Quote of the Day from the Friars Club Encyclopedia of Jokes: “My wife likes to talk to me during sex. In fact, the other day she called me from a motel.” – Scott Record
Bloomberg Quotes: “When your work speaks for itself, don’t interrupt.”–Henry J. Kaiser; “A moment’s insight is worth a lifetime of experience.”–SCOTUSChiefJustice Oliver Wendall Holmes
This week’s economic calendar is packed with important indicators. The highlight of the week will be the August ISM Manufacturing Survey (Tuesday), August ISM Non-Manufacturing Survey (Thursday) and August Employment Situation report (Friday). We will also get July Construction Spending (Tuesday), July Factory Orders, Beige Book and August Motor Vehicle Sales (Wednesday), August ADP Employment, July International Trade, and Q2 Productivity & Costs Final (Thursday). Courtesy of Economic Advisory Service
Bloomberg Top Stories:
*Pound Volatility Surges Most Since ’08 as Scottish Independence Vote Looms
*Bond Market Tilts Towards Frankfurt as ECB’s Influence Negates Fed’s Hawks – but of course!
*JPMorgan Operational Risk Rises as Regulators Say Bank’s Past Is Prologue – and TB!!!
*Dollar Strengthens as bonds Decline Before U.S. Economic Data; Gold Drops – unwinding trades?
*Draghi’s ABS Revival Bid Depends on How Regulators Define the Word Simple
*Swiss Economy Unexpectedly Stagnates as Euro Area Takes Toll on Exports – Ukraine!
*Argentines Flock to Stocks as Default Propels World’s biggest Equity Gains – inflation hedge?
*Halliburt Reaches $1.1 Billion Settlement Over Gulf of Mexico Oil Spill – stock rallies of course!
*Dollar General Raises Family Dollar Offer With Pledge to Sell More Stores – to whom?
*ConAgra’s Fruitless Ralcorp Deal Invites Breakup as CEO Departs – biting the dust?
*Brazil Real-Estate Price Bubble Seen Deflating Without Popping
*Angelo Mozilo Regrets Nothing at Countrywide as U.S. Government Closes In – FINALLY!!!
*Russia Accuses U.S. of Stoking Ukraine Conflict as Obama Heads to Region – sure we did…
*Obama to Deliver Warning to Putin to Stop on NATO’s Frontier With Russia
*Putin Faces Curbs on Debt Sales, Imports as EU Dips Into sanctions Chest – “moral equivalent of war” – remember Jimmy Carter’s use of this in 1977 referring to the energy crisis? Originally uttered by William James in 1910.
*Mantega Says Silva’s Economic Plan Reckless, Could Put Brazil in Recession
Friday’s Market Summary:
Friday’s monthend, despite the long weekend, brought a ‘flurry’ of activity (sic), at least in the part that is true trading for monthend: while total NYSE shares traded remained right where the were most of the week (2.2-2.7B shares), finishing with 2.23B, shares traded on the NYSE floor took off like a wounded snail, rising to 617M shares – oops, that’s still 82M below the falling 12-month average (699M)! Ah but it gets better, once again proving TB’s point: at the closing bell it stood at 229M shares – far and away its worst of the year – with most departed for the holiday weekend, it proves that all that activity was rebalancing by index funds. The average for the week was just 522M shares: compare to the average since 4/30 of an already weak 652M shares (coincidentally the same number as TB’s ship in the U.S. Navy: USS Ingersoll DD-652). Folks, that is WEAK! Don’t expect much more this week, except Friday brings Non-Farm Payrolls so there could be a flurry. All indices were up from 0.1% (Dow) to 0.7% (Russell 2000), except Transports which were flat and…almost forgot…the year’s winner, Dow Utilities which rose 0.8% for honors! A/D’s and Breadth were solid while new 52 week highs rose by a third to 288; new lows fell to 41 from 53. The VIX declined slightly to 11.98 -0.07, back in bull territory but far from its 11.63 close on 8/22, and low print of the week, 11.24 last Wednesday. Rally into yearend?…you decide.
Total NYSE Volume was stable again at a very weak 2.23B shares vs 2.3B vs 2.3B vs 2.4B vs 2.2B. Real NYSE Volume rose to 617M shares from the new 12-month low of 491M vs 497M vs 494M vs 521M vs 567M. But volume at the closing bell was just 229M shares a new 12-month low! The average for the week fell to 522M shares from the prior week’s 558M shares – this is a new 2014 low – average volume at the closing bell was also a new low for the year of 387M shares! Note that the average for the final week of 2013 was 424M! How about that: a 21st century low! There have been just four sessions above 800M since 4/28! The 12-month average is a historically weak 699M shares. Since 4/30 the average volume has been just 652M shares ranging from 517M to 927B….12 month high is 2.06B shares on 9/20/13!
