10/22/14…it’s in the news

Quote of the Day from the Friars Club Encyclopedia of Jokes: “I was in a bar the other day and heard two guys speaking Iranian. I asked them, “why are you speaking Iranian? You’re in America now…speak Spanish.” – Milton Berle ‘Uncle Miltie’

Bloomberg Quote of the Day: “Change your thoughts and you change the world.”

– Norman Vincent Peale

Bloomberg Top Stories:

*Consumer Prices in U.S. Rose 0.1% Last Month as Inflation Remained Muted – CPI +0.1!

*Europe Stocks Rise on Earnings as Dollar Gains After U.S. Inflation Report

*ECB Said to Boost Covered-bond Buying From Spain to Germany in Draghi Plan

*Total Appoints Patrick Pouyanne as CEO WHIle Desmarest Returns as Chairman

*Goldman Sachs Shows Investors Path Out of Economic ‘Alice in Wonderland’

*Credit Suisse Seen Reaping Trading Gain; Deutsche Bank’s Legal Bills Erode

*Coca-Cola and IBM Show Shareholders Punishing CEOs With No-Growth Strategy

*EMC to Absorb VCE Equipment Join Venture with Cisco Keeping a 10% Stake

*Ebola Relief in View as J&J Sees 250,000 Vaccine Doses Set for May Trials

*Iraqi Kurds Will Send 200 Pesmerga Fighters to Kobani With Heavy Weapons

*Nuclear Secrecy Feeds Concern About Rogue States Getting Hands on Weapons

Tuesday’s Market Summary:

An extremely strong session on higher volume. Even more impressive is the fact that the Dow closed up 215 at 16615 and that was with IBM subtracting 38 points! Even so it managed to close 29 points above its 200 day m/a (note that the 40/50 day are converging on 16900 so that is next resistance. Ditto for the other major indices. Dow Transports +3.1%!!! The NDQ 100 was already above it and closed just shy of the convergence of the 40/50 day at 4011, up 2.6%, Composite +2.4%. Dow +1.3%; S&P 500 +2%Unfortunately, despite gapping up on the open, the Russell 2000 (+1.6%), remains 33 below the 200 day which is now ‘below’ the 40/50 line. Weakest was Dow Utilities +0.3%. The question now is: has this got enough ‘legs’ to resume raising returns for the year? Dow Utilities still lead ytd +16.72% (price only!), followed by Transports +14.7%, the 100 is up 10.6% but the Composite just 5.8%. The Russell 2000 remains in the red at -4.4%. while NYSE Financials are up just 0.8% – ouch! Compare that to Utilities!

Volume bounced back to a strong 3.96B shares and once again A/D’s were solid and Breadth was especially strong. New 52 week highest despite doubling are still a low 129 while new lows only dropped from 82 to 56. VIX plunged again but remains elevated at 16.26 -2.11.

Total NYSE Volume came back to 3.96B shares vs 3.3B shares vs 5.05B vs 6.06B : average volume for the first 13 trading days of October was 3.73B, or about 730M more than the recent average. Shares traded on the NYSE floor – affectionately referred to by TB as REAL volume: for October it is 901M shares!!! Trading rose to 815M shares vs 742M vs 1.07B. For comparison purposes, for the prior 12 months it was a historically weak 709M shares…but for the first 13 trading days of October, 933M shares including Wednesday’s HUGE 1.22B shared day – highest since 9/19. Monday was the lowest since 10/6’s 696M share session. April 30 – September 30 we had just SEVEN 800M shares…for October so far? Twelve, including FIVE 900M+ share days.

A/D’s were solid: NYSE: +4.5x vs +2.8x vs +1.9x vs +2.3x vs -1.1x vs +1.6x vs -3.6x -7.2x!!! vs +4x! vs -3.4x; Nasdaq +2.9x vs +2.2x vs 1:1 vs +2x vs +1.2x vs +1.6x vs -2.7x vs -5.8x vs +2.5x vs -4.2x! Breadth was strong! NYSE +5x!!! vs +3.1x! vs +2.9x vs +1.7x vs -1.4x vs +1.6x vs -5.8x! vs -12.3x!!! vs +3.8x vs -4.7x!!! Nasdaq +6.3x!!! vs +5x!!! vs +1.8x vs +1.4x vs +1.03x vs +1.1x -7.2x!!! vs -4.4x! New 52 Week Highs doubled to 129 vs 62 vs 83 vs 52 vs 49 – their range for the year is 39-580!!! New Lows rose declined to average at 56 vs 82 vs 67 vs 311 vs 1043!!! The 2014 range is 24-1043!!! S&P VIX continues to retreat from those bearish extremes with a high of 31.06 (highest since 11/28/11!!!) to 16.26 -3.11, still bearish and well above 9/18’s 12.03 The average of the past 12 months is 13.83, with a low of 10.32! Needs a 14 print!

