2/13/14…the road to serfdom – not smurfdom!

Thought for the Day: “It is a cheap generosity which promises the future in compensation for the present.” – J. A. Spender – i.e. live life…to the fullest!

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Gay people invented sports. Think about it. Boxing. Two topless men…in silk shorts…fighting over a belt and a purse.” – Anon…published as a thought for Vladimir Putin!

Bloomberg Quote of the Day: “A full cup must be carried steadily.” – English Proverb…TB knew a woman once who…nevermind…

Bloomberg Top Stories:

*Retail Sales in U.S. Fell Last Month by the Most in a Year on Bad Weather – this month? Won’t be better! – wait…they can’t go shopping but can go to Unemployment?

*First-Time Jobless Claims in U.S. Unexpectedly Rose to 339,000 Last Week

*Stocks U.S. Fail as Retail Sales Slump, First-Time Jobless Claims Climb

*Optimism Springs From Russia to Turkey in Emerging Rebound – misplaced?

*Avon Says Foreign Bribe Settlement May Cost as Much as $132 Million

*Commerzbank Vows Faster Asset Cuts as Fourth-Quarter Profit Beats Estimate

*BlackRock’s Fink Touting Emerging Stocks With Mobius Fail to Stem Outflows-Sell!

*Israel Teaching California It Need Not Fret About Water With Desalination – hmmm

*Manhattan Luxury-Home Sellers Test Buyer Limits With $100 Million Pricing–get real!

*Storm Lashes U.S. Northeast With Windblown Snow After Coating South in Ice

*Kerry Bids to Defuse China-Japan Maritime Claims, North Korea in Asia Trip

*Spy Agencies Sending Congress Flawed Data on Use of Contractors, GAO Says

*Merkel’s Effort at No-Spying Pledge From U.S. Likely to Fail, Envoy Says

*More Young Adults Enroll in Obamacare Helping to Balance Risk, U.S. Says

Wednesday’s Market Summary:

It was a day where nothing much happened…yet another in a string of rallies to nowhere. Not much conviction as TB sees it. EVERY index was no more than +0.3% (Russell 2000 and NYSE Financials), f lat (S&P 500) or down no more than 0.2% (Dow 30 and Dow Utilties).

NYSE Volume was a weak 3.3B shares, while Real NYSE Volume dropped to a well below average 640M shares.

Advance/Declines went from strong to all having mere ‘1’ handles…NYSE Breadth was just 1.02x! Nasdaq stocks were +2.2x but vs +3.5x vs +2.3x. Not going to waste any more of either of our time on this.

Here is the scoreboard (note 3mo and 12 mo updated thru last Friday):

Index

February

YTD

3 mos.

12 mos.

Returns

Mo. to date

2/12/14

2/7/14

2/7/2014

Dow 30

+1.7%

-3.7%

+0.2%

+12.9%

Transports

-0.4%

-1.9%

+3.2%

+22.5%

Dow Utilities

+0.9%

+4.1%!!!

+0.3%

+6.2%

S&P 500

+2.1%

-1.6%

+1.5%

+18.4%

NASDAQ Comp

+2.4%

+0.6%

+5.3%

+29.2%

NDQ 100

+3.0%

+1.0%

+5.8%

+28.3%

Russell 2k

+0.2%

-2.7%

+1.9%

+19.1%

NYSE Fin

+2.3%

-2.1%

-0.1%

+12.3%

 KBW Banks

+1.5%

-1.3%

+2.8%

+23.2%

 NDQ Banks

+0.0%

-4.2%

-1.0%

+22.7%

Dow Utilities continue to be the best performer ytd despite some positives creeping in for the month.

Detailed analysis:

Dow 30 -0.2% vs +1.2% vs +0.1% vs +1.1% vs +1.2%; Dow Transports +0.1% vs +1.2% vs -1.1%!!! vs +0.8% vs +1.5%;Russell 2000 +0.3% vs +0.9% vs +0.2% vs +1.1% vs +0.9%; Dow Utilities -0.2% vs +1%!!! vs +0.6% vs +0.7% vs +0.8%; S&P 500 – vs +1.1% vs +0.2% vs +1.3% vs +1.2% vs +1.2%!Nasdaq Composite +0.2% vs +1% vs +0.5% vs +1.7%! vs +1.1%; NDQ 100 +0.2% vs +1.1% vs +0.6% vs +1.8%! vs +1.2%.

