4/14/14…can you trust those reported returns? …sometimes

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Golf is a lot like business. You drive hard to get in the green, and then wind up in the hole.” – unattributed

Bloomberg Quote of the Day: “Injustice anywhere is a threat to justice everywhere.”
– Martin Luther King Jr. …and the U.S. today there is plenty of self-induced injustice. TB

Bloomberg Top Stories:
U.S. Retail Sales in March +1.1%; Ex-Autos +1%; Median Est. +0.9%; Biggest since 9/12; excluding gas stations +1.4% – most since 2010; Autos +3.1% also highest since 9/12. Retail Sales in Feb. revised to +0.7% vs +0.3% – bonds slipping on news! Long end of ¼.
*Citigroup Quarterly Profit Unexpectedly Rises on Release of Loss Reserves – see, more optimistic of course, loan losses have declined! Wonder if they laundered more money, too?
*Stocks Drop With Ruble as Commodities Rise on Ukraine Tension; Gas Climbs – earlier…now:
*Stocks in U.S. GAIN on Citigroup Earnings, Retail Sales as Treasuries Rise – but slipping
*Trillion-Dollar Firms Denominating Bond Market Trigger U.S. Investigations
*Technology Bears Miss Biggest Drop Since 2011 After Covering Short Sales – too soon!
*TIAA-CREF Agrees to Acquire Nuveen for $6.25 Billion, Adding Mutual Funds – oy vey!
*GM Records Show Co-Workers Stymied In-House Sleuth Probing Ignition Switch – Switchgate?
*Obama’s Shrinking Deficits Silence Foreign Critics as Tax Revenues Mount
*Lending Drops to 17-Year Low in U.S. as Rates Curb Mortgages – Fed paying +0.25%!
*Pound Bets Most Bullish in Three Years With U.K. Housing Boom Accelerating
*Hedge Funds Boosting Bullish Crude Wagers as OPEC Output Contracts – hey it’s just OPM!
*Pimco Loses to Goldman in Hot New Bond Strategy as Gross Fund Trails Peers – awwww!
*Where Are the Technology Short-Sellers When You Need Them – doing high-freak trading!
*World-Leading $25 Hourly Wage Floor Pits Swiss Business Against Coal Union
*European Union Weights Tougher Russian Sanctions as Ukraine Tension Mounts – and U.S.???
*Republican Odds of U.S. Senate Takeover Rise as Democratic Turnout Shrinks
*Twitter’s Crowell Heads to Turkey for Negotiations Amid Erdogan Ban Threat
*Beijing Jumps Into Top 10 in A.T. Kearney’s Global Appeal Rankings – too hell with smog!
*The Dangers of a Worldwide Drift in Economic Policy – Mohamed A. El-Erian…heed! Smart man!

This week’s economic calendar is fairly light. The highlight of the week will be the March Retail Sales (Monday) and March CPI (Tuesday). We will also get February Business Inventories (Monday), April Empire State Manufacturing (Tuesday), March Housing Starts, March Industrial Production and Beige Book (Wednesday), and April Philadelphia Fed Survey (Thursday). Courtesy of Economic Data Service

Friday’s Market Summary:

