9/16/13…’Summers’ time???

Today’s Quote from the Friars Club Encyclopedia of Jokes: “A man cannot be too careful in the choice of enemies.” – Oscar Wilde

Bloomberg Quote of the Day: “It is a great art to saunter.” – Henry David Thoreau

Bloomberg Top Stories:

*Industrial Output in U.S. Expands 0.4% for the Biggest Gain in Six Months

*Summers Drops Fed Candidacy After Senate Democrats Spurned Obama’s Favorite – !

*Dollar Weakens While Stocks Climb After Summers Withdrawal; Oil Declines

*Bill Gross’s Favorite Trade Sours as Bonds Lose Faith in Fed Rate Guidance

*Fed Leadership Doubt Undermines Message on Low Rates as QE Tapering Looms

*Manufacturing in New York Region Expands Less Than Economists Estimated

*Mortgage-Bond Comeback Imeriled as $17 Billion Fannie-Freddie Sale Is Set

*Twitter Outpaces Facebook Getting More Sales From Mobile Advertising

*No Faith in Stocks Blocks China Campaign to Cool Housing Bubble

*U.S. Joins U.K., France Seeking UN Syria Resolution Leading to Assad Exit

*Syrian Chemical-Weapons Accord May Eliminate Threat From Israeli Doorstep

*Coakley Seeks Massachusetts Governorship After Failing to Win Senate Seat

Labor market trends are slowly improving with modest gains in nonfarm payroll employment. Moreover, the unemployment rate dropped as the participation rate slipped. Retail sales disappointed expectations but real consumer spending will continue to add positively to Q3 GDP. Meanwhile, ISM surveys, construction spending, business inventories and motor vehicle sales rose while consumer sentiment and factory orders fell. Inflation remains subdued.

Next week’s economic calendar is packed with important indicators. The highlight of the week will be the August CPI (Tuesday).

We will also get September Empire State Manufacturing and August Industrial Production (Monday), August Housing Starts (Wednesday), Q2 Current Account, August Philadelphia Fed Survey, August Leading Indicators, and August Existing Home Sales (Thursday).

In addition, the Federal Reserve FOMC will be meeting on the September 17th – September 18th with an announcement on the 18th. Courtesy of Economic Advisory Service.

NOTE: Friday is options expiration!

Friday was…well…a nothing day. The only remarkable mover was Dow Utilties which rose 0.9%, while the next two were the Dow and Russell 2000, both up 0.5%. The rest only ‘inched’ higher. NYSE Volume plunged to a very weak 2.7B shares while real traded plunged to just 567M shares – lowest since 8/26. Here are the facts:

* Dow 30 +0.5% vs -0.2% vs +0.9% vs +0.9% vs +0.9%; Dow Transports +0.5% vs -1.1% vs flat vs +1.9% vs +1.4%; Russell 2000 +0.5% vs -0.6% vs flat vs +0.9% vs +1.6%; Dow Utilities +0.9%! vs -0.3% vs -1.1%! vs +0.8% vs +0.5%; S&P 500 +0.3% vs -0.3% vs +0.3% vs +0.7% vs +1%; Nasdaq Composite +0.2% vs -0.2% vs -0.1% vs +0.6% vs +1.3%; NDQ 100 +0.1% vs -0.1% vs -0.2% vs +0.5% vs +1.2%.

*NYSE Volume plunged to a weak 2.7B shares vs 3.06B vs 3.1B vs 3.46B vs 3B (2.52B is 4th weakest of 20131.96B is the low). REAL NYSE Volume also dove to 567M shares, lowest since 8/26, vs 642M vs 657M vs 773M vs 638M  (482M on 7/3 in a shortened trading session is the low). The 12-month average is 719M 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 666M shares – the Hex! – 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.

*New 52 week highs have ranged from 33-864. They declined again to 191 vs 271 vs 355M vs 429 vs 309. New lows slipped to 87 vs 95 vs 100 vs 65 vs 49: 579-27 is the recent range.

