10/23/14…from Hoover to Ellison – the 100 foot journey

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Work is a fine thing if it doesn’t take up too much of your time.” – anon

Bloomberg Quote of the Day: “Roots are not in the landscape or a country, or a people, they are inside you.” – Isabel Allende

Bloomberg Top Stories:

*S&P 500 Futures Rise With Copper After Jobs Claims as Treasuries Decline – see commentary!

*Fewest Americans in 14 Years Filed for Unemployment Benefits in Past Month – but: a BIG but!

*Caterpillar Raises Forecast as Earnings Top Estimates on Building Revival

*Credit Suisse Sees a Mixed Start to Quarter as Volatility Boosts Trading – as TB has said…

*GM Profit Exceeds Estimates as Barra Seeks to Assure Investors of Future – fat chance!

*European Manufacturing Unexpectedly Grows With Risk of Recession Receding – u trust that?

*Saudi Arabia Said to Have cut Oil Supply in September; Brent Rises – why is gas price rising???

*Apple Seeks Edge by Making Mobile Payments Seem Simpler Than a Card Swipe – that’s it?

*UnderArmour Shares Fall on Concern That Apparel Maker’s Growth Is Slowing-drawer demand?

*Goldman Sachs, Citigroup Said Wary of Ergen as He Mulls T-Mobile Takeover

*Ottawa Is Returning to Normal After Shooting Near Parliament Shakes Canada

*Canada Youth From Calgary to Timmins Heed Islamic State’s Twitter Calling – U.S. too…bad!

*Obama’s Response to Crisis Seen as Too Cool for Public’s Emotional Needs – thank GOP!

*Suspected Nigerian Islamists Kidnap Women Days After Government Saw Truce – beat goes on!

Wednesday’s Market Summary:

Just when you were lulled into feeling safe, a down day…true volume was lower but A/D’s and Breadth were solid negatives. Worst was the VIX which partially reversed its four straight declines which had a low of 15.56, still bearish, and the BIG negative: the high of 31.06, not seen since 11/28/11! It closed at 17.87 +1.79 with a range of 15.56-18.43 – heed…high freaks are running the market…don’t you believe it is bulls…closest to that is shorts covering! The big loser was Tuesday’s winner, Dow Transports -2.1% vs +3.1%!!! Next was the Russell 2000 -1.4% vs +1.6%! The Dow, S&P 500 and both Nasdaqs were off from 05% (NDQ 100) to 0.9% (Dow). Meanwhile, Dow Utilities continued their slow and steady rise +0.6% vs +0.3%…their only significant declines was a 1.3% drop on 10/15 and they are now UP 4.6% this month!!! There is a message there folks. YTD they are up in price by 17.4%; now look at total return:20.1%!!! October’s total return is 4.5%: no other index is positive so far this month…even Dow Transports are down 1.6%! – this despite their huge move of 3.1% on Tuesday!

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!

Total NYSE Volume was modestly lower at 3.74B shares vs 3.96B vs 3.3B 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 slightly lower at 802M shares vs 815M vs 742M vs 1.07B twice. For comparison purposes, for the prior 12 months it is a historically weak 709M shares…but thus far in October, 895M shares including Wednesday’s HUGE 1.22B shared day – highest since 9/19. The lowest was 10/6’s 696M share session. April 30 – September 30 we had just SEVEN 800M shares…for October so far? 13 (this is no time to be superstitious!), including FIVE 900M+ share days.

A/D’s were back to negative: NYSE: -2.2x vs +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 -2.8x vs +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 worse: NYSE -3.7x! vs +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 -2.9x vs +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 increased to 161 vs 129 vs 62 vs 83 vs 52 vs 49 – their range for the year is 39-580!!! New Lows rose slightly to 68 vs 56 vs 82 vs 67 vs 311 vs 1043!!! The 2014 range is 24-1043!!! S&P VIX staunched it recent declines those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!) climbing back to 17.87 +1.79 with a range of 15.56-18.43, 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!

U.S. bond market was unchanged 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%; 30’s 2.99%; and the TIP 0.92%. Weak overnight: 10’s 2.25% -1/4; 30’s 3.01%! -1/2; and long TIP 0.94% -5/8.  

Libor update: 0.231% 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 little changed overnight; volatile Greece higher (Benchmark is 10yr): Germany 0.88% +1; UK 2.21% –; France 1.29% +1; Italy 2.52% +1; Spain 2.21% +1; Portugal 3.28% -1; Greece 7.20%!!! +9!!! 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.47% -1.

Gold closed lower at $1245.50 -$5.50 and is back between the 40/50 day m’a’s, following 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 $1235, Res the 50 day $1247, 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 weak at $1235.80 -$9.70, with a low of $1234.50. Silver still holding but near support at $17, after falling to $16.64 on 10/3 – lowest since 2/9/2010 and very close to $15.73, a multi-decade low!!!

