Quote of the Day from the Friars Club Encyclopedia of Jokes: Sign in a corporate boardroom: “Thank heavens this is a free country where you can do exactly as the government pleases.” – or not…how else do we explain a financial crisis caused by greed, a complete government bailout, and no one is guilty of anything. It is the corporations (with the backing of the Supreme Court) who have made this anything BUT a free country….while creating the widest wealth gap since the 1920’s while the median income adjusted for inflation has not changed in 45 years!
Bloomberg Quote of the Day: “To be surprised, to wonder, is to begin to understand.”
– Jose Ortega y Gasset
This week’s economic calendar is fairly light. The highlight of the week will be the May Retail Sales (Thursday) and May PPI (Friday). We will also get April JOLTs Job Openings and April Wholesale Inventories (Tuesday), May Treasury Budget (Wednesday), May Import & Export Prices and April Business Inventories (Thursday), and June Consumer Sentiment Preliminary (Friday). Courtesy of Economic Data Service
Bloomberg Top Stories:
*Italian-Spanish Bond Yields Drop to Records as emerging Currencies Rally – Greek bonds too!
*Tyson to Buy Hillshire Brands for $7.7 Billion, Topping Pilgrim’s Pride – let ‘em have it…
*Credit Suisse Is Said to Weigh Selling Its Holding in Fixed-Income Venture
*Merck & Co. Agrees to Buy Idenix for $3.9 Billion for Hepatitis C Drugs
*Barclays Heads of Asian-Pacific Foreign Exchange, Rates Structuring Leave – as they should!
*Shorts Reloading on S&P 500 in Ritual That Has Signaled Gains Since 2010 – will it again?
*McDonald’s May Sales Increase 0.9% as Asia Provides Cushion for U.S. Slump
*Lean Retirement Awaits U.S. Generation X as Wealth Trails Other Age Groups
*Venezuela Prostitutes Making More Money Selling Sailors’ Dollars Than Sex – Black market
*Ukraine Leader Proshenko says Violence Must End This Week as Talks Begin
*Nigeria Gunmen Seize 20 Women Near Site of Schoolgirl Abductions in Chibok
*Rouhani Visits Turkey to Boost Trade Links Amid Push to Lift UN Sanctions
*South Africa President Zuma Discharged From Hospital After Two-Day Checkup
Friday’s Market Summary:
Yep another ‘up’ day, led by Dow financials +1%, then Dow Transports +0.9% and then the Russell 2000 small cap +0.7%. The rest were up 0.5-0.9% except Dow Utilities -0.3%. Once again a ‘rally for no reason’ as tjere was nothing startling in the employment data and trading volume fell back from a still below average 3.1B shares to 2.84B shares while REAL NYSE volume barely budged to 640M vs 629M – still 77M shares BELOW average!
Total NYSE Volume as reported above slid to 2.84B shares vs 3.1B vs 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 again but insignificantly begging the question: what if they had a rally and nobody came? Just 640M shares vs 629M vs 592M vs 657M vs 549M vs 916M vs 544M vs 636M vs 657M vs 554M vs 577M! The 12-month average remains at a very weak 717M shares!!!!
A/D’s were positive for a 2nd day – after being meaningless for days: NYSE +2.9x vs +3.5x vs +1.1x vs -1.6x vs -1.1x; Nasdaq +2.5x vs +3.6x vs +1.2x vs -1.6x vs -1.6x. Breadth not quite as good: NYSE +2.3x vs +2.9x vs +1.3x vs -1.1x vs +1.1x; Nasdaq +2.4x vs +2.4x vs +1.7x vs -1.1x vs -1.2x vs -1.4x. New 52 Week Highs surged again to 532 vs 436 vs 262 vs 225 vs 318 vs 271 vs 287 vs 229 vs 336 vs 167 – recent low 71!!! New Lows were nearly halved for a new recent low of 36 vs 66 vs 96 vs 93 vs 57 vs 60 vs 45 – recent range now 36-214.
S&P VIX took a very bullish dive to 10.75 -.93 with a range of 10.75-11.39. This could be a setup for a very volatile options expiration on 6/20! Thus there was just one close above ‘12’ in NINE sessions and this was the first time in five sessions that there was no ‘12’ print!
Bonds closed slightly weaker which is a positive for them given the rally in stocks following the release of the data: 10 yr closed at 2.60% -1/8. 30 yr closed 3.44% -1/16. The long TIP, which hit a low of 0.978% on 5/29, closed 1.14% up 1/8. Overnight slipping again: 10’s 2.61% -3/16; 30’s 3.45% -5/16; and long TIP 1.15% -7/16. 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: 0.230% 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 mixed: Germany 1.36% +1; UK 2.69% +3; France 1.68% -2; Italy 2.71% -4!; Spain 2.59% -5!; Portugal 3.40%! -9!!!; Greece, which bottomed at 5.83% on 2/24 is now 5.60%!!! lower by another 5 and nearly 50 basis points in TWO sessions!!! – 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% –.
Gold did nothing after hitting $1258.10 highest since 5/30, but then closing at $1252.50 -.80. Last 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 $1287, then the 50 day $1288, and the 200 day $1295 – 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 slightly higher at $1256.70 +4.50 in an inside session.
Crude also closed essentially flat in a nothing session at $102.66 -.18, 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 ($102.15) then the 50 day ($101.96), and 200 day $100.19. The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is higher at $103.51 +.85, near session highs.
Global equity markets mostly higher: UK +0.3% vs +0.4% vs +0.1% vs -0.3% vs -0.6%; France -0.1% vs +0.5% vs +0.6% vs -0.1% vs -0.3%; Germany +0.1% vs +0.3% vs +0.3% vs -0.2% vs -0.5%; Japan +0.3% vs – vs +0.1% vs +0.2% vs +0.7% vs +2.1%!!! Hang Seng +0.7% vs -0.7% vs -0.2% vs -0.6% vs +0.9%; Korea -0.3% vs closed vs -0.7% vs closed vs +0.3%; India +0.7% vs +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 weaker in a tight range: DOW -10 (range 25); SPX -2 (3!!!); NDQ -3 (5!!!).
Some random thoughts:
…another Moyers interview yesterday with Nobel laureate, Joseph Stiglitz. A continuation on the theme of last interview: median U.S. income adjusted for inflation has not risen in 45 years!!! Meanwhile, the U.S. economy has continued to grow with the top 1% reaping the benefits and now in full control of elected officials…or at least enough to get what they want.
As he says, this country was built on spreading the wealth and every time we deviate from that we go to an unhealthy ‘unbalanced’ position which curtails growth. This is due to our tax incentives which encourage hiring abroad, keeping both individual and corporate funds offshore and of course not increasing worker pay. How can we possibly defend a minimum wage that is being surpassed daily by states and even cities??? Of course, they love to say they are merely protecting the small business man…since when did anyone – wealthy or government care about them?
Oh, and if you recall, Henry Ford doubled the pay of his employees despite being ridiculed and told he would go bankrupt. Instead, he got the ‘pick of the litter’ and his employees were able to afford a Ford! But we live in an age where corporations rule and are ruled by boards of directors who are in turn controlled by the Chairman/CEO (usually the same person), and as Stiglitz said, you can toss out Adam Smith, Milton Friedman and free market capitalism as the corporations – rather than being run for long-term performance exist for the benefit(s) of the CEO and boards where members are paid $500,000 a year to attend six meetings! How long can this go on?
Have a great week!