Quote of the Day from the Friars Club Encyclopedia of Jokes: “There are three ages of man: youth, middle age, and ‘Gee, you look good.” – Red Skelton
Bloomberg Quote of the Day: “Business is a combination of war and sport.” – Andre Maurois, yes and right now the N.Y. Oligarchs are crushing the U.S. Citizens.
U.S. Non-Farm Payrolls rose by 217k in May vs median 215k. March payrolls no revision; April revised down by 6k. Private Payrolls rose by 216,000 (198k were service jobs!); Government up 1k?!? Factory jobs increased by 10k; Construction 6k. Hourly Earnings for all workers rose by 0.2%, just 2.1% y-o-y..
The Unemployment Rate was steady at 6.3%. Household Jobs rose by 145k.The Underemployment Rate was 12.2% -0.1% (going nowhere). Participation Rate steady at multidecade low of 62.8%
(Canadian Unemployment Rate unexpectedly rose to7.0% while Labor Productivity declined 0.12% from Q1. Their Participation Rate was steady at 66.1% – lowest since 2001)
Market Reaction 8:50am EDT: Bonds rallying! 10yr +3/8; 30 yr +11/16; long TIP +1 point! Little change in Gold, Crude, or Dollar. Stock futures also higher: DOW +49; SPX +3.80; NDQ +10.
Bloomberg Top Stories:
*BNP Executive Dismissals Sought by New York’s Lansky Amid Settlement Talks – Damn right!
*Ex-Deutsche Bank Trader Biltar Said to Face Record Fine for Rate Rigging – more justice!
*Payrolls Probably Rose in May to Exceed U.S. Pre-slump Peak for First Time – big yawn…
*Bonds in Europe Gain With Stocks as Credit Risk Falls After ECB Stimulus
*Morgan Stanley Said to cut London Trader Jobs in Fixed Income, Currencies – less profitable?
*GM Claims Chief’s 9/11 Formula Gives Clue to How He’ll Pay Accident Claims – not friendly!
*Draghi Erects Firebreak Against Deflation Without Bond Purchases for Now – negative rates!
*Risk of Banks Dodging Swaps Rules Overseas Leads to Scrutiny by U.S. FDIC
*J.C. Penney Swap Inversion Erased as Survival Odds Grow – on life support?
*Hidden Greek Jewelry Billionaire Emerges as Folli Follie Hits 52-Week High – buy Bitcoins LOL
*How PGA Golf-Club Restriction Relate to SEC’s Mary Jo White – called a level playing field!
*France Plays Ukraine Peacemaker With Obama, Putin at D-Day Commemorations
*Obama Seeks Atlantic Alliance Unity on Anniversary of Normandy Landings – good luck!
*Seattle College Shooting Leaves 1 Person Dead, at least 3 Wounded – risky going to school!
Thursday’s Market Summary:
A solid rally…not remarkable but decent…of course we get payrolls tomorrow…does that explain the uptick in volume to 3.1B – still weak but only the second 3B+ share day in the last TEN sessions (the other was monthend’s 3.7B share day at just slightly above average). But where was retail? Dunno, but not playing stocks. Volume rose but to just 629M or 85M below average! The SEC announced a full investigation into ‘flash trading’ – would that have happened were it not for Michael Lewis’ book? They are now concerned that these guys might just have an edge over the rest of us…wake up. On another note FINRA (the former NASD and disliked by the SEC fined three firms for submitting incorrect trade dats…the three: Barclays (again!), Goldman and Merrill Lynch)…and boy do they know how to hit them where it hurts: $1 million each…or about a couple of hours of revenue…why bother? The last one TB saw was Charles Schwab for a change in the contract that prohibited class action suits by shareholders (didn’t want what happened because of adjustable rate notes again!), and they hit them for this with a whopping $500,000 fine…you do the math…how long did it take for them to recover that hit? Right, Chuck?
Back to yesterday, sure all indices were up led by the sagging Russell 2000 +2%!!!, then the Nasdaq Composite +1.1%; the 100 +0.9%…and guess what came next? A tie between Dow Transports AND Dow Utilities! Bring up the rear at 0.7% were the Dow and S&P 500…hmmm
Total NYSE Volume as reported above was 3.1B shares from a weak 2.78B vs 2.83B vs 2.5B vs 3.7B vs 2.68B vs 2.92B vs 2.89B vs 2.4B vs 2.74B! …WEAK!! Real trades on the floor of the NYSE rose but insignificantly begging the question: what if they had a rally and nobody came? Just 629M shares from a very weak 592M vs 657M vs 549M vs 916M vs 544M vs 636M vs 657M vs 554M vs 577M! The 12-month average continues to slip and is at a very weak 717M shares!!!!
