7/30/14…we didn’t start the fire…

Special Quote of the Day: “Many could forego heavy meals, a full wardrobe, a fine house, et cetera; it is the ego they cannot forego.” – Mohandas Gandhi…ah yes, but their egos won’t let them forego anything…even when others are suffering. – TB

Quote of the Day from the Friars Club Encyclopedia of Jokes: “I went to the bank the other day and reviewed my savings. I found out I have all the money I’ll ever need. If I die tomorrow.”
– Henny Youngman

Bloomberg Quote of the Day: “Excellence is not a skill. It is an attitude.” – Ralph Marston

Bloomberg Top Stories:
*Bankers Bonuses at Risk for Seven Years Under BOE Rules to Prevent Losses…but U.S.?
*U.S. Futures Gain With Treasuries Before Fed; Russian Stocks, Ruble Rally – weak sanctions!
*Barclays Returns to Second-Quarter Profit on Cost Cuts, Lower Impairments
*Argentine Default Deadline Looms With Hedge Fund Talks Set to Resume today
*Billionaire Steven Cohen Still Beating Hedge Funds After Shutting Down SAC – no shame!
*Greek Government Credit-Default Swaps Trade for First Time Since 2012 – get ‘em here!
*Bitcoin Faces Test at Highest EU Court – aka: TULIPS…tulipmania
*Hong Kong, Singapore Popping Housing Bubbles New York, London Can’t Handle
*Russian Central Bank Pledges Assistance to Lenders Sanctioned by U.S., EU – Putin, you rock!
*UN Shelter in Gaza Shelled With Loss of 20 People as Assault Intensifies
*Europeans Paying Million in Ransom Help Bankroll Al-Qaeda Terror Network
*Buffetts Take on Ricketts in Nebraska Contest Drawing Billionaire Backers

Tuesday’s Market Summary:

Not a pretty picture. All indices were down from 0.2-0.4% except Dow Transports -1.4%!; Dow Utilities +0.9%?; and the Russell 2000 which rose 0.2%? NYSE Financials were off 0.5%. So what was so bad? Monday’s mixed session where Dow Transports fell 1.1%! while Dow Utilities rose 1.3%!!!;and the Russell 2000 declined 0.5%.Since the July 18th rally where all indices except the Dow (+07%) were up from 1% to 1.6% (both Nasdaq’s and the Russell 2000), there have been two up sessions, two down and two mixed…not exactly compelling evidence of a bull market…in fact the modest gains since 7/10 have been neutralized – this as we remain near record highs (except the Russell which peaked on 7/1 and has plunged 6% since! has . Volume rose to 3.18B shares but remains below average…and weak on actual NYSE floor trades. A/D’s and Breadth were mixed with NYSE negative for a third session and Nasdaq positive but only slightly; new 52 week highs rose to 181 vs 152 while new lows slipped back to 118 from 141. The VIX rose sharply closing at 13.32 first close above ‘13’ since 7/17…hmmm.

Total NYSE Volume rose but remains below average at 3.14B shares vs 2.77B vs 2.63B vs 3.09B vs 2.05B. Recent high volume was 4.25B (end of quarter). Real NYSE Volume rose slightly again but just to 628M shares vs 589M vs 570M vs 631M vs 581m – six days after plunging to 541M, the third lowest of 2014 (531M was the low) – with 236M at the bell!!! 537M on 7/3 was second weakest since April 30th . There have been just two sessions above 800M since 4/28! The 12-month average remains at a very weak 703M. Since 4/30 the average volume has been just 666M shares ranging from 531M to 1.72B.

A/D’s were mixed with NYSE negative: NYSE -1.5x vs -1.3x vs -1.9x vs -1.1x vs +1.4x; Nasdaq +1.03x vs -1.7x vs -2.1x vs -1.2x vs 1:1x. Breadth was similar: NYSE -1.8x vs -1.4x vs -2x vs +1.2x vs +1.07x; Nasdaq +1.2x vs -1.5x vs -1.7x vs +1.2x vs +1.2x. New 52 Week Highs rose to 181? vs 152 vs 150 vs 280 vs 284 – recent range is 71-580!!! New Lows slipped back to 118 vs 141 vs 55 vs 70 vs 49 – recent range is 24-214. S&P VIX closed at 13.32 +.76 with a range of 12.12-13.35…Monday’s high was 13.64. Observe!

