8/2/13…Summers-time, and the livin’ ain’t easy…

From The Friars Club Encyclopedia of Jokes: “Why pay a dollar for a bookmark? Use the dollar FOR a bookmark.” – Fred Stoller

Bloomberg Quotes of the Day: “Wear a smile and have friends; wear a scowl and have wrinkles.” – George Eliot

Personal Income in June rose 0.3% vs estimate 0.4%! Consumer Spending +0.5% in line…but: sustainable???

U.S. Non-Farm Payrolls rose by 162,000 in July – smallest increase in four months! The median forecast was for 185k. Also May/June were revised for a loss of 26k jobs (June 188k vs 195k; May 176k vs 195k!). Private payrolls rose by 161k, government by 1k: Factory Jobs +6k; Construction DOWN 6k!

Jobless Rate Falls to 7.4% vs 7.56%, lowest since 12/08! – how did they do it? Participation rate declined by 0.1% to 63.4% (still at a 35 year LOW!) AND 227,000 household jobs were added – believe that? Well: full-time +92k, part-time (no benefits) +174k  – not as good as headlines suggest…got it?

Total unemployed and discouraged workers: 8.3% vs 8.4%; plus marginally attached; 9.1% vs 9.3%; plus part-time for economic reasons 14.3% vs 14.6% – exciting???

Market Reaction: 8:50am EDT: bonds ROARING from off ¼ to up 7/8 on the long end! Stock futures from slightly positive to slightly negative. Dollar weaker; Gold reversed a $23 loss and is now back to up $1! Crude little changed and slightly weaker.

Bloomberg Top Stories:

*Summers Leaving Government Post Saw Wealth Surge to $17 Million – Wake up!!!

*Derivatives Probe Finds Banks Manipulated Benchmark at Expense of Retirees – !!!

*Stocks in Europe Advance Before U.S. Payrolls Report as Bonds, Gold Fall

*Fortress to Blackstone Say Now Is Time to Sell Holdings as Markets Rally – !!!

*Tourre’s Conviction Shows Being Junior Goldman Employee Wasn’t a Defense – like: “I vas just following orders.” Achtung!

*Intesa Profit Slides as Recession in Italy Spurs Increase in Its Bad Loans

*RBS Names Ross McEwan CEO as Shares Slide on Decline in Operating Profit

*Viacom Doubles Buyback as Third-Quarter Profit Misses Analyst Estimates – oy vey!

*Banks Replacing Enron as Energy Traders Incite Lawmakers as Abuses Abound – but thankfully we have Sarbanes-Oxley to protect us! If only it would be put to good  use!

*Embassy Closures Ordered by U.S. Predominantly Muslim Country Aug. 4 – Caution!

*Putin Shows Global Player Mojo to Russians as U.S. Fumes Over Snowden Case

*Snowden Asylum Undercuts Obama’s Effort to Reset U.S.-Russia Relationship

Finally after six days a meaningful rally…or was it? …ahead of payrolls however and based on the reports possibly way to optimistic. The VIX declined, A/D’s and Breadth (especially) were positive, but volume was average and although solid declined on real NYSE trades. New 52 week highs more than doubled while new lows were stable at 108 vs 111, solid.

Best performer was Dow Transports…for a third straight session: +3.2%! vs +0.6% vs +0.3% vs -1.1%. All indices except the Dow (+0.8%) were up more than 1% including Utilities +1.0%! The NDQ 100 rose by a whopping 36 points by 95:1 with TEN stocks gaining more than one point led by Google +1 and Apple +3.6 for a total of 19 points!(CMCSA +1.6, SYMC +1.4), and two losing more than one point (AMGN -1.9, FB -1.2 vs +2.2 ). Gimme a break!

The VIX trading range had a lower high and lower low a day after hitting 14.14 with a session low of 12.94, finally settling in at 13.45 +.06. A/D’s were barely positive as was Breadth.

