8/5/14…all that glitters…

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Don’t trust a computer you can’t throw out a window.” – Steve Wozniak

Bloomberg Quote of the Day: “We are healthy only to the extent that our ideas are humane.” – Kurt Vonegut

Bloomberg Top Stories:
*European Stocks Rebound While U.S. Futures Decline; Gilts Fall on Economy
*Gannett Will Split in Two Through Spinoff While Buying Rest of Cars.Com
*Credit Agricole Rises Most in Three Months After Banco Espirito Santo Writedown
*Telefonica Offers $9 Billion for Vivendi’s Brazil Unit in Cash-Stock Bid
*U.K. Services Growth Accelerates to Fastest in Eight Months as Wages Gain – not here!
*BMW Posts Best Carmaking Profitability in Three Years on X5 SUV Deliveries
*Target Sees Gross Expenses of $148 Million From Data Breach, Cuts Forecast
*Cuba Keeps Giving as Playground for Mischief for U.S. Agents – what’s with these guys?
*Scarce Cemetery Space in New York to London Creates Plot Prices to Die For – PUN!
*Israel Withdraws Remaining Troops From Gaza Strip With Cease-Fire Holding
*Islamic Militants Target Second Iraq Dam as Infrastructure Under Attack – thanks Dubya!
*Ebola Threat at New York Hospital ‘Unlikely’ as Test Confirmation Awaited – wait, we can’t even control Mersa? Hope the docs start washing their hands!
*China Probes Two Canadian Café Owners for Suspected Theft of State Secrets – desperation?

Monday’s Market Summary:

Finally, a positive with all indices up from 0.4% to 0.7% except NDQ 100 +0.8% and the day’s winner, Russell 2000 +0.9%. But rather than a rally, or even a ‘dead cat bounce’, call it a Fosbury Flop (a 1965 Olympic gold winning high jumper with a different way of going over the bar), but that would be an insult to the man.
Volume was lower again at a below average 3.05B shares vs 3.79B vs 4.25B – the same as it was on June 30th! Once again below average volume on a rally (of sorts). Real trades on the NYSE also dropped to a below average 676M vs 792M vs 927M – their highest since 6/27! A/D’s and Breadth were finally positive but not convincingly so. New 52 week highs were slightly higher but still at an anemic Heinz 57 vs 46 vs 56 from 149!!! New lows declined but still strong at 178 vs 2650. The VIX plunged through two handles to 15.12 -191 – still in bear territory but…

Total NYSE Volume dropped to a below average 3.05B shares vs 3.79B vs 4.25B – same as June 30th (end of quarter), vs 3.44B vs 3.14B vs 2.77B. Real NYSE Volume also dropped to a below average 676M shares vs 792M vs 927M – highest since June 27th’s 1.49B (Friday before QE) vs 680M vs 628M – 10 days ago it was 541M, the third lowest of 2014 (531M was the low) – that with 236M at the bell!!! 537M on 7/3 was second weakest since April 30th. There have been just four sessions above 800M since 4/28! The 12-month average remains at a very weak 703M shares. Since 4/30 the average volume has been just 673M shares ranging from 531M to 927B….12 month high is 2.06B shares on 9/20/13!

A/D’s were back in the green but… NYSE +1.6x vs -1.7x vs -6.3x!!! vs -1.6x vs -1.5x vs -1.3x – prior to that they were puny positives! Nasdaq +1.7x vs -1.8x vs -5.1x! vs +1.4x vs +1.03x. Breadth was similar: NYSE +2.3x vs -1.7x vs -8.4x!!! vs –1.2x vs -1.8x vs -1.4x; Nasdaq +2.1x vs -1.9x vs -5.6x! vs +1.7x vs +1.2x. New 52 Week Highs rose slightly but remain anemic at a very weak 57 vs 46 vs 56 vs 149 vs 181 – recent range is 46-580!!! New Lows declined but remain strong at 179 vs 260!!! vs 234 vs 115 vs 118 – recent range is 24-260! S&P VIX closed at 15.12 -1.91! and with a range of 14.69-16.80…better but still in bear territory!

