4/3/14…oh it’s just a few microseconds…

Quote of the Day from the Friars Club Encyclopedia of Jokes: “I don’t make jokes. I just watch the government and report the facts.” – Will Rogers – fact from Congress??? An oxymoron! TB

Bloomberg Quote of the Day: “Players win games, teams win championships.” – Bill Taylor

Bloomberg Top Stories:

*Credit Suisse Restates Fourth-Quarter Loss on Charge for U.S. Tax Probe – $570M +$69M

*ECB Holds Rate as Draghi Builds Consensus on Defusing Threat of Deflation

*Dollar Rallies to 10-Week High Against Yen Before Jobs Data; Krona Weakens

*Bickering Billionaires From Kravis to Black Dodge Chaos at Energy Future – global warming?

*Gazprom’s $910 Billion Gaffe Shows How Putin Economy Is Wiping Out Wealth – for sure!

*U.K. Gas Posts Longest Losing Streak Since ’08 as Warm Weather Cuts Demand – warm???

*Morgan Stanley’s Porat Sees Embarrassment as Too Few Women Run Companies – see they want them to take over like Barra at GM to bear the brunt of the men’s crimes!

*Londoners Priced Out of Housing Blame Sales to Foreign Buyers – NY’ers priced out too!

*Tobacco Packaging to Go Brand Free as U.K. Tackles Childhood Smoking

*China Plans to Support Economic Growth With Rail Spending, Tax Reductions

*Google, Previously GOOG, Is Now GOOGL Until It’s Again – due to the new Class ‘C’ shares

*Formula From 1945 Casts Doubt on Accuracy of U.S. Shale Estimates – overstates reserves!

*Turkey Top Court Orders Erdogan Government to Remove Ban on Twitter Access

*Iraq Veteran Kills Three, Hurts 16 Before Shooting Self at Texas Army Base – PTSD – DUH!!!

*Late Surge of Obamacare Sing-Ups May Signal Younger, Healthier Customers – bad for GOP

*High-Speed Trading Might Really Be Too Efficient for Markets – poor CFA’s learned wrong!   

Wednesday’s Market Summary:

Another up day similar to Tuesday but not as fulfilling with a lot of ‘waffling’ before ending higher – S&P at record high…but up just 0.3%??? Don’t pop those corks yet! Dow Transports were best performer +0.7% vs +0.9%, while the Dow ended in a three way tie with the two Nasdaqs up just 0.2%. The Russell 2000 rose 0.4% vs +1.7% while Dow Utilities again assumed the position of ‘goat’ at -0.2% vs -0.6% – only loser two days running.

Do high-frequency traders influence markets? NYSE Financials were up just 0.2%..ok…then how did this happen? Look at the last three sessions: +0.2% vs +1.3% vs +1.1%…wait there’s more…Brokers +0.8% vs +1.4% vs +2%; KBW Banks +1.2% vs +1.2% vs +1.2%, and Nasdaq Banks -0.2% vs +1.6% vs +1.6%. Thought the whole was equal to the sum of the parts – which excludes of course Nasdaq Banks?!? BofA back to most active -0.5% vs +0.8% vs +1.3% – to 17.25 -.09, can it hold $17?

Here is another problem (stop being so picky TB!!! – rallies are good! Not always!) NYSE Volume fell again to a weak 3.1B shares vs 3.3B vs 3.35B…note 3.5B is 12-month average! Ditto for REAL floor trades which plunged to a weak 653M shares from an average 724M vs 847M vs 639M shares. Advance/Declines and Breadth were positive for a second day but not as much as Tuesday…the NYSE was +1.4x vs +2.5x and +2.1x vs +2.6x, Nasdaq +1.3x vs +3.1x and +1.6x vs +6x!!! – that last one on Nasdaq Breadth was impressive and obviously due to the surge in the NDQ 100 (+2:1 advancing vs 93:6!). New 52 Week Highs up slightly to 327 vs 306 vs 226 vs 110, while New Lows plunged to 18 – within 2 of their cycle low vs 30 vs 38 vs 56. Lastly, Volatility (VIX) barely budged but with an intraday low of 12.92 after falling sharply for two days to 13.09 -.01 – three straight days below 14 after 16 sessions above with a high close of 17.82 on 3/14 and an intraday high of 18.22. This could be quite a problem for bulls in three weeks – the next options expiration!

Overnight Comments:

Bonds: closed even weaker while stocks climbed AND THE CURVE FLATTENED with 10’s taking out the 3/3 high of 2.79%! (10’s 2.81%!!! vs 2.75%, 3/3 high 2.79%; 30’s 3.65% vs 3.61% from 3.73%). Overnight, a tad higher but 10’s continuing to lag : 10 yr 2.80% +1/16; 30 yr 3.64% +1/8; TIP 1.35% +3/16. Recent ranges: 30 yr high was 3.97% on 12/31; the 10 yr recent high 3.03%! Long TIP recent high was 1.64% The (record?) low of 0.36% was set on 4/5/13.  Libor update: 0.230% 3 mos, 0.328% 6 mos. –  new record lows set Monday: 3 mos  0.228%; 6 mos 0.328%! NOTE the Fed Funds rate has averaged 0.08% since 5/22/13 and is steady at 0.07% -0.09%. Foreign bond yields slightly higher while Greece continues to decline – high-freaks??? Germany 1.62% +1; UK 2.77% -1 – recent high 3.03%! France 2.15% +1; Italy 3.32% +2; Spain 3.29% +3; Portugal 4.00% +3; Greece 6.04% -6 vs 6.14% vs 6.37% vs 6.48% vs 6.54% vs 6.75%! yet another new post-crisis low!!! Recent range now 6.04% to 12.57%. Japan: 0.64% +2.

