Quote of the Day from the Friars Club Encyclopedia of Jokes: “If at first you don’t succeed, destroy all the evidence that you tried.”’ – Neil Heischer
Bloomberg Quote of the day: “I not only use all the brains I have, but all that I can borrow.” – Woodrow Wilson …ousted after WWI like Churchill was after WWII…war is hell…so goodbye.
This week’s economic calendar is full of important indicators. The highlight of the week will be the Q2 GDP 2nd Estimate (Thursday) and July Personal Income (Friday). We will also get July New Home Sales and August Dallas Fed Manufacturing (Monday), July Durable Goods Orders, June Case-Shiller Home Prices, August Richmond Fed Manufacturing and August Consumer Confidence (Tuesday), August Chicago PMI and August Consumer Sentiment Final (Friday). Courtesy of Economic Advisory Service
Bloomberg Top Stories:
*Dollar Extends Gains While European Stocks Rise With S&P 500 Index Futures – weak Euro!
*Draghi Pushes ECB Closer to Quantitative Easing as Deflation Risks Climb – buy bonds!!!
*Asset-Backed Bonds Said to Face Tougher Disclosure as SEC Prepares Rules – how special!
*Israeli Central Bank Unexpectedly Lowers Benchmark Interest Rate to 0.25% – from 0.50%
*Roche Expanding In Respiratory Drugs With $8.3 Billion InterMune Purchase
*Wall Street Can’t Get Any Bond Market Respect as Yield Forecasts Dismissed – 2% 10-year?
*What Sears Could Do to Shore Up Its Balance Sheet: Borrow, Sell, Spinooff – mail order???
*Ann Taylor Should Consider Sale Amid Reduced Forecast, Engine Capital Says
*InterMune Advances While Regado Bioscienses Retreats – very selective market!
*We’re Wondering If Plague of Locusts Would Be Bad for Stocks – might be bullish! LOL!
*How Joseph Tsai Went From Yale’s Lacrosse Fields to Mega-Deals at Alibaba
*Hollande Forced to Overhaul Cabinet Amid Split on Stagnant French Economy
*Islamic State Fighters Seize Last Assad Stronghold in North Syria Provence – remember Cuba when the U.S. didn’t support Castro…look what that got us…but who will emerge leader in Syria?
*Release of U.S. Hostage Held in Syria Shows Rival Militia’s Tactics Differ – poor Foley!
Friday’s Market Summary:
Talk about a boring session…better yet, let’s not! Okay, other than to say everything went from +0.1% (both Nasdaqs), to unched (NYSE Transports) to -0.3% (Dow utilities)…add in NYSE Financials at -0.4% with this weird pattern: NYSE Brokers +0.4%; KBW Banks -0.2%; Nasdaq Banks unched!?! Volume was a weak 2.3B shares…don’t expect even that this Friday ahead of the Labor Day weekend! …or how about shares traded on the NYSE floor? 521M shares –just missed being a new 2014 low and for the week just 558M shares! You can make the market do anything you want – if you have the money behind you – on a day like that! A/D’s were negative and Breadth slightly positive – just to muddle things further, while New Lows slumped and New Highs followed suit…a rather boring day…that said, the VIX declined again to 11.47 with a very tight, one point range. Didn’t you have something useful and productive you could have been doing instead of following the market…like the fools on CNBC? Let’s leave it at that…shall we?
Total NYSE Volume was flat declined to a very weak 2.3B shares vs 2.62B vs 2.56B vs 2.64B vs 2.61B vs 2.96B (even that wasn’t average!). Real NYSE Volume plunged to the second lowest of 2014 and nearly number one: 521M shares vs 567M vs 542M vs 556M vs 605M. The week’s average was just 558M shares! There have been just four sessions above 800M since 4/28! The 12-month average is a historically weak 701M shares. Since 4/30 the average volume has been just 661M shares ranging from 517M to 927B….12 month high is 2.06B shares on 9/20/13!
