Quote of the Day from the Friars Club Encyclopedia of Jokes: “Experience: a comb life gives you after you lose your hair.” – Mark Twain
Bloomberg Quote of the day: “Never put off until tomorrow what you can do the day after tomorrow.” – Mark Twain
TB saiz: “Necessity may be the mother of invention, but complacency is the mother of destruction.” Are WE too complacent? Markets? Government? World?
Bloomberg Top Stories:
*Economy in U.S. Expands at 4.2%, Surpassing Initial Estimates for 4% Growth – no reaction!
*U.S. Stock-Market Futures Decline as Ukraine Overshadows GDP Growth Report
*JPMorgan Strengthens Its Defenses Against Hackers After Attack on Systems
*Jobless Claims in U.S. Little Changed Last Week Last Week as Labor Market Recovers
*Global Sovereign Bond Gauge Approaches Record on Speculation Over ECB
*Safeway Seen Leading bond Revival Exceeding $100 Billion…but:
*World’s Biggest Wealth Fund Says U.S. Corporate Debt Boom Coming to an End – tight spreads!
*Abercrombie Shares Tumble as Second-Quarter Sales Miss Analysts’ Estimates
*Ukraine Cites Invasion as Separatists Widen Attacks on Government Forces
*Ebola Cases Likely to Surpass 20,000 as WHO Says It Needs $490 Million – ‘who’ says?
*Ugly Is Good for the Atlantic Hurricane Forecaster Betting on Quiet session – weather patterns!
Wednesday’s Market Summary:
Today should be the ‘big day’ of the week for stocks ahead of Friday and Labor Day weekend!
How about this? Since 8/15’s option expiration (2.99B shares), the average total NYSE volume has been just 2.5B shares – the highest being 2.64B shares. Contrast to June with an average 3.05B shares with six sessions above 3B and three of 4B or more! Yesterday’s was another weak 2.3B shares and the market showed it…barely budging except Dow Utilities +0.8%! The Russell 2000 small cap was the ‘loser’(?) at -0.2%. The rest were between unchanged (3!) and up 0.1%. Oh, but it gets even better: the S&P 500 was one of the flat ones closing at 2000.12 up from 2000.02 – this after its first 2000 close…ever???…and get this: the session high was 2002.14 – not even at Tuesday’s 2005…this ‘rally’ is long of tooth – very! A/D’s and Breadth were barely off center and mixed while New 52 week highs and lows both declined sharply. The VIX rose but back to Tuesday’s level with a range of just 0.39 – unheard of. It stands at 11.78 +.15. Ah, but bonds had a stellar day with yields dropping sharply (as did Europe!) and the long end up over a point. Gold and Crude markets were more like stocks…little changed and dull.
Total NYSE Volume was stable again at a very weak 2.3B shares vs 2.4B vs 2.2B vs 2.3B vs 2.62B vs 2.56B vs 2.64B. Real NYSE Volume also doing nothing, and still just above Monday’s lowest of 2014: 497M shares vs 494M vs 521M vs 567M vs 542M vs 556M. Last week’s average was just 558M shares – this week be well below even that level. There have been just four sessions above 800M since 4/28! The 12-month average is a historically weak 700M shares. Since 4/30 the average volume has been just 655M shares ranging from 517M to 927B….12 month high is 2.06B shares on 9/20/13!
A/D’s were little changed and mixed: +1.3x vs +2x vs 1.6x vs -1.6x vs +1.5x; Nasdaq -1.3x vs +1.9x vs +1.4x vs -1.7x vs +1.2x. Breadth was only slightly postive: NYSE +1.2x vs +1.9x vs +1.5x vs +1.1x vs +1.5x; Nasdaq +1.2x vs +1.7x vs +1.9x vs +1.4x vs +1.4x. New 52 Week Highs down sharply to 264 vs 318 vs 296 vs 198 vs 266 – recent range is 46-580!!! New Lows halved to 26! from 50 vs 52 vs 56 vs 71 – recent range is 24-260! S&P VIX seesawing again in a very tight range at 11.78 +.15. The range was an unbelievably tight .39! vs .60 vs .53.
Bonds closed STRONG – all at their recent lows!!! 10 yr 2.36% +3/8; 30 yr 3.10% +1-1/8, the long TIP 0.83% +1-3/8!!! Overnight, breaking even higher to new 12 month lows!!! 10’s 2.33% +3/16; 30’s 3.09% +5/16; and long TIP 0.82% +7/16. The (record?) low of 0.36% was set on 4/5/13.
Libor update: 0.238% 3 mos.; 0.330% 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 it has been for weeks! Foreign bond yields mixed with the PIIGS yields higher (note: these are all 10yrs!): Germany 0.89%!!! -2; UK 2.37% –; France 1.23% –2; Italy 2.42% +4; Spain 2.19% +5; Portugal 3.08% +8; Greece 5.67% +15!; The recent high on selloff was 6.75%. Recently 5.42% to 12.57%. Japan: 0.48% -1.
