6/11/14…life without Cantor…Eric, not Eddie!

Quote of the Day from the Friars Club Encyclopedia of Jokes: Every man has it in his power to make one woman happy…by remaining a bachelor.” – anonymous…but of course!

Bloomberg Quote of the Day: “If you don’t drive your business, you will be driven out of business.” – B.C.Forbes

Bloomberg Top Stories:
*Siemens Said to Consider Alstom Energy bid With Mitsubishi to Challenge GE
*Stocks in Europe Drop With S&P 500 Futures as Pound Rallies, Wheat Rises
*U.K. Jobless Rate Falls More Than Forecast to Lowest Level in Five Years
*Fed Ready to Keep super-Sized Balance Sheet for years to Preserve Recovery – ???
*OPEC Leaves Oil Production Target Unchanged at 30 Million Barrels a Day
*Tax Breaks for Apple to Starbucks to Be Probed by EU Competition Regulator – !!!
*Iraq Bonds Tumble Most in Year as Al-Qaeda Offshoot Takes Control of Mosul
*Family Dollar Traders Bet Carl Icahn Is the One to Get Sale Done
*Junk Loan Rally Shows Mutual Fund Redemptions No Deterrent – amazing reach for yield!
*Switzerland’s $381,000 Directors Brace for Activism as Board Rules Change – do it here too!
*Even Toilets Aren’t Safe as Hackers Start Targeting the Internet of Things – Target???
*Cantor Loss in Virginia Upends Republican Hierarchy, Dims Immigration Bill – they nailed him!
*Al-Qaeda Offhshoot Threatens Iraq Oil Sites After Taking Control of Mosul–what say you, GWB?
*Bergdahl-Taliban Swap Makes Obama Vow to Close Guantanamo Harder to Keep – Aarrgghh!!
*Spanish Lawmakers Debate Juan Carlos’s Abdication Amid Calls for Republic – !!!

Tuesday’s Market Summary:

The summer doldrums continue…boring!!!! How about this: all indices up except Dow Utilities which plunged 0.8% (but they can afford it). A mixed session where the biggest mover was the Russell 2000 -0.3% vs +0.9%! The rest ranged from -0.1% to +0.1% – incredible! Volume plunged again, especially floor trades! Nothing to see here!

Total NYSE Volume got even weaker falling to 2.69B shares vs 2.8B vs 2.84B vs 3.1B vs 2.78B vs 2.83B. Real trades on the floor of the NYSE plunged again to 557M shares vs 608M vs 640M vs 629M vs 592M vs 657M. The 12-month average declined by another 2k to a very weak 715M shares!!!!
A/D’s were negative for the first time in four sessions: NYSE -1.4x vs +1.6x vs +2.9x vs +3.5x vs +1.1x; Nasdaq -1.2x vs +2.2x vs +2.5x vs +3.6x vs +1.2x. Breadth mixed but barely budged: NYSE -1.01x vs +1.7x vs +2.3x vs +2.9x vs +1.3x; Nasdaq +1.3x vs +1.5x vs +2.4x vs +2.4x vs +1.7x. New 52 Week Highs were halved to 256 vs 515 vs 532 vs 436 vs 262 – recent low 71!!! New Lows about even but another near record (?) low of 24 vs 25 vs 36 vs 66 vs 96 vs 93 – recent range now 24-214.
S&P VIX moved back below 11 to 10.99 -.16 with a tight range of 10.93-11.66. This could be a setup for a very volatile options expiration on 6/20! There has been just one close above ‘12’ in 11 sessions and this was the 3rd time in five sessions that there was no ‘12’ print!

Overnight markets:

Bonds closed weak – a third straight and bigger decline: 10 yr closed at 2.64% -3/8. 30 yr closed 3.48% -3/4. The long TIP, which hit a low of 0.978% on 5/29, closed 1.17% -15/16. Overnight, slightly better: 10’s 2.64% +1/32; 30’s 3.47% +1/8; and long TIP 1.16% +1/4. 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.; 0.320% 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 little changed: Germany 1.42% +1; UK 2.73% +1; France 1.76% +1; Italy 2.80% -1; Spain 2.64% –; Portugal 3.30% –1; Greece, which took out the old lows is now 5.48% +1 after plunging nearly 70 basis points in THREE sessions!!! – Translate that from basis points to $!!! The high on selloff was 6.75%. Highly volatile!!! Range is now 5.42% to 12.57%. Japan: 0.59% –.

Gold closed higher at $1260.10 +$6.60 with an intraday high of $1262.30, highest since May 28th – still, it is meaningless. 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 $1284, then the 50 day $1287, 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 $1262.40 +2.30.

Crude, while taking out Monday’s surge to $104.57, and probing higher yesterday to $105.06, highest since 3/3, failed, closing at $104.35 -.06. 6/5’s low of $101.60 was lowest since 5/16. 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 well above all three moving averages: 40 day ($101.53) then the 50 day ($100.99), and 200 day $100.41. The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is $104.55 +.20.

Global equity markets mostly weaker: UK -0.5% vs -0.3% vs +0.3% vs +0.4% vs +0.1%; France -0.8% vs +0.1% vs -0.1% vs +0.5% vs +0.6%; Germany -0.9% vs +0.2% vs +0.1% vs +0.3% vs +0.3%; Japan +0.5% vs -0.9% vs +0.3% vs – vs +0.1%; Hang Seng -0.3% vs +0.9% vs +0.7% vs -0.7% vs -0.2%; Korea +0.1% vs +1.1%! vs -0.3% vs closed vs -0.7%; India -0.4% vs – vs +0.7% vs +1.5%!!! vs +0.9%; U.S. Stock Index Futures sharply lower after gapping down on the open: DOW -67! (range 64); SPX -9 (9); NDQ -16.75 (15).
Some random thoughts:

…one of the most contentious figures in Congress went down to defeat last night…and as late as the 6 o’clock news he was seen as a winner with ease. That would be Eric Cantor, who was the spearhead for driving a wedge between the two parties…not to mention his own party. Paul Ryan, on the other head was firm but not inflammatory as Cantor was.

Now perhaps, John Boehner can return to acting as the House Speaker instead of adding fuel to the fire. That remains to be seen, but clearly the Tea Party was not pleased with Cantor (who seems to have modeled himself after his predecessor under Gingrich, Tom DeLay, which history proved was acting in his own self-interest).

Will this change things? No, especially with Benghazi and now Bergdahl still rearing their ugly heads. Politics at the ‘new normal’…but for how long? November? One can hope…

Have a great day!

TB

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