A/D’s were modestly negative: -1.6x vs +1.5x vs 1:1 vs +1.8x vs +3.6x; Nasdaq -1.7x vs +1.2x vs -1.7x vs +1.2x vs +3x. Breadth was similar: NYSE +1.1x vs +1.5x vs +2.1x vs +4.3x! vs -1.3x; Nasdaq +1.4x vs +1.4x vs +1.3x vs +4.8x vs +1.2x. New 52 Week Highs took a header to 198 vs 266 vs 228 vs 294 vs 266 – recent range is 46-580!!! New Lows also fell to 56 vs 71 vs 53 vs 60 vs 99 – recent range is 24-260! S&P VIX however, decline to 11.47 -.29, back near its most bullish (overbought?) since 7/24. The range was a very tight 11.47-12.48.
Bonds closed higher in the long end: 10 yr 2.40% +1/32; 30 yr 3.16% +5/8 the long TIP 0.87% +3/4. Overnight, inching higher: 10’s 2.39% +1/16; 30’s 3.15% +1/4; and long TIP 0.87% +3/16. 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: 0.238% 3 mos.; 0.331% 6 mos., both 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 at 0.08-0.10% where it has been for weeks! Foreign bond yields sharply lower led by the PIIGS! Germany 0.94%!!! -4; UK 2.39% -1; France 1.30% -7; Italy 2.58% -1; Spain 2.24%! -14!!!; Portugal 2.99%!!! -22!!!; Greece 5.57% -18!!!!; The recent high on selloff was 6.75%. Recently 5.42% to 12.57%. Japan: 0.50% –. The good thing about trading Japanese bonds is you can sleep all day and no one will ever know!
Gold close higher in an inside session at $1280.20 +$4.80. On Thursday, it plunged to $1272.00, lowest since 6/18 – it’s 4th straight decline and sub-$1300 close since 8/6. It remains well below the 40 day AND 50 now the 200 day! 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 the 200 day $1287, then the 40/50 day at $1307. Next support? $1270 or so! 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 little changed after a failed rally attempt at $1279.30 -.90.
Crude also had an inside session closing at $93.65 -.31. Thursday’s low was $92.50, lowest since 1/15/14! (big driving weekend ahead, then we may see gas following suit). It has had FOURTEEN handles since 6/30! 7/22’s high was $105.20, 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 ($99.77), then the 40 day ($100.24), then the 50 day ($100.48)…the latter two in steep freefall! The range is $85.61-$112.24 since March 1, 2012. Overnight it is little changed in a narrow inside session at $93.69 +.04.
Global equity markets higher, led by Europe…UK closed: UK closed vs -0.1% vs +0.2% vs -0.5% vs +0.5%; France +1.2% vs -0.8% vs +0.8% vs -0.8% vs +0.4%; Germany +1.2% vs -0.4% vs +0.6% vs -0.07% vs +0.9% vs +1.5%; Japan +0.5% vs -0.3% vs +0.9% vs – vs +0.8%; Hang Seng +0.2% vs +0.5% vs -0.7% vs +0.2% vs +0.7%; Korea +0.2% vs +0.6% vs -1.4% vs +0.1% vs +0.9%; India +0.1% vs +0.2% vs +0.2% vs -0.4% vs +0.1% vs +1.1%. U.S. equity futures strong but off session highs – gapped higher on open!!! DOW +65 (range 50); SPX +8.50!!! (8); NDQ +18.25! (15).
Some random thoughts:
…haven’t you got anything better to do in the week ahead of Labor Day than think about the stock market? I/you/we have no idea where it is going to end up so why not get out there and enjoy the summer?…have fun??? The market will go where the market wants to go – or more accurately where the big boys ‘make it’ go.
Take a trip…work a crossword…have lunch with a friend…get a colo-rectal exam…at least that’s productive…not enjoyable, but productive. Now get out of here!