8/18/14…Ferguson’s a long way from Hannibal…

Quote of the Day from the Friars Club Encyclopedia of Jokes: “You don’t want another Enron? Here’s your law: if a company can’t explain one sentence what it does, it’s illegal” – Lewis Black

Bloomberg Quote of the Day: “Our attitude towards others determines their attitude towards us.”

– Earl Nightingale…you know how I feel about all you dear readers, right?

This week’s economic calendar is fairly light. The highlight of the week will be the July CPI Tuesday and FOMC July 29th -30th Meeting Minutes (Wednesday). We will also get July Housing Starts (Tuesday), August Philadelphia Fed Manufacturing, July Leading Indicators/July Existing Home Sales (Thursday). Courtesy of Economic Financial Service

Bloomberg Top Stories:

*Dollar General Offers $9.7 Billion for Family Dollar to Outbid Dollar Tree – what am I bid?

*Stocks Climb in Europe With S&P 500 Futures as bonds, Oil Drop on Ukraine – bonds just a tad!

*Russia Widens Ruble Trading Band in Show of Confidence Amid Ukraine Crisis

*Draghi Cash Offer to Banks Seen Losing Allure as Euro Area Risks Increase

*Morgan Stanley Helped Make Roseneft No.1 in Oil Until Putin Grabbed Crimea

*World’s Least-Loved Banks in China Sell Record Shares on Lending Addiction

*Bond Liquidity Risk in $3.5 Trillion Fund Market Defused by Cash Stockpile – !!!

*London Home Asking Prices Fall Most in Six Years as Record Rally Falters – overexuberant!

*Hedge Funds Least Bullish on Brent Oil in Two Years as Record Rally Falters –despite Ukraine!

*Don’t Hike Alone Is Jackson Hole Bear Warning for Central Bankers on Rates – 2014 conclave

*Refinery Breakdowns Boost Bullish Gasoline Wagers as Labor Day Approaches

*Millenials Picking Up Bar Tab Say ‘Venmo Me’ to Collect Money Via Phones

*Most Dangerous Day of Live Claims 1 Million Babies Doomed by Lack of $1.15 – just a shot L

*Missouri Governor Nixon Orders National Guard to Restore Peace in Ferguson – a fool!

*Kurdish Forces Take Control of Mosul Dam From Insurgents With U.S. Strikes – finally!

*Rick Perry Indictment Seen as Losing Effort to Criminalize Texas Politics – tit for tat – duh!!!

*Ferguson Police’s Actions Show Failure to Learn From Errors of Past Riots – see commentary!

 

Friday’s Market Summary:

Grand Ole Expiry! …and it was a duzie (you do know that was derived from Duesenberg, right? Of course!) A very mixed bag…unusual for an options expiration, as was the mediocre total volume while shares traded on the NYSE rose to 758M – 55M above average BUT at the closing bell it stood at just 603M shares! That 155M definitely was not retail! Advance/Declines and Breadth both mixed with NYSE slightly negative, Nasdaq the opposite. Also evidencing this was the split for the day: Dow and NYSE Financials -0.3%, Russell 2000 -0.2%; S&P and Dow Transports both FLAT, Nasdaq Comp +0.3%, 100 +0.5% (but by just 1.5:1). Once again the winner: Dow Utilities +0.5%! There is a lesson to be learned here…mor than one actually…figure it out!

Total NYSE Volume rose but was well short of average (strange for options expiration – even in the summer doldrums!), while shares traded on the NYSE floor only made it above average on closing bell orders of 155M shares! NYSE: 2.96B vs 2.7B vs 2.59B vs 2.76B vs 2.87B. Real NYSE Volume coming off its 2014 low was 758M shares – just 603M at the closing bell! vs 517M vs 559M vs 543M vs 596M. That’s an average of just 594M shares for the week! 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 667M shares ranging from 517M to 927B….12 month high is 2.06B shares on 9/20/13!

A/D’s were mixed with NYSE slightly negative and Nasdaq the opposite! NYSE -1.3x vs +2.1x vs +2.9x vs -1.4x vs +2.8x vs +3.1x; Nasdaq +1.2x vs +1.3x vs +2x vs -2.1x vs +2.7x. Breadth was identical??? NYSE -1.3x vs+1.8x vs +2.1x vs -1.8x vs +2.9x vs +4.2x!; Nasdaq +1.2x vs +1.6x vs +3x vs -2.1x vs +3.7x. New 52 Week Highs rose to an average 193 vs 141 vs 140 vs 96 vs 155 vs 86 vs 67 vs 49 – recent range is 46-580!!! New Lows also rose to 99 vs 72 vs 79 vs 84 vs 64 vs 145 vs 167 – recent range is 24-260! S&P VIX reversed and is slightly bearish at 13.25 +.89. The range widened to 11.89-14.94 – the low due to options expiration and the range wide!

