7/3/14…don’t drink a fifth on the Fourth!

uote of the Day from the Friars Club Encyclopedia of Jokes: “Whenever I feel like exercising, I lie down until the feeling passes.” – Robert Maynard Hutchins…take it easy, baby!

Bloomberg Quote of the Day: “We all have the ability. The difference is how we use it.”
– Stevie Wonder

U.S. Non-Farm Payrolls increased by 288k in June vs median estimate of 215km, and a 224k gain in May (revised up by 7k, while April was up by 22k). Private Payrolls rose by 262k, while Government added 26k! Factory Jobs increased by 16k and Construction by 6k.
The Unemployment rate declined to 6.1% -0.2%, almost a six-year low. The Participation Rate however was unchanged at 62.8% a 35-year low! Average Hourly Earnings rose 0.2% and are steady at +2.0% year-over-year. Household Jobs rose by 407k (remember those require just one hour a week and do not require income on farms – huh? Meanwhile the long-term jobless rate declined to 32.8%, lowest since June 2009 – to ‘just’ 3.1M and the underemployment rate fell by 0.1% to 12.1%.

More Jobs with little increase in wages equals a slow growth economy. Thanks, Congress!

Market Update 9am EDT: Bonds taking a hit (excessive due to speculators and early close?), with 10 year 2.68% -7/16; 30 year 3.50% -11/16, and long TIP 1.13%! -11/16 (from 0.978% last Thursday); stocks doubling their gains but still in a very narrow range; Dollar gaining slightly, Gold selling off and now -$6.44 but coming back from an $11 loss; Crude back to $103 but still off 0.45.

Bloomberg Top Stories:
*Stocks in Europe Rise as Gold Drops Before ECB; Krona Falls After Rate Cut
*ECB Keeps Rate on Hold as Economists Seek Draghi Guidance on Direction
*Traders Brace for Tempest as Payrolls Clash With ECB Set to Sway Markets
*Obama Says Bonus-Driven Trading Worsens Risk to Financial System Stability – lax control!
*U.K. Services Employment Rises at Record Pace as Economy Keeps Momentum
*Dollar Bulls Practice Art of Stealth Capitulation Amid Slump
*South China Sea Offers Xi Great-Power Status After Century of Humiliation
*How Detroit’s Two Pizza Barons Are as Different as Pepperoni and Sausage – Domino’s, failing and Little Ceasars (pizza, pizza). The first owned the Tigers, the latter the Red Wings
*Arthur Strengthens Off North Carolina to Become First Hurricane of Season
*Airports Serving U.S. Heighten Security on Concern Bombs Harder to Detect
*Europeans Press Russia to Persuade Ukrainian Separatists to Reach Cease-Fire
*Renzi Upends Berlusconi’s Macho Italy With Women in Half of Cabinet Seats – !!! Italy????

Wednesday’s Market Summary:

Tuesday was just another ‘one day wonder’ that we have all seen to kick off a new quarter. Despite the major indices being near or above record levels (weren’t they in 2007 for financials and 2008 for industrials?), the volume plunged back to a tepid 2.83B shares while real trades fell to a very weak 597M and that only with 150M shares at the bell! Advance/Declines were negative and Breadth non-existent, while new 52-week highs plunged from a one day surge to 580 back to a normal 319, and new lows remain weak. Compare: Dow +0.1% vs +0.8%; Dow Transports -0.4% vs +0.7%; S&P 500 +0.1% vs +0.7%; Nasdaqs +0.1% (barely) vs +1.1%; Russell 2000 -0.5% vs +1.1%. Dow Utilities had a sharp decline which made two rare negatives: -1.9%! vs -0.9%! Still the best performer at 6/30 for June (+5.9% followed by the Russell +5.3%); 6 mos.(+9.2% followed by Transports +8.6%), and a 23% gain for the 12-months, while Transports and the two Nasdaqs were up over 30% and only the S&P +24.5% and Russell +23.6% bested it. The Dow had to settle for a 15.5% gain, and NYSE Financials 18%, but where is the momentum?

Today’s payrolls report should create a flurry of activity before it settles in for a quiet ending!