Crude was pounded falling to $80.22 before closing at $80.52 -$2.29! 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 ($90.21), then the 50 day ($91.21), and lastly the 200 day (98.61) – all dropping. The range is now $79.78-$112.24 since 3/1/12. Overnight slightly higher but coming off a low of $80.05 at $81.42 +.90. How come gas went ‘up’ $3.05 vs $2.92 here (MN)???

European equities mixed, Asia weaker ex-India: 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 -0.4% vs +2.6%! vs -2%! vs +4%!!! vs -1.4% vs -2.2%!!! vs -2.4%!!!; Hang Seng -0.3% vs +1.4% vs +0.1% vs +0.2% vs +0.5% vs -1%! vs -1! Korea -0.3% vs +1.1% vs -0.8% vs +1.6%! vs -1%!; India +0.8% vs +0.8% vs +0.6% vs +1.2%! vs +0.4% vs -1.3%. U.S. equity futures STRONG and gapped on the open again: Dow +129! (range 164 +20gap)); SPX +14.50! (27 +24!); NDQ +30 (43 but gap was down? 4???).

 

Some random thoughts:

…to continue on the vein of prior columns this week, headlines today talk of public being disappointed in Obama’s response. True, it has not been the best, but the hysteria over Ebola defies any rational logic…ask scientists! We do not handle bodies…this is not Africa! Sure it is a very bad disease but chances of getting it are small – here! But thanks to politicizing it as the GOP has (as they are degrading women running for office and using a ‘vote count’ of how many times a candidate voted ‘with O-bama and distortions over O-bamacare), and the news – especially FOX natch – scaring people to death (sic), there is no way the government can look responsive enough to placate the critics…at least for another two weeks!

Survey the other day asked if voters had decided on the candidates yet: a solid number said no. Follow-up question: when will you decide? Night before the election! Watching the World Series last night we were inundated with negative ads for Dem candidates…the Karl Rovian kind – some were on twice, even back to back! That is having money to throw around. You cannot fight it but you can educate yourself to what is worse than mis-information…it is DIS-information, got it?!?

Here’s something else and why the Dems haven’t told their story is beyond belief…are they trying to lose? Is the deficit better or worse than when Obama took office? Surely, its higher, right? WRONG! It is now back to the levels of 2008 according to the CBO…yes, before he took office. Yet the GOP continues to preach austerity…even as our infrastructure crumbles around us. We remain in denial over climate change (god-forbid we call it global warming…a lot of new believers though in the valleys of central California!).

Also, healthcare costs are slowing their increase and yes the ACA is working…and it would be better if the GOP governors – to a man – have refused to create insurance exchanges, thus punishing their constituents over flawed philosophical argument.

As mentioned yesterday, Mitch McConnell fell on his floppy- cheeked face when he said he would repeal the ACA…not even replace…just repeal but when asked about Kentucky’s popular exchange he said he would keep that because the people like it and ‘it’s just a website.’ Out of touch? You bet he is…as much as Harry Reid but at least Reid isn’t mean-spirited, just a fool, which is part of the job description these days, no?

Now let’s look at the smallest amount of new jobless claims in 14 years: of course…at some point you can’t keep laying off and firms ARE hiring…forget the crap about no new jobs due the ACA – that doesn’t make economic sense.

Fear of being laid off remains high (and thus impacts spending and vacations), which is strange since the chances of being laid off are now at a 30-year low…but wait…there’s logic in that because it is taking LONGER to find a new job and trying to earn as much as the old job. Once again, the obscene case against raising the minimum wage – driven by big business and the U.S. Chamber of Commerce is hurting the economy…did they skip the part in economics that says if income increases, so does spending? What’s more most millennials are not taking vacations, either because they can’t afford them or are afraid of it affecting their standing at work. That too is bad for productivity….and isn’t productivity what it’s all about? Not to those overpaid CEO’s who think its all about them. Even in Silicon Valley where execs make huge bucks and get big options, employees are not being paid for the long hours they put in…why not, when Oracle’s Chairman and outgoing CEO, Larry Ellison is the highest paid CEO in the U.S. (the world?). This despite being the largest shareholder with 25% of the company in his hands…think it is safe to call him a narcissist…perhaps the penultimate narcissist (despite selling shares for years…finally shareholders said enough is enough and he is turning over day-to-day control to two men (one HP’s flawed former CEO, Mark Hurd…and note HP is going to split up the company…not a sign of strength).

None of the above will mesh with the Hoover Institute on Stanford’s campus…still can’t figure out why an ‘institute’ is named after a president who stood by while the U.S. plunged into a depression…can you? Perhaps like Hoover, they have enough money that they have lost the connection with the masses…dunno…just a thought.

So don’t believe everything you read…including here…even though TB tries to vet what he writes (after all he is a Vet). Think for yourself…something sorely lacking in America today. Just as realizing that we are all in this together is critical to maintain a democracy.

Have a nice day!

TB

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