11-12-13…last time you will see that date…the times are a’changin

Today’s Quote from the Friars Club Encyclopedia of Jokes: “The Peace Corps is sort of the Howard Johnson’ on the main drag into maturity.” – Paul Theroux

Bloomberg Quote of the Day: “Your time is limited, so don’t waste it living someone else’ life.” – Steve Jobs

Labor market trends are slowing improving with this week’s report bringing the 6-month average of non-farm payroll growth to 174k, little changed compared to its 18 month average of 175k. Labor force participation and the unemployment rate were volatile due to the Shutdown.   Smoothing this data and applying 174k monthly growth gets us to an unemployment rate of 6.8% by YE2014.   Q3 GDP was stronger than expected on a bounce in inventory accumulation. This week’s economic calendar is fairly light.  We will get October Treasury Budget (Wednesday), Q3 Productivity & Costs and September International Trade (Thursday), October Import & Export Prices, November Empire State Manufacturing, October Industrial Production and September Wholesale Trade (Friday). Courtesy of Economic Advisory Service (repeating)

Bloomberg Top Stories:

*China Vows Bigger Role for Markets as Party Closes Beijing Policy Summit

*Stocks in Europe Fall With Treasuries as Dollar Gains; Metals, Pound Drop

*Russia Economy Failed to Accelerate Last Quarter as Growth Missed Forecast

*Obama to Nominate Massad to Replace Top U.S. Derivatives Regulator Gensler – GOOD!!!…IF that is he can get past the obstructionist Senate. Gensler did nothing!

*Record Bond Exodus From Broad-Market Funds Hits Pimco to JPMorgan Hardest- !

*Volatility Jump Detected In Treasuries as Traders Brace for Higher Yields–not stocks!!!

*GE Prints Jet-Engine Fuel Nozzles to Propel Market Seen Topping $6 Billion –in 3D!!!

*Malone’s Liberty Global Said to Be in Talks to Buy Intel’s Pay-TB Service

*Dish Advances on Earnings; Hologic Misses Estimates – and the beat goes on…and on

*Apple May Try to Beat Record $1 Billion Samsung Patent Verdict in Retrial – oh groan!

*World Trade Tower Opens 40% Empty in Lower Manhattan Real Estate Revival – ?

*Philippines Relief Effort Hampered by Heavy Rains as Second Storm Arrives

*Obamacare Debut Falling Short Threatens Long-Term Prospects for Exchanges

*Pentagon Contracts Dropped 66% in October as Shutdown Deepened U.S Cuts – nice!

Monday’s Market Summary:

It was a blah day…blah…blah…blah. Only Dow Transports, up 0.5% budged the rest were all +/- 0.1%…not surprisingly volume came in at a weak 2.53B shares, and REAL NYSE Volume was a mere 538M shares – lowest since August 5th ! No bond market, commodities barely budged, etc. Only thing of note was NYSE Financials which despite being up 0.1%, posted the following: Brokers +0.8%; KBW Banks -0.2%, Nasdaq Banks -0.9%…you pick ‘em. Perhaps they need treasuries to do anything…ya think? Despite their ennui, the VIX Plunged .37 to 12.53, the session low of 12.40 being lowest since 10/18 and more importantly the close was lowest since 8/13 – on a nothing day??? All the more reason to be concerned about options expiration on Friday!

Twitter (TWTR) continues to fulfill TB’s expectations since even though it closed at $42.80 +$1.25, the high was just $43 and it put in another new low of $39.40 – it’s second straight lower high/lower low…third time’s the charm!

The Nasdaq 100 edged lower by 0.1% vs +1.4%, with just 1.1:1 advancing. Compare to +9:1 and -13:1…warning signals? Price change? -3.90 vs +45 vs -64.ed losers by 9:1 vs –13:1!!! Six members gained more than a point while two lost more than a point. FB -2.2; CMCSA -1.5 vs +1.5; MSFT -1.3 vs +1.9 vs -4.7 vs +11.3!!! vs +5.2 vs +1.2; vs +1.2; GOOG -1.3 vs +2 vs -3.6; APPL -1.1 vs +6.6 vs -6.7 vs -3.9 vs -0.9 vs +5.4.; AMZN +1.7 vs +2.8 vs -5.2 vs -1.2; PCLN +1.1.

Advance/Declines AND breadth were only slightly positive. New 52 week highs were steady at 254 vs 253 vs 206 vs 228 vs 262, while new lows plunged to 64 (never short a thin market) vs 103 vs 109 vs 85 vs 83.

Bond market closed in respect for veterans…not so stocks…make ‘em pay! Friday’s closes: 10’s 2.75% -1-1/4!!!, 30’s 3.85 -2-1/2!!!, long TIP 1.53% -2-3/4!! Gold closed weakest since 10/17 for a 2nd day at $1281.70 -$2.90 but  off $27 in three sessions! All due to that NEGATIVE key reversal…caution! Crude also little changed closing at $95.03 +.43 and weak, following last Tuesday’s session low of $93.07, lowest since June 24th!!!

