2×7=14…who caused the crisis??? (Update)

Quote of the Day from the Friars Club Encyclopedia of Jokes: “If there is such a thing as genius, which is just what?-what the fuck is it?-I am one you know. And if there isn’t, I don’t care.” – John Lennon…hmmmm????

Bloomberg Quote of the Day: “The way is not in the sky. The way is in the heart.” – Buddha…a Wall Streeter might ask: what’s a heart?…and what is it WORTH!!!

Non-Farm Payrolls in U.S. Rose by 113k vs 180k median forecast in Januaryt. Nov. report was increased by 33k to 274k. Dec. revised to 75k vs 74k. Private Payrolls rose by 142k while Government declined by 29k… biggest drop since October 2012 – thanks to Congress government – hiring – is the problem…what part of ‘stmulus’ don’t they get in their zeal to condemn Keynes? Construction and manufacturing added jobs, while services fell due to post-holiday layoffs. Retail fell by 12,900, most since June 2012!  Weather had little to do with anything  at 262k, little changed from a year ago.

The Unemployment Rate declined to 6.58% in January vs 6.68%. Household jobs increased by 638k – do you believe that? The participation rate rose, albeit slightly to 63% in January/  A benchmark revision added 347k jobs in year ended March 2013. How about the Underemployment Rate? It fell to 12.7% – oh, just 12.7% are underemployed…don’t you feel better? Total Average Hourly Earnings rose 1.9% in Jan. year-over-year…wonder if CEO’s would settle for that? Not ‘no’ but HELL NO!

Market Reaction (9:45am EST): Little change in bonds and stocks rose initially but may have hit the days high…time will tell. Gold and Crude little changed, as is the Dollar.

Bloomberg Top Stories:

*Payrolls in U.S. Rise Less Than Forecast as Jobless Rate Declined to 6.6%

*S&P 500 Index Futures Climb With Stocks After U.S. Jobs Data as Bonds Gain

*Bank of England Staff Said to Have Condoned Conduct at Heart of FX Probe

*Investors Desert U.S. Stock Funds for Bonds at Record Pace, Citigroup Says – then why aren’t bond yields falling more???

*Ukraine Imposes Currency Controls After Failing to Ease Hrynia’s Decline

*LinkedIn Declines After Sales Forecast Trails Estimates as Growth Slows–a la Twitter!

*U.S. Employment Report Can Seem Like a Rorschach Test for a Nerd! – Do tell!

*Harvard Professor’s Blinkx Blog Post Enriched at Least Five Short Sellers

*Sellers Return to U.S. Housing Market in Sign of Relief for Spring Buyers

*California’s Drought Impact Seen Spreading From Wildfires to Food Prices

*Smart Money Seizes Fischer ‘98 Notes Amid Emerging Markets Contagion

*Sochi Security Concern Gives Way to Pageantry as $45 Billion Games Begin

*Light Snow to Sweep Across U.S. East Coast This Weekend Without Piling Up

*Vatican Says UN’s Child-Abuse Report Is Unfair to Church as Talks Continue -!?!

*Here Comes Another ‘Mostly Useless’ Nonfarm Payrolls Report by Barry Ritholtz

Thursday’s Market Summary:

Aha! A rally…and on good volume of 3.8B shares…not the 4+ billion of the slide but well above the norm. Real NYSE Volume for a second day was in the mid-700’s – again, not of the 800-900M of the selloff but still above the 723M share average. Also, it was not only more than a ‘dead cat bounce’ on the Dow but about 2/3 of Monday’s plunge and closed almost at the high. Even better for the S&P 500. At the end of today’s summary you can see where we stand for the month and ytd. One caution on the rally…and a big one: today is the payrolls report and the ADP on Wednesday was below estimates…that could either enhance or destroy the rally. Note that the VIX took a dive to 17.26 -2.69…a big drop but still to a moderately bearish level…but there is plenty of time to play for the ‘high freaks’ as options expiry is a long two weeks away!

Advance/Declines and breadth were ‘solid’ but new 52 week highs while nearly doubling to 92 remain WEAK by any standard, while new lows were more than halved, but to an average 72…watch, wait, and learn. Here is the scoreboard (will update 3mo and 12 mo on Monday:

 

Index

February

YTD

3 mos.

12 mos.

Returns

Mo. to date

2/5/14

1/31/14

1/31/2014

Dow 30

-0.5%

-5.7%

0.5%

12.1%

Transports

-1.5%

-3.0%

3.4%

24.5%

Dow Utilities

-1.2%

+2.0%!

