9/23/14…ISIL, climate change, and Agent Orange

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Football is not a contact sport. It’s a collision sport. Dancing is a contact sport.” – Duffy Dougherty

Bloomberg Quote of the Day: “Music is enough for a lifetime, but a lifetime is not enough for music.” – Sergei Rachmaninoff

Bloomberg Top Stories:

*Islamic State Pounded as Arab Jets Join U.S.in Expanding Strikes to Syria

*Dollar Weakens as Gold Climbs on U.S. Airstrikes; Stocks in Europe Decline – plunge!

*Lew Crackdown on Inversions Faces Immediate Test With Eight Deals Pending – go get ‘em!

*Citigroup Warns History No Guide When Fed Starts Raising Rates Next Year – concept!

*BlackRock Says ‘Broken’ Corporate Bond Market Needs to Improve Liquidity

*AstraZeneca Falls With Shire on U.S. Plan to Restrict Tax Inversion Deals – and the point is?

*Ruble Still Overvalued After Sanctions-Triggered 12% Selloff – you bet it is and others!

*Ex-Deutsche Bank Trader Hal Lehr Said to Start JPMorgan-Backed Hedge Fund –den of thieves

*Procter & Gamble Selling Its European Pet-Food Business to Spectrum Brands – aarf!

*’Inversion’ Gives Companies Foreign Addresses to Cut U.S. Taxes – that’s basically it, and bad!

*All This Chatter About Climate Change Is Nothing But Hot Air – fires, flooding, heat, cold? Huh?

*Shrinking Bond Desks Populated by Journeymen as Masters of Universe Wither – eh? Sonny?

*Man Shot Dead by Australian Police After Threat to Abbot, Herald Sun Says

*Obama Joins Ban at UN Climate Summit That Falls Short of Forcing Remedies – who are biggest polluters? China and the U.S. – it can’t happen here! Don’t bet on it!

*Our Financial Early-Warning System Still in Need of a Lot of Fixing – what early-wanring???

 

Monday’s Market Summary:

More weirdness…or as they say in the submarine service: “take ‘er down!” …and down it went, led by the Russell 2000 -1.5%! (now down 3% ytd!), then Dow Transports -1.4%, but still up 15.1% ytd. Next came the two Nasdaqs -1.1% and -1%…the composite now up just 8.4% and the 100 still up 13.1% ytd. S&P 500 -0.8% and up 7.9% ytd, the Dow -0.6% but just 3.6% ytd. Dow Utilities didn’t help either -0.8% BUT still up 12.6% so far this year! A funny thing happened with NYSE Financials though (ytd up just 3.8%): while they were off 0.8% (NYSE Brokers and KBW Banks -0.8%, and Nasdaq Banks -1.1%), BofA resumed it #1 most active spot and closed +04% AND barely above $17: $17.02. CNBC was all atwitter about the stock with some saying it was a $30 stock in a year, others even more optimistic for the long-term. Excuse TB if he differs on this! 2nd place went to Alibaba which declined by $89.89 -$4.3% – so far TB’s prediction that IPO day would be the high ($99.70), looks intact…yesterday’s high was just $92.95! Never give a sucker an even break.

Total NYSE Volume fell back to an above average 3.3B shares from 4.65B, 3rd highest of last 12 months, vs 3.2B vs 3.14B vs 3.14B vs 2.76B. Real NYSE Volume also fell back to an average 697M shares with 597M posted at the closing bell, vs 1.85B – highest since 3/21 – vs 676M vs 668M vs 649M. Still just one day above even 700M in 26 sessions! There have been just five sessions above 800M since 4/28! The 12-month average is a historically weak 696M shares. Since 4/30 the average volume is just 662M and that boosted by Friday’s volume. 12 month high is 2.06B shares on 9/20/13!

A/D’s were highly negative! NYSE: -4.7x! vs -1.5x vs +1.6x vs +1.1x vs +1.8x; Nasdaq -3.9x! vs -1.9x vs +1.5x vs +1.3x vs +1.2x. Breadth was even worse: NYSE -5.4x!!! vs -1.6x vs +1.2x vs +1.1x vs +2.5x; Nasdaq -4.4x!!! vs -2.2x vs +1.7x vs +1.6x vs +1.9x. New 52 Week Highs plunged by ¾ to a very weak 63!!! vs 222 vs 205 vs 146 vs 84 vs 59 – recent range is 59-580!!! New Lows however rocketed to 329!!! vs 237! vs 159 vs 125 vs 186 – recent range is 24-260! S&P VIX closed back above ‘13’, rejecting the ‘12’ handles of the prior two sessions. Just those two have been below ‘13’ in the last 16 sessions. Note yesterday’s range: 13.13+13.98. Last Wednesday was a double top at 14.53!

