Quote of the Day from the Friars Club Encyclopedia of Jokes: “Nowadays you can’t even spank your kids. My dad would take time out of his busy day…to whip our ass.” – Jeff Foxworthy
Bloomberg Quote of the Day: “We would accomplish many more things if we did not think of them as impossible.” – Vince Lombardi…the greatest football coach of all time…as a motivator!!!
Bloomberg Top Stories
*Wholesale Prices in U.S. Gain Most in Year as Deflation Threat Seen Ebbing – long bond +1pt!
*Carney Says Increase in Interest Rate Can Wait as Economic slack Persists
*Stocks in U.S. ‘Fluctuate’ Near Records While Small-Cap, Tech Shares Slide
*Emerging Market Stocks Gain With Bonds on Stimulus as European Shares Drop
*Google to Microsoft to Face User-Request Overload After EU’s Privacy Ruling
*Wall Street Fixed-Income Bonuses Seen Falling as Asset Managers Get More
*European Bonds Lead Global Rally on Bets Central Banks Will Keep Stimulus
*Tata Steel Posts a Fourth-Quarter Profit Amid Recovery in European Demand
*Citic Pacific to Sell $5.1 Billon Stake to Investors Including Qatar, AIA
*Vodafone Left Waiting in Europe as AT&T Turns to DirecTV at Home
*Sao Paolo Mall Glut Unnerves Bond Traders as Boom Falters
*Silicon Valley’s Judge Koh Wields Gavel to Reshape Gmail to Apple IPhone
*Recession-Baby Millennials Scarred by U.S. Downturn Spurn Stocks for Cash – thank you high frequency traders and the rest of Wall Street…with the blessings of an ‘owned’ Congress!
*Larov Says Ukraine Close to Civil War, Russia Has No Plan to Send Troops
*Turkish Mine Fire Kills More Than 200, Leaves Hundreds Trapped Underground
*Baraka Claims Win in Newark, N.J., Mayor Race With Wall Street as Divide
*Ukraine-Russia Crisis Weighs on Eastern Europe as Development Bank Meets
Tuesday’s Market Summary and changes since 4/23 (TB’s last update):
A mixed bag as options expiry draws near. Dow Transports were up +0.5% but good enough to take honors, followed by Dow Utilities rose 0.3% and worst place was the Russell 2000 -1.1% – yep the same one that scored large Monday with a 2.4% gain. The Dow was up just 0.1%; S&P 500 and NDQ 100 both FLAT (slightly negative actually), while the Nasdaq Comp fell 0.3%. Volume stunk at a WEAK 2.86B shares! Real shares traded on the floor fell to 604M shares, not only beating Monday’s 641M for 2nd worst session since 4/6/14 but only one day out of the past nine has had a 700M share volume…while the 12 month average is 725M shares!!! Still the VIX had a slight decline to 12.14 -.09 and with a range of 12.05-12.74…remember options??? Repeating: 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!!!
Advance/Declines and Breadth were both slightly negative…negating Monday’s strength: NYSE -1.2x vs +3.7x; Nasdaq -1.9x vs +3.9x. Ditto Breadth: -1.1x vs +5.2x and -1.9x vs and +1.3x vs 5.3x…smells of options geeks and high freaks, no? New 52 Week Highs which had fallen to a weak 93 on Friday surged back to 233 Monday…then to 208 while New 52 Week LOWS plunged to 62 a day after rising to a high 214 from 209 – things that make you go hmmmm.
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!!!
