Quote of the Day from the Friars Club Encyclopedia of Jokes: “New York is a city where everyone mutinies but no one deserts.” – Harry Herschfield …ain’t that the truth! TB
Bloomberg Quote of the Day: “The surest test of discipline its absence.” – Clara Barton, RN
Bloomberg Top Stories:
*Dollar Strengthens to Four-Year High as Metals Fall, European Stocks Rise: Euro $1.27!
*Trujillo Said to Seek $9.6 Billion With Arab Funds for Telecom Italia Bid
*Currency to Oil Benchmarks Trageted as U.K. Aims to Extend Labor Penalties
*Ellison Boost Oracle Credit Line to $9.9 Billion Funding Island, Regattas – are they nuts???
*Apple’s Cook Goes From Record-Breaking Sales to IPhone Software Stumbles – nothing new!
*China Foreign Exchange Regulator Uncovers $10 Billion in Fraudulent Trades – TB‘s shocked!
*Draghi Debt Plan Fuels Longest Winning Streak for Covered Bonds Since 2009
*Deutsche Bank Gains Share in Fixed-Income Market, Closing Gap With Leaders
*Defense Companies in U.S. Climb to Record on Iraq-to-Syria-to-Ukraine Wars
*Harvard Management Winds Up Sticking With What Isn’t Working – fall from grace!
*Sushi Proving Too Expensive in Moscow Where Putin Economy Diminishes Ruble
*Islamic State Oil Sites Targeted in New Wave of U.S.-Arab Strikes on Syria – great!
*Obama Shifts ‘Language of Force’ in UN Speech Against Muslim Extremism – big yawn!
*Billionaire Uvtushenkov Stays Under House Arrest as Court Rejects Appeal
*Zuma Fuels Speculation With Delay in Naming Central Bank Chief Replacement –
Wednesday’s Market Summary:
Okay, okay, so the market rallied…at first it looked like it would not gain back the prior day’s losses but then it accelerated in the afternoon, getting the job done. Still, it failed to recover from all of Monday’s losses (note though that the S&P 500 had a ‘lower low’ bouncing from just above the 40 day m/a (1978 vs 1976), and created a positive ‘key reversal’…of sorts). Bears watching!
All indices were up from 0.7% (Dow Transports) to 1.1% (NDQ 100) and readers know how much TB hates it when all the indices move by approximately the same amount, except Dow Utilities which lost just 0.2%, but is now below the 40/50 day m/a’s. The session low of 548 is a multiple bottom (545-549), tracing back to 8/15. NYSE Volume remains just above the 12 month average while shares traded on the NYSE floor remained above 700M for a 2nd day. Now the bad news: new 52 week highs only rose to 57 from a very weak 39, while new lows only declined slightly to a still high 289. A/D’s and Breadth were both positive but less than the magnitude of the two negatives. VIX plunged 11% reversing Tuesday’s 10% rise, but remains in bear territory at 13.27.
Total NYSE Volume slightly higher at an above average 3.4B shares vs 3.27B vs 3.3B vs 4.65B (3rd highest of last 12 months) vs 3.2B. Real NYSE Volume rose again to 734M shares vs 719M vs 697M vs 1.85B – highest since 3/21 – vs 676M. Only the 3rd 700M+ day in 28 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 663M. 12 month high is 2.06B shares on 9/20/13!
A/D’s were positive for the first time in four sessions: NYSE: +1.5x vs -2.4x vs -4.7x! vs -1.5x vs +1.6x; Nasdaq +2x vs -2.3x vs -3.9x! vs -1.9x vs +1.5x. Breadth was similar: NYSE +1.8x vs -2.5x vs -5.4x!!! vs -1.6x vs +1.2x; Nasdaq +2.4x vs -2.3x vs -4.4x!!! vs -2.2x vs +1.7x. New 52 Week Highs up slightly and remain extremely weak at 57 vs 39!!! vs 63 vs 222 vs 205 vs 146 – recent range is 39-580!!! New Lows declined but remain high at 289 vs 329!!! vs 237 vs 159 vs 125 – recent range is 24–329! S&P VIX declined by 11% a day after rising 9.1% but still closed in bear territory at 13.27 -1.66. The range was 13.24-14.93, along with Tuesday’s 14.94, these are highest since 8/15. Only Friday and Monday have been below ‘13’ in the last 19 sessions.
