9/8/14…what say you, Mr. Martin?

Quote of the Day from the Friars Club Encyclopedia of Jokes: “I’m living so far beyond my income that we may almost be said to be living apart.” – E.E.Cummings
Bloomberg Quote of the Day: “Without discipline, there is no life at all.” – Katherine Hepburn, does that apply in prison too???

This week’s economic calendar is fairly light. The highlight of the week will be the August Retail Sales (Friday). We will also get July Consumer Credit (Monday), July Job Openings (Tuesday), July Wholesales Inventories (Wednesday), August Treasury Budget (Thursday), August Import/Export Prices, September Consumer Sentiment Preliminary and July Business Inventories (Friday). Courtesy of Economic Advisory Service

Bloomberg Top Stories:

*Pound Weakens With Stocks, Bonds on Scotland; Brent Crude Drops Below $100: WTI $92!

*Hertz Chief Mark Frissora Steps Down After Investors Push for His Removal – soreheads!

*Apple’s New iPhone Set to Divide Winners From Also-Rans in Supplier Race – Samsung?

*You Missed $1 Trillion in Returns by Agreeing With Naysayers of Fed Policy – don’t rub it in!

*Twitter Begins Testing ‘Buy’ Button as Plans for E-Commerce Revenue Emerge – do you ‘like’?

*Alibaba’s M&A Buy Spree to Be Questioned at Waldorf as IPO Roadshow Kicks Off – not invited

*Treasury to Decide on U.S. Inversion Deterrents in ‘Near Future, Lew Says – too little, too late!

*Budweiser Kingdom St. Louis Faces an Invasion From Craft-Brewery Venture – still drink Bud?

*Crowdfunding Firm With Google Executive Seeks to Upend Real Estate Lending–new, new thing

*Hedge Funds Reduce Bullish Natural Gas Bets as Volatility Slides – along with Crude prices!

*California Prince Brown Turns Foes to friends Reviving No. 1 U.S. Economy – unlike Bush!

*Ukraine Says Army Posts Are Shelled During Truce With Pro-Russian Rebels – TB is shocked!

*U.K. Government Races to Extend Powers to Scots to Blunt Independence Push – fat chance!

*Obama Offense Against Islamic State Depends on Shaky Alliance in Mideast – unstable!

*Raimando Pension Overhaul Challenges Labor Clout in Rhode Island Elections

*Both Djokavic AND Federer Ousted in U.S. Open semi’s – WOW!!!

 

Friday’s Market Summary:

Another blah day…sure it was up…the Russell 2000 just 0.2%, but the rest + 0.4-0.6% – oops…forgot Dow Utilities: UP 1.2% – imagine…nearly as much as any three other indices! Hey, Bulls! Did you ever stop to ask ‘what kind of rally is that? Didn’t think so! You owe this rally to Fed and its QE’s (but why wasn’t there a boost when the ECB cut the reference rate to 0.5%? Beats the hell out of TB – why didn’t YOU ask that? But there is precedent for this kind of rally – remember Sir Alan of Greenspan? …what he did in 2001? …of course he believed we would have surpluses as far as the eye can see and even feared the treasury market shrinking so he cut rates to 2% – and if you can believe this…to 1% in 2004! He made money so cheap that only a fool wouldn’t borrow…and THAT created not only the housing boom/bust but allowed greed to prevail over common sense and create the worst financial crisis in world history! Talk about an emperor who lost his clothes!

NYSE VOLUME slipped back to 2.81B shares from even a modest rise to 3.06B shares on Thursday while those traded on the NYSE floor were stable again at 610M shares or 88M below average – just 474M at the closing bell! A/D’s and Breadth were positive; new 52 week highs slumped again to a weak 164 vs 265 while new lows rose slightly to at 87. VIX still oscillating at 12.09 -.55 with a violent range of 11.06-13.18 – which one do you believe is the right level?

Now look at the S&P 500 since ‘breaking the 2k barrier’ on 8/26 to close at 2000.02; then on 8/27 a high of 2000.54,closing at 2000.12; then failing to get above it on 8/28! Then three consecutive closes above 2k, the highest being 2003.37 for monthend. All three highs this week have been above 2k but the best was Wednesday at 2011.17. It closed at 2007.71 – it’s not supposed to happen this way, folks!

Total NYSE Volume dipped to 2.81B shares from 3.06B vs 2.77B vs 2.8B vs 2.23B. Real NYSE Volume steady at 610M vs 607M vs 616M vs 593M vs 617M from the new 12-month low of 491M. The average for the prior week was 522M shares – 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! There have been just four sessions above 800M since 4/28! The 12-month average is a historically weak 698M shares. Since 4/30 the average volume has been just 651M shares ranging from 517M to 927B….12 month high is 2.06B shares on 9/20/13!

A/D’s were positive: +1.6x vs -2x vs -1.1x vs -1.1x vs +2.4x; Nasdaq +1.2x vs -1.6x vs -1.8x vs +1.5x vs +2.4x. Breadth was similar:: NYSE +1.6x vs -1.6x vs -1.1x vs -1.2x vs +2.6x; Nasdaq +1.7x vs -1.3x vs -1.4x vs +1.7x vs +3.5x. New 52 Week Highs sharply lower at a weak 164 vs 265 vs 374 vs 288 vs 192 – recent range is 46-580!!! New Lows slightly higher at 87 vs 80 vs 56 vs 41 vs 52 vs 26! – recent range is 24-260! S&P VIX declined to 12.09 -.55, its 4th straight close above ‘12’ AND look at the range: 11.96-13.18 – wider and higher!

U.S. bond market was slightly weaker: 10 yr 2.46% -1/16; 30 yr 3.23% -5/16, the long TIP 0.95% -1/2. Overnight rallying and more than recovering Friday’s losses: 10’s 2.43% +5/16; 30’s 3.19% +11/16; and long TIP 0.92% +1 point!

Libor update: 0.232% 3 mos.; 0.327% 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 remains 0.08%-0.10%, where it has been for weeks! T-Bills are at ZERO percent out to one year!!! DE-FLATION? Foreign bond yields mixed and little changed but plunged even further Friday following U.S. payrolls (note: benchmark is the 10yrs): Germany 0.92% -1; UK 2.46% –; France 1.26% –; Italy 2.27% +2; Spain 2.07% +3; Portugal 3.05% +1; Greece 5.45% +3 – traded to the recovery low: 5.42%; Crisis high: 12.57%. Japan: 0.52% -1.

Gold was DIW with a ‘lower high and lower low’ ($1258 replacing Thursday’s $1261.60 on nearly a ‘key reversal’ to its worst since 6/10), closing at $1267.30 +.80. 8/28’s high was $1296.40 – this marks it’s 14th straight sub-$1300 close. It is way below the 40/50 and 200 day m/a’s. 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 $1287, then the 40/50 day at $1297-1303! Recent high was $1392.60 on 3/17, highest high since 9/4/13. Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!! Overnight it is weaker in an inside session at $1265.10 -$1.20.

Crude closed weak for a second day at $93.29 -$1.16 and that was off a low of $92.86, three days after a nosedive to $92.68. 8/21’s low was $92.50, lowest since 1/15/14! There have been 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 ($98.01), then the 50/200 day ($99.27/99.78) – 40/50’s still falling! The range is $85.61-$112.24 since March 1, 2012. Overnight it is weaker again with a session low of $92.07 – it is just above that at $92.12 -.17!

Global equity markets weak, India STRONG, Japan up slidghlty: UK -0.9% vs -0.6% vs +0.4% vs +0.8% vs +0.1%; France -0.5% vs -0.5% vs +1.5% vs +1.3% vs +0.2%; Germany -0.2% vs -0.3% vs +0.8% vs +1.4% vs +0.5%; Japan +0.2% vs -0.1% vs -0.3% vs +0.4% vs +1.2%; Hang Seng -0.2% vs -0.2% vs -0.1% vs +2.3% vs –; Korea closed vs -0.3% vs +0.3% vs – vs -0.8%; India +1.1%! vs -0.2% vs -0.2% vs +0.5% vs +0.6%. U.S. equity futures weaker, gapped slightly lower on open: Dow -31 (range 33); SPX -3.60 (4!); NDQ -3(4!).

 

Some random thoughts:

…just a little quote for the day…who said it and when?

“If businessmen, bankers, your contemporaries in the business and financial world, stay on the sidelines, concerned only with making profits, letting the government bear all of the responsibility and the burden of guidance of the economy, we shall surely fail…the fact is the Government isn’t something apart and remote from you. It is you – all of us. If those responsible for major decisions in business, finance, labor, agriculture are irresponsible, Government can’t compel you, short of moving in the direction of a dictatorship, to be responsible, or moderate, or prudent.”

Hint: it was in era of at least some semblance of corporate responsibility, aka: free market capitalism. That is before they figured out how to buy (steal?) the Congress, and make the voters, and their needs and wishes, irrelevant.

Hope you didn’t peek. It was the great William McChesney Martin, speaking to a group of investment bankers in New York in 1955 (today you would hear guffaws from them), former chairman of the Federal Reserve. A man of great wisdom. Did you know that at 26, he was elected President of the NYSE? Source was War and Gold by Kwasi Kwarteng, a fascinating book…so applicable today that it is scary!

That should hold you until tomorrow. Have a good one!

TB

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