A/D’s were positive: +2.4x vs -1.3x vs +1.3x vs +2x vs +1.6x; Nasdaq +2.4x vs -1.9x vs -1.3x vs +1.9x vs +1.4x. Breadth was better on the Nasdaq: NYSE +2.6x vs -1.7x vs +1.2x vs +1.9x vs +1.5x; Nasdaq +3.5x vs -1.2x vs +1.2x vs +1.7x vs +1.9xx. New 52 Week Highs bounced back to 288 vs 192 vs 264 vs 318 vs 296 – recent range is 46-580!!! New Lows slid to 41 vs 52 vs 26! vs 50 vs 52 – recent range is 24-260! S&P VIX declined slightly to 11.98 -.07. The range was 11.74-12.44 – recent low is last Monday’s 11.24 – we are again in bull territory until…
Bonds closed little changed and mixed at or just above their new 12 month lows: 10 yr 2.34% +1/16; 30 yr 3.08% -1/16, the long TIP 0.82% -5/16. Overnight, weaker, especially 30 yr’s!!! 10’s 2.40% -1/2; 30’s 3.15% -1-3/8!; and long TIP 0.88% -1-5/8! Not clear why except following Europe’s lead?!? The (record?) low of 0.36% was set on 4/5/13.
Libor update: 0.234% 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 back to 0.08%-0.10%, where it has been for weeks! T-Bills are 0.02%-0.05% out to 6 months and just 0.09% for one year! Foreign bond yields were mixed Monday and weak overnight (note: benchmark is the 10yrs): Germany 0.92% +4; UK 2.43% +5; France 1.30% +5; Italy 2.44% +2; Spain 2.24% –; Portugal 3.21% +5; Greece 5.63% — it traded to 5.58% last week. Recovery low: 5.42%; Crisis high: 12.57%. Japan: 0.50% +1.
Gold closed slightly lower in an inside session at $1286.50 -$3.90. Thursday’s high was $1296.40 – this marks it’s 10th straight sub-$1300 close! It remains well below the 40/50 and just above 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!!! SUP is the 200 day $1285, RES the 40/50 day at $1301-05. 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 plunging to its lowest since 6/18: $1266.90 -$19.90, AND closed gap of $1272.70-$1277.20!
Crude also tried to rally with a high of $94.71, which closed the gap from a week ago and then even higher in the afternoon session to $96!?! before closing just below at $95.96 +$1.41! – uncertainty over Middle East? 8/21’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 ($99.11), then the 200 day ($99.76), then the 50 day ($100.47)…HUGE drops daily now!!! The range is $85.61-$112.24 since March 1, 2012. Overnight it is following Gold’s lead at $94.86 -$1.10! – it’s session low but in an inside session reversing Friday’s late afternoon surge to its highest since 8/20.
Global equity markets closed higher Monday and are higher again overnight, ex-Korea: UK +0.1% vs ‘+’ vs -0.4% vs – vs +0.4%; France +0.2% vs ‘+’ vs – vs -0.7% vs –; Germany +0.5% vs ‘+’ vs -0.2% vs -1.3% vs –; Japan +1.2%! vs ‘+’ vs -0.2% vs -0.5% vs +0.1%; Hang Seng – vs ‘+’ vs – vs -0.7% vs -0.6%; Korea -0.8% vs ‘+’ vs -0.4% vs – vs +0.3% +0.2%; India +0.6% vs ‘+’ vs closed vs +0.3% vs +0.4%. U.S. equity futures higher: Dow +21 (range 46); SPX — (9); NDQ +8.25 (16). US Market opening mixed and fading – except Transports! Utilities flat.
Some random thoughts:
…so much TB could write about, so here goes:
1. Warren Buffett financed Burger King buyout of Tim Horton’s – Mr. Two-Faced at work again…the same man who bemoaned the fact that his secretary pays a higher tax rate than he does, is supporting tax inversion. Question Mr. Buffett: will this result in lower taxes for your secretary, or merely fewer services?
2. Once again, TB’s blood pressure rose hearing Arthur C. Brooks, head of the conservative think tank, American Enterprise Institute. TB commented on this when this first aired on July 25th. This man continues to say that the GOP is what the country needs…he says: they are the only ones who can save the working stiff. How so? Just trust them, he says. Don’t raise minimum wage and don’t force Walmart and Target to do so…it will cost jobs…really? How so, if for both of these behemoths their employees are their best customer – Walmart’s words! Also, why should the U.S. subsidized through food stamps their greed? But his best…saving it for last is “there are no dead-end jobs…I started out in a dead-end job…that is where promotion comes from…oh really? That is being out of touch! …and this is a compassionate conservative? Two more points: there is no wealth gap, the problem is that the top 10% have gotten 90% of the gains over the past 20 years…not Arthur…the top 1% – compassionate my derriere!
Would like to go on but will save it for later this week. Meanwhile, have a good one!