Bonds were mixed but remain near their 12-month highs: 10 yr closed at 2.48% +3/32; 30 yr closed 3.29% -1/8. The long TIP closed at 0.94%! -5/8. Overnight slightly weaker: 10’s 2.49% -1/16; 30’s 3.29% -1/8; and long TIP 0.94% -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: 0.238% 3 mos.; 0.334% 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 at 0.08-0.10% where they have been for weeks! Foreign bond yields higher across the board, especially Greece! Germany 1.16% +3; UK 2.57%! +3; France 1.55% +3; Italy 2.73% +3; Spain 2.53% +4; Portugal 3.66% +5; Greece 6.29%!!! +21!!! The recent high on selloff was 6.75%. Highly volatile!!! Recently 5.42% to 12.57%. Japan: 0.51% -1.

Gold traded in a narrow range closing at $1287.70 $7.10. This following Monday’s low of $1279.70, lowest since 6/19. Fourth straight close below the psychological $1300 (even the session highs couldn’t top it), three days after a negative key reversal (higher high, lower low and close below prior days low!). It remains 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 remains well below all three moving averages …200 day $1288, the 50 day $1293 and the 40 day at $1303!!! Those were all critical support levels! 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 $1292.40 +$3.50 in another inside session.

Crude had a nothing day closing at $98.29 +.41 a day after trading down to $97.09!!! – lowest since 2/5. 7/22’s high was $105.20, still highest since 7/2. 7/15’s session low was $90.01 – lowest since 3/21 – EIGHT 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 well below what was critical support at $99.84 – 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 200 day ($99.84), then the 50 day ($103.49), and then the 40 day ($103.60)!!! The range is $85.61-$112.24 since March 1, 2012. Overnight it is $98.40 +.11 – in a 2nd straight inside session.
.
European equity markets higher – 2nd time in 4 sessions; Asia mixed again: UK +0.4% vs +0.5% vs -0.8% vs -0.3% vs -0.1%; France ++0.5% vs +0.8% vs -0.5% vs -1.1%! vs +0.1%; Germany +0.4% vs – vs -1.5%!!! vs -1.2%! vs +0.1%; Japan -1% vs -0.3% vs -0.6% vs -0.2% vs +0.2%; Hang Seng +0.2% vs +0.3% vs -0.9% vs +0.1% vs +0.4%; Korea -0.7% vs +0.4% vs -0.2% vs -0.3% vs +1%; India +0.7% vs +1% vs -1.6%!!! vs -0.7% vs +0.4%. U.S. equity futures weaker: Dow -41 (range 55); SPX -6.60 (8); NDQ -11.75 (16)…yesterday’s gains negated.

Some random thoughts

…TB read a review of a book by Kwasi Kwarteng called War and Gold over the weekend and thought it good enough to buy for his Kindle. It traces gold as a reserve back to the 16th century with the Spaniards, proceeds with the French and English, then on to Bretton Woods, and finally to the present.

It does not speak kindly of Sir Alan of Greenspan (Fed policies and beliefs) or Dubya (a guns and butter and tax cuts plan that puts LBJ to shame). It dispels that ‘myth’ that it is only the Democrats that are ‘tax and spend’ and shows how the GOP destroyed a surplus in just three years by obscene spending (which continued when the Dems took control of the House – briefly), and spending on the war while initiating tax cuts with the blessing of Glenn Hubbard (not to be confused with L. Ron Hubbard but even more dangerous). What did Dubya do? He passed every bill that crossed his desk until 2006 – now that’s forceful! On top of that his Treasury Secretary, Paul O’Neill quit in disgust at his lack of fiscal responsibility…ostensibly the spending was on homeland security but it was a pittance compared to the pork he passed. In his eight years, he vetoed just 12 (TWELVE) spending bills, half of what his father did and much less than the forty something vetoed by Reagan!

It is well written and informative…and shows just what gave the Tea Party its power. Worse it shows how gratuitous tax cuts and his two wars created the enormous budget deficits we face today…oh? You mean you thought it was Obama’s fault?

Enjoy your day…make it a profitable one!

TB

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