…here’s the book:

* Dow 30 +0.8% vs -0.1% vs flat vs -0.2% vs +0.5% vs +0.1%; Dow Transports +3.3%!!! vs +0.6% vs +0.3% vs -1.1%!!! vs +0.5%; Russell 2000 +1.4%! vs +0.3% vs +0.3% vs -0.8% vs -0.6%; Dow Utilities +1%? vs -0.7% vs +0.3% vs +0.3% vs 0.6%; S&P 500 +1.3% vs flat vs flat vs -0.4% vs +0.1%. Nasdaq Composite +1.4% vs +0.3% vs +0.5% vs -0.4% vs +0.2%; NDQ 100 +1.2% vs +0.2% vs +0.5% vs -0.2% vs +0.5%.

*NYSE Volume was stable at an average 3.78B shares vs 3.81B vs 3.31B vs 2.82B vs 2.74B vs 3.31B vs 3.07B vs 2.42B (3rd weakest of 2013…1.96B is the lowest of 2013). REAL NYSE Volume fell sharply to a solid 798M shares vs 904M vs 678M vs 579M vs 596M (562M is lowest since 7/3). The 12-month average is 717M shares. The average since 6/30 is now 685M shares, ranging from 482M to 906M, 482M being the 2013 low! There have been just SEVEN 1B+ share sessions! There have been 30 800M+ shares in 2013: 12 up, 17 down, and one mixed, but on trades of less than that 92 have been up and 34 down …there have been 29 mixed sessions.

*New 52 week highs have ranged from 33-864. They more than doubled to 730 vs 307 vs 257 vs 209 vs 262 vs 410 vs 569. New lows were stable at 108 vs 111 vs 69 vs 76 vs 87 vs 180 vs 60 – 27 is the low.  

  1. Advance/Declines were positive: +1.6x vs +1.1x vs +1.1x vs -2.2x vs -1.1x (recent range -17.5x to +4.4x) on NYSE and +2.6x vs +1.2x vs +1.1x vs -2.2x vs -1.6x (recent -3.5x to +3x). Breadth was even more so: +3.3x vs +1.2x vs -1.1x vs +2.8x vs -1.1x (recent -18.6x!!! to +6.9x!!!) on NYSE and +3.2x! vs +1.1x vs +2.2x? vs -1.6x vs -1.4x vs +2.6x (recent -12.8x to +6.2x)  
  2. NYSE Financials rose for the first time in five sessions by 1.5% vs -0.2% vs -0.3% vs -0.7% vs -0.3%. BofA was most active rising 2.4% with a high of $14.99 and closing at $14.95 +.35 after hitting $15.03 six days ago – highest since Jan. 14 and now major res. Brokers +2%! vs +0.5% vs -0.1% vs -0.9% vs -0.8%; KBW Banks +1.9%! vs +0.5% vs +0.1% vs -0.9% vs -0.7%t; Nasdaq Banks+1.8% vs +0.1% vs flat vs -1%! vs -0.5%.  
  3. Volatility (S&P VIX) declined from 13.45 to 12.94 -.51 with a tight and lower range of 12.82-13.25 with Tuesday’s high being 14.14!!!  On 7/23 it declined to 12.07, lowest since April 12th! VIX peaked at 20.49, plunged to 18.90 on June options expiry then closed at 20.11 on 6/24 and has been down below 14 since! 6/24’s session high of 21.91 was highest since 12/31/12 (22.72)!!! The range since April ‘12 is 11.05 (multi-year low o n 3/14/13) to 21.9. It is well below the 40/50 day (15.65/15.34) and the 200 day (14.95)!!!…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks were up ahead of U.S. payrolls, Europe giving it back, Japan strong: UK -0.2% vs +0.1% vs +0.7% vs +0.3% vs +0.3%; France flat vs +0.5% vs -0.4% vs +0.5% vs +0.3%; Germany +0.1% vs +1.2% vs -0.4% vs +0.4% vs +0.3%; Japan +3.3%!!! vs +2.5%!!! vs -1.5%! vs +1.5%! vs -3.3%!!! vs -3%!!! vs -1.1%!;  Hang Seng +0.5% vs +0.9% vs -0.3% vs +0.5% vs -0.5%; Korea +0.1% vs +0.4% vs -0.2% vs +0.9% vs -0.6%; India DOWN 0.8% vs -0.2% vs flat vs -1.3%!!! vs -0.8% vs -0.3% vs -1.4% vs -1%. U.S. equity futures slightly higher with Dow in a range of just 19 points!: DOW +19; SPX +2.20; NDQ +10 – range FIVE points!

