Quote of the Day from the Friars Club Encyclopedia of Jokes: …for the upcoming weekend…
“What contemptible scoundrel stole the cork from my lunch?” – W.C. Fields – you didn’t know?
“Actually, it only takes one drink to get me loaded. Trouble is, I can’t remember if it’s the thirteenth or fourteenth.” – George Burns
“The whole world is about three drinks behind.” – Humphrey Bogart
*An alcoholic is someone you don’t like, who drinks as much as you do.” – Dylan Thomas
Bloomberg Quote of the Day: “Formal education will make you a living;self-education will make you a fortune.” – Jim Rohn…if you play it right…and are lucky!
U.S. Non-Farm Payrolls rose 209k in July short of median estimate of 230k – but with today being the first of the month expect significant revisions – up or down. Private payrolls +198k, Govt +11k. May was revised up 5k to 224k and June 10k to 298k. Services fell from 232k to 140k; Retail to 27k from 41K; Business Services 47k vs 73k! Government +11k vs +28k!!! Average hourly earnings were flat. Average Hours Worked steady at 34.5 (means a lot of part-timers); Overtime Hours declined by 0.1 hours.
The Unemployment Rate rose to 6.2% +0.1%, largely due a blip up in the Participation Rate to 62.9%, still near a four decade low! Teens not having a great summer if they were saving for college: their rate 20.2%! Household jobs increased by131k.Meanwhile the Underemployment Rate rose to12.2% vs 12.1%
Market Reaction: 10am EDT: In bonds, 10’s held gains, while long end has retreated. Stocks continued their overnight decline…but are now mixed with most having slight gains – ex-Dow. Looking for nothing more than a dead cat bounce, if that, from yesterday’s thrashing! Gold slightly higher but remains extremely WEAK; Crude continuing its slide. Dollar little changed.
Bloomberg Top Stories:
*Payrolls in U.S. Rose 209k in July as Unemployment rates Climbed 0.1% to 6.2%
*Treasuries Gain With Gold (?) After Jobs Data While U.S. Equities Fluctuate (?)
*Argentine Bonds Post Biggest Decline since 2012 as No Deal Seen Imminent
*Bonds Show Strains as Credit Markets’ Best Global Rally Since 1997 Wilts – wilts?
*Manufacturing in U.S. Expands at Fastest Pace in Three Years – has it peaked too?
*Consumer Spending in U.S. Increased in June by the Most in Three Months – sustainable?
*Iliad Falls Most Since 2006 as $15 Billion T-Mobile Bid Seen as Inadequate
*Fiat Says Ciao to Italy as Merger With Chrysler Ends National Symbol’s Era – CEO tired of trips?
*Gaza Truce Unravels as Israel Probes Reports That a Soldier was Captured – one soldier??? Who do they think they are?…the U.S.???
*Ukraine Says Russian Planes Violate Airspace as Monitors Reach Crash Site – finally???
Thursday’s Market Summary:
What’s a mother to do??? More repercussions from the Fed statement and now disappointing earnings results. Followed by weak Chicago PMI and Employment Cost Index showing wage increase above estimates…who cares they are starting from absurdly low levels. Also, on Wednesday Business inventories grew in that ‘great’ GDP revision…could they have been ‘involuntary’? No matter, the economy isn’t growing fast enough to do anything…especially to help the outlook for workers getting more money…ergo more appetite to buy!
In one day the Dow gave up all its returns for the year: down 317 points or 1.9%; ytd -0.08%! Worst performed was the Russell 2000 small cap -2.3%!!! and now -3.7% ytd!!! Dow Transports which declined 1.6% remain best at +10%; followed by Dow Utilities -1.6% but still +9.93%! Next is the NDQ 100 -2.1%!!! and now +8.4% ytd… yesterday it’s A/D ratio was MINUS 25:1!!!
NYSE Financials declined by 1.9% and are now in the red ytd at -3%! KBW Banks component while Nasdaq Banks were -1.4% and -3.7% ytd! Not a pretty picture, right, bulls? So funny watching CNBC yesterday as one after another the ‘eggspurts’ said its time to buy and Schwab’s Liz Ann Sonders declared that “stocks are not overvalued by any measure.” – Say it isn’t so, Liz!
Volume was just what you DON’T want to see on a down day: STRONG! 4.25B the same as it was on June 30th! Remember average is around 3.5B shares – a rarity these days. Real trades on the NYSE also surged to their highest since 6/27: 927M shares or about 220M above average…typical of late, 200M of those shares came at the closing bell! Today ‘should’ see a ‘dead cat bounce’ as overnight futures plunged again (DOW -112 at the low!), but are coming back. A/D’s and Breadth were extremely negative. New 52 week highs were cut by three to a very weak 56 from 149!!! New lows doubled to a high 234 vs 115! The VIX rose a HUGE 3.6% to 16.96 – highest close since 4/11/13. Range 14.26-17.11! July was a bitch! Particularly if you were buying, right? This one ain’t on TB…he warned you…repeatedly!
