5/13/14…back home again…in Minnesota

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Basically my wife was immature. I’d be at home in the bath and she’d come in and sink my boats.” – Woody Allen

Bloomberg Quote of the Day: “Life itself is the proper binge.” – Julia Child

Bloomberg Top Stories
*American Shoppers Took a Breather in April After March Retail Sales Surged
*Pfizer’s Read Puts AstraZeneca Case to Lawmakers While Weighing Higher Bid
*AT&T Said to Be in Advanced Talks to Acquire DirecTV for About $50 Billion
*Stocks in U.S. Little Changed After Data as Treasuries Advance, Euro Drops
*Pimco’s ‘New Normal’ Morphs Into ‘New Neutral’ After El-Erian Leaves Firm
*Coca-Cola Raises Keurig Green Mountain Stake to 16% After Initial Purchase
*Google to Face Data Removal Demand as EU Court Backs Right to Be Forgotten
*Euro Bond Yields Lose Sway in Blow to Draghi’s Deflation Fight
*Fannie-Freddie Overseer Eases Buyback Rules to Spur Home Sales
*Florida Shrinks Debt Most in 30 Years With Schools Crumbling – seniors win!
*The Secret Brazilian Happy Meal That McDonald’s Keeps Behind the Counter
*Lehman Trade Is Gift That Keeps on Giving for John Paulson to King Street
*Russia Warns of Ukraine Crisis as Gazprom Sets Deadline for Payment on Gas
*Showdown Coming in U.S. Senate on Reviving $80 Billion Business Tax Breaks
*EU Election Campaign Halted in Spain as Rajoy Mourns Murdered Politician
*Brought Hastens Fire Season With U.S. Damage Projected to Top $1 Billion

Monday’s Market Summary and changes since 4/23 (TB’s last update):

A strong but strange brew…The Russell 2000 took honors +2.4%!?! That was followed by Dow Transports +1.9%, then the Nasdaq Comp +1.8% and the 100 +1.6%. S&P 500 +1%, then the Dow, up just 0.7%…still a nice day. Only casualty was Dow Utitlities -0.9% – but that is hardly a proxy these days for big dividend payers which did well…especially mortgage REITS. Advance/Declines and Breadth also strong…especially the latter and New 52 Week Highs which had fallen to a weak 93 on Friday surged back to 233…BUT (there’s always a ‘but’ on the good news…New 52 Week LOWS rose to a high 214 from 209 – things that make you go hmmmm.
Now for the ‘big hurt’” VOLUME, just 2.98B shares (average is 3.5B)…Friday’s was also weak at 3B, and lowest since 5/5’s 2.7B share day…both were modest ‘up’ days! Note that 4/30’s was 3.7B – above average and a plus day…but also monthend (index funds rebalancing)! Now for the most confusing…VIX…after closing at 21.44 (just off high of 21.48) on 2/3 and very bearish, it has had lower highs of 18.22 (3/14), and 17.85 (4/11), it settled Friday at 12.23 -.69 after ‘gapping down’ on the open with a low of 11.88 – lowest since 1/15 – BUT just like that date, note that Friday is yet another options expiry…let the fireworks begin Note that the Dow closed on 12/31/13 and went sideways and on the January expiry closed at 16482…it then began a decline to 15373 on 2/3!!! THIS could happen again…unless you believe stocks are fairly valued here? Do you, punk?…well do you? Note that in June, August, and September 2013 and January 2014 – you could have sold on the options expiration (third Friday) and bought considerably cheaper!
Just a thought…but one worth considering…unless you are a die hard bull who keeps watching the indices (Dow and S&P) continue to eke out new highs or ride at them, while the two Nasdaq’s peaked in early March!!! So did the Russell 2000 small cap…the leader yesterday with that 2.4% gain??? – ytd it is STILL -2.6%??? Meanwhile, the Nasdaq Composite and 100 are up just 0.8% and 0.6% respectively…hmmm. The winners? DOW UTILITIES +9%!!! Followed by Dow Transports +6.3%…while the S&P 500 is up just 2.6% and the Dow 30 just 0.7% – would you have thought that from reading the bulls comments or watching CNBC? No freaking way!

Upshot: we continue to see average volume…with rallies on low to average volume and retail running will below average (725M shares). Monday’s rally? Just 641M shares…which negates the strong A/D’s and Breadth!!! High frequency trading…still running the show and SICK!!!

A an up session of sorts with all indices up from 0.4% (DOW) to 1.2% (Russell 2000) except the ‘hot’ Dow Utilities which were flat for a second session following Thursday’s 1.1% decline which scarcely dented its performance…nothing to see here. Nasdaq Composite came in second again at +1% vs +0.6%; NDQ 100 +0.8%; Dow Transports +0.6%, while the S&P and Dow were both up 0.4%. End result: useless information due to too much white noise.
Volume rose slightly but insignificantly …of course…it was an UP day: 3.18B shares vs a WEAK 2.62B vs 3.31B vs 3.14B vs 3.72B while actual trades on the NYSE rose only slightly to a still well-below average 679M shares vs a WEAK 603M (second only to 1/3’s 544M share day!), this from a strong 834M shares on a mixed sessions. Drilling down further: 675M vs 746M (12 mo. ave. slipped to 724M shares!)

Overnight Comments:

Bonds: ‘blipped’ up yesterday with the 10 yr at 2.66% but back to 2.62% overnight. 30’s went from 3.38% to 3.50% and are now 3.4%. the long TIP was as low as 1.05% on 5/2, rose to 1.19% yesterday and is now 1.16%. Cycle highs: 30 yr high was 3.97% on 12/31; the 10 yr recent high 3.03%! Long TIP was 1.64% The (record?) low of 0.36% was set on 4/5/13. Libor update: 0.224% 3 mos.; 0.323% 6 mos., both just off their record lows: 0.222% and 0.320% respectively! The Fed is driving this by continuing to pay 0.25% on their excess reserves – why lend??? 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 0.08% -0.09%. Foreign bond market yields mostly lower – ex-Greece: Germany 1.53% -1; UK 2.69% -2, – recent high 3.03%! France 2.01% –; Italy 3.09% -1; Spain 3.04% -2; Portugal 3.63% -1; Greece 5.89% +4 vs 5.85% vs 5.93% vs 6.08% vs 6.29%!!! vs 6.15%!!! vs 5.77%!!!. Range is 5.77% to 12.57%. Japan: 0.61 +1.

Gold closed higher with a surge to $1304.50 in an outside session closing at $1295.80 +8.20 April Fool’s rally began at $1277.40 and was totally negated! It is well below all three moving averages and the psych support level of $1300 with first res at the 200 day $1301, then the 40 day $1304, and the 50 day $1314 – following the ‘key 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!!! Overnight it is little changed at $1296.40 +.60.

Crude closed slightly higher in an inside session but remains WEAK at $100.39 +.60 – when TB left it was $102. 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 RES is the 50 day ($100.98) then the 40 day ($101.14), the 200 day is $100.43. The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is $101.21 +.62 with a high of $101.52.

Global equity markets slightly higher, Japan and India strong: UK +0.1%; France +0.3%; Germany +0.6%; Japan +2%!!! Hang Seng +0.4%; Korea +0.9%; India +1.4%! U.S. equity futures higher in the usual narrow trading range: DOW +21 (range 30); S&P +2 (4!); NDQ +6 (10).


Some random thoughts…

Got back last night and had an interesting and thought-provoking trip to Florida, D.C. and an interesting drive back. Hope to have a summary tomorrow.

It’s good to be back even if it is gloomy in Minnesota.

Have a great day!



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