8/8/14…democracy is messy…pullease…Iraq ain’t no democracy!

Quote of the Day from the Friars Club Encyclopedia of Jokes: “A football fan is a guy who’ll yell at the quarterback for not spotting an open receiver forty-five yards away, then head for the parking lot and not be able to find his own car.- anon


Bloomberg Quote of the Day: “A short saying oft contains much wisdom.” – Sophocles

 

Bloomberg Top Stories:

*Stocks Fall in Europe on Iraq Crisis While U.S.Futures Rebound??? Hello, Asia trashed!!!

*Banks Said to Be Forming Argentine Disputed Debt Buyer Group After Default – sure they are!

*Yesterday’s U.S. Tax-Inversion Buyers become Tomorrow’s Inversion Target – must be stopped!

*Junk-bond Losses in U.S. Spur Record $7.1 Billion of Withdrawals in Week – !!!

*McDonald’s Restaurant Sales in July Decline as U.S. Slumps for Third Month

*Citigroup, Accenture, JPMorgan Hire Hundreds for Tech Hub in Buenos Aires

*Hoarding Bank Capital Isn’t Enough for Basel’s Coen as Nordics Break Away

*MetLife Discloses $1Billion of Russia, Ukraine Investments Amid Conflict – oh, swell!

*Brazil Inflation Slows More Than Forecast on Lower Transport, Food Prices – 0.01% – amazing!

*How Tesla’s Project With Toyota Led to Clashes in Opposing Cultures – surprised?

*NCAA Opens Door for Colleges to Act Like Businesses They Are – but education???

*Fired Market Basket CEO Earned Workers’ Loyalty With Personal Connections – family feud!

*U.S. Carries Out Airstrikes Against Militants From Islamic State in Iraq

*Israel Aircraft Pound Gaza Targets After Hamas Rockets Shatter Cease-Fire

*Ukraine Says It’s Open to Halting Flow of Gas in Sanctions Against Russia – and beat goes on

*Hawaii Avoids First Hurricane in 22 Years as Iselle Becomes Tropical Storm – A-lo-ha!!!

Thursday’s Market Summary:

 

Bonds to new 12-month highs, while stocks slumped by 0.2% (Dow Transports) to -0.6% (S&P). Only winner was Dow Utilities which came back late in the session and closed +0.9%. This vs -2.3% for the prior two sessions!

Total NSYE Volume slipped to a below average 3.22B shares vs 3.5B while real trades on the NYSE floor declined again to 670M or about 35M below average. Advance/Declines on the NYSE have now been negative 7 of the last 9 sessions, while the Nasdaq has had four but the prior five positives ones were mostly so flat as to render them not worthy of mention. Breadth, was even more negative and again the positives have been miniscule while some of the negatives have been very weak. New 52 week highs were slightly higher but at a very weak 67 vs 54 while new lows picked up to a high 167 vs 146 vs 166 vs 178. The VIX continues to oscillate closing slightly higher at 16.66 +.29 while the range remains bearish at 15.44-17.25!

 

Total NYSE Volume dipped to a below average 3.22B shares vs 3.5B vs 3.44B vs 3.05B vs 3.79B vs 4.25B. Real NYSE Volume was slightly lower at a below average 670M shares – 120M at the bell vs 689M vs 703M vs 676M vs 792M vs 927M – 13 days ago it hit 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 704M 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 slightly negative: NYSE -1.1x vs +1.5x vs -2.5x vs +1.6x vs -1.7x vs -6.3x!!! All positives have been puny for two weeks! Nasdaq -1.8x vs +1.5x vs -1.4x vs +1.7x vs -1.8x vs -5.1x! Breadth was more so: NYSE -2.3x vs -1.05x vs -3.6x vs +2.3x vs 1.7x vs -8.4x!!!; Nasdaq -1.7x vs -1.1x vs -1.8x vs +2.1x vs -1.9x vs -5.6x! New 52 Week Highs rose slightly but remain weak for a sixth session at a weak 67 vs 49 vs 54 v 57 vs 46 vs 56 vs 149 – recent range is 46-580!!! New Lows rose a bit and remain high at 167 vs 146 vs 166 vs 179 vs 260!!! vs 234 vs 115 – recent range is 24-260! S&P VIX closed slightly higher at 16.66 +.29, and the range was almost the same as Wednesday at 15.44-17.25.

