11/25/14…as Ferguson goes, so goes…

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Confession is good for the soul only in the sense that a tweed coat is good for dandruff.” – Peter De Vries Bloomberg Quote of the Day: “Intense love does not measure, it just gives. – Mother Teresa

Bloomberg Top Stories:

*Economy in U.S. Grows More-Than-Forecast 3.9% on Higher Consumer Spending

*U.S. September Home Sale Prices Unchanged Vs Prior Month, FHFA Says

*Case-Schiller National Home Prices Rose 4.8% in Sept. y-o-y; 20 City Prices +4.9%

*S&P 500 Futures Rise With Europe Stocks on U.S. GDP Report as Dollar Gains – a tad

*Missouri Governor Orders More Troops as Ferguson Erupts on Jury Decision

*Santander Replaces CEO Marin With CFO Alvarez in Ana Botin’s First Shakeup – ?

*Lawmakers in U.S. Push for More Iran Sanctions After Nuclear Deal Failure

*Snowfall in Eastern U.S. Threatens Travel on Eve of Thanksgiving Holiday

*Nigeria Central Bank Raises Benchmark Interest Rate to 13%, Devalues Naira

*Dollar Bulls Amass Record $48 Billion Stake in Rally Lasting – all in?

*NYC Pays Record $732 Million as Cost of Settlements Rises Under De Blasio

*Rape Debate Raises Question Just Who Are Those College Boys? – not MY son!

*FBI Files Say Hedge Fund Analyst Made Millions Trading on Dell Insider Tips

 Monday’s Market Summary

Are any of you getting it yet? What TB has been telling you (ad nauseum?) about options expiration and month/quarter end? IGNORE THEM! Stay away! Sheesh! Note the opening on the Dow: following suit to Friday (but that in the rush to cover ahead of expiry), the Dow gapped up on the open (just 2 points) but for the first half hour went nearly vertical hitting the session high (+78 and of course another new record: 17855), then retraced over the next 20 minutes to a slight negative, and then spent most of the session the red – at the low down 20), before ‘inching back’ in the final 45 minutes to close up a whopping SEVEN points (i.e. flat)! Sign of strength? Not in TB’s book. Note the Mohammed El-Erian feels too that stocks are grossly overvalued, asking why stocks are so strong when commodities are in the tank? You decide…will the rest of the year be good for stocks and other living things? Yes, you say, but the Russell 2000 was up 1.2% – isn’t that the index that didn’t even participate in Friday’s rally (+0.1%)? Note that the other three indices that had a good session, Dow Transports, and the two Nasdaqs didn’t do much of anything Friday, and the S&P 500 was up just 0.3%. Dow Utilities were the only loser -0.8% vs +0.4% – still up 20.5% ytd (price alone!) near Transports, +23.9%! A/D’s and Breadth which were strong for NYSE stocks on Friday reversed with Nasdaq stocks being strong? New 52 week highs fell back to 280 vs 359 while new lows were steady at 68. The S&P VIX closed below ‘13’ for a second day at 12.62 -.28 (about neutral) and the session high was just 13.02, two days after topping at 15.74! Volume plunged back from that high 3.9B shares to a weak 3.1B…got it?

Total NYSE Volume plummeted back to 3.1B shares from 3.9B, highest since 11/4, vs 3.1B, lowest in more than a week, vs 3.4B vs 3.41B. Average volume since 9/30 is about 3.6B shares and slipping, or about 600M more than the 12-month average. Shares traded on the NYSE floor (aka REAL) also plunged to a below average 707M shares from a strong 1.04B shares highest since 10/31 (obviously expiration related!), vs 662M, lowest in 8 sessions, vs 738M vs 731M. For comparison purposes, for the prior 12 months it is a historically weak 715M shares…but since 10/1: 821B 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…since 10/1: 16, and FIVE 900M+ days.

A/D’s were so-so on the Big Board but strong on Nasdaq (a reversal?): NYSE: +1.6x vs 2x vs +1.9x vs -1.6x vs +1.6x; Nasdaq +2.4x vs +1.1x vs -2.6x vs +1.5x vs -1.9x. Breadth was even more divergent: NYSE +1.1x vs +3.7x vs +2.1x vs -1.6x vs +2x; Nasdaq 3.1x!!! vs +1.3x vs +2.8x vs -2.2x vs +2x. New 52 Week Highs dropped back to 280 vs 359 vs 173 vs 135 vs 304 – their range for the year is 39-612!!! New Lows were stable a very weak 68 vs 66 vs 104 vs 141 vs 117. The 2014 range is 24-1043!!! S&P VIX range narrowed with a high of just 13.02! This two days after hitting a very bearish 15.74, highest since 11/4! It closed near the session low 12.43 (for a 3rd day) at 12.62 -.28. This is its 20th sub-15 close since peaking on 10/15. Heading back toward those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!)? You decide. The average of the past 12 months is 14.00, with a low of 10.28!…high close of 26.25 on 10/15/14! A month till next options expiration…won’t THAT be fun?