Total NYSE Volume rose to an average 4.25B – same as June 30th (end of quarter), vs 3.44B shares vs 3.14B vs 2.77B vs 2.63B. Real NYSE Volume also rose to 927M highest since June 27th’s 1.49B shares (Friday before QE) vs 680M vs 628M vs 589M vs 570M – 8 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 704M. Since 4/30 the average volume has been just 671M shares ranging from 531M to 927B….12 month high is 2.06B shares on 9/20/13!
A/D’s were off-the-charts negative: NYSE -6.3x!!! vs -1.6x vs -1.5x vs -1.3x vs -1.9x vs -1.1x – prior to that they were puny positives! Nasdaq -5.1x! vs +1.4x vs +1.03x vs -1.7x vs -2.1x. Breadth was similar: NYSE -8.4x!!! vs –1.2x vs -1.8x vs -1.4x vs -2x; Nasdaq -5.6x! vs +1.7x vs +1.2x vs -1.5x vs -1.7x. New 52 Week Highs cut by 2/3 to 56! vs 149 vs 181 vs 152 vs 150 – recent range is 71-580!!! New Lows doubled to 234!!! vs 115 vs 118 vs 141 vs 55 – recent range is now 24-234. S&P VIX closed at 16.96 +.3.63 or 27.2% with a range of 14.26-17.11…now DEEP in bear territory!
Bonds traded weak even as stocks were plunging but came back at the close and are back near the new 12-month highs: 10 yr closed at 2.56% –. 30 yr closed 3.32% -1/16. The long TIP closed at 0.95% -1/8. Overnight higher ahead of payrolls: 10’s 2.52% +5/16; 30’s 3.31% +1/8; and long TIP 0.95% +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: 0.240% 3 mos.; 0.333% 6 mos., both slightly higher but 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 back at 0.08-0.10% from 2 basis points below where they have been for weeks! Foreign bond yields higher –ex Gilts: Germany 1.16% +1; UK 2.58% DOWN 2! France 1.54% +1; Italy 2.74% +4; Spain 2.52% +2; Portugal 3.65% +6!; Greece 6.01%!!! +10 – 22bp’s in two days! The recent high on selloff was 6.75%. Highly volatile!!! Recently 5.42% to 12.57%. Japan: 0.53% –.
Gold traded down to $1281.30 (lowest since 6/19) before closing nearby at $1282.80 -$14.10!!! Second close below the psychological $1300 two days after a negative key reversal (higher high, lower low and close below prior days low!)…note the first break is usually a false break…and so it was! Now well below the psychological support level of $1300! 7/17’s session high was $1346.60, highest since March 19th!!! 6/9’s $1240.20 was lowest since 1/31/14!!! It is now way below all three moving averages which remain near locked…200 day $1287, the 50 day $1293 and the 40 day at $1301!!! Those were all critical support levels 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…that too 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 $1289.50 +$6.80 with a low of $1281.00, lowest since 6/19.
Crude traded down to $97.88!!! – lowest since 3/18 before settling at $98.17 -$2.10! 7/22’s high was $105.20, still highest since 7/2. 7/15’s session low was $90.01 – lowest since 3/21 – not EIGHT handles since 6/30 – two yesterday alone! 6/20’s run to $107.73 – highest since 9/19/13, a huge down session – put it in freefall and now well below what was critical support at $99.87 – 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 now at the 200 day ($99.87), then the 50 day ($103.72), and then the 200 day $103.82!!! consider 50/40 major res! The range is $85.61-$112.24 since March 1, 2012. Overnight it traded down to $97.09, lowest since 2/5/14!!! Currently $97.72 -.45 -ay cabron!
Global equity markets slammed, Europe for a 2nd day: UK -0.8% vs -0.3% vs -0.1% vs +0.6% vs -0.2%; France -0.5% vs -1.1%! vs +0.1% vs +0.9% vs –; Germany -1.5%!!! vs -1.2%! vs +0.1% vs +0.8% vs -0.8%; Japan -0.6% vs -0.2% vs +0.2% vs +0.6% vs +0.5%; Hang Seng -0.9% vs +0.1% vs +0.4% vs +0.9% vs +0.9%; Korea -0.2% vs -0.3% vs +1% vs +0.6% vs 0.7%; India -1.6%!!! vs -0.7% vs +0.4% vs closed vs -0.5%. U.S. equity futures weak for a 2nd session but coming back from multi-session lows!!! Dow -28 from -112; SPX -3.20 from -14!; NDQ -3.50? from -30!!!…coming back from trashing in anticipation of July payrolls report!
Some random thoughts
…TB watched again Frontline’s, Losing Iraq. Must have snoozed the first time because they did blame Bremer for his first to Orders over the objection of the generals. His interviews showed him as smug and having not reflected on his errors…not HIS fault! Rumsfeld looked like a buffoon as did Dubya with his ‘Mission Accomplished’ banner, and ‘bring it on’ – we learned nothing, nothing from either Viet Nam OR the First Gulf War. Those who fail to heed the lessons of history are doomed to reapeat them…to paraphrase.
Have a weekend! Enjoy!