Bonds closed higher for a second day and again set new 12 month low yields (how come no one ever says “don’t fight the tape” when its bonds??? 10 yr closed at 2.34%! +9/16; 30 yr 3.13%! +1-1/4!!!; the long TIP 0.83% +1-7/16!!! Overnight they are givng back some of the gains: 10’s 2.37% -5/16; 30’s 3.16% -9/16; and long TIP 0.86% -3/4….rally still intact though! Cycle highs yields: 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: 0.232% 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 at 0.08-0.10% where they have been for weeks! Foreign bond yields higher across the board but still holding most of the gains from that two day rally which ended with new 12-month low yields: Germany 1.01% +6 – from 0.95%! UK 2.41% +9; France 1.40% +7; Italy 2.65% +6; Spain 2.46% +77; Portugal 3.47% -2; Greece 5.78% —; -36bp’s in 2 days!!! The recent high on selloff was 6.75%. Recently 5.42% to 12.57%. Japan: 0.49% –.

Gold closed weaker with a low of $1293.00, first sub-$1300 print since 8/6! It closed at $1306.20 -$9.50! It is now back below the 40 day and the 50 day is in striking range, as is 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!!! First RES is again at the 40 day $1310, SUP at the 50 day at $1302, and the 200 day at $1286 – these are VERY tight supports! ALL remain 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 weak at $1302.100 -$4.10 with another sub-$1300 low of $129.40!

Crude closed meaninglessly higher in an inside session a day after trading down to $95.26 – lowest since 1/27/14. It closed at $97.35 +$1.72. It has had ELEVEN 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. 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 ($99.78), then the 40 day ($101.67), then the 50 day ($102.43)…the latter two are in freefall! The range is $85.61-$112.24 since March 1, 2012. Overnight it is weaker at $96.52 -.83 in yet another inside session….caution flags!

European equity markets strong for a 2nd day…Asia not so much, India strong though: UK +0.7% vs +0.8% vs +0.5% vs +0.1% vs -0.1%; France +1.2%! vs +1% vs +0.3% vs +0.6% vs -0.6%; Germany +1.5%!! vs +0.9% vs +0.3% vs +0.9%: Japan flat for a 2nd day and showing weakness vs +0.7% vs +0.4% vs +0.2%; Hang Seng – vs +0.6% vs -0.4% vs +0.8% vs +0.2% vs +1.3%; Korea -0.5% vs closed vs – vs +1% vs +0.1% vs +0.4% vs -1.1%! India +1.1%! vs closed vs +0.7% vs +0.2% vs +1.4%!!! vs +0.8% vs -1%!. U.S. equity futures STRONG – DOW gapped up on open! Dow +90! (range 37 – 93 including the gap!); SPX +11 (7 – 12 with gap); NDQ +21.25 (21 plus a minor opening gap of 1)

 

Some random thoughts:

Ferguson Mississippi is a far cry, not in miles as it is just 108 Miles from Hannibal where Samuel Clemens (Mark Twain) grew up, although he was born in Florida, MO. Just 40 miles away but light years since Hannibal is on the banks of the mighty Mississippi or Big Muddy. Wonder what Mr. Twain would say about the happenings in Fergie? Probably something pithy! Now TB is going to insert his views of the rioting:

