12/16/13…inside the beltway…the land of Kumbaya! NOT!!!

Joke of the Day from the Friar’s Club Encyclopedia of Jokes: I took an economy flight. There wasn’t any movie, but they flew low over drive-ins.” – Red Skelton

Bloomberg Quote of the Day: “I skate where the puck is going to be, not where it has been.” – Wayne ‘the Great’ Gretzky

This week’s economic calendar is packed with important indicators. The highlight of the week will be the November CPI (Tuesday). We will also get December Empire State Manufacturing, November Industrial Production (Monday), Q3 Current Account (Tuesday), November Housing Starts (Wednesday), November Existing Home Sales, December Philadelphia Fed Survey and November Leading Indicators (Thursday) and Q3 GDP 3rd Estimate (Friday). In addition, the Federal Reserve FOMC will be meeting on December 17th – December 18th with an announcement on the 18th. Courtesy of Economic Advisory Service

The Empire State Survey rose 1.2% but new orders declined; Q3 Productivity was revised +1.1% to +3.3%, but how did it get there? – a downward revision in labor cost of 0.6% to -1.4%! Lastly, Industrial Production rose 1.1% BUT this increase is in spite of a slowing trend over the last TWO years, and to grow further requires INCREASED consumer buying!!!

The point is this: yes, economy is growing, but on the backs of middle class and below workers. If they had the same increases CEO’s were getting inflation would be our concern, not growth! Fat chance! Also, a big thanks to the Kumbaya Congress for their ‘deal’ – leaving out extended unemployment insurance…happy new year y’all who can’t find a job!!! Note stock up strong on open, AND bonds!!!! Use caution this week!

Bloomberg Top Stories:

*Stocks in Europe Rally With U.S. Futures as Gold Declines on Manufacturing

*Industrial Production in U.S. Climbs by 1.1% in Biggest Increase in Year – see above!

*Factory Output Grows in Euro Area as Germany Leads Rebound From Recesssion

*Fed Taper Message Succeeds in Persuading Market o Adjust Economic Data – Hah!

*TIPS Wipeout Shows Fed Losing $3 Trillion Fight Against U.S. Disinflation…got that? All it is doing is driving stocks higher…but wait…trees don’t grow to the sky…do they?

*Crude Oil Production in U.S. Will Approach Record Levels by 2016, EIA Says

*Hedge Funds’ Bullish Best on Natural Gas Jump as Thermometer Drops – same old!

*Baidu Forced to Add Warnings as Regulators Focus on china Stocks Overseas

*Secret Inside BofA ‘Office of the CEO’ Stymied Relief for Needy Homeowners – once again BIG BANKS behaving badly…and making little guy pay for THEIR greed!!!

*Budget Deal Celebrated by U.S. Lawmakers Belies Rigors Ahead on Decisions – oh joy!

*Kerry Urges South China Sea Stability While Rejecting China Air Zone Move

*Twelve Governments Agree to Help U.S. in Fighting Offshore Tax Evasion – wake up!  

Friday’s Market Summary:

Friday the 13th lived up to expectations: a nothing day with plunging volume and now we have the final options expiration of 2013 to look forward to on Friday. The petulant Dow was up just 0.1% (similar to the S&P 500 flat), and closed at the lowest weekly close in SEVEN weeks! At 15,755, it was the lowest close since 11/8…happy days no longer here??? The BEST performers were Dow Transports, up a mere 0.4% followed by the Russell 2000 small cap at +0.3%. The rest ranged from flat to -0.3%.

The VIX added to the gains since Wednesday’s gains closing at 15.77 +.22, but with a high of 15.80 vs Thursday’s session high of 16.09!!! -highest since 10/16!!! NYSE Volume plunged to a WEAK 3..06B shares from an average 3.37B shares vs 3.48B vs 3.08B vs 3.11B vs 3.13B. The 12-month low of 1.59B shares was 10/29! Real NYSE Volume also plunged to a well below average 633M shares from an above average 753M vs 741M vs 633 vs 696M vs 671M.

Advance/Declines and Breadth were slightly positive. New 52 week highs rose slightly to 113 from a very weak 83!!! vs 112 vs 199 vs 322, while new lows were halved to 166 vs 353!!! vs 239 vs 123 vs 125 vs 149…get the picture? They don’t like it!!!