Total NYSE Volume fell sharply to a weak 2.83b shares vs 3.15B vs 3.02B vs 4.25B (end of quarter) vs 2.78B. 6/30 and June options expiration were the only high volume (4+B) days! Real NYSE Volume plunged to a WEAK 597M shares and that only with 150M at the closing bell, vs 686M vs 792M vs 1.49B shares – that and options expiry’s 1.72B shares the only ones above 800M since 4/28! The 12-month average continues to slip and is at a very weak 706M. Since 4/30 the average volume has been just 686M shares ranging from 531M to 1.72B.

A/D’s were negative: NYSE -1.6x! vs +2x vs +1.5x vs +2x vs +1.1x; Nasdaq -1.2x vs +2.7x vs +1.3x vs +1.7x vs -1.1x. Breadth was flat: NYSE +1.05x vs +2.1x vs +1.2x vs +1.3x vs +1.02x; Nasdaq -1.01x vs +3.7x! vs +1.7x vs +1.5x vs +1.1x. New 52 Week Highs plunged to a normal 319 vs 580 vs 392 vs 301 vs 221 – recent range is 71-580!!! New Lows were level at a very weak 26 vs 27 vs 34 vs 42 vs 51 vs 64 vs 52 – recent range is 24-214.
S&P VIX dropped to 10.82 -.33 – extremely bullish! …overly??? For the 2nd time in 8 sessions the high end of the range was below ‘12’: 10.56-11.18 – the 2nd straight ‘10’ handle on the low end! Recent low is 10.34 on June’s options expiration!

Overnight markets:

Bonds closed weaker – payroll and long weekend anxiety? 10 yr closed at 2.63% -9/16. 30 yr closed 3.46% -1-3/16! The long TIP, which hit a low of 0.978% on 5/29, closed 1.11%! -1-5/8 – nearly 3 points in two days! Overnight flat ahead of payrolls: 10’s 2.63 –; 30’s 3.46% –; and long TIP 1.10% +1/16. 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: 0.232% 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 is 0.09-0.10% where it has been for weeks! Foreign bond yields little changed except Italy, Spain, and Portugal which are rising: Germany 1.25% –; UK 2.69% -1; France 1.71% –; Italy 2.86% +3; Spain 2.69% +6!; Portugal 3.60% +3; Greece 5.85% +1. The recent high on selloff was 6.75%. Highly volatile!!! Recent range 5.42% to 12.57%. Japan: 0.55% –.

Gold closed higher again at $1330.90 +$4.30 with the high just below Tuesday’s $1334.90 – a slightly higher high and highest since 3/24! This is the 10th straight close above $1300 since 4/14! 6/9’s $1240.20 was lowest since 1/31/14!!! It is well above all three key moving averages which are nearly locked: 200 day $1288, then the 50 day $1288, and the 40 day $1286! Key is the psychological $1300 level. It is coming back from a selloff that has been in place since 3/17 when it set 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 weaker at $1320.00 -$10.90.

Crude continued to selloff : it fell again to $104.10 intraday – now lowest since 6/10 before coming back to close at a weak $104.48 -.83 (6th straight close below $106 and first below $105!). 6/20’s run to $107.73 – highest since 9/19/13, a huge down session – has left it in limbo and showing signs of more weakness to come. 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 coming within range of the 40/50 day moving averages – both rising! 40 day $103.94, 50 day $103.23 then the 200 day $100.02. The range is $85.61-$112.24 since March 1, 2012. Overnight it is weaker still at $103.77 -.71! Session low $103.69 – below the 40 day!

European equity markets higher, Asia slightly weaker: UK +0.5% vs +0.3% vs -0.1% vs +0.1% vs –; France +0.4% vs – vs -0.3% vs – vs +0.1%; Germany +0.6% vs +0.2% vs +0.2% vs +0.1% vs –; Japan -0.1% vs +0.3% vs +1.1%! vs +0.4% vs -1.4%; Hang Seng -0.1% vs +1.6% vs closed vs -0.1% vs +1.5%; Korea -0.2% vs +0.8% vs -0.2% vs +0.7% vs -0.3%; India -0.1% vs +1.3% vs +0.4% vs +1.3% vs +0.2%; U.S. Stock Index Futures slightly higher in another narrow range session: DOW +15 (range 29); SPX +1.90 (4!!!); NDQ +5 (3 for a 2nd day!!!!).

Some random thoughts:

Nothing to say as there is nothing new to comment on…again…focused on the long weekend, you should be too!

Have a great safe and sane Fourth and enjoy the long weekend!

TB

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