Friday was…in a word…a disaster – wait…didn’t TB say that about Thursday? Uh, yeah! Now we can look forward to THIS Friday’s options expiry. For a second day the market struggled throughout the session and went out just off the lows – the dawning of a new bear market? Total NYSE Volume was steady at a solid 3.73B shares vs 3.73B vs 3.3B vs 3.7B vs 3.77B vs 3.6B vs 3.03B shares. REAL NYSE Volume (if there is a such thing anymore!), rose again to a high 815M shares vs 771M vs 703M vs 836M vs 781M vs 661M vs 653M vs 724M (12 mo. ave!) vs 847M vs 639M. All indices were down by at least 0.9% with the Russell 2000 the goat, off 1.4% followed closely by the two Nasdaqs (-1.3%,-1.2%), then the S&P 500 -1% and both the Dow and Dow Transports -0.9%. Best of show was again Dow Utilities -0.1% vs -0.5% and are now up 9% ytd! +0.5% this ugly month which has seen all the indices down by 1.75% (Dow) or more. Banks are the worst for the month: KBW -4.7% and Nasdaq Banks -4.1% – didn’t TB warn you of that? They will be even worse today as JPM earnings plunged 19% – worse than anyone expected – in pre-market trading it is $55.77-55.80 – $1.40 or 2.4% following yesterday’s 1.2% drop…Jamie???
Of the major indices yesterday the worst were the two Nasdaqs, -3.1% and -2.9% respectively; the Russell 2000 -2.6%; S&P -2.1%; Transports -2.1% and the Dow -1.6%. NYSE Financials -1% vs -2.1% vs +1.4% vs +0.2% vs -1.5% with Brokers -2% vs -2.8%!!! vs +1.4% vs +0.6% vs -2.1%; KBW Banks -1.1% vs -3%!!! +0.5% vs flat vs -1.6%; Nasdaq Banks -0.7% vs -2.5%!!! vs -0.1% vs +0.1% vs -0.7%.
BofA most active: -2.2%! vs -2.9%!!! vs +1.1% vs +0.3% vs vs -1.9%! vs -2.5%! Closed $15.77 -.35! Session low was $15.62 – lowest since 12/31/13!!!

Here are the latest returns – not pretty except Dow Utilities!!!

As of 4/11/14 MTD YTD
Dow -2.6% -3.3%
Transports -3.8% 0.2%
Dow Utilities 0.4% 8.9%
S&P 500 -3.0% -4.2%
NDQ Comp -4.8% -4.2%
NDQ 100 -4.1% -4.0%
Russell 2000 -5.3% -4.5%
NYSE Fin -3.4% -3.1%
KBW Banks -5.8% -1.7%
Nasdaq Bks -4.7% -2.3%

CAUTION!!! Money managers have benefitted by those great multi-year returns which as TB has pointed out have been long term returns. Remember that figures lie and liars figure. Look at the returns on the S&P 500 for 3 and 5 years…then add one quarter since the bottom was in March 2009…and they will continue to shrink from here. 3 year got a boost to 21.8% from the prior plunge to just 14.6% (dividends reinvested), BUT look at five years +21.1% from +47.4%!!! Also, remember that there is not much of a ‘kicker’ from reinvestment in the index over having just put the money in treasury bills (averaging 6.6%). Just 67 basis points for five years and just 55bp’s for three years! That is a sign of extreme volatility as it is normally way more than 1%!

Advance/Declines were very negative again …the NYSE was -2.5x vs -3.4x! vs +2.7% vs +2.1x vs -2.1x vs -1.9x vs -1.5x, Nasdaq -3.8x! vs -6.3x!!! vs +2.9% vs +1.9x vs -3.2x vs -4.9x! vs -2.3x. Breadth was extremely negative – again! NYSE -4.2x! vs -7.4x!!! vs +2.7% vs +2.2x vs -4.4x!!! vs -1.9x vs -1.5x; Nasdaq -5x! vs -14.5%!!! vs +6.3%! vs +2.2x vs -3.1x vs -7.3x!!! Looks like a trend to TB – indeed! Nasdaq declining issues beat Advancers for a second day by 4.3:1! vs -7.8:1!!! vs +3:1 vs +2.1 vs -3.4:1 vs -6:1 on the Composite and by –44:1! vs -100:1!!! vs +7.4:1! vs +3:1 vs -4:1 vs -97:4 on the 100!!! New 52 Week Highs were more than halved to a WEAK 42 vs 97 vs 138 vs 60 vs 56 vs 268 vs 273 vs 327 vs 306 vs 226 vs 110, while New Lows jumped to a high 151! vs 91 vs 37vs 56 vs 107 vs 71 vs 31 vs 18 – within 2 of their cycle low . Lastly, Volatility (VIX) surged 7% following a 15% increase from the lowest in five sessions closing at 17.03 +1.14!! The range was 15.89-17.85! – highest since 3/14!…options anyone? On Wedneday TB said; the decline “could be a set-up for a week from Friday’s options expiry.” Prophetic? The low of 12.60 just six days ago was lowest since Jan. 22!

