Quote of the Day from the Friars Club Encyclopedia of Jokes: “The Concorde was great. It travels at twice the speed of sound. Which is fun except you can’t hear the movie until two hours after you land.” – Howie Mandel
Bloomberg Quote of the Day: “It is a profitable thing, if one is wise, to seem foolish.” – Aeschylus – TB excels at this!
Bloomberg Top Stories:
*Stocks in Europe fall With Spain, Italy Bonds; Oil Drops, Treasuries Gain
*Commerzbank Said to Be Next to Face Penalties in U.S. Sanctions Crackdown
*Complacency Breeds $2 Trillion of Junk as Investors Pile Into Fertilizer – where future is???
*Deutsche Bank’s U.S. Corporate Banking Head Mayer Said to Join Cerberus
*Euro’s Reserve Appeal Fading as ECB’s Measures Prompt Decline
*Schaeuble Says Economic Overhaul No Excuse to Ease Up on Deficit Reduction
*Dalio’s Bridgewater, Paulson Said to Rise in June as Hedge Funds Advance
*Energy Trading Seen Plunging as Expanding Regulation Curtails Transactions
*Canadian Traders See Stock Market Fizzling After Record Advance
*Oil Markets Snooze Through Iraqi Chaos as Shale and Saudis Boom – do tell!
*Another Example of How U.S. Tax Policies Make Cynicism Easy – U.S. companies bidding government contracts through foreign subsidiaries and thus avoiding taxes – FOUL!!!
*Israel Pounds Gaza From Air and Sea After Rocket Fire, Calls Up Reservists
*Obama Invites Texas Governor Perry to Meet in Dallas on Immigration Issue – bad idea! LBJ would have made him come to the White House where HE was in control!
*Merkel Tested as U.S. Partner by Reignited Espionage Clash in Germany
*Teflon Thailand’s Capital Bangkok Opens Post-Coup Comeback Chapter
Monday’s Market Summary:
A bad day on modestly better volume – which remains WEAK! Advance/Declines were negative; Breadth even worse; all indices were negative (except Dow Utilities +0.3%) from -1.8% on the Russell 2000 to -1% on Dow Transports while the best, Dow and NDQ 100, were off just 0.3%. Note that the Nasdaq Composite was -0.8%, the only saving grace for the 100 – and only gainer was APPL which reduced the loss on the index but it still had 6.7:1 declining! On top of that the VIX rose 1.01 to 11.33 after being below 11 for two straight sessions! NYSE Financials were off 0.7% but look: Brokers -1.1%!; KBW Banks -0.7%; Nasdaq Banks -1%!. Not a pretty picture. Oh, and bonds rallied after trading weak for three sessions, Gold was moderately lower in a very narrow inside session, while Crude closed at the lowest price since 6/9/14.
Total NYSE Volume was only slightly better at 2.66B from an extremely weak 1.99B vs 2.83b vs 3.15B vs 3.02B vs 4.25B (end of quarter). Real NYSE Volume barely budged to 602M shares vs 537M – second weakest since April 30th vs 597M vs 686M vs 792M vs 1.49B at end of quarter. That and options expiry’s 1.72B shares the only ones above 800M since 4/28! The 12-month average is at a very weak 706M. Since 4/30 the average volume has been just 679M shares ranging from 531M to 1.72B.
A/D’s were negative – especially Nasdaq: NYSE -2.2x vs +1.3x vs -1.6x vs +2x vs +1.5x; Nasdaq -3.9x vs +2.1x vs -1.2x vs +2.7x vs +1.3x. Breadth was even worse: NYSE -3.4x vs +2.8x vs +1.05x vs +2.1x vs +1.2x; Nasdaq -3.5x vs +2.2x vs -1.01x!?! vs +3.7x vs +1.7x. New 52 Week Highs plunged to a very weak 187 vs 324 vs 319 vs 580 vs 392 – recent range is 71-580!!! New Lows were stable for a fourth session but remain very weak 27 vs 26 vs 27 vs 34 vs 42 vs 51 – recent range is 24-214.
S&P VIX rose 1.01 to close at 11.33 after being below 11 which was overly bullish. After three sessions where the top of the range was below 12, it rose to 11.01 -11.54 For the 4th time in 10 sessions the high end of the range was below ‘12’. Thursday’s close was a new recent low 10.32, barely taking out 10.34 on June’s options expiration!
