3/3/14…Paris in time…

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Every man has a perfect right to his opinion, provided it agrees with ours.” – Josh Billings, and…”I am free of all prejudices. I hate everyone equally.” – W. C. Fields…yes,yes, my little chickadee…

Bloomberg Quote of the Day: “We are healthy only to the extent that our ideas are humane.” – Kurt Vonnegut – haven’t we lost our ‘humanity’? Certainly some of us have!

Quote of the day by Warren Buffett: “(The Bitcoin) does not meet the test of a currency…I wouldn’t be surprised if it’s not around in 10 or 20 years.” – really, Warren! Don’t go out on a limb…if it is around for 10 it means it worked! I give it 2-5, which is what some of the people might receive at sentencing! 

Bloomberg Top Stories:

*Stocks Drop Most in a Month as Crimea Crisis Fans Bond Gains; Corn Soars

*U.S. ISM Manufacturing Index Rises More Than Estimated to 53.2 From 51.3

*Commodities Climb to Six-Month High as Grains, Natural Gas Rise on Ukraine

*Unilever Said to Seek Up to $2 Billion in Sale of Ragu Pasta-Sauce Brand- RAGU???

*GM Joins Chrysler, Nissan Beating U.S. Sales Estimates While Ford Misses-+Toyota!

*Berkshire Reduces Clarity on Number of Succession Candidates for Buffett – ???

*ECB Rate-Cut Momentum Seen Ebbing as Draghi Musters Officials for Decision

*Citigroup’s Mexico Losses Add to Pain for Bond Buyers Tempted by 11% Rates

*Fed Lifts Veil Slowly on Bank Oversight as Steps Lag Monetary Transparency

*Cold War Ghosts Return to Haunt East Europe as Putin Makes Move for Crimea

*Ukraine Sees Greater Russian Incursion Amid Worst Standoff Since Cold War

*Putin’s Grab  for Crimea Shows Trail of Warning Signs West Failed to Read – duh!

*Severe Wineer Cost to U.S. Air Travelers Put at $5.3 Billion by MasFlight

*EPA Says Sulfur Must Be Cut by Two-Thirds in Gasoline Undere New U.S. Rules

This week’s economic calendar is packed with important indicators. The highlight of the week will be the February ISM Manufacturing Survey and January Personal Income (Monday), February ISM Non-Manufacturing Survey (Wednesday) and February Employment Situation report (Friday). Courtesy of Economic Advisory Service.

 

Friday’s and two week Market Summary:

Not going to dwell on it but Friday turned out to be a mixed bag. Best performer? DOW UTILITIES UP 0.6%!?! Dow, S&P, Dow Transports and Nasdaq Composite all up 0.3-0.4%…that’s it!  Meanwhile the NDQ 100, Russell 2000 and NYSE Financials were all off 0.3-0.4%! Narrow range, eh what? Well…had the market closed around 2pm EST it would have been a completely different story…Dow was up nearly 120 points and a new high!…followed by a plummet to -50 (like Minnesota temps!). As TB said in the last commentary before leaving: aren’t we running out of reasons to rally yet?

One thing TB was wrong about was options expiry…not only did stocks continue to climb but volatility ROSE? from 13.57 (and 14.14 on 2/13) to 15.47 (Weds before options expiry!), and ended the month at 14.00…rising even as Dow rose 1% for the two weeks, S&P +1.3% – and a record high close?; but Transports up just 0.6%; NDQ 100 +0.9% and closed just 3 points below Thursday’s record high close??? The Nasdaq Composite rose 1.5% and closed just 9 points below Thursday’s record high close. Freaky huh? Dow Utilities, which are the best performer ytd (+5.8%) and barely in 2nd for the last three months at +6.3%, were FLAT for the two weeks? Question: why are income producing stocks doing so well…even for 12 months, 7.8% is nothing to sneeze at although eclipsed by all the others double digit gains…but the year is young…no?