Bonds were destroyed with losses of as much as two points and are weak again overnight ahead of payrolls – the long bond has broken out of the trading range : 10 yr Treasury 2.74% -1/4 (recent range 2.74% to 1.63%!!!), and the 30 yr range of 2.82% to 3.77%, WAS 3.71%, currently 3.77% -1/4. The long TIP is 1.39% -1/4. The (record?) low of 0.36% was set on 4/5. Recent high 1.53%! Libor update: 0.267% 3 mos, 0.397% 6 mos. Both remain near the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields higher across the board: Germany 1.73% +6; UK 2.48% +9; France 2.27% +5, Italy 4.34% -2; Spain 4.61% +1; Portugal 6.39% +12!; Greece 9.69% +1 vs 9.64% -18!!! vs 9.80% vs 9.79% vs 9.81% vs 9.81% -10 vs 9.91% vs 10.02% +19 vs 9.81% vs 9.95% +17 vs 9.86% vs -13 vs 9.93% vs 10.07% vs 10.02% -16!!! vs 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% +2.

 Gold closed slightly lower on an ‘inside’ session as it continues to see-saw but remains above the critical $1300 closing at $1311.20 -$1.80. 7/23’s session high was $1349.20 – highest since 6/20! 6/27’s intraday low was $1179.40 – lowest since at least 2011 and now critical support. $1300 remains psychological support, and it remains between the 40 day $1308 and the 50 day $1325 – both still falling. lt is way below, the 200 day – $1550!!! Overnight it has been SLAMMED hitting a low of $1282.40 – lowest and first time below $1300 since 7/19!!! It is currently $1288.30 -$22.80!!! Crude closed higher at $107.89 +$1.14 – following Tuesday’s session low of $102.67. It remains above the 40/50 day m/a’s (101.17/99.67), both rising. The 200 day ($93.72) is distant support. MAJOR SUP is again $104.21 -36 – a triple bottom from 7/10-7/12….it traded below it for five straight sessions before rallying Weds. 4/18’s low of $85.61 was lowest since 12/11! It is slightly weaker overnight at $107.69 -.20– with a session high of $108.82, near the high of $108.93 on 7/19! The range is $85.61-$109.32 since March 1, 2012.

Some random thoughts:

Larry Summers for Fed Chairman…that’s the ticket. Part of the ‘conspiracy’ to eliminate Glass-Steagall and now we learn that his net worth rose by $17 million after leaving Treasury…of course this is a pittance compared to Robert Rubin who Sandy Weill rewarded handsomely for his support by making him Vice Chairman of Citi – without portfolio and more than doubling his net worth – and for this he encouraged the bank to take more risk (as deposed CEO Chuck Prince said, ‘when the music is playing you have to get up and dance’ – yes but you better keep your ear on the sound!). Then when it all came tumbling down he said he didn’t understand those derivatives. This from a self-pronounced ‘eggspurt’ on bonds. People: we (you) were had…and then you got to bail them out and despite them paying back the TARP loans more money has been funneled to them by the government and the Fed while they earn record profits (not from banking!), and increase executive compensation while cutting jobs and keeping the dividend at historically low levels.

TB has just one question: when will the next (and final?) financial crisis come? Interesting story today where from Fortress to Blackstone the word is: get out of the market! This came out in offering statements so it isn’t just hype…better think about it.

Too disgusted to say more today…wake up Obama; it’s your legacy that is on the line!

 Hope you can all have a fun weekend…now get out of here!

 TB

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