Quote of the Day from the Friars Club Encyclopedia of Jokes: “[Success] means that you have, as performers (and Wall Streeters) will call it, ‘fuck you’ money…All that means is that I don’t have to do what I don’t want to do.” – Anon…which segues into:
Bloomberg Quotes of the Day: “The question isn’t who is going to let me; it’s who is going to stop me? Ayn Rand…mentor to Greenspan and a ‘voice’ of the ‘new’ GOP
Bloomberg Top Stories:
*Oil Drops ($52.50!!!) in Worst Year Since 2008 as Europe Rises, U.S. Stocks Fluctuate
*Jobless Claims in U.S. Rose More Than Forecast in Holiday Influenced Week
*Divers Deployed to Find AirAsia Black Boxes as Sonar Locates Part of Plane
*Raise a Toast to the Market Forecasters Who Got Things ‘Least Wrong’ in 2014 – !?!
*Blackstone Opens Up About Hidden Fees as Regulators Pushing Transparency – !!!
*Navalny Defiant After Violating House Arrest to Join Anti-Putin Protest – !!!
*Greek Bank-Deposit Withdrawals Said to Accelerate as Early Election Nears
*Currency Traders Enjoy Best Year Since 2008 as Central Banks Spur Swing
*Oil Set for Largest Slump Since 2008 as OPEC Battles U.S. Shale Producers
*Hedge Funds Surrender to Oil Rout With First cut in Bullish Bets in Months – !!!
*Five Guantanamo Bay Prisoners Will Be Released in Kazakhstan by Pentagon
*Canadian Bonds Defying Forecasters While Posting Best Returns Since 2011
Tuesday’s Market Summary:
Mark Twain said, “October: This is one of the particularly dangerous months to invest in stocks. Other dangerous months are July, January, September, April, November, May, March, June, December, August and February.” TB says he was an optimist (joke!). Will also say that the FIVE most dangerous trading days of the year are December 24 to December. As noted earlier, Christmas Eve is usually the lightest day of the year, then volume stays low until sometime in early January. New Years Eve is particularly dangerous (like the options expiration), because of index fund rebalancing and the other hi-jinx that occur with flash traders, day traders, brokerage traders – all of whom may have to end the year ‘flat’, and even some money managers who want to be able to show they were in the right stocks/sectors. Shares traded on the NYSE floor last year on 12/31 totaled just 539M shares but note that at the closing bell it stood at just 383M, incredibly weak. Also, last year, stocks had been up but then sagged until 12/18, then rallied climbing higher through yearend in very narrow range sessions, went sideways until Jan. 24, then sharply declined until Feb. 5 before they resumed their ascent. Amount of decline on SPX?5.8%! – in eight sessions!
As TB has told you, ad nauseum, Dow Utilities are far and away the best performer of the past year and 12-months with returns exceeding 30%! Even they were vulnerable yesterday plunging 2.1%, and although scarcely a dent. Why? For one thing, “trees don’t grow to the sky” The dividend yield for 2007 was a slim 2.83% – note for financial stocks and many others that was the peak! 2001 was 3.81%, the lowest of the ensuing years. The range from 2009 to 2013 was 4.01-4.3% making them extremely attractive (as opposed to the usual ‘boring’). Where does the yield stand now? 3.13%…hmmm. There are 15 members in the index and they have all done well this past year. 2015? With energy prices plunging they might be able to increase their dividends…emphasis on ‘might’ as state regulators will be watching closely and those who are in need of rate increases my find more pushback.
As for the rest of the market: both Nasdaq’s were off 0.6%+; S&P 500 and Russell 2000 -0.5% (for the ytd up just 4.3%!); Dow 30 -0.3%; and best of the lot Dow Transports -0.2% (year’s second best performer: dividend yield 1.06%! This steadily down from 1.98% in 2008!). NYSE Volume steady at 2.4B shares of about 1.2B below the 12-month average, while shares traded on the NYSE floor declined slightly to 539M shares or about 190M below average; new 52 week highs fell to 257 from 414, while new lows held tight at 95; S&P VIX ROSE to 15.92 +.86 with a range of 15.48-16.20!!! – well back in bear territory again!!!…and you wanted to ‘play’ today? Got a hunch? Bet a bunch!
