8/21/13…don’t ‘bank’ on it!

From The Friars Club Encyclopedia of Jokes: “An atheist is a guy who watches a Notre Dame-SMU football game and doesn’t care who wins.” –  Dwight David Eisenhower

Bloomberg Quote of the Day: “Behind every great man is a woman rolling her eyes.” Jim Carrey

Bloomberg Top Stories:

*Goldman Options Trading Error Shows Peril Persists One Year After Knight – again!

*Dollar Strengthens as Commodities Decline With Stocks, U.S. Index Futures

*Yen Bearish Bets Upended as Abe Decision on Consumption Tax Increase Looms

*Brazil Halts Municipal Bond Market When Banks Collect $140 Million in Fees – BofA!

*Yen Bearish Bets Upended as Abe Decision on Consumption Tax Increase Looms

*U.K. Posts First July Deficit in Three Years as Government Spending Rises

*BMW Owners Left Waiting for Repairs on Global Supply-Chain Breakdown

*Bitcoin Craze Spawns Virtual China IPOs as U.S. Regulators Boost Scrutiny

*Egypt Arrests Two Islamist Leaders as Crackdown on Brotherhood Intensifies

*German Opposition Leaders Tackle Merkel on Cost of Crisis Aid to Greece

*Syria Forces Kill Dozens of Civilians Near Damascus, Opposition Group Says 

TB will call it a mixed day since the Dow was off 0.1% even though all other indices were up. Dow is too much of a benchmark to ignore. Meanwhile Goldamn made the news again when an options trading program blew up shortly after the open driving options prices on several stocks to $1! Yet you believe in the sanctity…and sanity of our markets? What fools we are! There is no liquidity except that which the high frequency traders choose to provide so don’t be surprised when we have the next ‘flash crash.’

You doubt that statement, then consider: a client of TB’s with a $3 million portfolio lost about $25k on Monday…it almost shook him to the point of selling…but to whom as the bids were non-existent. THEN came Tuesday…at the end of the day the very same portfolio ROSE by $26k!!! Is that rational? You bet it isn’t. It’s a wake-up call to what the SEC and other regulators have allowed to happen to the ‘safest’ market in the world. Happy? TB isn’t…it’s disgusting! Are flash traders starting to hold positions overnight?

Ex the Dow, all indices were up led by Dow Transports +0.9%, the rest…including Dow Utilities, rose from 0.4% to 0.7%. The subset NYSE Financials were up 1.5%!…but… NYSE Volume barely higher at a weak 2.97B shares vs 2.88B vs 3.14B vs 3.42B. Real NYSE Volume plunged again to a very weak 619M shares from an ‘average of late’ 670M from a strong 835M (average since 6/30 is just 674M shares!).

The Nasdaq 100 gained 12 points with 4:1 advancing. Just three members gained more than one index point:  MSFT +1.6 vs -2.9 vs -4.2; CELG +1.2; INTC +1.1 vs +1.7 vs -2.4; Apple was the only member to lose more than a point: -5.6!!! vs +4.5 vs 3.5 vs +7.5 vs +18.5!!! vs +10.8!!! vs -5.5 vs -3.3! Advance/Declines and Breadth were both positive for the first time in four days! New 52 week Highs were steady at a weak 80 vs 72 vs 72 vs 62 vs 229 (this is an across-the-bow warning!),while New Lows declined but to a still very high 339 vs 579!!! vs  431 vs 510 vs 312 vs 262 vs 104. The VIX slipped and closed at 14.95 -.15 a day after its first time above 15 since July 3!!! But the range was a high 14.25-15.25 – yep, that’s another new recent high!!! It is above the 40/50 day (14.20/14.84) and the 200 day (14.69)…heed!!!