  1. As a former harbor patrolman and graduate of the Los Angeles County Sheriffs Academy TB would like to make the following observations:
    1. Without confirmation it seems that the officer acted inappropriately, by shooting a ‘subject’ not a suspect first, in the patrol car, then after he got out, although there was a struggle so we need to await results of an investigation – which had better be my an outside, and preferably federal agency
    2. IF, as was later reported he had the handful of cigars in his hand, that might have prompted the ‘stop’ – dunno, but it would not be a reason for force
    3. Did he have the subject sit down in the car while questioning him?
    4. Although it appears clear that Michael Brown, Jr. had stolen the cigars from a convenience store, the officer was not aware of this
    5. The video from the store was compelling and showed that Brown was not the innocent young teen the picture that was released showed
    6. Similarly the photo of Trayvon Martin was not what he looked like at the time of the shooting
    7. The Ferguson police blew it…especially the Chief in releasing the video
    8. he was no longer in charge of the investigation
    9. it had no bearing on the stop, and ‘arrest’
    10. technically it was an arrest as he had apparently restrained Brown
    11. the State Patrol head who took over has done a great job of calming
    12. even so, it is not enough
    13. the owner of the convenience store is now a victim – twice over!
    14. he is being punished just because Brown (likely) stole from him
    15. The riots and comparison to Occupy Wall Street
    16. In every ‘gathering’ there are those who are seriously concerned
    17. and there opportunists such as looters
    18. these people black or white are a scourgethey are not interested in justice only their own greed!
    19. A rioter has now killed another protestor; police have used military force
    20. This is not calming but exacerbating the problems
    21. Most black leaders and Brown’s parents have appealed for calm, but some are inflaming
    22. Yes, police force is overwhelmingly white, but…
    23. Less than ten years ago so was Ferguson
    24. Has the police force tried to recruit black officers
    25. You can’t fire the existing ones and replace them with blacks
    26. Records will show the truth
    27. Like firemen, police are heavily father/son lineage
    28. Mostly in small towns now
    29. What has happened to cause such hatred for, and fear of, police?
    30. When Martin was killed TB said this and it is worth repeating
    31. First day at the academy we were told. ”you are no different than any of the perps you will encounter…you just didn’t get caught (anyone care to deny this?), and:
    32. in one or two seconds you will make a decision which will be determined in court two or three years later whether it was correct
    33. NEVER draw your weapon or brandish it unless you intend to use it
    34. Private citizens are quick to show their weapon – foolish!
    35. Most arrests are made on routine traffic stop
    36. Outstanding warrants, other crimes (weapons etc)
    37. Also at the academy though, in one class an instructor told us how to detain someone – example was ‘low-riders’ – latinos, TB was upset by this
    38. Follow them until they make a traffic violation, then check out the car
    39. TB wondered how many such stops it takes to create an enemy
    40. A ‘clean’ person, say out on a date?How many before they hate…despise…the police?
    41. Counterproductive as it makes neighborhood fear and not cooperate
    42. No more ‘beat’ officers
    43. Too expensive
    44. Don’t get to know the people in the neighborhood
    45. Officers are seen as soldiers, invincible in their cruisers
    46. Only way they get to know people is when they stop/arrest them
    47. Creates bias on the part of the officer, even if black/latino
    48. Officers get ‘reclusive’ become their own ‘element’
    49. Isolated from community
    50. Reason some agencies require residency is they know the area
    51. But do they know the people?Some even become estranged from former friends
    52. This has got to stop! How many riots does it take?
    53. How many residents of the communities are hurt before something is done?
    54. TB was in Cincinnati for a Bockfest a murder happened a block away
    55. In five minutes copters, police, etc. were on scene
    56. Remained there for the weekend
    57. Residents were outraged
    58. An innocent black man, a father had been killed
    59. Normally it would be business as usual
    60. Increased surveillance to protect a mostly white crowd
    61. Why isn’t there this much attention normally?
    62. The suspect was arrested within three hours
    63. Confessed…a simple theft gone bad
    64. to TB however, Martin’s shooting was clearly unjustified
    65. as for his killer, he has since proven what he is – a bully

To conclude, there are no simple answers but we all have to work harder, police, citizens (black, latino, Asian, and white) to stop the madness and build a better America. As soon as we categorize ourselves as one of those groups we lose. But it can only be done with hard work and seeing others as we wish to be seen. The ‘carry’ laws such as Florida and Arizona, must be repealed, certainly the ‘stand your ground’ provisions except when threatened physically. The odds remain that you are more likely to be the victim (accidental discharge or losing control of your weapon), than to stop a crime.

This is a strong argument against unrestricted stand your ground laws: you buy a new car; it is in the garage with the door open; your neighbor’s son sees it and comes over to take a look; you come out of the house and see a person but it is dark; you shoot and kill him only to find out it is your neighbor! In Florida, that would be acceptable. But note, that is for criminal charges only! Like Zimmerman, you would then be subject to civil penalties that could bankrupt you (remember OJ? Now in prison, and he beat the murder only due to his attorneys and poor prosecution by Marcia Clark and Christopher Darden, and creative defense by Johnnie Cochran – DNA, and of course the glove with OJ insisting on wearing a rubber glove under it – a real sucker punch producing : if it doesn’t fit, you must acquit…yet it would have fit! Nice assist for the camera hungry Judge Ito. Note: excluded evidence, found him guilty in the civil case thanks to the Brown’s attorney, Daniel Petrocelli!)

(Clarification from Friday’s commentary: “…bet you didn’t know this: the Archduke Ferdinand and his wife Sophie, were assassinated on June 22, 1914 and that is billed as the catalyst for WWI. But as early as the previous spring it was apparent the world would be at war. The stock market ignored it…and in fact it was nine days after the assassination that the market reacted on July 31, 1914! No sense of alarm – initially – until everyone started cashing in their pounds for gold…led by the bankers who in turn refused to let their customers have the gold! Typical, right?

So on July 31st, the Bank of England ordered the stock exchange closed – and it remained closed for the remainder of 1914! This in turn caused the NYSE to close and it too remained closed for the duration of 1914! One hundred years ago…almost to the day…why wasn’t this one of the anniversaries we seem to be getting nearly every day?”

What was not said is that while the NYSE remained closed, the very next day a new exchange opened one block from the Big Board! It remained active until the NYSE was reopened. What this shows is the resiliency of the markets when a need arises. Note also the NYSE tried to sue them to cease and desist but it failed.)

Have a terrific week! Don’t believe everything you hear or read…even from TB. You decide!

TB

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