A/D’s were positive – after being meaningless for days: NYSE +3.5x vs +1.1x vs -1.6x vs -1.1x vs +1.1x; Nasdaq +3.6x vs +1.2x vs -1.6x vs -1.6x vs -1.6x. Breadth was not quite as good: NYSE +2.9x vs +1.3x vs -1.1x vs +1.1x vs -1.1x; Nasdaq +2.4x vs +1.7x vs -1.1x vs -1.2x vs -1.4x. New 52 Week Highs were strong at 436 vs 262 vs 225 vs 318 vs 271 vs 287 vs 229 vs 336 vs 167 – recent low 71!!! New Lows got hit dropping to 66 vs 96 vs 93 vs 57 vs 60 vs 45 vs 61 vs 50 – recent range 45-214.
Watch volatility closely…S&P VIX remains bullish and for the first time in five session managed to decline, although the bearish increases were minimal closing at 11.68 -.40 – leaving just one close above ‘12’ in NINE sessions with a range of 11.44-12.34 – 4th ‘12’ print in 8 sessions!
Bonds closed modestly higher but still have not recovered from Tuesday: 10 yr closed at 2.58% +3/16. 30 yr closed 3.44% +1/16. The long TIP, which hit a low of 0.978% on 5/29, closed 1.15% +1/4. Overnight slightly better: 10’s 2.56% +3/16; 30’s 3.42% +5/16; and long TIP 1.13% +7/16….check back AFTER payrolls! 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: 0.230% 3 mos.; 0.321% 6 mos., both remain just off their record lows, set recently: 0.227% and 0.320% respectively! NOTE the Fed Funds rate has averaged 0.08% since 5/22/13 and is 0.07% -0.09%. Foreign bond yields lower across the board – sharply lower for many! Germany 1.36% -4; UK 2.66% -2; France 1.70% -9!; Italy 2.76% -17!!!; Spain 2.% -17!!!; Portugal 3.48% -13!!!; Greece, which bottomed at 5.83% on 2/24 is now 5.68%!!! LOWER BY 42!!! – Translate that from basis points to $!!! The high on selloff was 6.75%. Highly volatile!!! Range is 5.77% to 12.57%. Japan: 0.59% -2.
Gold had the best day this month closing at $1253.30 +$9.00 and with a high of $1256.60 not seen since 5/30! This after six days of boredom. Tuesday’s $1240.20 was lowest since 1/31/14!!! It hit $1304.10 on 5/22 – the last time it saw $1300! It remains way below the 40/50/200 days and the psych support level of $1300 with first res at the 40 day $1288, then the 50 day $1289, and the 200 day $1296 – note convergence and thus formidable resistance! It has fared poorly since the ‘key reversal’ on 3/17, after printing the recent high of $1392.60, highest high since 9/4/13! Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!! Overnight it is off slightly and currently $1252.30 -$1.00 with a high of $1256.90.
Crude also closed essentially flat after making a charge to $103.69 before succumbing at $102.64 -.02, following Monday’s low of $102.10, lowest since 5/20. Friday’s high was $104.50 – still highest since being slammed on 4/22! 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 remains above all three moving averages but very close to first support at the 40 day ($102.17) then the 50 day ($101.91), and 200 day $100.20. The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is slightly higher at $102.64 +.16 in another narrow range session.
European equity markets higher, Asia lower, ex-India! UK +0.4% vs +0.1% vs -0.3% vs -0.6% vs -0.1%; France +0.5% vs +0.6% vs -0.1% vs -0.3% vs –; Germany +0.3% vs +0.3% vs -0.2% vs -0.5% vs +0.2%; Japan – vs +0.1% vs +0.2% vs +0.7% vs +2.1%!!! Hang Seng -0.7% vs -0.2% vs -0.6% vs +0.9% vs closed; Korea closed vs -0.7% vs closed vs +0.3% vs +0.4%; India +1.5%!!! vs +0.9% vs -0.2% vs +0.7% vs +1.9%!!! vs -0.1% vs -1.3%! U.S. Stock Index Futures slightly higher in a tight range ahead of payrolls: DOW +25 (range 24); SPX +1 (4); NDQ +3 (7!).
Some random thoughts:
“Victory has a thousand fathers, defeat is an orphan.” – JFK
…D-Day…a day of valor by men who for the most part don’t exist today…not them…but their ideals and feelings of country and duty. How many of us would have willingly embarked on that brutal trip across the English Channel? Tom Brokaw was right: they WERE the greatest generation! We should all be humbled by their bravery and suppression of their own wellbeing.
Last nights The Sixties, discussed Eisenhower and the U-2 incident in which we were caught lying, Cuba Missile Crisis following the failed Bay of Pigs invasion – caught again that CIA was not involved…especially JFK…and how he learned to not trust his military advisors. Then how he was demolished by Kruschev, the overconfidence gained from winning the Cuba standoff that led us to try to stop the Domino Theory in Viet Nam…a costly experience in dollars and lives as well as loss of confidence in our government and leaders…conclusion was that JFK would have not handled it the way LBJ did (he had total confidence in military advisors). Lots of lessons!
Have a great weekend but continue to think of the fallen.