…here’s the book:

* Dow 30 -0.1% vs -0.5% vs -0.2% vs -1.5%!!! vs -0.7%; Dow Transports +0.9% vs -0.7% vs +0.6% vs 1.1% vs -1%; Russell 2000 +0.4% vs -1.1%!!! vs -0.3% vs -1.5% vs -0.4%; Dow Utilities +0.6% vs -0.9% vs -1.1%!!! vs -1.3%!!! vs -0.8%; S&P 500 +0.4% vs -0.6% vs -0.3% vs -1.4% vs -0.5%; Nasdaq Composite -0.4% vs -0.1% vs -1.7% vs -0.4% vs +0.4%; NDQ 100 +0.7% vs -0.1% vs -0.1% vs -1.7% vs -0.4%.

*NYSE Volume rose slightly to a still weak 2.97B shares vs 2.88B vs 3.14B vs 3.42B vs 2.88B (2.52B is 4th weakest of 20131.96B is the low). REAL NYSE Volume dropped again to a very weak 619M shares vs 670M vs 835M vs 716M vs 588M (482M on 7/3 in a shortened trading session is the low). The 12-month average is 716M shares. The range since 6/28’s 1.75B share day, excluding the four sessions above 800M, is 482M-798M shares. The average since 6/28 is just 673M shares, ranging from 482M to 906M. There have been just SEVEN 1B+ share sessions! There have been 31 800M+ shares in 2013: 12 up, 17 down, and two mixed, but on trades of less than that 93 have been up and 42 down …the down days are beginning to steadily increase! There have been 33 mixed sessions.

*New 52 week highs have ranged from 33-864. They barely budged to a weak 80 vs 72 vs 72 vs 62 vs 229. New lows declined but to a still very high 339 vs 579!!! vs 431 vs 510! vs 313 vs 262 vs 104 – 27 is the recent low.

  1. Advance/Declines were positive for the first time n four days: +3.2x vs -4.3x vs -1.9x vs -5.5x!!! vs 2.1x! (recent range -17.5x to +4.4x) on NYSE and +2.8x vs -2.3x vs -1.2x vs -4.3x!!! vs -1.4x (recent -3.5x to +3x). Breadth was similar: +3.1x vs -5.8x!!! vs -1.9x vs -2.9x vs -1.4x (recent -18.6x!!! to +6.9x!!!) on NYSE and +4.2x? vs -2.6x vs -1.1x vs -7.7x!!! vs -1.1x (recent -12.8x to +6.2x)  
  2. NYSE Financials rose sharply but just offset Monday’s loss +1.5% vs -1.4%! vs -0.1% vs -1.3%! vs -0.1%. BofA was most active rising 1% but a day after plunging 1.4%!!! vs +0.7% vs -1.3% vs +0.7% vs +0.7%, closing at $14.29 +.14. It has been weak since hitting $15.03 – 19 days ago – highest since Jan. 14 and major res. Brokers +1.4% vs -0.9% vs +0.3% vs -2% vs -0.3%; KBW Banks +1% vs -1.3%! vs -0.3% vs -1.2% vs flat; Nasdaq Banks +1.4% vs -0.8% vs +0.2% vs -1.1% vs -0.2%.   
  3. Volatility (S&P VIX) declined slightly but the range remained 14.29-15.25 a day after closing above 15 for the first time since July 3rd. Note the recent low of 11.84, the recent range is now 11.83-15.25 taking out 7/31’s high of 14.14! VIX peaked at 20.49, plunged to 18.90 on June options expiry then closed at 20.11 on 6/24 and HAD 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 on 3/14/13) to 21.90. It is above the 40 day (14.20), the 200 day (14.69) and the 50 day (14.84)…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

European stocks weaker, Asia mixed, Korea closed: UK -0.5% vs -0.6% vs -0.5% vs flat vs -1%!; France flat vs -1.3%! vs -0.8% vs +0.1% vs -0.4%; Germany -0.1% vs -1%! vs -0.3% vs -0.4% vs -0.7%; Japan +0.2% vs -2.6%!!! vs +0.8% vs -0.8% vs -2.1%!!! vs +1.3% vs +2.6%!!! Hang Seng -0.7% vs -2.2%!!! vs -0.2% vs -0.1% vs flat; Korea closed vs -1.6%! vs -0.1% vs -0.2% vs closed; India -1.9%!!! vs -0.3% vs -1.6%!!!! vs -4%!!! vs closed. U.S. equity markets opening slightly lower after another narrow trading range overnight that left futures lower: DOW +45; SPX -5.40; NDQ -5.50.