Total NYSE Volume was steady at higher but remains weak at 2.42B shares vs 1.7B vs 1.4B (now lowest in 21 sessions – typical for December after options expiry), vs 3.34B vs 5.9B. Average volume since 9/30 which had a 600M cushion over the 12 month average (3.6B shares or so), but continues to be hacked away Shares traded on the NYSE floor (aka REAL), declined slightly to 539M shares vs 552M vs 446M vs 349M (a new 2014 low and just ahead of 12/26/13’s 253M share session) vs 613M vs 791M vs 2.49B – 3-year high!!!. For comparison purposes, for the prior 12 months it remains at a historically weak 729M shares, steady only because last yearends lows have fallen off. Since 10/1: 833B shares and declining again – including FIVE 1B+ share sessions), and since 12/1 861M shares down from 961M on 12/23 shares!!! The lowest was 12/24’s 343M share session. April 30 – September 30 we had just SEVEN 800M shares…since 10/1: 22 – but just one in Nov, and NINE 900M+ days! FOUR 800M days, FOUR 900M and FIVE 1B share days in Dec.!!!…but that is now history.
A/D’s for NYSE were moderately negative: NYSE: -1.4x vs +1.4x vs +2x vs 1:1 vs +1.8x vs +1.4x vs +1.8x vs +4.1x! vs +6.7x!!! Nasdaq -1.6x vs +1.1x vs +1.9x vs +1.4x vs +1.0x vs +1.6x vs +1.1x vs +3.2x vs 4x!!! Breadth was similar: NYSE -1.6x vs +1.5x vs +1.9x vs -1.2x vs +1.1x vs +2.3x vs +8.1x!!! vs +14.3x (-15.5x on 12/16!!!); Nasdaq -1.7x vs 1:1 vs +2.3x vs 1.5x vs -1.3x vs +2.2x vs +1.4x vs +4.6x! vs -9.5x!!!. New 52 Week Highs dropped sharply to 257 vs 414 vs 381 vs 325 vs 488! vs 352 – their range for the year is 39-612!!! New Lows steady at 95 vs 90 vs a weak 57 vs 59 vs 92 vs 79 vs 82 (12/16’s high was 712!!!) The 2014 range is 24-1043!!! S&P VIX traded up for a 2nd session to 16.20 – also second day without a ‘14’ handle which lasted just two sessions – and closed UP yet again at 15.93 +.86. the session low was a still high 15.48 – compare to 12/16’s high of 25.20, which was highest since 10/17! We remain at risk of those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!). The average of the past 12 months is 14.15 slowly and steadily climbing, with a low of 10.28!…high close of 26.25 on 10/15/14!
U.S. bond market positive for a 3rd day and still seems wanting to test those recent 12 month low yields from 12/16 (10’s 2.06%!; 30’s 2.69%! and long TIP 0.76%!!!), 10’s closed at 2.19% +1/8; 30’s 2.76% +3/8, but the long TIP slipped to 0.87% -1/8. Overnight slightly higher again – early close today: 10’s 2.18% +1/16; 30’s 2.76% +1/16; long TIP 0.87% +1/16.
Libor update: 0.255% 3 mos.; 0.357% 6 mos. Steady now and still not that far off their recent record lows! The Fed Funds rate has averaged 0.09% but is currently 0.05-0.07% – from 0.14% the 9-month high. T-Bills: +0.02%, one-month; 0.03%, 3 mos; 0.20% – 0.25% is recent high!