U.S. bond market gave back some of Tuesday’s gains: 10 yr 2.57% -5/16; 30 yr 3.28% -5/8; the long TIP closed at 1.09% (low was 0.87%!) -7/16. Rallying overnight: 2.55% +1/8; 30’s 3.26% +5/16; and long TIP 1.07% +7/16.
Libor update: 0.234% 3 mos.; 0.330% 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 -0.01%, one-month, to just 0.10% one year!!! Foreign bond yields lower – even Greece after rising for three days (benchmark is the 10yrs): Germany 0.99%! -1; UK 2.46% -1; France 1.33% -1; Italy 2.33% -4; Spain 2.10% -4; Portugal 3.09% -5; Greece 6.00% -11 – volatile since the recovery low of 5.42%; Crisis high: 12.57%. Japan: 0.52% –. Bonds remain ‘risky business’!
Gold closed slightly lower at $1219.50 -$1.50, an ‘inside’ session. Tuesday’s high was $1236.10. That followed Monday’s new low of $1208.20, lowest since 1/6/14. This marks it’s 27th 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 $1271, then the 50 day at $1278 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 $1210.30 -$9.20! Worse, the session low was $1206.60, still lowest since 1/2/14. Will $1200 hold??? Important! Silver remains weak with Monday’s new low of $17.33 – lowest since 2/26/2010!!!
Crude rallied, closing at $92.80 +$1.24, this coming off a low of $90.58 Tuesday, just above last Thursday’s low of $90.43 – 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 ($94.95!!!), then the 50 day ($96.49), and lastly the 200 day (99.65) – all declining, especially 40/50! The range is $85.61-$112.24 since 3/1/12. Overnight it is $93.05 +.25 in another ‘inside session’. Look at the 40 day!
Global equity markets mixed for a 2nd day: UK -0.1% vs -0.1% vs -1.6%! vs -0.7% vs +0.6%; France +0.3% vs +0.5% vs -2%!!! vs –0.1% vs -0.2%; Germany +0.5% vs +0.1% vs -1.5%! vs -0.1% vs +0.2% vs +1%; Japan +1.3%! vs -0.2% vs closed vs -0.7% vs +1.6% vs +1.1%; Hang Seng -0.6% vs +0.4% vs -0.5% vs -1.4% vs +0.6%; Korea -0.1% vs +0.3% vs -0.5% vs -0.7% vs +0.3%; India -1%! vs -0.1% vs -1.6% vs +0.4% vs -0.1% vs +1.7%. U.S. equity futures slightly higher but little changed: Dow +6 (range 36); SPX +0.20 (4!); NDQ +0.75 (8!).
Some random thoughts:
…so Larry Ellison has decided to step down…finally…but face it, he’s a control freak! No way he can keep his fingers out of the pie. Bloomberg story today says ORCL has a $9.9 billion line of credit…used to finance his toys…regatta’s (America’s Cup), and ‘Ellison’s Island’, the one he bought in Hawaii…yep the entire island! Lanai…off Molokai…he owns 97% of the rock…which has a crater that makes for great diving…almost every resident is now paying him rent or working for him. Prince Larry bought it from fellow billionaire David Murdock who had developed resorts there but it turned into a money pit. Enter Ellison who bought it 87,000 acres for $300 million.
Ellison has pledged 5.6% of the market cap against the credit line. That is not a good thing because what if he defaults and that stock hits the market…what, me worry? Right, Larry.
Ellison is worth $43 billion…and still owns $25% of the company…over the objections of advisors who have warned him to divest…which he has done but just this year gained another 3.2 million shares in options awards…Investors better hope he doesn’t kick the bucket. Note that the second biggest investor, BlackRock (4.2%) dumped 7,782,872 shares in the last quarter…what do they know…or fear?
Many know him for the America’s Cup, which he used to ‘extort’ millions in benefits from the city of San Francisco…until they finally had had enough of him. Can you blame them? Should have done it earlier…and his foray into yacht racing was just another of his ‘win at all cost’ ventures. A lot of serious sailors do not approve of his ‘flying wings’ and don’t consider them America’s Cup boats…but in that race, the champion makes the rules.
He is the highest paid CEO…add this to the above and what you have is a narcissist…right?Only a narcissist would have to be the highest paid CEO in a company where he is far and away the biggest shareholder.
Now Investors have successfully lobbied for executive pay (his and co-CEO Mark Hurd, and new co-CEO Safra Catz who will ‘replace’ Larry), based on performance…finally!
…are you in?…or out?
He may be your idol but he sure as hell isn’t TB’s.
Have a great day!