Dow 30 +0.1% vs +1.1% vs -1% vs +0.8% vs -0.1%; Dow Transports +0.5% vs +1.1% vs -1.4% vs -0.7% vs -0.5%; Russell 2000 +0.1% vs +1.9% vs -1.8% vs -0.5% vs -0.4%; Dow Utilities -0.1% vs -0.2% vs -0.9% vs +1.3% vs -0.8%; S&P 500 +0.1% vs +1.3% vs -1.3% vs +0.4% vs -0.3%; Nasdaq Composite flat vs +1.6% vs -1.9% vs -0.2% vs +0.1%; NDQ 100 -0.1% vs +1.4% vs -1.9% vs -0.1% vs +0.1%…hmmm.

*NYSE Volume plunged to a  WEAK 2.53B shares vs 3.82B vs 4.14B vs 3.33B vs 3.48B. The record high (?) is 4.82B shares on Q3 end of quarter while 2.52B is 4th weakest of 20131.96B is the low). REAL NYSE Volume also plunged to the lowest since Auguts 5th from a strong 820M shares from a super strong 910M vs 704M vs 742M vs 658M, lowest since 10/14 (2.06B shares also on Sept. expiry was 3rd highest ever (6/30/06 3.38B; 7/12/02 2.29B while 482M on 7/3 on a shortened trading session is the 2013 low). The 12-month average is 722M shares. The average since 6/28’s 1.75B share day, is now just 700M shares, ranging from 482M to 2.025B shares on 9/20. There have been just EIGHT 1B+ share sessions! There have been 37 800M+ shares in 2013: 16 up, 19 down, and two mixed.

*New 52 week highs have ranged from 33-864. They were steady at 254 vs 253 vs 206 vs 228 vs 262. Recent high is a super-strong 890!!!New lows plunged to 64 vs 103 vs 109 vs 85 vs 83 vs 59.  

  1. Advance/Declines were barely positive: +1.1x vs +1.3x vs -3.5x vs +1.1x vs -2.1x (recent range -17.5x to +6x) on NYSE and 1:1 vs +3x vs -3.4x vs -1.1x vs -1.4x (recent -4x!!! to +3.8x). Breadth was similar: +1.3x vs +2.7 vs -6.4x!!! vs +1.2x vs -2.3x (recent -18.6x!!! to +7.2x!!!) on NYSE and +1.2x vs +3.8x vs -4.7x!!! vs -1.4x vs 1:1x (recent -12.8x to +6.5x).  
  2. NYSE Financials little changed +0.1% vs –1.3% vs +0.5% vs -0.7% vs flat. BofA most active +0.6% vs +1.2%! vs +0.2% vs 0.6% vs +0.1%, closing at $14.40 +.08! It has struggled since hitting $15.03 on 8/1 – highest since Jan. 14 and major res. Brokers +0.8% vs -1.9% vs +1.2% vs -0.2% vs +0.5%; KBW Banks -0.2% vs -1.1% vs +0.3% vs flat vs -0.1%; Nasdaq Banks -0.9% vs -0.9% vs +0.5% vs +0.1% vs +0.2%.
  3. Volatility (S&P VIX) dropped to 12.40 before closing at 12.53 -.37 vs 12.90 vs  13.91. Only the 3rd time below 13 since 8/13! Note in August it surged back on the expiry! The recent range is 11.83-21.01!!! Since March 11th the average has been just 14.49…way below the five year’s 23.32~~~ and the 200 day: 14.40!!! It peaked at 22.79 on 12/28/12…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks weak, ex-Japan/Korea; India lower for a 6th straight session!?! UK -0.4% vs +0.3% vs -0.7% vs +0.1% vs +0.1%; France -0.3% vs +0.5% vs -1.5%!!! vs +1.2%!!! vs +0.9%; Germany -0.3% vs +0.2% vs -0.8% vs +1.3%!!! vs +0.4%; Japan +2.3%!!! vs +1.3% vs -1% vs -0.8% vs +0.8%; Hang Seng +1.4% vs -0.6% vs -0.7% vs flat vs -0.7%; Korea +0.9% vs -0.4% vs -1% vs -0.5% vs flat; India -1% vs -0.9% vs -0.8% vs -0.4% vs -0.4% vs -1.3%! U.S. stock futures slightly lower in another narrow trading range session: DOW -14; SPX -3.60; NDQ -8 – poor Nasdaq…no traction!

Bonds were…well destroyed on Friday! Long end lost 2-1/2 points and TIPS were even worse. Thankfully closed yesterday while we regroup? Overnight weaker by another 3/16! 10 yr Treasury 2.77% -3/16 (recent range 1.63% to2.99%), and the30 yr range 2.67% to 3.90%, 3.87% -3/8. The long TIP is 1.54% -3/16 – over FIVE points in three days!!! The (record?) low of 0.36% was set on 4/5. Recent high yield: 1.63%! Libor update: 0.239% 3 mos,0.355% 6 mos. Both steady but barely above new record lows!!! Banks remain cautious and loaded with cash!!! Foreign bond yields higher, ex-U.K., Greece pounded!!! Reversal of Monday! Germany 1.78% +3; UK 2.79% -1; France 2.25% +4; Italy 4.15% +2; Spain 4.12% +3; Portugal 5.84% +10! Greece 8.19% +27 VS 7.91% -10!!! Recent range now: 7.71%-12.57%. Japan 0.59% +1.