A note on volume: unimpressive and weak for the most part, with a NYSE low for the period of 3.09B shares on Valentine’s Day and a high of 3.99B shares on Friday’s monthend! Not even an average 3.5B shares on options expiry. Real Volume on the floor was generally weak…about 100M below average with three exceptions: most notably last Friday’s 960M shares – highest since 12/20 but again it was monthend; 808M on options expiration;  and 845M shares on the following Monday. Average is about 723M shares! It has been above 700M just 18 times since 12/20 and the average is just 694M shares. Last year there were just TEN 1B+ share sessions! There have been 48 800M+ shares since 12/31/12: 20 up, 24 down, 4 mixed.

GOLD rose just 0.3% for the two weeks but is strong again and up $25 overnight (2%), while Crude rose from par by 2.3%! and it two is up another $2 (2.1%) o/n! Hmmm?

As for bonds, the 30 year yield declined by 12 basis points to 3.58%, and the 10 yr by TEN. Both of these are stronger by 3-5bp’s overnight too!!! TIPS performed similarly.

Here is the scoreboard thru February:

 

Index

February

YTD

3 mos.

12 mos.

Returns

2/28/14

2/28/14

2/28/14

2/28/14

Dow 30

+6.2%

-1.5%

+2.6%

+15.8%

Transports

+4.2%

-0.7%

+6.3%

+22.8%

Dow Utilities

+3.4%!

+5.8%!!!

+6.3%

+7.8%

S&P 500

+6.8%

+0.6%

+3.6%

+22.5%

NASDAQ Comp

+7.8%

+3.2%

+6.7%

+35.9%

NDQ 100

+7.4%

+2.9%

+6.2%

+34.5%

Russell 2k

+8.1%

+1.7%

+5.3%

+29.3%

NYSE Fin

+6.0%

-1.0%

+1.1%

+16.4%

 KBW Banks

+5.4%

-0.4%

+3.2%

+27.6%

 NDQ Banks

+6.7%

-0.9%

+2.4%

+28.4%

Comments:

  1. Dow Utilities continue to be the best performer ytd and barely lag the Nasdaq Composite for the three months.
  2. Note the Russell 2000 led the month with an 8.1% gain! Comp +7.8%, 100 +7.4%
  3. Transports are lagging and have had a disconnect from the Dow 30 several times over the past month…Dow theorists take note! Also return is NEGATIVE YTD!
  4. Remember the year is young…and fraught with RISK! Don’t be a pig!!!

Bonds closed little changed and mixed. Finally below the mid-Oct. levels, when the storm hit. 30 yr 3.58% – the high was 3.97% on 12/31; the 10 yr 2.65%, recent high 3.03%! Long TIP 1.29%, high was 1.64% 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. –  record lows set recently: 0.329% 6 mos!  3 mos just above its 0.233%!!!). NOTE the Fed Funds rate has averaged 0.08% since 5/22/13 and is steady at 0.06-0.09%!!! Foreign bond yields mostly lower overnight ,ex-Portugal/Greece: Germany 1.58% -5; UK 2.67% -5 – recent high 3.03%!; France 2.16% -4; Italy 3.45% -2; Spain 3.50% -1; Portugal 4.85% +2; Greece 6.96% +6 – Friday’s new low was 6.90%! Recent range now 6.90% to 12.57%. Japan: 0.57% -1.

Gold closed lower but still $3 higher than two weeks ago at $1321.60 -$10.20. It has closed above the psychological $1300 every day since 2/12! It has also been above the 200 day since 2/14! It is now major support at $1306. The high was $1345.60 on 2/26 – highest since 10/31when the selloff began!!! Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!!  Recent high is $1375.40 back on 9/19. Psych levels: $1200 and $1300 support, with critical support at the 40 day ($1271) and the 50 day ($1259).  Overnight high is $1350.50 replacing the 2/26 high and is currently $1347.80 +$26.20!!!

 

Crude closed little changed at $102.59 +.19 but well above the $100.30 on 2/14! It has held ‘par’ since 2/12 which was the first time since 12/27/13! 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. Distant support is at the 40 day m/a ($97.62), and the 50 day m/a ($97.87). FIRST SUPPORT at the 200 day ($99.87) The recent range is $85.61-$112.24 since March 1, 2012. It is currently $104.16 with a high of $104.97 – highest since 9/23/13!!!