Bonds closed higher, again setting new 12-month highs: 10 yr closed at 2.46% +1/4. 30 yr closed 3.23% +9/16. The long TIP closed at 0.87% +11/16. Overnight slightly weaker: 10’s 2.47% -1/8; 30’s 3.24% -1/4; and long TIP 0.88% -5/16. 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: 0.236% 3 mos.; 0.329% 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 little changed: Germany 1.12% –; UK 2.55% –; France 1.50% –; Italy 2.63% -1; Spain 2.45% -2; Portugal 3.52% -4; Greece 5.79% +2. The recent high on selloff was 6.75%. Highly volatile!!! Recently 5.42% to 12.57%. Japan: 0.52% +1.
Gold traded down to $1298 before closing at $1300.50 -$5.30 but the important thing is that while trading in a narrow range it suffered a negative key reversal (higher high, lower low and close below prior days low!) Sitting on psychological support level of $1300! 7/17’s session high was $1346.60, highest since March 19th!!! Just 3 closes below $1300 in 25 sessions since plunging on 4/14! 6/9’s $1240.20 was lowest since 1/31/14!!! Once again it is back below all three moving averages which remain near locked and CRITICAL…40 day $1299, the 50 day $1294 with final support still at the 200 day $1287!!! Note the recent high of $1392.60 on 3/17, highest high since 9/4/13, then ended the session with a negative key reversal sparking the downturn! Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!! Overnight it is slightly higher at $1300.10 -0.40 in another inside trading session.

Crude closed weaker yet again at $100.97 -.70 with a session low of $100.37 – lowest since 7/16! Last Tuesday’s high was $105.20, still highest since 7/2. 7/15’s session low was $90.01 – lowest since 3/21 – SIX handles since 6/30! 6/20’s run to $107.73 – highest since 9/19/13, a huge down session – put it in freefall and now just above critical support at $99.90 – the 200 day! 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. RES at the 40 day ($103.99), then the 50 day $104.03 (just crossed), and the 200 day $99.90!!! The range is $85.61-$112.24 since March 1, 2012. Overnight it is a tad better at $101.31 +.34 in a narrow inside session.
.
European equity markets little changed, Asia higher: UK -0.1% vs +0.6% vs -0.2% vs -0.2% vs +0.1%; France +0.1% vs +0.9% vs – vs -0.8% vs +0.8%; Germany +0.1% vs +0.8% vs -0.8% vs -0.5% vs +0.6%; Japan +0.2% vs +0.6% vs +0.5% vs +1.1% vs -0.3%; Hang Seng +0.4% vs +0.9% vs +0.9% vs +0.3% vs +0.7%; Korea +1% vs +0.6% vs 0.7% vs +0.4% vs -0.1%; India +0.4% vs closed vs -0.5% vs -0.6% vs +05%. U.S. equity futures higher: Dow +36; SPX +4.50; NDQ +13.25.

Some random thoughts

…remember that Billy Joel song?…aren’t you getting a wee bit tired of markets that grind higher but in reality are trendless with little or no conviction thus tying the hands of money managers while the high freaks make money on (limited) volatility. Tomorrow is month end and with the first half producing after last quarters volatility and strong 12-month performance, would you want to risk that in the next five months? Some may…not TB!

Meanwhile the world is turning into a conflagration as we see a growing religious war: Christians and Jews against Muslims; Muslim Sunni’s against Shia; Syria in chaos; Libya back in turmoil; Egypt also struggling; Saudi Arabia could overthrow the ruling family; Africa has hot spots all over it. Russia in power struggle with Ukraine and shooting down airliners and denying accountability while the EU wrings its hands over the economic costs and weighing those against financial gain. Thankfully for us all we have is a dysfunctional government…but elections coming…all eyes on the primaries. Oh, and of course the banks who continue to lose suit after suit…record upon record…while their CEO’s reap huge rewards…ain’t that right, Jamie? Oh yeah, and those record fines are a pittance compared to the illicit profits earned…with no clawbacks, few firings, and not apologies…after all the fines are paid by the shareholders…ain’t that a bitch?

Don’t let the bastards get you down…would say it in Latin but takes too long.

It’s a great life if you don’t weaken…right?

TB

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