6/27/14…will someone do something….please?

Quote of the Day from the Friars Club Encyclopedia of Jokes: “A car is useless in New York; essential everywhere else. The same with good manners.” – Mignon McLaughlin

Bloomberg Quote of the Day: “I dwell in possibility.” – Emily Dickenson…that’s impossible! TB

Bloomberg Top Stories:
*Jenkins Falters in Barclays Culture Shift as Dark Pool Suit Cites Deceit – a sick industry!
*Euro-Area Economic Confidence Unexpectedly Declines on Currency, Ukraine
*Dollar Weakens as S&P 500 Futures Retreat While Yen, Treasuries Strengthen
*Yellen’s Spending Recipe Lacking One Key Ingredient; Bigger Wage Increased – only CEO’s!
*Market Structure Nightmares Come True in Schneiderman’s Barclays Complaint
*German Inflation Coming In Above Forecasts Signals Euro Area Price Pickup
*Utilities Unsexy No more as Three-Year Deal High Tempts Buffett – Dow Utilities +16% ytd!!!
*Argentina Tests Court Order by Posting $539 Million Interest Payment
*Big-Belly Boeing 777 Capacity Blunts Demand for Cargo-Only Jets
*Moscow Hookahs Go Nicotine-Free as Russia Tobacco Ruling Hits Pipe Smoking
*Are Markets Worth the Expense of Turning the Lights Back on? – hmmm
*Putin Crimea Honeymoon Hides Retreat to Economic Bunker as Credit Dries Up
*Ukraine to Extend Cease-Fire in East as President Signs EU Trade Accord
*Top Cleric Tells Iraq Leaders to Pick New Premier as Forces Bomb Militants – !!!
*Kerry Finds U.S. Vision Hard to Sell in Mideast Roiled by Islamic Radicals – What vision???
*Fastest-Growing Metro Area in U.S. Has No Crime, Pollution or Kids – The Villages, Florida! Adults 55+ only, no voting rights for residents and developed by a billionaire libertarian!

Thursday’s Market Summary:

All of the action is bonds which rallied again ignoring the brief positive ‘flutter’ in stocks despite the weak data. Bonds saw thru it and long TIPS close BELOW 1%!
A mixed session so we have had all possible combinations this week. This despite a valiant attempt to ignore the Final Q1 GDP drop and the weakness in consumer spending accompanies by a slight pickup in the savings rate. It still hasn’t even retraced 50% of Tuesday’s loss. Consider: Dow -0.1% vs +0.3% vs -0.7%; Transports -0.2% vs +0.9% vs -0.9%; S&P 500 -0.1% vs +0.5% vs -0.6%; NDQ Composite and 100 both FLAT vs +0.7% vs -0.6% and -0.4% respectively. Russell 2000 -0.2% vs +0.8% vs -1%. Dow Utilities however were up slightly at 0.1% vs + 0.6% vs +0.1%! NYSE Financials -0.4% vs +0.1% vs -0.8%: Brokers -0.3% vs +0.8% vs -1.5%; KBW Banks -0.3% vs +0.3% vs -0.8%; Nasdaq Banks flat vs +0.6% vs -0.7%.

Total NYSE Volume was weak at 2.78B shares vs 3.1B vs 3.06B shares, down from 4.22B on Friday’s options expiration. Real NYSE Volume declined to a very weak 592M shares (with includes 100M AFTER the bell!) vs 653M vs 648M and the 12-month average slipped again to 708M! Since 4/30 the average volume has been just 664M shares ranging from 531M to 1.72B.

A/D’s were totally NEUTRAL!!! NYSE +1.1x vs +2.2x vs -1.7x vs -1.01x vs +1.3x; Nasdaq -1.1x vs +1.7x vs -2.4x vs -1.3x vs +1.3x. Breadth was similar: NYSE +1.02x vs +2.2x vs -3.5x! vs +1.05x vs +1.1x; Nasdaq +1.1x vs +2.4x vs -2.3x vs +1.06x vs +1.3x vs 1.3x. Note that Breadth on the NDQ 100 was -1.7:1 while the index was unchanged. New 52 Week Highs were stable at a weak 221 vs 214 vs 288 vs 369 vs 469 – recent range 71-515!!! New Lows dipped to 51 vs 64 vs 52 vs 42 vs 60 vs 42 vs 40 vs 38 – recent range is 24-214.
S&P VIX was slightly higher rising from a slight negative at the close but remains in bullish (overly???) territory at 11.63 +0.04 with ‘12’ prints at the top of the range for a third session: 11.50-12.51 – range has been stretching higher for five straight sessions after bottoming at 10.34 last Friday on options expiraton!

Overnight markets:

Bonds closed higher for a third session with TIPS closing BELOW 1%! 10 yr closed at 2.53%! +1/4. 30 yr closed 3.34% +1/2. The long TIP, which hit a low of 0.978% on 5/29, closed 0.99%%!!! +11/16. Overnight they climbing again: 10’s 2.51%! +1/8; 30’s 3.34% +9/16; and long TIP 0.97%!!! +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: 0.235% 3 mos.; 0.327% 6 mos., both remain near their record lows, set recently: 0.222% and 0.320% respectively! NOTE the Fed Funds rate has averaged 0.09% since 5/22/13 and remains at 0.09% -0.10%. Foreign bond yields little changed following yesterday’s strong session except Portugal and Greece which are higher: Germany 1.24% –; UK 2.63% -1; France 1.69% +1; Italy 2.84% –; Spain 2.64% +1; Portugal 3.58% +11!!! Greece, which closed at 5.76% yesterday is now 5.83% +8! The recent high on selloff was 6.75%. Highly volatile!!! Recent range is 5.42% to 12.57%. Japan: 0.55% -1.