NYSE Financials +0.3% vs +1.1% vs — vs +1.1% vs +1.4%. BofA most active: -0.8% vs +1% vs -0.7% vs +2.3% vs +1.9%. Closed $16.75 -.13 The high print was $17.42 on 1/15/14 – highest since 5/10/10!!! Brokers +0.3% vs +1% vs +0.3% vs +1.2% vs +1.4% vs -0.9%; KBW Banks -0.2 vs +0.9% vs +0.1% vs +0.8% vs +1.7%. Nasdaq Banks -0.1% vs +1.2%! vs +0.1% vs 0.2% vs +0.8%.

*NYSE Volume slumped to a below average 3.3B shares vs 3.67B vs 3.29B vs 3.74B vs 3.8B vs 3.97B vs 4.04B vs 4.7B 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 also slumped to a well below average 640M shares vs 710M vs 654M vs 763M vs 743M vs 755M vs 837M vs 922M vs 952M (highest since 12/20).  622M was lowest since 1/3/14. It has been above 700M just fourteen times since 12/20! The 12-month low is 272M on 12/24. The average since 12/20 is just 683M shares. The 12 month is 724M 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 rose slightly to 243 vs 206 vs 142 vs 132 vs 92 vs 53. 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 a tad higher at a still weak 42 vs 35 vs 32! vs 48 vs 72 vs 162 vs 120 vs 216 vs 135 vs 70. Recent high is 353; low 20!!!  

Advance/Declineswere slightly positive: +1.3x vs +3.5x vs +1.4x vs +3.4x vs +3x (recent range -17.5x to +6x) on NYSE and +1.2x vs +2.3x vs +1.5x vs +2.4x vs +1.9x (recent low -6.1x!!! to +3.8x). Breadth was similar: +1.02x vs +4.7x! vs -1.1x vs +4.6x! vs +3.8x!(recent -18.6x!!! to +7.2x!!!) on NYSE and +1.6x vs +2.6x vs +2.4x vs +5.5x!!! vs +3.2x (recent -12.8xto +6.5x). 

Volatility (S&P VIX) declined again and is now well BELOW the m/a’s suggesting a possibly overbought market. Options expiry not until the 21st – a setup? It closed at 14.30 -.21 – session low 14.02! It ‘gapped down’ last Friday from 17.09-16.31…watch! Contrast to 1/31’s high of 21.48 highest since 6/24/13! Look at the 40/50 day (14.76/14.64 – crossed!) and the 200 day, 14.58. 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 again and are drifting above the mid-Oct. levels, when the storm hit. Rallying overnight – but not enough to stem the prior two days losses! 30 yr 3.69% +5/8 – the high was 3.97% on 12/31; the 10 yr 2.74% +7/16, recent high 3.03%! Long TIP 1.41% +1/2. The (record?) low of 0.36% was set on 4/5. The recent high yield: 1.64%! Libor update: 0.236% 3 mos,0.331% 6 mos. – Both at or slightly 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 0.06-0.09%!!! Foreign bond yields mixed, problem credits higher…Greece came off yesterday’s new lows! Germany 1.66 -6!; UK 2.77% -4! – recent high 3.03%!; France 2.26% -4!; Italy 3.75% +3; Spain 3.65% +1; Portugal 5.01% +4; Greece 7.55% +19!!! – day after setting a new low of 7.23%! New range7.23%!!! High 12.57%. Japan: 0.59% -1.

Gold closed higher for a third day for a combined gain of +$32 and remains near the psychological $1300 and first resistance at the 200 day ($1313). It closed at $1295.00 +$5.20. Last Thursday’s session low was $1237.50, lowest since 1/23! A week ago Tuesday’s intraday high was $1294.40, highest since 11/14/13!!! 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 ($1241) and the 50 day ($1240). The 200 day is $1313 and within reach – major resistance! Overnight it is slightly weaker at $1293.30 -$1.80.

Crude closed higher and above ‘par’ – its first close above $100 since 12/27/13! This after setting a new high of $101.38 – highest since 10/18. Monday’s session high was $100.55! 1/14’s low was worst since 5/2/13: $91.24! 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 (96.68), and the 50 day m/a ($96.74). FIRST SUPPORT at the 200 day ($99.48) – 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 lower at $99.58 -.79…will par be rejected?