Bonds closed not only strong but at new 12-month highs! 10 yr closed at 2.41%! +1/2; 30 yr 3.22%! +7/8; the long TIP 0.89% +3/16. Overnight they were higher but slipped to little changed and mixed following the revised Productivity gains but are not climbing again and hitting more new 12-month highs: 10’s 2.39% +3/16; 30’s 3.21% +1/4; and long TIP 0.88% +3/16. 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: 0.234% 3 mos.; 0.328% 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 also lower across the board for a second session; problem credits had weakened late yesterday afternoon: Germany 1.06% –; UK 2.47% -1; France 1.46% -3; Italy 2.82% -5; Spain 2.55% -6; Portugal 3.79% -3; Greece 6.37% -3 The recent high on selloff was 6.75%. Recently 5.42% to 12.57%. Japan: 0.50% -2!

 

Gold closed higher and had a higher high intraday of $1313.10, highest since 7/22 and closed at $1312.50 +$5.80. Monday’s low was $1279.70, lowest since 6/19. This breaks the string of six straight closes below the psychological $1300, which began with a negative key reversal (higher high, lower low and close below prior days low!). It is now above all three moving averages and 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!!! Support is now the 40 day $1306, the 50 day at $1295, and the 200 day at $1287. Those are again 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 traded up to another new high of $1324.30 but also came off on Productivity and is now $1309.90 -$2.60.

 

Crude closed slightly higher but only after trading down to $96.55 – lowest since 2/4! – NINE handles since 6/30! 7/22’s high was $105.20, still highest since 7/2. 7/15’s session low was $90.01 – lowest since 3/21. 6/20’s run to $107.73 was highest since 9/19/13 (a huge down session which put it in freefall well below what was critical support at $99.82 – 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 ($99.79), then the 40 day ($103.07), and then the 50 day ($103.10) –almost locked!!! The range is $85.61-$112.24 since March 1, 2012. Overnight it is slightly higher at $97.65 +.31 in an inside session.

.

Global equity markets mixed but mostly weaker – Japan crushed!!! Korea and India very weak too! UK -0.3% vs – vs -1.3% vs +0.4% vs +0.5% vs -0.8%; France +0.2% vs -0.2% vs -1.3% vs +0.5% vs +0.8%; Germany +0.1% vs +0.3% vs -1.4% vs +0.4% vs – vs -1.5%!!! vs -1.2%! Japan -3%!!! vs +0.5% vs -1.1% vs -1% vs -0.3%; Hang Seng -0.2% vs -0.8% vs -0.3% vs +0.2% vs +0.3% vs -0.9%; Korea -1.1%! vs -0.3% vs -0.3% vs -0.7% vs +0.4%; India -1%! vs -0.3% vs -0.9% vs +0.7% vs +1% vs -1.6%!!! U.S. equity futures were also slammed but game back following Productivity: Dow +21 back from -111!!! (range 152!); SPX +4.70 from -15 (23); NDQ +7.75 from -30 (43!).

 

Some random thoughts

 

…the worlds a mess…or as Dubya’s first Secretary of Defense and architect (sic) of the Iraq War, Donald Rumsfeld would say, “democracy is messy”. Really, Don…you didn’t create a democracy you destroyed the entire balance of power in the Middle East. Ah, but the Sunni’s did it to themselves by not voting to protest the elections…now that is brilliant! Just brilliant…and what do they/we have to show for it? Minority rule! Honk if you doubt this! Oh, and in case you didn’t notice, Obama spoke last night and concern was in his voice…not solutions but legitimate concern. Overnight we launched strikes against the Iraqi militants…mostly Sunni, which has us in the odd position of defending the Shia, thanks to our ideal of democracy which put in power Maliki who misused his office to punish the Sunni’s…not a good place to be…remember Saudi Arabia? This will not end well!

 

Have a fun and relaxing weekend…you’ll need it for options expiry next Friday!!!

 

TB

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