Gold closed slightly lower in dull trading but at the lowest level since 10/1 and well below $1300 following a NEGATIVE key reversal (higher high, lower low, close below prior days low) last Thursday, closing at $1281.70 -$2.90…-$36 in three days. It had a lower high and lower low at $1278.10, lowest since 1017! The recent low is $1251 on 10/15 – lowest since 7/10. Recent high was $1375.40 on 9/19.  6/27’s intraday low was $1179.40 – lowest since at least 2011 and critical support. $1300 remains psychological support with major res now at the 40 day ($1318) and the 50 day ($1327). Major resistance at $1375, the 9/19 high. The 200 day is at $1417. Overnight it is slightly weaker at $1280.70 -.40 with another new low of $1275.80!!!

Crude was boring following two straight ‘inside’ sessions, four days after falling to $93.07, lowest since 6/24, closing at $95.03 +.43. It has shown no sign of strength since 9/18’s surge to $108.49. 9/19’s session high was $108.99! Recent rally high and close are $110.70 and $110.53 respectively. It is way below the 40/50 day m/a’s ($100.40/101.91), both plunging, and major resistance! The 200 day ($98.68) is also major resistance. 4/18’s low of $85.61 was lowest since 12/11! The recent range is $85.61-$112.24 since March 1, 2012. Overnight is little changed at $94.96 -.18, with a session low of $94.31.

Some random thoughts:

Only the Tax Foundation, purportedly nonpartisan but with leanings towards big business (you don’t really think the U.S. Chamber of Commerce gives a damn about small companies do you?), and conservative ‘ideals’, has released a study stating that the wealthy have provided $2 trillion to the lower 40% of the population…how special! Especially since the wealth gap has expanded with the top 1% owning 90% of the wealth assets in the country…awkward – no?

Reality check…see this article on the decline and fall of the middle class for some shocking statistics: http://www.startribune.com/opinion/commentaries/231223651.html

Even worse is Paul Krugman’s column from last Thursday on the true damage caused by the reactionaries in the GOP. http://www.nytimes.com/2013/11/08/opinion/krugman-the-mutilated-economy.html By failing to address long-term unemployment and create jobs…not a la the New Deal but by modernizing the energy grid and repairing the highways and bridges across the nation that are in serious decay. Cutting spending with unemployment this high is tragic…and for what? A witch hunt on our debt that is supposed to destroy us. If it does, the GOP has itself primarily to blame…they controlled the House for eight years following the balanced budget created by the DotCom boom and an unprecedented run in stocks. Then, on a minor dip in the economy the Bush Administration produced two rounds of tax cuts which benefitted almost exclusively the top 1% thus causing a huge widening of the wealth gap to levels not seen since the robber barons. They drove the estate tax down to zero in 2010 – a year in which famed Yankee’s owner George Steinbrenner and at least two other billionaires died…who says you can’t take it with you, right, George? Not only that but they reduced the capital gains thus favoring investment income over workers wages. They did this by reducing the tax on capital gains spearheaded by Larry Kudlow and Jim Cramer by distorting the ownership of dividend paying stocks…that over 100 million Americans own them…ah, but almost all of that is in tax-sheltered IRA’s/401(k)s and pension funds…which will be taxed at ordinary income rates when withdrawn. Talk about bait and switch.

As for unemployment in this dangerous game,  Krugman cites ‘schooled’ economist Robert Brusca PhD, (as opposed to unschooled economist Larry Kudlow), on the distortion in the unemployment rate created by the declining ‘labor participation rate’ which has fallen to the lowest percentage since 1978. Brusca held the participation rate steady and calculates what the true unemployment rate is…since those who drop off are not considered part of the labor pool…nice, eh? Given Bernanke’s stated 6.5% unemployment rate target (and this does not adjust for part-time jobs), which some at the Fed think is too high…Yellen?, IF the participation rate was back at 2007 levels it would imply that 6.5% is actually closer to 12% since it accounts for 4.5 points of the drop in unemployment. Some recovery!

So now with the pressure from anti-tax lobbyist Grover Norquist, they extort the GOP Congress to never raise any taxes…with to Grover includes removing expensive subsidies and we are doomed to a balloon that will expand until it pops…will the U.S. pop with it? Who cares? Certainly not Grover or the Koch brothers funded Tea Party.

Enjoy…but beware of the winds of change as ‘the times they are a’changin’.

11-12-13 – the last time we will see ‘magic numbers’ in our lifetimes…ok, 1-4-14 etc, but nothing like this or 12-12-12. Have a great day! 

TB

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