Quote of the Day from the Friars Club Encyclopedia of Jokes: “I was walking along the beach – that’s generally where you’ll find the beach – looking for ashtrays in their wild state.”
– Ronny Graham
Bloomberg Quote of the Day: “Learning never exhausts the mind.” – Leonardo da Vinci
Bloomberg Top Stories:
*U.S. Trade Deficit in U.S. Widened 7.6% in September to $43 Billion – hmmm
*Trade Deficit Widened in September to Four-Month High as U.S. Exports Fell
*Oil Tumbles on Saudi Price Cut as Bonds Advance While U.S. Futures Decline !?!
*Deutsche Bank Fixed-Income Co-Head Amrolia Moves to Digital Technology Job
*JPMorgan Faces U.S. Criminal Investigation Into For-Ex Trading – cost of doing business!?!
*Scotiabank to Cut 1,500 Jobs While Taking Charge for Venezuela, Caribbean – ay, cabron!
*Alibaba Profit Tops Estimates as Growth in Shoppers Lures Advertising Cash
*Unanimity Deserts Central Banks as Economic Unknowns Spur diverse Views – a bad thing!
*Euro Woes Pressure a Parade of Eastern EU States toward Monetary Easing – but the Fed?
*Billionaire Icahn Wants Trump Casino Tax Losses, Panel Says – is he still an ‘icon’? are they?
*Election-Day Politics Ignore Ever-Shrinking U.S. Government – no way to stage a recovery!
*Baghdad Mansions Selling for $1 Million Even With Islamic State at Gates – go figure!
*Munis’ Top Performance in U.S. Shows Investor Faith in Local Govts -…or desire to avoid taxes!
*Saudi Arabian Attack Leaves Five Dead in Shiite-Minority Eastern Province
*Burkina Faso’s Military Promises Religious Leaders It Will Hand Over Power
*Merkel Calls Rebel Separatists Votes Illegal as Ukrainian Tensions Mount
Monday’s Market Summary:
Where is the follow-thru? Volume dropped back to average; new 52 week highs declined but remain strong for a sixth day, but new lows stubbornly high too; A/D’s and Breadth were meaningless, and just as it appeared the S&P VIX might break below 14 it closed higher. Meanwhile Commodities remain in the tank and Crude is being pounded again today! All indices ranged from -0.3% (Russell 2000) to -0.01% (Dow), to +0.3% (NDQ 100)…this despite new record highs intraday for the Dow, and S&P, and the Nasdaq. Oh, almost forgot, Dow Utilities were +0.7%…hmmm. Nasdaq Composite highest since the 3/00 market peak (total return since then (dividends included), 1.02% annualized; Dow however from the 2nd 2000 peak is up 10.2% annualized!!!), S&P from 3/31/00 +4%; since it last high 12/31/07 7.1%. Remember these exclude inflation and taxes…but who cares, right? Again, perception is everything!…isn’t it?
Total NYSE Volume dropped back to an average 3.53B shares from a strong 4.26B vs 3.63B vs 3.74B vs 3.61B: average volume for October is 3.7B, or about 700M more than the recent average. Shares traded on the NYSE floor – affectionately referred to by TB as REAL volume: for October also declined to 869M shares. Volume was above average at 794M shares vs 1.04B vs 763M vs 823M vs 785M. For comparison purposes, for the prior 12 months it is a historically weak 711M shares…but thus far in October, 869M shares – including that HUGE 1.22B share day – highest since 9/19, followed by two more 1B plus days leading to options expiry!. The lowest was 10/6’s 696M share session. April 30 – September 30 we had just SEVEN 800M shares…for October 15, SIX 900M+ days.
A/D’s were slightly negative: NYSE: -1.1x vs +3.3x vs +1.7x vs -1.3x vs +4.6x!!!; Nasdaq -1.2x vs +2.3x vs +1.7x vs -1.2x vs +3.8x! Breadth was mixed: NYSE -1.1x vs +4x! vs +1.5x vs -1.6x vs +4.8x!!! Nasdaq +1.4x vs +3.3x! vs +1.1x vs -1.5x vs +5x!!! New 52 Week Highs declined but to a still strong 416 vs 612 vs 351 vs 312 vs 326 – their range for the year is now 39-612!!! New Lows declined again but remain high at 94 vs 137 vs 153 vs 86 vs 80 vs 136. The 2014 range is 24-1043!!! S&P VIX closed HIGHER at 14.76 +.73 for its 5th sub-15 close since peaking on 10/15. Still well below those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!). The range remained below 15 for a second day but with the low rising to 14.23-14.99 – but we haven’t seen it this low since 9/24. Remains slightly bearish and well above 9/18’s 12.03 low close. The average of the past 12 months is 13.94, with a low of 10.32!…high close 26.35 on 10/14!
U.S. bond market closed little changed and mixed. The recent 12 month low yields (10’s 2.09%; 30’s 2.87%; and long TIP 0.83%), 10’s closed at 2.34% -1/16; 30’s 3.07% -1/32; and the long TIP 0.97% +1/32. Doing better overnight: 10’s 2.31% +1/4; 30’s 3.03% +11/16; and long TIP 0.95% +5/8. QE’s may end, but dump $4.3 trillion??? No way!…in fact there IS no way to do that!