Bonds rallied yesterday but are giving up ground overnight following Monday’s rout which produced the TENTH breakdown since May 2nd when Bernanke mentioned ‘tapering’: 10 yr Treasury 2.85% -5/16 (recent range NOW 2.88% to 1.63%!!!), and the 30 yr range NOW 2.67% to 3.90%, currently 3.89% -5/8. The long TIP is 1.57% -3/8 The (record?) low of 0.36% was set on 4/5. Monday’s high yield: 1.61%! Libor update: 0.262% 3 mos, 0.395% 6 mos, steady. Both remain near the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields higher across the board: Germany 1.88% +4; UK 2.72% +5; France 2.43% +4, Italy 4.34% +3; Spain 4.50% +5; Portugal 6.33% +9!!!; Greece 9.83% +8 vs 9.75% +24!!! vs 9.58% vs 9.45% vs 9.46% vs 9.54%. Look at some of its recent big moves: 9.75% +24!; 9.64% -18; 9.81% -10; 10.02% +19; 9.95% +17; 9.86% -13; 10.02% -16; 10.27% -1; 10.33% -25!; 10.85% +28!; 10.54% +40!!!; 10.85% -37!!!. Recent range: 8.04% to 12.57%. Japan 0.72% -1.

Gold closed higher at $1372.60 +$6.90 two days after a high of $1384.10 not only highest since 6/18 but more than eradicating the selloff since then! Last Wednesday’s session low was $1271.80 – lowest since 7/17! 6/27’s intraday low was $1179.40 – lowest since at least 2011 and now critical support. $1300 is psychological support, and it is above both the 40 day $1296 and the 50 day $1307. The 200 day is a distant $1524!!! Overnight it is weaker at $1361.90 -$10.60. Crude closed sharply lower at $104.96 with a session low of $104.50. Support remains at the 40/50 day m/a’s (104.37/102.79), both rising. The 200 day ($94.89) is distant support. Minor sup is $104.21-36 – a triple bottom from 7/10-7/12. 4/18’s low of $85.61 was lowest since 12/11! Major Res is the high of $108.93 on 7/19! The range is $85.61-$109.32 since March 1, 2012. It is lower overnight at $104.54 -.52, with a session low of $104.35, right at the 40 day!!!

 

 

Some random thoughts:

Yesterday on CNBC, two former federal prosecutors from the 2nd  District in New York (where the financial companies are…i.e. Wall Street), debated whether the SEC is persecuting JPMorgan and worse whether they are conspiring to break up the bank. Conspiring? Picking on? Get real…the government is unable to agree on anything so how in the hell can there be a conspiracy? But while they were debating the point, entirely missed was the number of civil cases that JPM under the direction of wunderkind Jamie Dimon has been fined for over the past five years. Breaches of contract, fraud, overcharging municipalities…and the latest manipulating energy prices…don’t forget that they were, along with Goldman in the game of manipulating aluminum prices.

All TB will say is this: what does this say about a company whose leader allows these things to happen…not just once but again and again…with very few of those who committed the acts held accountable. The total cost must add up into the billions…and that excludes the losses on the London Whale trade.

Meanwhile, BofA continues to be charged too…the latest being overnight in Brazil for fleecing municipalities in their newly-formed (a year ago), municipal bond market.

How corrupt has our society become? How much more don’t we know about. Notice TB didn’t even mention Goldamn or Citi…this time…

Have a great day but don’t take any wooden nickels!

TB

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