Bonds had a STRONG session yesterday rebounding from Monday’s ‘blip’ up with the 10 yr closing at 2.61% vs 2.66% +7/16; 30’s 3.44% +1 point! vs 3.50% from 3.38%. The long TIP was as low as 1.05% on 5/2, rose to 1.19% Monday and closed at 1.14% +1-1/16. Overnight strong again: 10’s 2.57% +5/16; 30’s 3.42% +9/16; and long TIP 1.12% +5/8. 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: 0.225% 3 mos.; 0.324% 6 mos., both just off their record lows, just set: 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 0.07% -0.09%. Foreign bond market yields sharply lower across the board, led by Greece: Germany 1.38% -4; UK 2.62% -6, – recent high 3.03%! France 1.82%! -6; Italy 2.91% -3; Spain 2.85% -5; Portugal 3.50% -2; Greece had a rough period after hitting 5.83% on 2/24 then rising to 6.33% on 4/28 but is coming back: 6.16% -11! Range is 5.77% to 12.57%. Japan: 0.59 -2.
Gold closed slightly lower in a very narrow inside range at $1294.80 -$1.00. April Fool’s rally began at $1277.40 and was totally negated! It remains below all three moving averages and the psych support level of $1300 with first res at the 200 day $1301, then the 40 day $1302, and the 50 day $1313 – 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 STRONG at $1304.60 +$9.80 with a high of $1306.10.
Crude closed STRONG at $101.70 +$1.11 with a session high of $102.05 – back to where it was when TB left on 4/23. 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. It is now back above all three moving averages with first RES at $102.20, the 4/29 high and support at the 40 day ($101.17) then the 50 day ($101.00), the 200 day is $100.43. The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is still climbing: $101.98 +.28 with a high of $102.18.
Global equity markets slightly lower, Asia strong ex-India: UK -0.2% vs +0.1%; France -0.1% vs +0.3%; Germany -0.1% vs +0.6%; Japan -0.1% vs +2%!!! Hang Seng +1%!!! vs +0.4%; Korea +10.4% vs +0.9%; India -0.2% vs +1.4%! U.S. equity futures slightly lower in another narrow range session: DOW -14 (range 32); S&P -3 (7); NDQ -6 (13).
Some random thoughts:
…Tom Friedman’s book has influenced my thinking ever since the first Gulf War. The change from Florida with its retirees (yesterday they announced their lowest debt ever…thanks to cuts in education spending…but who needs that, right?)…to ‘K’ Street and the Capitol…where spending (especially by lobbyists is a way of life. Here is a recap of that part of our three week trip…
On April 23rd we flew to Ft. Lauderdale and then drove up to Delray Beach where we stayed at a friends nice house…what a location…an hour north to West Palm and the Breakers where we had lunch and another hour south to Miami where we drove to Joe’s Stonecrabs at the end of Sourth Beach. Great place…lot of fun…don’t care if I ever go back to Miami and Delray Beach is the only place I would stay again on the east coast of Florida…except St. Augustine where I would go any time…more later.
We then drove to Key Largo and down to Key West…boring except when the keys open up to you along the route but it’s 90 miles down…Hemmingway’s home is a must see.
Then up the west coast Everglades City where we stayed at the Rod and Gun Club…strange but fun…and took an air boat ride through the Everglades…be sure to get a small one. Then to Naples and Fort Meyers. Had a nice ‘toon boat tour and then to Sanabel and Captiva islands…great fun.
From there to St. Augustine…oldest city in U.S. and former capital of Florida. Didn’t care for Tampa or anywhere else in western Florida…or Orlando…but St. Augustine is incredible…a great walking city that even surpasses Savannah. Stayed in a 100 year old hotel and ate in a 107 year old Mexican/Spanish restaurant…wonderful place.
Then up to Charleston and on to Monticello…an incredible home of an incredible man. Then to D.C. where we stayed four days and visited our good friends and had breakfast (in a group) with one of our senators, Al Franken…interesting. Visited Viet Nam Wall again and two high school friends, then the new Korean War Memorial…chilling but captured that war.
Among other sites there, the Newseum is a must…had some great meals and the Washington Monument was just unveiled…not open yet but had already made the trek to the top…once is enough!
The rest of the trip tomorrow…
Sun is back out in Minnesota…and 59 degrees already!
Have a great day!