U.S. bond market was mixed and mostly lower: 10 yr 2.56% +3/32; 30 yr 3.29% -1/32, the long TIP pummeled closing at 1.13% (low was 0.87%!) -3/4. Stronger overnight: 2.55% +3/16; 30’s 3.27% +3/8; and long TIP 1.11% +1/2.  

Libor update: 0.233% 3 mos.; 0.331% 6 mos., both remain near their record lows, set recently: 0.222% and 0.320% respectively! 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 -0.1%!, one-month, to just 0.10% one year!!! Foreign bond yields slightly lower ex-Greece for a 2nd day (benchmark is the 10yrs): Germany 1.00% -1; UK 2.47% -2; France 1.33% -1; Italy 2.37% –; Spain 2.18% -3; Portugal 3.16% –; Greece 5.94%!!! +16! – losing ground again from the recovery low: 5.42%; Crisis high: 12.57%. Japan: 0.53% –. Bonds remain ‘risky business’!

Gold closed slightly higher at $1217.900 +$1.40, but with another new low of $1208.20, lowest since 1/6/14. This marks it’s 25th 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 40 day at $1275, then the 50 day at $1281 and the 200 day at $1284 – incredibly tight and 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 rallying – finally – and is now $1233.20 +$15.30 with a high of $1237. Silver remains weak with Monday’s new low of $17.33 – lowest since 2/26/2010!!!

Crude also closed weak again at $91.52 -.89 – contract switched to Dec. today. It rejected Tuesday’s session high of $95.19 – highest since 9/2. Last 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 ($95.41!!!), then the 50 day ($96.82), and lastly the 200 day (99.70) – 40/50 still falling fast. The range is $85.61-$112.24 since 3/1/12. Overnight it is $91.47 +.60 with a low of $90.58.

Global equity markets WEAK following U.S.: UK -1.6%! vs -0.7% vs +0.6% vs 0.4% vs –; France -2%!!! vs –0.1% vs -0.2% vs +0.6% vs +0.7%; Germany -1.5%! vs -0.1% vs +0.2% vs +1% vs +0.5%; Japan closed vs -0.7% vs +1.6%! vs +1.1%! vs -0.1%; Hang Seng -0.5% vs -1.4%!!! vs +0.6% vs -0.9% vs +1%; Korea -0.5% vs -0.7% vs +0.3% vs +0.2% vs +1%; India -1.6%! vs +0.4% vs -0.1% vs +1.7%! vs +0.5%. U.S. equity futures also weak – gapped down on the open for a 2nd day…following two up-gaps – indecisive???: Dow -46 (range 58 plus 8 on the gap!); SPX -6 (9 +2); NDQ -13.50 (20 +4). FOUR ‘gap’s in a row is unusal…unheard of???

 

Some random thoughts:

…ISIL…(ISIS?) is a problem…too well funded to stop easily…and ruthless in their recruitment: ‘you’re either with us or…DEAD!’ True, they have to be stopped…but how? Sure we have drones, aircraft, but they are like the dreaded Hydra of Greek mythology…or as John McCain would call it ‘whackamole’. This is going to be tough and likely long, with serious implications for the West.

How about those Iranian soldiers in N.Y. for training? Tried to flee to Canada…government is asking ‘why’? TB asks, why not? Wouldn’t you?

Looks like the question of why Turkey is not playing was answered (perhaps): prisoner exchange with ISIL. Of course, publicly denied but the hints are there. Now we will see what they are willing to do. TB will be there in two weeks…might get some answers. Glad we have hotel reservations with all those refugees flooding in.

Off to the VA today to see an old nemesis. His name is Agent Orange…TB was exposed to ‘him’ in 1965…no ‘visible’ effects so far but not taking any chances Update on VA overcrowding: contacted VA in St. Cloud, MN about 1-1/2 hours from here. At State Fair they had a booth and I filled out the form. Two weeks later had an appointment. Meanwhile, on the news Minneapolis VA has 3-4 month waiting period. It pays to shop…if you have the time and transportation (oh, and they will provide transportation if needed!).

TB supports the climate change activists…as did the UN Secretary yesterday. But corporate interests…and not just oil…will fight it tooth and nail. Renewable energy is an anathema to them. Hell, if Rockefeller had had his way we would still be using whale oil…like the Japanese insist on doing. TB is no ‘tree hugger’ just kept an open mind and the evidence is there for all to see…open your eyes…its your children’s future! Meanwhile, the first signs are hitting the island republics…the Maldives…people fleeing as the water rises. Of course, we knew the polar cap was melting at an alarming pace…but so what? So what if meat prices are up because of a drought that could equal the Dust Bowl era. Won’t go further…you know the right thing to do!

Have a phenomenal day!

TB

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