0.3%

6.7%

S&P 500

-0.5%

-4.1%

1.2%

17.8%

Composite

-1.1%

-2.9%

4.6%

29.1%

NDQ 100

-0.7%

-2.6%

4.2%

27.4%

Russell 2k

-2.4%

-5.1%

3.2%

24.1%

NYSE Fin

+0.1%

-4.3%

-1.3%

11.3%

 KBW Banks

-0.1%

-2.9%

4.7%

23.0%

 NDQ Banks

-1.4%

-5.6%

3.3%

24.6%

Detailed analysis:

Dow 30 +1.2% vs – vs +0.5% vs -2.1% vs -0.9%; Dow Transports +1.5% vs -0.8% vs +1.2% vs -3.2%!!! vs -0.2%; Russell 2000 +0.9% vs -0.8% vs +0.8% vs -3.2% vs -0.3%; Dow Utilities +0.8% vs -0.5% vs -0.5% vs -0.9% vs +0.8%; S&P 500 +1.2% vs +1.2% vs -0.2% vs +0.8% vs -2.3%; Nasdaq Composite +1.1% vs -0.5% vs +0.9% vs -2.6% vs -0.7% vs +1.8%; NDQ 100 +1.2% vs -0.4% vs +0.9% vs -2.3% vs -0.5%.

*NYSE Volume was slightly lower but still well above average 3.8B shares vs 3.97B vs 4.04B vs 4.7B shares vs 4.04B. The 2014 low is 2.76B. The record high (?) is the 4.97B shares of 12/20/13 and Q3 end of quarter while 11/29’s 1.59B is weakest of 2013). REAL NYSE Volume slipped again but to a still above average 743M shares vs 755M vs 837M vs 922M vs 952M (highest since 12/20).  622M was lowest since 1/3/14. It has been above 700M thirteen times (superstitious?) since 12/20! The 12-month low is 272M on 12/24. The average since 12/20 is just 682M shares. The 12 month is 723M shares. Last year there were just TEN 1B+ share sessions! There have been 45 800M+ shares since 12/31/12: 19 up, 23 down, three mixed.

*New 52 week highs have ranged from 33-864. They nearly doubled but to a still weak 92 vs 53 (a new recent low!) vs 56 vs 91 vs 135 vs 162. Contrast to 440 and 498 last month. 53 is the recent low, which had been 201 during the rally days! Recent high is a super-strong 890!!! New lows were halved to 72 vs 162 vs 120 vs 216 vs 135 vs 70. Recent high is 353; low 20!!!  

Advance/Declineswere positive, Nasdaq not so much: +3x vs -1.4x vs +2.1x vs -5.6x! vs -1.7x (recent range -17.5x to +6x) on NYSE and +1.9x vs -2.2x vs +1.7x vs -6.1x!!! vs -2.3x (recent low -6.1x!!! to +3.8x). Breadth was more so: +3.8x! vs -1.4x vs +2.8x vs -16.2x!!! vs -2.5x (recent -18.6x!!! to +7.2x!!!) on NYSE and +3.2x vs -2.2x vs +2.2x vs -9.6x!!! vs -1.5x (recent -12.8xto +6.5x). 

NYSE Financials +1.4% vs +0.1% vs +1.1% vs -2.5%! vs -0.7% vs +1.1% vs -1.2% vs +1.2%. BofA most active: +1.9%? vs +0.5% vs  — vs -2.5x! vs -1.1% vs +1.5%. Closed $16.71 +.32? The high print was $17.42 on 1/15/14 – highest since 5/10/10!!!Brokers +1.4%! vs -0.9%! vs +1.6% vs -3.6%!!! vs -1.4% vs +1.1% vs +1.4% vs -2.1%;KBW Banks +1.7% vs -0.1% vs +1.2% vs -2.7% vs -1.3% vs +1.1%.Nasdaq Banks +0.8% vs -0.4% vs +1.3% vs -3.1%! vs -1.3% vs +1.1% vs -1.5%! Trendless!

Volatility (S&P VIX) plunged but has been oscillating since Friday with a high of 21.48, and closed yesterday at 17.26 -2.69! Big but still well above average. Mondays 21.48 was the highest since 6/24/13! Look at the 40/50 day (14.63/14.44 – crossed!) and the 200 day, 14.54. 12/26’s 11.69 was lowest since 3/15/13!!! The recent range is now11.83-21.48!!! It peaked at 22.79 on 12/28/12…the range since 12/31/12 is 11.05 (3/14) to 21.92 (6/24)!