  1. Advance/Declines were sllghtly positive: +1.6x vs -2.1x vs +1.3x vs +1.8x vs +4x; (recent range -17.5x to +4.4x) on NYSE and +1.5x vs -1.8x vs -1.1x vs +2x vs +3.1x (recent -3.5x to +3.8x). Breadth was similar: +1.7x vs -2.2x vs +1.5x vs +2.5x vs +6.4x! (recent -18.6x!!! to +6.9x!!!) on NYSE and +1.4x vs -2.2x vs +1.4x vs +2x vs +6.5x!!! (recent is -12.8x to +6.5x)  
  2. NYSE Financials rose by 0.2% vs -0.6% vs +0.2% vs +1.1% vs +1.6%. BofA 2nd most active to Nokia again +0.2% vs -1.2% vs +0.3% vs +1.1% vs +0.8%, closing at $14.51 +.03. It has struggled since hitting $15.03 a month ago – highest since Jan. 14 and major res. Brokers +0.4% vs -0.9% vs -0.8% vs +1.5% vs +1.5%;  KBW Banks +0.2% vs -0.6% vs -0.3% vs +1% vs +0.7%; Nasdaq Banks +0.3% vs -0.5% vs -0.4% vs +0.7% vs +0.7%.  
  3. Volatility (S&P VIX) was little changed and remains above 14 at 14.16 – 05. Two weeks ago it closed at 17.01 but a week prior it was at 13.98. The recent range is now 11.83-17.81. It peaked at 22.79 on 12/28/12. It is now below the 40 day (14.12), the 50 day (14.33) and the 50 day (14.24)…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

 

Global stocks higher: UK +0.8% vs -0.2% vs +0.1% vs -0.1% vs +0.9%; France +0.9% vs flat vs -0.1% vs -0.1% vs +1.6%; Germany +1.2%! vs +0.1% vs +0.1% vs +0.5% vs +1.9%; Japan closed vs +0.1% vs -0.3% vs flat vs +1.5%; Hang Seng +1.5%! vs -0.2% vs +0.1% vs -0.2% vs +1%; Korea +1% vs -0.5% vs flat vs +0.5% vs +1%; India +0.1% vs -0.3% vs +0.4% vs flat vs +3.8%. U.S. equity futures STRONG on Summers withdrawal: DOW +148; SPX +16.30!; NDQ +22.75.

Bonds  closed higher Friday and are strong overnight on Summers withdrawal and Syria no doubt: 10 yr Treasury 2.78% +7/8 (recent range now 2.99% to 1.63%!!!), and the 30 yr range 2.67% to 3.90%, now 3.79% +7/8. The long TIP is now 1.49% +1-5/16. The (record?) low of 0.36% was set on 4/5. Recent high yield: 1.63%! Libor update: 0.252% 3 mos, 0.380 6 mos. A new record low on 6 mos. and 3 mo. is knocking at the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields lower: Germany 1.92% -6; UK 2.86% -6; France 2.47% -6, Italy 4.50% -7; Spain 4.44% -4; Portugal 7.27% +1; Greece 10.08% -1. Look at some of its recent big moves: 10.05% -19; 10.03% +11; 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 0.71% -1.

Gold hammered again Friday closing at $1308.60 -$22 – a two day loss of $65!!! Session low $1304.60!!! 8/14’s session low was $1271.80 – lowest since 7/17! 6/27’s intraday low was $1179.40 – lowest since at least 2011 and critical support. $1300 is next and psychological support, as both the 40 day ($1350) and the 50 day ($1333) have been broken. The 200 day is at $1494. Overnight it is slightly higher at $1314.60 +$6.00. Crude closed slightly lower at $108.21 -.39, five days after setting a rally high and close of $110.70 and $110.53 respectively – Weds. session low $106.39! It remains above the 40/50 day m/a’s (106.76/106.45), both rising. The 200 day ($96.70) is distant support. 4/18’s low of $85.61 was lowest since 12/11! Major Res is the high the spike to $112.24 on 8/28. That move was immediately rejected! The range is $85.61-$112.24 since March 1, 2012. Overnight it is sharply lower at $106.79 -$1.49….Syria?

Some random thoughts:

Summertime ain’t Summers time…thankfully…yes, there is a god and note how positively the markets are responding overnight in equity futures and at the U.S. open!

One caveat: Friday is options expiration and a quadruple witching…with all the volatility it could be a pretty violent week…where she stops no one knows.

TB isreally getting tired of the Barron’s editorial page. The prior two weeks Tom Donlon talked about how it is the wealthy class that creates growth…really? Because if so, and their size growing while middle class and lower slips, we should have 6% GDP! THEN, this week a guest editorial by Donald Boudreaux, a prof at GeorgeMasonUniversity talked about how the middle class has never had it so good and they should stop grousing. Compared prices on refrigerators, etc. Only a passing mention of rising healthcare and education costs…how special. He closes with “…no reasonable person familiar with the cost and full range of consumer options available in 2013 can reach any conclusion other than that ordinary Americans today are far more prosperous than at any time in the past.” Really…any time in the past??? When was he born, 1990??? Oh, and those ‘consumer options’ how about interest rates of 30% on credit cards when the cost to them is less than 1%….no wonder there is now credit card growth only student loans and autos!!! Reminds TB of the old saw: those that can’t…teach! You decide!

Have a great week!

TB

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