greek bonds!!!
Gold closed slightly higher Friday closing at $1283.10 +$3.20 on a very narrow ‘inside’ session! Thursday’s session high was $1297.20 not seen since 6/24! – 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: $1334/1357 – both declining rapidly, and way higher, the 200 day – $1580!!! Overnight it is $1277.90 +.30 with a session low of $1275.30. Crude closed higher (offsetting Thursday’s loss which had a new rally high of $107.45, highest since 3/1/12) at $105.95 +$1.04, also on an inside session! It remains well above the 40/50 day m/a’s (97.07/96.74), both climbing sharply now, while the 200 day ($92.68), is distant support. First support is $104.21-36 – the lows of the last three sessions! 4/18’s low of $85.61 was lowest since 12/11! It is weaker overnight at $105.18 -.77. The range is $85.61-$107.45 since March 1, 2012..
Some random thoughts:
…that is how Yogi Berra might have put it…remember the movie Cramer vs. Cramer where it went through the lives of two people who met, married, and then the marriage ended in divorce?…well it was supposed to but they ended up fighting by killing each other in bizarre scene in which the chandelier fell to the floor. Well…it looked that way on Friday when CNBC had Jim Cramer do an exclusive interview with Jamie Dimon.
First, for all the things I have said about Mr. Dimon he clarified one point when Cramer asked him about the challenge made to him as Chairman of the Board and CEO. He said that the board meets without him to set the agenda (I believed as chairman he did), and second that they determine his salary and bonus without his presence.
On the surface that sound good and it much better than TB thought, but it seems highly unlikely that the board is going to undermine its wunderkind. Dimon went on to say that there is no evidence that a separate chairman and CEO is any better for shareholders – and it costs more money…or does it? There is no way of knowing how Dimon’s compensation for both positions is determined. Lastly, the board did punish him for the $4.4 billion loss due to the whale. That is where the rest of Cramer’s questions led.
How could a CEO have so many people who were friends he appointed get so much wrong? Dimon sidestepped this by pointing to his excellent and acclaimed lieutenants that remain and never mentioned any…like J.E. Staley, or Ina Drew who have departed (Staley was not part of the Whale incident and was on ‘Seal Team 6’, sent over to clean things up…but he cost the company over $350 million due to breaching a contract he made for the purchase of American Century accounts). That is troubling.
How could such a well-managed bank as JPMorganChase have allowed the Whale incident to happen. Dimon said that it was supposed to be a small piece of the program that inexplicably grew to epic proportions (how, Jamie…how?)
TB will grant you this…Dimon is smooth, composed, and not easily rattled…even by Cramer’s screaming out the questions. Now for the final zinger though:
How come you are opposed to tighter regulations? Because they impact the entire industry for what a few have done (you mean like the Whale incident casting dispersions on risk controls at big banks…sorry TB had to ask).
Why didn’t anyone go to jail? Just because someone make a bad decision doesn’t mean it was a crime. If they did something wrong send them to jail. (Wait a minute Jamie…the entire world has suffered for the greed of these bankers…perhaps you included…but they were simply bad decisions…like having 40 times leverage…for a bank??? You may think TB is dumb but he ain’t stupid!!!). So you see, the regulatory process…for which there is no regulation of the five largest banks…needs no fixing. If you believe this I have a beautiful bridge in California …or Brooklyn…or connecting the Upper Peninsula to Michigan…that I will happily sell you.
Here is a follow-up question TB would have asked and Cramer should have asked: How come the Justice Department, who says there isn’t enough evidence to convict criminally continues to collect record fines…many of them from JPMorganChase…and those who cost the bank the money in many cases still have jobs…like CEO’s and Chairman/CEOs?
Is it right for the shareholders who have seen the value of their stocks fall…and dividends dwindle…to have to pay these fines…well is it, Jamie, is it??? Say it ain’t so, I dare you!
Update: After those great ‘headline earnings’ JPM opened higher, with a high of $55.85 near the record high of May 22 of $55.90 (the prior record was $53.25 on 5/9/07 producing an annualized return since of -4.13%, -1.95% with dividends reinvested). People can read…and think, Jamie…hence the stock going up to $55.85 on the open the steadily declining all session to $54.80 and closing just above it. Wells Fargo suffered a similar fate rising to $43.05 – just 3 cents off the 7/9/13 high and very near the 9/19/08 all time high of $44.68 (on a one day spike just before the crash). Results were better but still had holes, yet at the end of the day it closed up and very near a 12-month high…don’t let the facts impair your judgment. Meanwhile, good old BofA keeps chugging and is near its highs – why, is a deep, dark mystery….but what goes up…
Simon Johnson wrote another scathing piece on how the banks continue to try to thwart preventative legislation…when are you going to show some concern? Write damn it!
Have a great week and to you frankophiles…yesterday was Bastille Day!!!