Bonds were stronger but remain near the high yields of August and November: 30yr 3.92-3.93%! Gold rose slightly and any chance of a yearend rally is remote, after failing after Tuesday’s rally to $1267.50, highest since 11/20! Five days ago it printed a new low of $1210.10! 12/4’s ‘positive key reversal’ off that low has been rejected as was the prior one! Crude closed slightly lower at $96.60 -.90, but only after a print of 96.26, lowest since 12/3 and has given back virtually all of Tuesday’s gains! Nine days ago it had a new low of $91.77 – lowest since 6/3! Gas: $2.85 over the weekend!

The Nasdaq 100 lost another 4 points vs -9 vs -45 vs -2 vs +12 vs +26.5…conflicted? Breadth was just 1:1 vs -7:3 vs -11:1!!! vs 1:1 vs -9:5 vs +4.8:1. Just four members lost more than one index point, while another four gained a point: APPL -4.9 vs -0.7 vs -3.4 vs n/a vs +5.2 vs-6.4. Trendless, at best! MSFT -3.9 vs -2.9 vs -3.7 vs +4.2 vs +2.3 vs +2.7; GOOG -2.2 vs -1.8 vs -1.8; CSCO -1.3 vs -1.8; ADBE +3.1; FB +2.4; GILD +1.5; AMZN +1.2.

Dow 30 +0.1% vs -0.7% vs -0.8% vs -0.3% vs FLAT vs +1.3%! Dow Transports +04% vs flat vs -1.6%! vs -0.7% vs +0.4% vs +0.6%; Russell 2000 +0.3% vs +0.2% vs -1.6%! vs -0.9% vs -0.2% vs +0.8%; Dow Utilities -0.2% vs -0.1% vs -0.9% vs -1.1% vs -0.5% vs +1.1% vs -0.9%; S&P 500 flat vs -0.4% vs -1.1%! vs -0.3% vs +0.2% vs +1.1%; Nasdaq Composite +0.1% vs -0.1% vs -1.4%! vs -0.2% vs +0.2%; NDQ 100 -0.1% vs -0.3% vs -1.3%! vs -0.1% vs +0.3%. Note how dull the Nasdaq has become!?!

*NYSE Volume fell sharply to a WEAK 3.06B shares vs 3.37B vs 3.48B vs 3.08B vs 3.11B vs 3.13B. The record high (?) is 4.82B shares on Q3 end of quarter while 11/29’s 1.59B is weakest of 2013, replacing 1.96B as the low). REAL NYSE Volume alspo fell sharply to a well below average 633M shares vs 753M shares – highest since 11/26 – vs 741vs 633M vs 480M vs 674M. The average for the weak was better but below average at 691M shares. Since 11/11 the high is 828M shares on 11/26! The 12-month average is 722M shares. The average since 6/28’s 1.75B share day is just 695M shares, ranging from 482M to 2.025B shares on 9/20. This year there have been just NINE 1B+ share sessions! There have been 38 800M+ shares in 2013: 16 up, 19 down, three mixed.

*New 52 week highs have ranged from 33-864. They continued their slide to a WEAK 83!!! vs 112! vs 199 vs 322 vs 326. Recent high is a super-strong 890!!! New lows SURGED to 353!!! vs 239! Recent low is 35! A bow shot!!!  