Overnight equity markets:

European equity markets lower after climbin for four days, Asia weaker too but never gained traction: UK-1%! vs +0.2% vs +0.8% vs +0.1% vs +0.4%; France -0.6% vs +0.7% vs +0.7% vs +0.3% vs +0.7%; Germany -0.6% vs +1.1%! vs +1.5%!!! vs – vs +0.7%; Japan -1.8%! vs +0.6% vs closed for two days vs +2.2%!!! Hang Seng -0.5% vs +1.5%! vs +1.8%! vs closed vs +1%; Korea -0.5% vs +0.2% vs +0.5% vs – vs +0.8%; India -1.3%!! vs +0.4% vs +0.1% vs -0.2% vs +0.3%. U.S. equity futures plunging: DOW -100 (range 117); SPX -11.80 (14) ; NDQ -23!!! (25) – oops!

 

 

Some random thoughts:

Last night TB watched a Frontline entitled Inside Syria. Divided into two half hour segments. In the first, a reporter (Muhammad Ali – seriously!) was smuggled in by the rebels and it showed the battle between them and the jihadists! Not pretty! The second was even more appalling as it was on the children of Aleppo. Talk about graphic and only a person with no compassion could not feel pity for these children. But worse, as in all wars was how they have become matter of fact about the dangers. What will they grow up to be like…if, that is, they are lucky enough to survive. Where is the West? EU? UN?

How does one survive in that environment…living amidst rubble? As Tom Friedman wrote in From Beirut to Jerusalem, which remains the Bible on the Middle East, survival, mentally, is by rationalizing why others are killed (they lived on the dangerous side of the street, they went out less than 15 minutes after the seize-fire was set.

What differentiates the Syrians, as the Lebanese are a mixed culture of Marianists, and not so dedicated Muslims. But now, all you hear is “I will kill all of the jihadists – Allah willing” – think about that…meanwhile the jihadists are saying the same thing. That is what a belief in ‘fate’ can do for people. A far cry from the Beirut psychology, right?

Have wanted to discuss this since hearing it last week on PBS. The usual Mark Shields and David Brooks segment on politics. Shields kicked it off by asking what has happened to us…to Americans…that we have become so discompassionate that we believe what happens to people is of their own doing…be it success or living in poverty…and dying there. Nobody cares…certainly not the GOP or the wealthy – many of whom got there on the backs of the people who are now downtrodden and living in abject poverty. Makes you proud to be an American, no?

Shields said that he cannot understand how this happened in less than three decades…well it did…and who was president then? …just asking! No, everyone does not have a fair and equal chance. Brooks agreed totally with his analysis!

Last night TB watched an interview with Sen. Marco Rubio (R-FL …in case you forgot). If the GOP has any brains…a doubtful supposition…they will get behind this man. TB has had differences with his ideas in the past but he is now talking in a spirit of what Congress used to be about.

He highlighted the situation of the poor…and while giving credit to LBJ’s ‘war on poverty’ said it did not go far enough. Welfare isn’t the answer. You can’t keep people above poverty yet not provide them with the tools to move upward…at least towards being middle class.

The problem, IMHO, is this: when TB graduated in 1962 from one of the best high schools in California, Santa Monica High, less than a third went on to college. Were the others losers? No, at that time you didn’t need a college degree for most jobs. In addition, many of the underachievers had learned great skills (automotive, machine shop, etc.), and went on to have great careers…some as well-paid tool and die makers, etc.

Then of course came globalization…and with it outsourcing of the good-paying jobs to lesser and lesser countries – wherever the labor was cheapest. Thus, like auto workers, they found themselves in their 40’s with dim prospects. Conversely, becoming a civil servant was not a ‘cherished’ act. Yet in the end, these people ended up far better (with pay raises, and pensions), then the majority of Americans…pity those who decided to make a career in the military…moved frequently so they couldn’t even buy a home.

Meanwhile, we pumped in billions to education…trying to send everyone to college, when if we had split the students and taught many of them computer skills (which are now expensively taught by private colleges (sic), and financed through expensive student loans which turn graduates (colleges too!) into serfs – not the ones von Hayek discussed in his conservative ‘bible’ The Road to Serfdom – a biased and flawed way to run a country.

Rubio is saying that this is what has to change…to provide people a ‘boot up’ not a handout…not that you can let them live in poverty without good healthcare and proper diets…but to give them hope. I like Rubio…the new Mark Rubio, that is. One unfettered by his bifurcated party, that ignores the needs of 90% of its constitutents and is the reason it is a losing party…time for change. That would be the GOP which TB supported, until he saw the effects of ‘Reaganomics’ (‘sic’, sick, and sicker).

Have a great day…and think about building a better America…America the beautiful?

TB 

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