U.S. bond market was weaker but remains near the new 12 month low yields (10’s 2.09%; 30’s 2.87%; and long TIP 0.83%), 10’s closing at 2.22% +1/4; 30’s 2.99% -1/2; and the TIP 0.92% -5/8. Rallying overnight: 10’s 2.20% +1/4; 30’s 2.97% +7/16; and long TIP 0.90% +5/8.  

Libor update: 0.232% 3 mos.; 0.323% 6 mos., both just above new record lows! The Fed Funds rate has averaged 0.09% and is steady at 0.08-0.10%. T-Bills range from 0.03%, one-month, to just 0.10% one year!!! Foreign bond yields lower, led by Greece and the other PIIGS (Benchmark is 10yr): Germany 0.86% -1; UK 2.17% –; France 1.28% -1; Italy 2.48% -3; Spain 2.18% -2; Portugal 3.24% -13!!!; Greece 6.96%!!! -49!!! from 8.69% last Thursday! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.48% –.

Gold closed higher again at $1251.70 +$7.70 which places it above both the 40/50 day m’a’s, and with a new recent high of $1255.60, highest since 9/10/14. There have been just two prints below $1200 since 12/31/13 – 10/3 and 10/6 and soundly rejected! Last close above $1300 was on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! SUP is the 40 day at $1236 and now the 50 day $1248, and the 200 day at $1284. 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 at $1244.00 -$7.70. Silver still holding in the mid- ’17’s after falling to $16.64 on 10/3 – lowest since 2/9/2010 and very close to $15.73, a multi-decade low!!!

Crude closed little changed for a 3rd day at $82.81 +.10. Last Thursday’s high $84.83, low $79.78…lowest since 6/27/13!!! There have been 28!!! handles since peaking at $107.73 on June 13th at $107.73 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 ($90.27), then the 50 day ($91.286), and lastly the 200 day (98.62) – all dropping. The range is now $79.78-$112.24 since 3/1/12. Overnight slightly higher and tight at $82.79 +.29.

European equity markets higher, Asia strong, led by the highly volatile Japan: UK+0.2% vs -0.9% vs +1% vs -0.7% vs -2.8%!!! France +0.2% vs -1.3%! vs +2.1%!!! vs -1.1% vs -3.6%!!! Germany +0.4% vs -1.4%! vs +2%!!! vs -0.4% vs -2.9%!!! Japan +2.6%! vs -2% vs +4%!!! vs -1.4% vs -2.2%!!! vs -2.4%!!!; Hang Seng +1.4% vs +0.1% vs +0.2% vs +0.5% vs -1%! vs -1! Korea +1.1% vs -0.8% vs +1.6%! vs -1%! vs -0.4% vs -0.7%; India +0.8% vs +0.6% vs +1.2%! vs +0.4% vs -1.3%. U.S. equity futures slightly higher: Dow +18 (range 94); SPX +1.70 (12); NDQ +5 (20).

 

Some random thoughts:

…so you thought yesterday’s commentary was partisan? If so, you aren’t paying attention to the news…or just listening to FOX NEWS…you know, the one that is ‘fair and balanced’.

Here are some snippets from recent news releases:

*Just announced: CPI +0.1% in September…plunging oil prices mainly!

*Farming

– Just 6% of farmers are under age 35; 33% are 65 and older

-Number of individual farms: 2.1MM 2012; 6.8MM 1935

-Biggest 0.5% produced 32% of value; Bottom 75% just 3%

-Price increases are mainly convenience costs: packaged salad vs lettuce – farmers get nothing!

-Nearly 1/3 of all produce (6B pounds!) is thrown away as not being marketable (bruised, etc.)

-From 1995-2012 govt. provided $256B in subsidies; mainly big farms (ADM,etc), $11M to farms/businesses owned by billionaires (Buffett’s brother gets a huge subsidy on his large farm)

*Energy

-36% of Bakken natural gas is flared off

*Politics

-Republicans are focusing on defeating women running for office – thought they wanted women?

-using stale data from the non-partisan think tanks against their opponents

-blaming everything from ISIS to Ebola on Obama

– distorting data on the ACA so they can destroy it even though a majority thinks it is a good program. Sure, it could be better but they want to repeal and then ‘come up with’ better

-continually saying simplify the tax code knowing full well that that has been tried by every president starting with Reagan. Not unless the lobbyists say so and they say ‘no’!

Just a few of TB’s least favorite things…

Have a nice day!

TB

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