Bonds closed stronger. 10 yr closed at 2.61% +1/4. 30 yr closed 3.44% +5/8. The long TIP, which hit a low of 0.978% on 5/29, closed 1.06% +3/4. Overnight they are strong again: 10’s 2.59 +3/16; 30’s 3.42% +3/8; and long TIP 1.04% +1/2. 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: 0.234% 3 mos.; 0.330% 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 0.08-0.10% where it has been for weeks! Foreign bond yields mixed: Germany 1.24% -2; UK 2.68% -4; France 1.67% -2; Italy 2.83% +2; Spain 2.70% +3; Portugal 3.61% +4; Greece 5.91% +6. The recent high on selloff was 6.75%. Highly volatile!!! Recent range 5.42% to 12.57%. Japan: 0.55% -1.
Gold closed slightly lower at $1317.00 -$3.20 in a very narrow inside session. Friday’s low of $1310.00, lowest since 6/20 while 7/1’s high was $1334.90 – highest since 3/24! This is the 12th straight close above $1300 since plunging on 4/14! 6/9’s $1240.20 was lowest since 1/31/14!!! It remains above all three key moving averages which are nearly locked: 50 day $1289, then the 200 day $1288, and the 40 day $1287! Key is the psychological $1300 level. It appears stalled after coming back from the 3/17 selloff 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 higher at $1324.00 +$7.00 in another ‘inside’ session.
Crude continued its selloff, its 7th straight decline since 6/25. the low was extended again to $103.19 – now lowest since 6/9 before coming back to close at a weak $103.53 -.52 (7th straight close below $106 and 3rd below $105; and first below $104!!!). 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 below the 40 day moving average and nearing the 50 day – both rising! 40 day $104.10, 50 day $103.31 then the 200 day $99.99. The range is $85.61-$112.24 since March 1, 2012. Overnight it is little changed at $103.47 -.06 in a narrow inside session.
Global equity markets weaker for a 2nd session, this bodes poorly due to treading water for nearly two weeks; India slammed after being best performer Monday: UK -0.6% vs -0.5% vs +0.5% vs +0.3% vs -0.1%; France -0.5%-1%! Vs +0.4% vs – vs -0.3% vs –; Germany -0.5% vs -0.5% vs +0.6% vs +0.2% vs +0.2%; Japan -0.4% vs -0.4% vs -0.1% vs +0.3% vs +1.1%! vs +0.4% vs -1.4%; Hang Seng – vs – vs -0.1% vs +1.6% vs closed vs -0.1% vs +1.5%; Korea +0.1% vs -0.2% vs -0.2% vs +0.8% vs -0.2%; India -2%!!! vs +0.5% vs -0.1% vs +1.3% vs +0.4% vs +1.3%; U.S. Stock Index Futures weaker: DOW -25 (range 29 vs 48 vs 29); SPX -3.50 (4! vs 6 vs 4!!!); NDQ -4.75(7 vs 6 vs 3!!!).
Some random thoughts:
…it most certainly isn’t the U.S. of A. in the Middle East where are bungled, and under false pretenses invasion of Iraq set the stage (some would argue it began when the Saudi’s allowed us to base aircraft there in the first Gulf War precipitated by Saddam’s ill thought out invasion of Kuwait. Either way we are now in an area (and a large one), war that has become religious…not only against Jews…and Christians, but has now become secular between the Shia and the Sunni’s. Note that it is only in Saudi Arabia and Kuwait now where the minority Sunni’s rule over the Shia…the election of Al Maliki in Iraq and his subsequent shoving aside any and all Sunni’s from government brought on the rebellion – although the Kurds were short-changed from the beginning and thus easy to unite.
All of this falls squarely on the U.S. and the Bush Administrations blustery “crusade” (a horrible choice of words by Bush 43!), against the ‘terrorists’ of 9/11 which was extended to Iraq with Baghdad sacked due to a lack of American forces to defend it (which included the Central Bank and the Museum of Antiquities), while protecting the Oil Ministry to preserve those precious contracts!
Then to compound the mistakes, Bush appointed Paul Bremer as administrator (and then self-appointed ‘Viceroy’), whose first executive order was to ban all Baathists from any position in government – including teachers, most of whom had to register as Baathist in order to get their jobs…and now lost them because they did). This was in direct conflict with the administration policy that the Iraqi’s ‘know who the bad guys are’ The worst part of the order however, was he turned away the Red Guard, a highly trained military group…and sent them home (they still had their weapons!), but with no hope for jobs what did he (we?) expect. This has now come back to haunt us as the rapidly trained soldiers are not doing their job…some due to the fact the side with (understandably) the rebels.
TB could go on but you get the picture…and it is another chapter of the Ugly American.
Have a great day…”it’s a great life if you don’t weaken.” (attributed to Canadian cartoonist Seth).