Quote of the Day from the Friars Club Encyclopedia of Jokes: “Hamlet is the tragdy of tackling a family problem too soon after college.” – Tom Mason
Bloomberg Quote of the Day: “Action is the foundational key to all success.” – Pablo Picasso
Bloomberg Top Stories:
*Argentina Planning Debt Swap to Skirt U.S. Order to Pay Holdout Criditors – Goldman again???
*Emerging Market Stocks Decline as Gilts Advance; Pound Weakens After BOE
*BOE Saw Greater Chance of Rate Increase This Year Than Investors Expected – not to worry!
*FedEx Fourth-Quarter Earnings $2.46 a Share Beat $2.36 Analyst’s Estimate – not to shabby!
*GE Said Preparing to Present Improved Offer for Alstom’s Energy Assets – Sellers Market!!!
*Cyprus Said to Sell Bonds as Last Bailed-Out Euro Nation Returns to Market
*Ruble Ends Five-Day Decline as Ukraine Bonds Advance on Cease-Fire Talks
*Petrobras Buys $1.24 Billion of Woe With Delays on Its Pasadena Refinery
*Poloz’s Sway Over Loonie the Envy of Central Bankers Worldwide
*Loonie Flight Besieges Bonds Stung by Record Foreign Exodus
*Fight Over 401(k) Rules Pits mother of COBRA Against Wall Street’s Lobby
*Breaking Bad Meets Fargo revealing Murderous Underbelly of Oil Shale Boom
*Ukraine Pledges Unilateral Cease-Fire in Days to End Eastern Region Unrest – not so, Iraq!
*Iraq Premier Fires Commanders as Troops Fight Islamists North of Baghdad
*Kurd Oil Exports Seen Growing as Region Grabs More Territory Amid Conflict
Tuesday’s Market Summary:
Another quiet day on below average but it was also the first day of the FOMC meeting so all eyes will be on the Fed statement around 2pm…then all hell could break loose. A big question is how they will view the jump in CPI – not that it is a problem or even a trend – but what will they then do about the QE tapering? A lot hangs on the tone of the statement.
All indices were up led by the Russell 2000 +0.8%, with the NDQ 100 coming in FLAT. The rest were all up 0.2-0.4%. NYSE Financials rose 0.6%. but in one of those rare events, the subsectors rose significantly more: Brokers +2.5%!!!; KBW Banks +1.3%; Nasdaq Banks +1.5%. Huh? BofA moved back into its place as the most active stock rising 2% but vs -1% vs +0.1% vs -1.1% vs -2.1%.
Total NYSE Volume was stable at a still weak 2.96B shares vs 2.91B vs 2.58B vs 3.03B vs 2.67B vs 2.69B vs 2.8B vs 2.84B vs 3.1B – that is one big string of weak sessions! Real trades on the floor of the NYSE were also stable at an extremely weak 600M shares vs 604M vs 575M vs 621M vs 532M vs 557M vs 608M. The 12-month average barely held at a very weak 714M shares.
A/D’s were modestly positive: NYSE +1.6x vs 1:1 vs +1.3x vs -1.4% vs -1.6x; Nasdaq +2.1x vs +1.2x vs +1.04x vs -1.8x vs -1.5x. Breadth was similar: NYSE +2.2x vs +1.04x vs +2.2x vs -2.2x vs -1.6x; Nasdaq +2.7x vs +1.5x vs +1.8x vs -2x vs +1.05x. New 52 Week Highs were also stable at 255 vs 251 vs 171 vs 186 vs 193 vs 256 vs 515 – recent low 71!!! New Lows were dead in the water again at a very weak at 38 vs 34 vs 36 vs 30 vs 25 vs 24 vs 25 – recent range is 24-214.
S&P VIX declined but remained above ‘12’ for a fifth straight session closing at 12.06 -.59, the bottom of the range of 12.06 –12.89 – second straight day the low end has been above 12….13 is the key here and the low end is moving higher! There have now been FIVE straight closes above ‘12’ in 16 sessions. You do know that the long-term average is ‘20’, right?
Bonds closed weak – FOMC jitters? 10 yr closed at 2.65% -1/2. 30 yr closed 3.44% -7/8. The long TIP, which hit a low of 0.978% on 5/29, closed 1.13% -3/4. Overnight they are slightly better: 10’s 2.64% +1/8; 30’s 3.44% +1/16; and long TIP 1.12% +1/8. 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: 0.231% 3 mos.; 0.325% 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 remain slightly higher at 0.09% -0.10%. Foreign bond yields mixed but note that they sold off big yesterday afternoon: Germany 1.39% -1; UK 2.74% -4; France 1.85% -2; Italy 2.82% –; Spain 2.73% +3; Portugal 3.48% +4; Greece, which took out the old lows is now 5.76% -9. The recent high on selloff was 6.75%. Highly volatile!!! Range is now 5.42% to 12.57%. Japan: 0.59% +1.