Overnight global equity markets:

Global equity markets being slammed! UK -1.6%! France -2.3%!!! Germany -2.9%!!!; Japan -1.3%! Hang Seng -1.5%!!! Korea -0.8%; India -0.8%. U.S. markets following suit: Dow -150! S&P -15; Dow Transports -67! Composite -39; NDQ 100 -31. Best? Dow Utilities…again…-3.38 (-0.8%). ROCK AND ROLL!!!   

 

Some random thoughts:

Being away for two weeks was wonderful on several counts: first, the weather…just when you thought it couldn’t get worse in Minnesota – it did! We left on 2/16 a nice sunny day…not long after though it turned to merde! Most of the time we saw extreme weather warnings for Minnesota and that was nothing compared to the East Coast corridor (conversely California is begging for rain in the worst drought in hundreds of years…anyone recall Cadillac Desert? Hmmm!)

Paris go up to the 50’s most of the time we were there…shirtsleeve weather for Minnesotans – and shorts! Generally sunny at least part of the day, a few showers with most coming late at night Just one day of real rain and again, only in the morning.

Had my trusty Bloomberg with me…kept up but due to the 7 hour time difference – 9 from the West Coast, didn’t linger on the market…just comforting to have access if and when needed. Didn’t pay much attention to the news except headline stories and read the International New York Times on the plane home yesterday. Some interesting stories.

Now about the trip: we stayed at our favorite spot: the Ile St. Louis. Our second time there (6th time to Paris) and little had changed. It is the best location in Paris because it is in the middle of the Seine…connected by a bridge to the Ile de la Cite and Notre Dame. Going either to the left or right bank is equidistant so you can do a lot of walking and really feel Paris!

Last time we stayed at the Hotel de St. Louis right on the main street – there are only three on the ile…Rue d’Ile St. Louis. This time we rented an incredible apartment on the other side of the street and down a block. That is the way to go…at $200 a night and able to eat some meals in was great. Generally, we had coffee and croissants in the morning and a big late lunch with wine and cheese…and fois gras back at the flat. The owner was helpful and while it was very small it was also very comfortable.

The best part was we were like locals, not tourists. We got to know the people of the Ile and had no agenda for specific days. We had been to all the museums…mostly…in the past. This was the most relaxing and best trip ever!

Had several conversations with French people…attended a Rotary meeting there and was treated like royalty by the members even though I speak little French…but I did master the ‘air kiss’ at the meeting. The French are very warm and kind people so forget the Larry Kudlow’s of the world who berate them. Even the waiters aren’t as rude as people tell you. Avoid other Americans though as you end up focusing on one another and looking bad or like an ‘Ugly American’ in your zeal to have fun…just try to avoid it and learn from the people there. Also, we had a couple of incidents on the street where people stopped to help us…give us directions…suggest a very nice Kodak moment…or take your picture for you. This is what happens when you act like a local rather than an American in Paris!

I was having lunch alone in a restaurant (Balzar) and a woman was seated next to me…in her seventies, ok??? She saw me writing in my journal and asked where I was from. Well…we shared a love for San Francisco as the world’s second best city…after Paris! She had been to many of my old favorite restaurants there, now gone” Chez Michele, Le Castel and the brasserie Le Central. A wonderful lunch reminiscing. She said she loves Obama but has hated every other American president starting with Reagan…I saw her point. She and others we spoke to thought Congress is a despicable joke…I concurred!

We were having our traditional lunch at another favorite, Le Precope – the oldest restaurant in Paris and seated next to us was a well-dressed man. He seemed to ignore us until he heard us talking about restaurants. Turned out he is a well-known artist, work is similar to Guy Buffet, a very nice guy.

We use Paris Shuttle to and from Charles de Gaulle and the man who picked us up on the way back to the airport was one of the owners – well-educated and we discussed many of the differences between the U.S. and French economies. He thinks our system is much better but thinks unemployment in both countries is horrible. We both feel that when one can make nearly as much from unemployment or other welfare as when you work that there is little incentive to find work…also he sees there the same lack of skills in the labor force as we have. Sure sounds like Econ 101 to me…you?

May be a while but we will return to Paris but we most assuredly will.

Au revoir!

TB 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: