Quote of the Day from the Friars Club Encyclopedia of Jokes: “What’s the difference between an optimist and a pessimist? An optimist created the airplane; a pessimist created the seat belts.”
Bloomberg Quote of the Day: “To be prepared is half the victory.” – Miguel de Cervantes
This week’s economic calendar is full of important indicators. The highlight of the week will be the August PPI Tuesday and August CPI (Wednesday). We will also get September Empire State Manufacturing and August Industrial Production (Monday), Q2 Current Account (Wednesday), August Housing Starts and September Philadelphia Fed Manufacturing Survey (Thursday) and August Leading Indicators (Friday). In addition, the Federal Reserve FOMC will be meeting on September 16th & 17th with an announcement on the 17th. Courtesy of Economic Advisory Service
Bloomberg Top Stories:
*Stocks in U.S. Fluctuate Amid Economic Data as Commodities Fall With Crude – options???
*Industrial Output ins U.S. Unexpectedly Falls for First Time Since January – heed!
*Alibaba Said to Plan Increasing IPO Pricing Amid Strong Investor Interest
*Dollar Rallies to 14-Month High as Commodities Fall; Ruble Slips to Record – !!!
*Bank of America Said to Hire Morgan Stanley China Investment-Bank Chairman
*Apple IPhone 6, Plus Pre-Orders Topped 4 Million Units in First 24 Hours
*New York Fed Empire Manufacturing Index Rises More Than Estimated to 27.54
*Microsoft to Buy Minecraft Game Creator Mojang for $2.5 Billion – good luck!
*Bond Market Dispels Inflation Alarm as Yellen Winds Down $3 Trillion of QE
*British Bonds Beat Treasuries as Scots Vote Sparks Speculation on BOE Rate
*Deutsche Bank Analyst Who Called Emerging-Market Losses to Start Own Firm
*RadioShack Advances While Cree Falls on Downgrade; U.S. Premarket Movers
*Fed Signals Last Call as the Six-Year Party Is About to End
*Regulator Lawsky Who Helped Snag BNP Pushes to Settle Cases on His Terms
*Coalition Against Islamic State Militants Confirms Military Aid for Iraq
*Sweden Thrown Into Turmoil as Anti-Immigrant Surge Leaves Hung Parliament
*Ukraine Clashes Prompt U.S.-Russia Meeting on Sidelines of Iraq Conference
*Rules Worsening Traffic Jams Put Sao Paulo Mayor in Fast Lane Out
*Goodell Is Urged to Quit as NFL Commisioner by Blumenthal Over Rice Video – just do it!
*Fed Will Do What It Can to Avoid ‘Language Tantrums’: Mohammed El-Erian
Friday’s Market Summary:
Not a good day, compounded by a solid increase in volume to 3.2B shares (694M on floor). Bad day on higher volume spells trouble…and we have options expiration this Friday! All indices in the red, led by Dow Utilities -1.8%, followed by the Russell 2000 -1%, S&P 500 and both Nasdaqs off 0.6%, Dow -0.4%, while Dow Transports closed a tad in the red. NYSE Financials off 0.3%. A/D’s and Breadth both negative – especially NYSE issues. New 52 week highs slightly weaker at 101, while new lows inched higher to 110. VIX rose, closing above 13 again at 13.31 +.51. That’s it!
Total NYSE Volume rose to 3.2B (highest since 8/7!) on the down day vs 2.93B vs 2.86B vs 2.87B vs 2.78B. Real NYSE Volume also rose to an average 694M shares (highest since 8/15’s 758M shares – a mixed session) vs 605M vs 608M vs 603M vs 602M The average for the week ended 8/29 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 697M shares. Since 4/30 the average volume has been just 649M shares, and slipping ranging from 517M to 927B….12 month high is 2.06B shares on 9/20/13!
A/D’s were negative, especially NYSE: NYSE: -3.8x vs +1.3x vs +1.1x vs -3.3x vs -1.6x; Nasdaq -2.1x vs +1.4x vs +1.6x vs -3.2x vs +1.3x. Breadth was similar:: NYSE -2.6x vs +1.9x vs +1.2x vs -3.4x vs -1.9x; Nasdaq -1.5x vs +1.7x vs +2x vs -3.9x vs +1.5x. New 52 Week Highs lower at a weak 101 vs 113 vs 107 vs 121 vs 225 – recent range is 46-580!!! New Lows slightly higher at 110 vs 104 vs 128 vs 109 vs 71 – recent range is 24-260! S&P VIX back above 13 closing a t13.31 +.51 BUT with a range of 12.85-14.27! 10th straight close above ‘12’!
U.S. bond market plunged ahead of FOMC: 10 yr 2.59% +3/16; 30 yr 3.34% -1-3/16, the long TIP 1.08%! (low was 0.87%!) -1-13/16!!! Coming back overnight: 2.59% +3/16; 30’s 3.32% +7/16; and long TIP 1.06% +5/8.
Libor update: 0.235% 3 mos.; 0.331% 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 range from ZERO, on-month, to 0.09% one year!!! Foreign bond yields little changed and mixed after Friday’s plunge (benchmark is the 10yrs): Germany 1.06% +2; UK 2.53% –; France 1.42% -1; Italy 2.46% –; Spain 2.33% -1; Portugal 3.20% -1; Greece 5.61% +1 – but still not far from the recovery low: 5.42%; Crisis high: 12.57%. Japan: 0.57% –. Bonds are ‘risky business’!
Gold closed weak yet again at $1231.50 -$7.50 – and worse with another new intraday low of $1228.10 intraday: lowest since 1/10/14! – this marks it’s 19th 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 ($1285), then the 40/50 day at $1287-1293 – falling! 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 slightly higher at $1235.40 +$3.90, but only after putting in another new low of $1226.30, lowest since 1/9!
Crude closed lower after a failed rally attempt at $92.27 – before closing higher at a still weak $92.83 +$1.16. Thursday’s low of $90.43 was lowest since 6/28/13! There have been SEVENTEEN handles since peaking at $107.73 on June 20th. 6/20’s run to $107.73 was highest since 9/19/13 (a huge down session which put it in freefall. The record high of $147.27 was on 9/30/08, the low since on 12/30/11 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 ($96.91!!!), then the 50/200 day ($97.97/99.77) – 40/50 falling fast now! The range is $85.61-$112.24 since 3/1/12. Overnight it tested Thursday’s low with a $90.63 but is now $91.88 -.39.
Global equity markets mixed, Hong Kong weak, Japan closed: UK -0.1% vs +0.3% vs -0.7% vs – vs –; France -0.2% vs – vs -0.8% vs -0.1% vs -0.2%; Germany +0.1% vs –0.2% vs -0.6% vs –0.3% vs -0.3%; Japan closed vs +0.3% vs +0.8% vs -0.3% vs +0.3%; Hang Seng -1%! vs -0.3% vs -0.2% vs -1.9% vs closed; Korea -0.3% vs +0.4% vs -0.7% vs 0.3% vs closed; India -0.9% vs +0.2% vs –0.2% vs -0.8% vs -0.2%.. U.S. equity futures gapped down big on the open and plunged before coming back to a slight positive, but now back in the red 61 points on the Dow: Dow -11 (range 70!); SPX -1.70 (9!); NDQ -9.50 (21). U.S. stock market opened a tad higher than declined on Industrial Production: Dow -22; S&P -3; NDQ -28; Trans -25; Utilities +2.
Some random thoughts:
We didn’t start the fire,
It was always burning
Since the world’s been turning.
We didn’t start the fire,
No we didn’t light it
But we tried to fight it.
– written and sung by Billy Joel.
…listening to the talk shows this weekend was fruitless and confusing…only one that gave us anything was Fareed Zacharia 360 – and it looks bad! He had Henry Kissinger on who put some of the blame on Obama for the troop withdrawal from Iraq – but wait, didn’t Dubya set the stage for that? You betcha. He spared no words for GOP loudmouth Dick Cheney – a man whose time has ‘went’!
What amazes me is, as Henry the K said, they have the funds and they don’t need to beat us, just keep us hopping all over the Middle East, fomenting more hatred for the U.S. Why so amazing? Isn’t that how WE beat the Brits in 1776? The best trained army in the world…by a bunch of clumsy fools. Oh, and we must have forgotten Viet Nam too! Dubya certainly forgot the ‘guns and butter’ story…and worse…not wanting to ‘tax and spend’ he cut taxes and spent…both domestically and on the two wars! What fools we are! As if that weren’t enough, the GOP is screaming for more war…some even for ‘boots on the ground’. Wake up, stupid American voter!
Oh, forgot…your vote doesn’t count.
Fareed had an interesting stat: Behind the U.S. which country has the largest army? France? Germany? Italy? Turkey? Correct answer is Turkey…with over 600,000 and they need it!
If you aren’t watching Ken Burns’ ‘The Roosevelts’, be sure to watch the repeats…fascinating…oh, and not only was Teddy a ‘cowboy’ he was downright dangerous. In another country, another time, he would have been a dictator and not a benevolent one.!
Have a great week!