Gold closed slightly lower in boring trading at $1283.40 -$1.80. Last Thursday, it plunged to $1272.00, lowest since 6/18 – it’s 9th straight sub-$1300. It remains well below the 40/50 and just below the 200 day m/a. 7/17’s session high was $1346.60, highest since March 19th!!! 6/9’s $1240.20 was lowest since 1/31/14!!! RES is the 200 day $1285, then the 40/50 day at $1303-6. 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 strong at $1293.40 +$10.90 with a session high of $1295.30, highest since 8/20.
Crude closed about even at $93.88 +.02 in another inside session. Last 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 40 day ($99.36), then the 200 day ($99.76), then the 50 day ($100.70)…HUGE drops daily now!!! The range is $85.61-$112.24 since March 1, 2012. Overnight it is about even again at $93.94 +.06 in yet another inside session with a range of just 52 cents!!!
Global equity markets weak! – ex India: UK -0.4% vs – vs +0.4% vs closed vs -0.1%; France -0.7% vs — vs +0.6% vs +1.2% vs -0.8%; Germany -1.3%! vs – vs +0.2% vs +1.2% vs -0.4%; Japan -0.5% vs +0.1% vs -0.6% vs +0.5% vs -0.3%; Hang Seng -0.7% vs -0.6% vs -0.4% vs +0.2% vs +0.5%; Korea – vs +0.3% vs +0.4% vs +0.2% vs +0.6%; India +0.3% vs +0.4% vs – vs +0.1% vs +0.2% vs +0.2%. U.S. equity futures also lower but off their overnight lows: Dow -38 (range 88!); SPX -4.60 (10); NDQ -8.25 (18)
Some random thoughts:
…remember the backlash by the right of Occupy Wall Street? Bunch of hippies who need baths. To those of us from the 60’s sounds very familiar…and you know what? The hippies were more right than the rest of us – this from a Viet Nam Vet who learned the truth afterwards (the truth? You can’t handle the truth!). TB never liked the OWS moniker and would have preferred a positive RCA: Reform Corporate America and Wall Street. Might have had a chance, no? Oh, well.
Back to the present. With all these ‘hot’ tax inversions, TB has an idea: Occupy Burger King. First, some background. According to Wikipedia:
At the end of the company’s fiscal quarter in September 2012, Burger King reported it had 12,667 outlets in 73 countries; of these, 66 percent are in the United States and 95 percent are privately owned and operated. The company locations employ more than 37,000 people who serve approximately 11.4 million customers daily.
Why not picket them? They did it to Medtronic but since that was a BtoB company it fizzled quickly. Perhaps some of those franchisees are sympathetic? …they paying U.S. taxes and the like while the franchisor becomes a snow bird (tax purposes only…no movement of headquarters). If they aren’t sympathetic consider these options:
- Calls from customers to managers asking them what they think!
- If they are sympathetic, have they told the franchisor? Probably not.
- From there several options are available:
- More calls to managers,
- Sit-ins – buying a small drink and sitting there for hours, or TB’s fav:
- the drive-thru window!
- Read the menu and ask questions and then either leave, or
- Buy a small item
- Have several cars drive thru using same technique
- Discouraging to other customers off to Mickey D’s
- Hitting them on the revenue end
Just a few of TB’s favorite things…”when the dog bites…”
TB a protestor? Unheard of but this is hurting America and before you say corporate taxes are too high, consider that only a company with a lousy accountant pays the 35% rate! …or GE and a few other big boys who are subsidized for billions (ADM’s subsidies are bigger than its bottom line!). Most other big companies pay just a fraction of the rate: 10% or lower (Medtronic was paying 9% and opted for 4% from Ireland). Now, before you label TB anti-business:
It has been described in this blog more than once how Nobel laureate Franco Modigliani (who TB was privileged to meet), was an advocate of a zero corporate tax rate. This would serve many functions:
- Allow repatriation of offshore funds
- Repatriating tax domicile to U.S.
- Force companies to make sound financial decisions rather than tax-based
- Cause dividends to be at least equal to stock buybacks
- Buybacks are a waste – stock repurchased is held in treasury, not retired
- Used to grant more options!
- Eliminates double taxation of dividends
- Dividends then taxed as ordinary income – no more qualified dividends
- Buybacks are a waste – stock repurchased is held in treasury, not retired
A friend wrote that it is the Dems who are fighting this. Wrong! It is the lobbyists who are fighting it and it is they who ‘bribe’ those in both parties…but it is not politically expedient to favor a zero corporate tax rate which Modigliani noted. How many accountants, tax preparers, or tax lawyers do you think would?…ah…another zero! This is the biggest sheltered business in America (the world?). Nobody wants to end an annuity…especially one this profitable.
…and the beat goes on…
Enjoy your day…just one more ahead of the weekend…if you are a top trader, not even that!