Bonds closed weaker for a THIRD day – much more and it will be a trend! Back around mid-Oct. levels, when the storm hit. Mixed overnight following payrolls: 30 yr 3.67% -1/16 – the high was 3.97% on 12/31; the 10 yr 2.68% UP 1/8, recent high 3.03%! Long TIP 1.39% +1/16. The (record?) low of 0.36% was set on 4/5. The recent high yield: 1.64%! Libor update: 0.234% 3 mos,0.331% – A NEW RECORD LOW! 6 mos. BOTH at or just above NEW record lows 0.234%!!! and 0.331% respectively!). NOTE the Fed Funds rate has averaged 0.08% since 5/22/13 and is steady at 0.06%!!! Foreign bond yields lower: Germany 1.66 -3; UK 2.72% -2 – recent high 3.03%!; France 2.24% -4; Italy 3.70% -6; Spain 3.70% -6; Portugal 4.89% -3; Greece 7.65%! — AND nearing the recent low of7.51%??? High was 12.57%. Japan: 0.61% +1. Yen weaker at 102.07 but still near 101.18, Wednesday’s low. Recent range 101.18-105.44-weakest since 10/1/08!!!

Gold closed little changed in an inside session at $1257.2 +.30. Last Thursday’s session low was $1237.50, lowest since 1/23! Monday’s intraday high was $1280.10, highest since 11/18!!! Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!!  Recent high is $1375.40 back on 9/19. Psych levels: $1200 sup; $1300 res, with major sup at the 40 day ($1237) and the 50 day ($1237) – STILL LOCKED!!! The 200 day is $1318 and major res. Overnight it is slightly higher at $1259.90 +$2.70.

Crude also closed slightly higher at $97.84 +.46, with an intraday high of $98.83, taking out last Thursday’s high of $98.59 – both highest since 1/2/14! 1/14’s low was worst since 5/2/13: $91.24! Note 12/27 was first time above $100 since 10/21! The record high of $114.83 was on 5/2/11, the low since on 10/4/11 is $74.95: $93.60 is the midpoint!!! Recent rally high and close are $110.70 and $110.53 respectively. Support is at the 40 day m/a (96.43), and the 50 day m/a ($96.19)! RES at the 200 day ($99.34!!!) –  major res and slowly rising! 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 little changed at  $97.80 -.04.

Overnight equity markets:

Global equity markets higher: UK +0.4% vs -0.9% vs +0.3% vs-0.3% vs -0.2%; France +0.7% vs +1% vs +0.1% vs – vs -0.1%; Germany +0.7% vs -0.9% vs -0.2% vs -0.9% vs -0.1%; Japan +2.2%!!! vs -0.2% vs +1.2% vs -4.2%!!! vs -2%!!!; Hang Seng +1% vs +0.7% vs -0.6% vs -2.9% vs closed; Korea +0.8% vs +0.9% vs +0.2% vs -1.7% vs -1.1%; India +0.3% vs +0.3% vs +0.2% vs – vs -1.5%!. U.S. stock futures higher following payrolls but in a very tight range: DOW +57; SPX +9.60; NDQ +24!

 

Some random thoughts:

An economic quiz to see how informed or misinformed you are…misled?…by the ultra-conservatives – didn’t that used to be called reactionary, which is just shy of fascist?

When did we have a ‘balanced’ budget? 2000, under Bill Clinton…remember: surpluses as far as the eye can see? Ah, but the ‘cut taxes and spend like mad’ GOP solved that. You see there was a whiff of a recession…slight slowdown was more accurate but instead of the ‘never let a crisis go to waste’ mantra of Rahm Emmanuel that the GOP derides, they said ‘never let a slowdown, however slight, not be an excuse to cut taxes’ and worse, give the benefits to the wealthy!

Were the Democrats the force behind ‘everyone owning a home’? Originally, yes, but do not be deceived while the House Dems were the big supporters, more behind the scene were Senate GOP’ers…who received huge sums from FNMA/FHLMC for their efforts. Then G.W. Bush who abhorred the concept went to a FNMA housing conference and spoke on how he supported the idea. At least the Dems were forthright!

Wasn’t the government at fault for pressuring banks to make ‘bad loans’ to poor risks? If you believe this you have been listening to too many bankers as the rapid growth of sub-prime loans began in 2006 – when the housing market topped! Furthermore, most of the subprime loans were SOLD and repackaged by Wall Street and sold to unsuspecting investors (who were not protected since Congress had ruled that they were ‘informed’; a stretch when even the CEO’s of the banks that got into trouble didn’t understand them. Oh, and how about those ‘liar loans’ and worse: don’t say everyone was to blame because unqualified buyers applied for a loan! I can ask for any size loan but it is YOU, the banker that approves it (and furthermore falsified data to make them qualify!). A former Citi exec who wrote memos to all senior execs that more than half the loans being made did not conform to their lending standards was removed. From Prince to Rubin, they all denied seeing the memo…how convenient!

That’s enough for now…will have more quizzes next week. Factual? Source of most will be Alan Blinder’s book, which is thoroughly documented!

Have a great weekend!

TB 

 

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