Gold had a narrow inside session closing at $1316.10 -$6.10 a day after trading up to $1325.60 Tuesday – highest since 4/15 when it swooned. This is the sixth straight close above $1300 since 4/14! Six days ago the high was $1285.10 – highest since 5/27 when it began its devastating plunge. 6/9’s $1240.20 was lowest since 1/31/14!!! It remains above all three key moving averages which are very tight: 200 day $1288, then the 50 day $1285, and the 40 day $1283 – key is the psychological $1300 level 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 is little changed at $1316.20 -.80 in a very tight range. Since last Friday’s $41 rally it has done nothing but consolidate.

Crude traded down to $105.03, lowest since 6/12! Last Friday’s run to $107.73 – highest since 9/19/13, a huge down session – has left it in limbo. It closed at $105.84 -.66 – the 2nd close below $106 since rally began more than a week ago over Iraq. 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 $103.36, 50 day $103.10, then the 200 day $100.07. The recent range is $85.61-$112.24 since March 1, 2012. Overnight it is little changed at a weak $105.81 -.06 in a tight inside session.

Global equity markets little changed except for a weak Nikkei! UK +0.1% vs — vs -0.5% vs -0.1% vs -0.2%; France – vs +0.1% vs -0.7% vs +0.1% vs -0.3%; Germany +0.1% vs – vs -0.4% vs – vs -0.3%; Japan -1.4%! vs +0.3% vs -0.7% vs +0.1% vs +0.1%; Hang Seng +1.5%!!! vs -0.1% vs +0.3% vs -1.7% vs +0.1%; Korea -0.3% vs +0.7% vs -0.6% vs +1% vs +0.4%; India +0.2% vs -1%! vs -0.2% vs +1.4% vs -0.3%; U.S. Stock Index Futures weaker: DOW -26 (range 41); SPX -4.10 (6!); NDQ -5 (10!).

Some random thoughts:

…TB’s blood pressure up as he had to respond to an old Navy buddy who believes we have gone soft and that we can win any war…if we wanted to…with anybody. This sounds right out of Dick Cheney’s ill-designed playbook.

One thing that TB learned from reading Ken Okrient’s tome on Prohibition, Last Call, is that then, as now the Republican Party preaches being for the middle class but caters only to the wealthiest Americans. But at least with high income tax rates then – which if you can believe this ROSE after Prohibition ended – they had a gripe. Using Econ 100 it is rational for an individual to continue to work hard until the marginal tax rate exceeds 50% (it peaked at 90% after repeal and remained there for decades), not the 35% that our billionaires squeal about even while they don’t pay it and shelter it offshore…as do our corporations the latest of which was Medtronics that is moving its ‘corporate’ headquarters to Ireland for a 9% tax rate…bet they never came close to paying 30% here!

This has prompted some to say that while it makes sense financially…and the company claims it is forced to do this as stewards to the investors…but this flies in the face of why corporations are allowed to exist and as Milton Friedman and other ‘sage’ economists believed would always work in the long term interest of the shareholders for the long-term survival of the company. Long-term now means the expected tenure of the CEO (by the CEO), while short-term is the next quarter! Oh and spending corporate money is not for the benefit of the shareholders (necessarily) but to donate to PACs which serve the CEO’s interest and might not necessarily align with the investors…let them eat cake! – if they can afford it!

Ever hear of Rebekah Erler? She’s the Minneapolis woman who wrote to Obama about the plight of the middle class as her family struggles to get alone. In what is more likely to be a fundraising trip, the president met with her and others and had lunch with her yesterday. That’s great…but what will come of it? He certainly shows empathy for peoples problems but what has he or will he do about them? Not much and thanks to a recalcitrant GOP couldn’t anyway. Which brings us to SOTU and John Boehner.

In case you have been asleep, Boehner is filing a suit against Obama for overuse of authority…and careful to add, not impeachment – the party still bears the scars of that fiasco! TB had to laugh when the tea party guy, Lankford, running against veteran Sen.Thad Cochran in Oklahoma in his rant said the veteran representative was guilty of ‘reaching across the aisle!” Quel horror!
But back to Boehner…isn’t that what the Speaker is supposed to do? Didn’t he blame his problems on an unruly tea party contingent and the near-deposed Eric Cantor?

Then comes the Supreme Court voting 9-0 that Obama violated the Constitution in 2012 when he appointed members of the Labor Relations board while the Senate was in an interim recess. That is true, but what they did not address is a Senate who missued the filibuster by not allowing up or down votes for appointees to any position. So, constitution or not, what happens when the people elect someone and yet the opposition with no good reason stymies anything he tries to do including appointees to assist him in doing his job? The court was right, the Constitution trumps but it is doubtful this is what they intended. Some democracy when we have a gridlocked Congress.

Ok, blood pressure has subsided now…TB thinks…you decide the issues.

Enjoy your weekend…hopefully it is a good one!

TB

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