Libor update: 0.232% 3 mos.; 0.328% 6 mos., both steady and just above new record lows! The Fed Funds rate has averaged 0.09% and is back to 0.08-0.10%. T-Bills range from 0.03%, one-month, to just 0.09% one year!!! Foreign bond yields lower across the board!?! (Benchmark is 10yr): Germany 0.81% -4; UK 2.23% -5; France 1.16% -5; Italy 2.37% -4; Spain 2.12% -1; Portugal 3.29% -3; Greece 7.90% -7. 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.43% -1.
Gold traded quietly but weak all session. On Monday it declined to $1160.50. Yesterday’s close was $1169.80 -$1.80. So much for that recent high of $1255.60, highest since 9/10/14. There have now been 5 sessions with prints below $1200 since 12/31/13 – 10/3 and 10/6, 10/30, 10/31 and 11/3. Last close above $1300 was on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! Res is at $1200 (psychological), then the 40 day at $1223, the 50 day $1233, and the 200 day at $1283. 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 again trading in a narrow range at $1169.80 -$1.80 Silver also broke down with a low of $15.63 Friday, more than a five year low and heading towards $14.65, a multi-decade low!!! It is now just $15.95 -.26.
Crude closed weak at $78.78 -1.76 taking out 10/27’s $79.44 intraday low – and replacing it with $78.08, lowest since 6/28/12. 10/25’s high was $84.83. There have now been 30!!! 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 ($87.57), then the 50 day ($88.87), and lastly the 200 day (98.13), all accelerating to the downside. The range is now $78.08-$112.24 since 3/1/12. Overnight it has traded down to $75.84 (it’s 32nd handle and lowest since 101/4/11!!!. Last is $76.56 -$2.22.
Global equities weaker – ex-Japan which is back from a holiday! UK -0.6% vs +1.1%! vs -0.6% vs +0.6% vs +0.6%; France -0.6% vs +2.3%!!! vs -0.4% vs +0.1% vs +0.6% vs -1.4%; Germany -0.6% vs +2.1%!!! vs -1% vs +0.6% vs -1.6% vs +1.4%; Japan +2.7%!!! vs closed vs +4.8%!!!!! vs +0.7% vs +1.5%! Hang Seng -0.3% vs -0.3% vs +1.3%! vs -0.5% vs +1.3% vs +1.6%; Korea -0.9% vs -0.4% vs +0.3% vs -0.1% vs +1.8%! India – vs -0.1% vs +1.9%!!! vs +0.9% vs +0.9%. U.S. equity futures slipping again: Dow -22 (range 63); SPX -4.50 (9); NDQ -12.25 (19).
Some random thoughts:
…or as they say in Chicago…vote early, vote often!…or just stay home and say ‘no’.
Is Congress dysfunctional or just doing what it is ‘paid’ to do? Most likely it is the latter because if it truly was dysfunctional, billionaires like the Koch brothers, wouldn’t be pumping millions into the elections…not just federal but state…AND local! This is about control and contempt for one’s fellow man…after all, people are only poor because they are too lazy to work!
How lazy are they?…well, for one (according to Sen. Bernie Sanders), the annual income of the Walton’s at $45 million is equal to the bottom 40% of the United States…think about that…and yet, they can’t even pay their employees a minimum wage and we, the people, subsidize them with food stamps for their workers!
If you recall, TB said he was reading William K. Black’s recap ot the 1980’s S&L crisis, The Best Way to Rob a Bank is to Own One. The more he reads the more he sees how that was prelude to the banking crises since, the latest finally surpassing the biggest financial crisis in history, exemplified by Charles Keating’s Lincoln Savings and Loan (if only Honest Abe had been alive to sue for defaming his name).Oh, and don’t forget Keating was a fav of Ronnie and Don Regan, and other ‘free-marketers’ in his administration who believed him when he said, “government is the problem, not the solution.” In that, he was partially correct…it was HIS administration that weakend the S&L regulators (note nothing was done for the banks…that is until he, over the objections of his Treasury Secretary Don Regan, bailed out Contintental creating ‘moral hazard’.
First as head of the Federal Home Loan Bank Board they installed (instilled?) Richard Pratt who virtually eliminated oversight of the S&L’s, and then after ‘vetting’ him as still on their team, appointed Edwin Gray, a former S&L exec, and Reagan confidante. But then as he saw the abuses, he began to re-regulate inciting the ire of Keating who turned to his ‘five’ friends in Congress (note that he was a Republican but gave willingly to anyone who would support his cause – does that sound like today? You can bet your sweet bippy it does!).
Anyway, the more TB reads, the more he sees the foundations being laid for the recent global financial crisis. Heck as his experts, Keating had Alan Greenspan, and noted economists. Isn’t that special…even more so that a follower of Ayn Rand, and anti-regulation, would become chairman of the Fed!
Enough…have to get out and vote…as MY vote counts…does yours? One man one vote, yes,but a few billionaires, some convicted felons, can clog the airlines with lies and innuendos and that is just exercising their constitutional rights! It’s good to be king, right?
Have a great day…but you had better start thinking for yourselves…it’s later than we think!