  1. Advance/Declines were barely positive: +1.3x vs -1.4x vs -4x! vs -1.5x vs 1:1 vs +2.6x (recent range -17.5x to +6x) on NYSE and +1.4x vs -1.1x vs -3.3x! vs -1.9x vs -1.4x vs +2.1x (recent -4x!!! to +3.8x). Breadth was similar: +1.2x vs -1.4x vs -6x!!! vs -1.5x vs +1.7x vs +2.4x (recent -18.6x!!! to +7.2x!!!) on NYSE and +1.2x vs -1.3x vs -3.6x! vs -1.1x vs 1:1 vs +1.8x (recent -12.8x to +6.5x).  
  2. NYSE Financials rose just 0.1% vs -0.4% vs -1.3%! vs -0.3% vs -1% vs +1.3%. BofA most active: -0.5% vs flat??? vs -2%!!! vs -0.1% vs +0.2% vs +0.8% vs -1.3%, closing at $15.18 -.07. 11/25’s 12-month high was $15.98, highest since 6/1/10. Brokers +0.1% vs +0.3% vs -1% vs flat vs flat vs +1.6%; KBW Banks -0.2% vs +0.5% vs -1.4%! vs -0.3% vs +0.3% vs +1.4% vs -1%; Nasdaq Banks -0.2% vs +0.6% vs -1.2% vs -0.9% vs -0.4% vs +1.7%
  3. Volatility (S&P VIX) rose modestly to a high 15.77 +.22, following Wednesdays 10.9% surge to close at 15.54 +.12, with a session high of 16.09! It is well above the 40/50/200 day m/a’s: 13.46/14.19/14.34!!! The recent range is 11.83-21.01!!! Since March 11th the average has been just 14.44…way below the five year average of 23.32~~~ and the It peaked at 22.79 on 12/28/12…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Bonds closed higher but have not been able to recovered from Wednesday’s pounding – the fourth time since last August when the ‘tapering talk’ began – closing at 3.87% +3/8 on the 30 yr while the 10 yr closed at 2.87% +1/4. Slightly higher overnight: 10 yr Treasury 2.85% +1/8 (recent range 1.63% to 2.99%), and the 30 yr 3.86% +3/16 (recent range 2.67% to 3.92%). The long TIP is 1.54% +11/16. The (record?) low of 0.36% was set on 4/5. NOTE recent high yield: 1.63%! Libor update: 0.243% 3 mos, 0.345% 6 mos. (both at or near record lows!). Foreign bond yields lower, ex-Greece: Germany 1.82% -1; UK 2.87% -2; France 2.42% -1; Italy 4.05% -4; Spain 4.07% -3; Portugal 5.98% –; Greece 8.65% +7. Recently: 7.71% – 12.57%. Japan 0.68% -1.

Gold gained back about 1/3 of Thursdays loss in a nothing session. The chances of a a yearend rally are slim to none following Thursday’s low of $1222.60, negatinv once again a positive key reversal. It closed at $1234.60 +$9.70. This, three days after trading to $1267.50, highest since 11/20. 12/6’s low was $1210.10, lowest since 6/28. Recent high is $1375.40 on 9/19. 6/27’s intraday low was $1179.40 – lowest since at least 2011 and critical support. $1300 remains psychological resistance with major res at the 40 day ($1282!) and the 50 day ($1285!). Major resistance at $1375, the 9/19 high. The 200 day is a $1373. Overnight it is little changed in dull trading , and is now $1234.4. -.20.

Crude closed slightly lower at $96.60 -.90, but only after trading to $96.26, lowest since 12/3. Note the double top at the high of $98.75 not seen since 10/22. On 11-27 it printed a new low of $91.77, lowest since 6/3!!! The record high of $114.83 was on 5/2/11, the low since on 10/4/11 was $74.95: $93.60 is the midpoint!!! It has lost momentum from 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 remains above the 40 day m/a ($95.69) but slightly above the 50 day (97.02), both are dropping AND major support! The 200 day is $98.64, and very 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 it is slightly higher at $97.18 +.57 – back above 50 day – with a high of $97.51!

Overnight markets:

European stocks higher, Asia weak: UK +1% vs +0.2% vs -0.5% vs +0.3% vs -0.5%; France +1.3% vs +0.3% vs -0.1% vs +0.8% vs -0.7%; Germany +1.7% vs +0.1% vs -0.4% vs +0.1% vs -0.8%; Japan -1.6% vs +0.4% vs -1.1% vs -0.6% vs -0.3% vs +2.3%!; Hang Seng -0.6% vs +0.1% vs -0.5% vs -1.7%! vs -0.3%; Korea -0.1% vs -0.3% vs -0.5% vs -0.8% vs -0.4% vs +1%!; India -0.3% vs -1% vs -1.2% vs -0.4% vs -0.3% vs +1.6%! U.S. stock index futures higher, but options week: DOW +79; SPX +9; NDQ +16 – this means NOTHING!!! Tuesday or Wednesday will set the tone for expiry.

Some random thoughts:

Running late but how disgusting our Congressmen are patting one another on the back for doing nothing…ok, one thing…preventing a shutdown  of the federal government…again!

As TB said Friday: a 9% approval rating but 90% of incumbents are reelected? ‘Splain it to me, Lucy!

Have a great week!

TB

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