Overnight Comments:

Bonds: rallied sharply for a second day while the curve continued the ‘bull flattener’ (10’s +3/16 vs +3/8; 30’s +11/16 vs +1 pt; Long TIP +1 pt vs +1-5/16 – seven days after the 10’s replaced the 3/3 high of 2.79% with a 2.80% BUT, like a bad golfer, no follow-through! (Latest: 10 yr 2.18% -1/8; 30 yr 3.48% –; TIP 1.19% — long end holding! Recent highs: 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: 0.229% 3 mos.; 0.323% 6 mos. The Fed is driving this by continuing to pay 0.25% on their excess reserves – why lend??? Just out: lending at 17-year low!!! But Fed has no choice in financing the securities they bought in the QE’s! NOTE the Fed Funds rate has averaged 0.08% since 5/22/13 and is glued to 0.07% -0.09%. Foreign bond yields little changed while Greece continues to loose ground since the auction – now up 47bp’s from the NEW post-crisis low – set THURSDAY! In a word – sukkahs!!! Look at the PIGS – do you think they shorted them against Greece then reversed after the auction??? DUH!!! Germany 1.52% +2; UK 2.63% +2, – recent high 3.03%! France 2.00% –; Italy 3.17% -4; Spain 3.13% -5; Portugal 3.89% -5; Greece 6.29%!!! vs 6.15%!!! vs 5.77%!!!. Range now 5.77% to 12.57%. Japan: 0.60% –.

Gold had an ‘inside’ session one day after posting a high of $1324.90 – highest since 3/24 – and closed at $1318.70 -$1.40. Just 8 days after trading down to $1277.40, lowest since 2/10. Back above the 200 and 50 day with the 40 day in striking distance. Still could do it! Perhaps today? 3/4 was the 1st close above the 200 day and $1300 in eight sessions! – now off $51 in 20 sessions following the reversal on 3/17 after printing new recent high of $1392.60, highest high since 9/4/13 – that ended in an outside day and nearly a negative key reversal! Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!! Psych level: $1300 sup, with technical support below at the 50 day $1315 then the 200 day, $1298, and first res just above at the 40 day, $1326. Overnight $1325.30 +$6.30 AND a new high of $1330.80 highest since 3/24.

Crude tried to break out and put in a new high of $104.44 along the way, highest since March 4. It closed at $103.74 +.34. On April Fool’s Day it finally broke above the 40/50 and 200 day m/a’s, trading up to $102.24. 3/2’s session low was $97.37, lowest since 2/4! 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 SUPPORT is the 40 day ($101.22), then the 50/200 day ($100.71 – locked!). The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is slightly weaker at $103.51 -.23 in an ‘inside’ session.

European equity markets ALL even??? Asia mixed: UK – vs -1.1%! vs +0.3% vs +0.8% vs -0.8%; France – vs -1.3%! vs +0.1% vs +0.4% vs -0.7%; Germany – vs -1.7%! vs +0.3% vs +0.2% vs -0.7% vs -1.5%!!! Japan -0.4% vs -2.4%!!! vs – vs -2.1%!!! vs -1.4%! vs -1.7%! Hang Seng +0.2% vs -0.8% vs +1.5%!! vs +1.1%! vs +1%! Korea – vs -0.6% vs +0.5% vs +0.3% vs +0.2%; India closed vs -0.4% vs +0.1% vs +1.6% vs closed. U.S. equity futures higher in another narrow range: DOW +62 (range 42); SPX +9.60 (18); NDQ +23 (37). Stock market opening higher too: Dow +82; Trans +77; S&P +12; Comp +32; 100 +25; R2k +7

Spring is still in Minnesota…not so nice over weekend but sunny again today! But 31 degrees 

Have a great week!



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