Gold closed slightly weaker but came back from a low of $1258 at $1272.00 -$2.90, a day after a surge in the European market to a new high of $1285.10 – still highest since 5/27 when it began its plunge. 6/9’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 $1280, then the 50 day $1285, and the 200 day $1291 – convergence continues 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 little changed at $1271.30 -.70 in quiet trading.
Crude had a volatile session trading down to $106.01 before coming back to close at $106.34 -.54, after trading up to$107.69 Friday on Iraq concerns – that is still highest since 9/19/13 – a huge down day. 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 remains well above all three moving averages: 40 day ($102.46) then the 50 day ($102.65), and 200 day $100.14. The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is slightly higher at $106.78 +.42.
European equity markets slightly higher, Asia mixed, India giving back Tuesday’s gains: UK +0.3% vs +0.1% vs -0.3% vs -1.1%!!! vs +0.2%; France – vs +0.2% vs –0.6% vs -0.8% vs +0.2%; Germany +0.2% vs +0.3% vs -0.3% vs -0.8% vs +0.1%; Japan +0.9% vs +0.3% vs -1.1%! vs +0.8% vs -0.6%; Hang Seng -0.1% vs -0.4% vs -0.1% vs +0.6% vs -0.4%; Korea -0.6% vs +0.4% vs +0.1% vs -1%!!! vs -0.2%; India +1.3%! vs -0.2% vs -1.4%!!! vs +0.4% vs -0.4%; U.S. Stock Index Futures little changed and cautious: DOW +7 (range 7!!!); SPX +1 (2!!!); NDQ +7.25 (8!!!).
Some random thoughts:
…that was Colin Powell speaking…repeated by John McCain too. We ‘broke’ Iraq, thanks to a couple of neo-cons (Cheney and Rumsfeld), used a force that was too small and moved too fast to safeguard Baghdad from looting…which included the Central Bank and the Museum of Antiquities, arguably the most important in the world! Ah, but we protected the Oil Ministry and all those documents crucial to OUR oil companies! Not surprising the Cheney was the former CEO of Halliburton…is it?
Sure, Saddam was evil, but he alone had Iran wondering IF he had those WMD’s and thus held them at bay…no sooner was he gone than Iranian ‘friends’ came into Iraq and then a Shiite was elected President in the form of Al-Maliki who tossed out the Sunni’s from any place in government (reminds one of Morsi, no?). We have already set a precedent for supporting the overthrow of democratically elected governments so the extension should be obvious.
But that skips over the stupidest move in the entire conflict…one that falls right in the lap of Paul Bremmer…the Viceroy if you will…or even if you won’t! (When writing Inside the Green Zone, Rajiv Chandrasekeran called Henry Kissinger, who Bremmer worked for and asked about him. The reply: “He’s a control freak!” This from Henry Kissinger of all people!
Bush said, ‘the Iraqi’s know who the bad guys are’ so let them decide. Bremmer came in and his first…his very first…order was that no one who was a Baathist should hold a government job…again, nevermind that IF you wanted your job you had to join the party! Not only was he warned against this but part of his first order was that the Red Guard was to be disbanded! So, these guys who appeared…armed and in uniform…were sent home…with their weapons…and instead we pulled people off the streets and trained them for military duty. Well done, Bremmer…you jerk beyond comprehension!
Last night on the news, an Iraqi woman said if only the old army was still there we wouldn’t be facing this…and she is right!
Damned right, we own it! But now what? Imagine that we are/were considering letting the Iranians ‘help’ us…to the dismay of all of our allies! Especially the Israeli’s!
But back to Bush, who declared ‘mission accomplished’ absurdly while landing on the jet of a carrier on the way back from the gulf, said that Rumsfeld was the best Secretary of Defense (later he told Robert Gates he should have fired him later!), and swaggered off into the sunset. Now Obama owns it…what will…or can…he do? Not being a military man and not trusting the military (can you blame him?), the outlook is bleak at best.
It began with Egypt and now the entire Muslim world is at risk…thank you, USA!
As for Hillary Clinton’s epiphany that she was wrong on voting to invade Iraq…get real…how convenient when it is obvious the situation is FUBAR!!! Discount it!
Have a great day!