U.S. bond market closed slightly weaker. The recent 12 month low yields (10’s 2.09%; 30’s 2.87%; and long TIP 0.83%), 10’s closed at 2.30% -1/8; 30’s 3.01% 7/16, and the long TIP 0.97% -3/8. Overnight trying to rise: 10’s 2.31% –; 30’s 3.01% +3/16; and long TIP 0.97% +5/16.  

Libor update: 0.233% 3 mos.; 0.327% 6 mos., both steady and just above new record lows! The Fed Funds rate has averaged 0.09% and is steady at 0.09-0.10%. T-Bills: 0.4% one-month, 0.01%! 3 mos, 0.12% one year.

Foreign bond yields lower across the board ex-Greece which is just a tad higher (Benchmark is 10yr): Germany 0.76% -2; UK 2.02% -3; France 1.09% -2; Italy 2.16% -1; Spain 1.95% -2; Portugal 2.91% -4; Greece 7.72% +2. 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.44% –.

Gold closed slightly weaker at $1196.60 -$1.80, in an inside session, a day after a session high of $1208.20 – highest since 10/30 and first time above the 40/50 day since 10/21!…still hanging on to 11/14’s ‘positive key reversal’. 11/7’s low was $1130.40, a new 12-month low!). The last 19 sessions have had prints below $1200 – first time since 12/31/13 Last close above $1300 was on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! Res/SUP is at $1200 (psychological), then the 40 day at $1203, the 50 day $1207, then the 200 day at $1277. The 12-month high is $1392.60 on 3/17, highest high since 9/4/13. $1130.40. 11/7’s low was $1130.40! Overnight, it rose to $1203.00 briefly (only the 4th time over $1200 since 10/31), and currently $1191.10 -$5.50…at session low! Silver traded up $16.76 overnight, highest since 10/30, and back from 11/5’s low of $15.12, more than a five year low.

Crude also closed slightly lower at $75.78 -.73, also an inside session. Friday’s session high was $77.83. 7 days ago it set a new recent low of $74.07, lowest since 9/17/10!!! 10/25’s high was $84.83. There have been 33!!! handles since peaking at $107.73 on June 13th, highest since 9/19/13. 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 ($81.43!), then the 50 day ($83.77!), and lastly the 200 day (96.57!), all continuing to accelerate to the downside! A failure here could take us to $70! The recent range is now $74.07-$112.24 since 3/1/12. Overnight it is little changed and again unable to even ‘touch’ $77! Currently $75.95 +.17.

European equities higher; Asia mixed UK +0.3% vs – vs +1% vs -0.6% vs -0.1%; France +1.4%! vs +0.7% vs +2.1% vs -1.1% vs +0.6%; Germany +1.4% vs +0.7% vs +2% vs -0.6% vs +0.7%; Japan +0.3% vs closed vs +0.3% vs -0.1% vs -0.3% vs +2.2% vs -3%; Hang Seng -0.2% vs +2% vs +0.4% vs -0.1% vs -0.7% vs -1.1% vs -1.2%; Korea +0.1% vs +0.7% vs +0.4% vs -0.5% vs – vs +1.2%; India -0.6% vs +0.6% vs +1% vs +0.1% vs -0.5% vs -0.1%. U.S. equity futures modestly higher adfter gapping up on the open? DOW +32 (range 31 +10 gap); SPX +3.40 (8); NDQ +9.75 (26 +2).

 

Some random thoughts:

…America! Justice in Ferguson? How could any group, especially with three black women in it think there was no guilt in the shooting? Perhaps the three women were the votes to charge with something? That would be the worst possible outcome. As a former law enforcement officer and graduate of the Los Angeles County Sheriff’s Academy, there is no way at least one charge shouldn’t be brought against the officer (reminiscent of the BART Fruitvale Station killing). The sad thing is that lost in the confusion is the fact that that boy had committed a crime…in fact just done so, substantiated by video cam…but not one worthy of the death penalty. Just as in Florida, though, childhood pictures were brought out showing an innocent young boy. Also, as in Florida, he was killed senselessly! Both the white and black communities must accept blame for this. Unfortunately, not the way Rudy Giuliani did on MTP Sunday…which turned into a shouting match that got totally out of control with a civil rights proponent. Recall, this is a man who wanted to be president!

Nothing is excused but Ferguson, like hundreds of cities around the country, was a time bomb…racially charged. Giuliani also made one valid point: 90% of all blacks murdered are by other blacks. Isn’t that at least partially due to the poor being congregated in just one place? Isn’t the fact that we have the highest incarceration rate of any industrialized nation a concern? We need legal reform that makes the penalty fit the crime, not hand out ten year sentences for possession – and at the end of that time they are hardened, and smarter, criminals. Yes, justice truly is blind!…and so are our elected officials.

Lastly, and deserving of a huge amount of blame is the affable NRA with its strong lobby who uses the excuse that Chicago has more killings and more illegal guns than anywhere in the country. Could legislation change that? Probably not, but a large amount of the blame for so many guns falls squarely on the NRA and its stance against any form of gun regulation.

Have a great day!

TB

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