Gold wasn’t noteworthy other than it finally closed higher and without an intraday low a day after trading down to $1277.40, lowest since 2/10. It closed at $1290.80 +$10.80. It has been in trouble since imploding a week ago, breaking all supports. Yesterday was the first higher close but still six straight sessions below $1300 since 2/12!!! – off $94 in 13 sessions  following the reversal! On 3/17 it had a new recent high of $1392.60, highest high since 9/4/13 – that ended in an outside day and nearly a negative key reversal and has been down every day since!It had closed above the psychological $1300 every day since 2/12! …and above the 200 day since 2/14, which is now first resistance!!!. Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!!  Psych level: $1300 res, AND technical res at the 200 day, $1297, then the 50 day, $1308, and the 40 day, $1321!!! Overnight giving back most of the gains at $1283.40 -$7.40.

Crude closed lower for a second day after ending the nice rally and remains not only below par but below all three moving averages! This, just four days after finally breaking above the 40/50 and 200 day m/a’s and hitting $102.24, highest since 3/10. It closed at $99.62 -.12. It had been back above $100 for six days. The session low was $98.86, lowest since 3/25! On 3/10, it had a high of $102.82 then plunged below the 200 day! 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. First RESITANCE is the 50 day ($99.99), then the 200 day ($100.50), and finally the 40 day ($100.73). The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is in an ‘inside’ session and is now $99.45 -.17. Look out below!

European equity markets lower, Asia mixed: UK -0.1% vs +0.2% vs +1% vs +0.3% vs +0.1%; France -0.3% vs — vs +1.1%! vs -0.1% vs +0.4%; Germany -0.2% vs +0.1% vs +0.7% vs +0.1% vs +0.9%; Japan +0.8% vs +1%! vs -0.2% vs +0.9% vs +0.5% vs +1%; Hang Seng +0.2% vs +0.3% vs +1.3%!!! vs +0.4% vs +1.1%!; Korea -0.2% vs +0.3% vs +0.3% vs +2.3%!!! vs +0.2%; India -0.2% vs +0.5% vs +0.3% vs +0.2% vs +0.6% vs +0.5%. U.S. equity futures little changed in another narrow range which has become the norm: DOW +5 (range 34); SPX +0.10 (5); NDQ -0.75???(10!!!)   

 

Some random thoughts:

You cannot begin to imagine the treachery (by Goldman and Morgan Stanley – the former now disavowing high-frequency trading) to their clients while benefitting at their expense as they scrambled along with 200 hedge funds to pay $12 million (up front) for a five year non-cancellable contract to shave 15 mcroseconds off communication time thus making the ‘random walk hypothesis’ a sick joke. Those poor CFA’s and MBA’s who were indoctrinated into the rationality of markets and prices being representative of what a stock is worth. Balderdash!!!

I am about 15% through Michael Lewis’ book and while some call him an opportunist, TB calls him a whistleblower doing a service that Congress and the SEC failed to provide…the first for monetary gains, the latter has no excuse, they simply failed in their duty to protect investors. This is not surprising, since the government took the view that with non-regulated securities they were only bought and sold by sophisticated investors – of course, one crisis and five years later we know that was completely wrong! That, doesn’t even mention the people who were duped into mortgages they didn’t understand and in many cases were designed to default.

In case you agree with CNBC’s Rick Santelli who railed on the floor of the CBOT ‘does anyone here want to pay for someone else’s mortgage?’ The answer was a booming NO!!! But in the end they did pay as all Americans did for the transgressions not of those taking out mortgages or buying overpriced homes they couldn’t afford (but were told they could!), in some cases were steered into subprime when they could have qualified for conventional (mainly minorities!), into floating rate vs. fixed with resets not explained that spiked the rates to where they couldn’t afford the payments. Caveat emptor? TB believes in that but not when they not only mislead you but in many cases…and these by some of the biggest banks…restated their financials for them – wait, isn’t that fraud? Again, TB says: there is nothing wrong with me asking for a $1 million loan. It is the lender’s bad when he grants the loan…ignoring basic financial facts and even covers them up.

If you say “they should have known better”, shame on you for being part of the problem. Those who felt that way became tea-partiers and have created the biggest mess in our government in nearly 100 years.

Not related, except that Congress is at it again. Remember the Crimean crisis…Congress demanded we do something…then  they went on vacation…some even went to the Ukraine so they could voice their dissent. Don’t worry, they said, it will be the first item on the agenda upon their return. Well…according too Mark Shields on PBS, Boehner sent a memo to the senate that any resolution that the Senate sends to them MUST contain a clause requiring the Treasury to stop investigating…are you ready for this??? THE KOCH BROTHERS!!!  Now I am going to hurl!

Oh, and three weeks later…still no action – except by the ‘evil’ Obama administration!

Doesn’t it make you sick to see Harry Reid…and even more so…Mitch McConnell grab the mike with several of their compatriots (not to be confused with patriots), standing behind them nodding in agreement while they spit out lies? Hey, whatever happened to those requisite American Flag pins to show how much of a patriot you are? Will close with a Doonesbury cartoon in which a congressman is leaving to give a speech and can’t find his American Flag pin. His wife says: why don’t you wear the one that is on your pajama’s? His answer: no this is for a speech!

Have a great day!

TB

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