European bond markets firm; GREECE still high but sharply lower – most likely this is due to short covering to get square (Benchmark is 10yr): Germany 0.54% –; UK 1.75% -4; France 0.78%! -4; Italy 1.82%! -6!; Spain 1.54%! -6!; Portugal 2.62%! –2; Greece 9.09 -25!; look at the last 13 days range: 7.03% to 9.32!!! Not for the faint of heart! 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.31% –.
Gold closed up and would be considered strong were it not for Monday’s downdraft which gave back 2/3 of Friday’s gains. It closed at $1200.40 +$18.50 – first close at or above $1200 since 12/15 and with a range of $1180.50-$1210.90 – a positive ‘key reversal’!!! Beware that this could just be window dressing and postion squaring. 12/22’s low was $1172.20, lowest since 12/1! This is first time above $1200 in 13 sessions. 12/9’s intraday high was $1238.00 – highest since 10/22. Now back above the 40/50 day! 11/7’s low was $1130.40, the current 12-month low!). 39 of the last 40 sessions with prints below $1200. Last close above $1300 was on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! MAJOR SUPPORT now at the 50 day $1196, and the 40 day $1189, with major res at the 200 day $1260. The 12-month high is $1392.60 on 3/17, highest high since 9/4/13. 11/7’s low was $1130.40! Overnight, back below $1200 at $1195.90 -$4.50 with a high of $1203.90 in a very narrow range session. Silver above $16 for a 4th session following a high of $16.48 yesterday last Thursday, but following its $17.27 high on 12/10. $14.12 is the recent low, not seen in more than five years!
Crude struck yet another low of $52.70, lowest since 4/30/09!!! before coming back to close at $54.12 +.50, also a positive key reversal but remains VERY weak, following a 5-day high of $58.91 Consider: 10/25’s high was $84.83. There have now been 52!!! 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 4/30/09 is $51.94: $84.15 is the average! Recent rally high and close are $110.70 and $110.53 respectively. RES at the 40 day ($67.38!!!), then the 50 day ($70.13!), and lastly the 200 day ($91.73) – and still plunging. Could have a nice bounce but beware of the 40/50 day res! Still likely to test $50 over the next couple of weeks! The recent range is now $52.90-$112.24 since 3/1/12. Overnight, it traded down to another slight new low of $52.51 and is now $52.90 -$1.22 – ouch!!!. Note that following the financial crisis it traded down to $32.40 on 12/31/08 from a high of $147.27 just three months earlier (-78%!!!).
Overnight Global Equity Markets:
Global stock markets mixed, Germany/Japan/Korea closed: UK +0.3% vs -1.1% vs -0.2 vs closed vs +0.2%. France +0.6% vs -1.2% vs -0.7% vs closed vs -0.4%; Germany closed vs –1.2% vs -0.8% vs closed vs +0.6% vs +0.4%; Japan closed vs -1.6%! vs -0.5% vs +0.1% vs +1.2%; Hang Seng +0.4% vs -1.1% vs +1.8% vs +0.1% vs -0.3%; Korea closed vs -0.6% vs -1% vs +0.1% vs +0.4%; India +0.4% vs flat vs +0.6% vs +0.1% vs -1.1%. U.S. equity futures little changed: DOW +18 (range 47); SPX +2.90 (6!); NDQ +5 (4!?!). Say goodnight, Dick…
Some random thoughts:
…a few predictions for 2015 and beyond:
First, U.S. economy will continue to grow with wages only slightly higher due to several state increases in minimum wage, while Congress drags its feet (again). Inflation obviously not a problem: got that Janet? QE’s on hold for the entire year!
Second, Housing Market is peaking having priced out most new buyers…beware of this!
Third, GOP will become the Grumpy Old Party with many of the new guns not willing to play
Fourth, Elizabeth Warren will announce her intention to run for president…a populist she could well be the first woman president. Hillary will lose out again
Fifth, not a prediction, a fact: TB will eliminate this section of the column as he is embarking on a new project…no longer TBD but TBA…soon!
Friday will be the last column with a commentary, but market analysis will continue as usual. Watch for announcements. Happy New Year to all