1/30/15…Houston, we have a problem…DEFLATION!!!

TB’s Wine Quote of the Day: “Men are like wine – some turn to Vinegar, but the best improve with age.” – Pope John XXIII

Bloomberg Quote of the Day: “If winning isn’t everything, why do they keep score?” – Vince Lombardi…or have a trophy with ‘Lombardi’ inscribed on it? Boggles the mind…

Overnight Global Markets:

***Europe’s deflation is increasing as prices are plunging at a pace last seen in the depths of the recession of 2009. Annual inflation rate fell to MINUS 0.6% – biggest decline in the history of the Euro!!! Unemployment in the Eurozone only slightly at 11.4%. Source: Bloomberg News

Global equity markets weaker (ex-Japan), led by India: UK –0.5% vs -0.5% vs -0.1% vs -1%! vs –; France –0.7% vs -0.1% vs -0.4% vs -1.5%! vs +0.4% vs +1.7%! Germany -0.5% vs +0.1% vs +0.4% vs -1.4%! vs +0.9% vs +1.9%!!! Japan +0.4% vs -1.1%! vs +0.2% vs +1.7%!!! vs -0.3% vs +1.1%; Hang Seng –0.4% vs -1.1%! vs +0.2% vs -0.4% vs +0.2% vs +1.3%; Korea -0.1% vs -0.5% vs +0.9% vs – vs +0.8%; India -1.7%!!! vs +0.4% vs +1% vs closed vs +0.9% vs +0.4% vs +1.9%! U.S. equity futures HAMMERED and FALLING – Dow gapped down on the open!!! DOW -179 (range 177 +gap 16!); SPX -19.50! (19); NDQ -17.25 (40!).

Global Money Markets: Libor: 0.255% 3 mos.; 0.357%; 6 mos. – still hovering near their recent record lows! The Fed Funds rate has averaged 0.09% and is 0.11-0.12%, BUT LOOK: 0.05-0.08%!!! 0.12% is the 9-month high. T-Bills: 0.00%, 1 mo; 0.01%, 3 mos; 0.06% 6 mos; 0.14% 1-yr. – back from 0.25% – the 12-month high, boring!

U.S. Treasury Bonds took off to new lows o/n on EU zone DEFLATION! 10’s 1.67%!!! +3/4; 30’s 2.25%!!! +1-5/8!; Long TIP: 0.50%!!! +2-1/8 – ALL new lows!

European Bonds: Yields sharply lower majors to more new low yields!!! Greece crushed again! Germany 0.33% -2; UK 1.35%! -7!; France 0.57% -2; Italy 1.61% +1; Spain 1.45% —; Portugal 2.62% +4; Greece 10.68%!!! +81 – new recent range: 7.03% to 10.68%!!! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.27% -1; low is 0.19%!

Dollar Index slightly lower but in a tight range following Monday’s 95.527, highest since 9/30/03! Currently 94.62 -.16. Euro: 1.1321 +.0015, following Monday’s 1.1098 – an 11-year low!!! Sterling 1.5056 –.0087, after bottoming out on Monday at $1.4952, with critical support at $1.48, a double-bottom from 3/29-31/2013! Yen continues to inch its way back and is now 117.71 -.16 – support is 119, the 40/50 day m/a’s! 1/15’s 115.86 was best since 12/17/14’s 115.57 – weak since peak Oct. ‘14: 105.23; recent best 2/4/14 @ 100.76!!! Record: 12/30/11: 75.35!!!

Commodities: So much for that brief rally in commodities; all three broke down yesterday! Gold trading in a tight inside session just above yesterday’s low and the 200 day, and is now $1262.30 +$6.30! As Harry Carey would say, “tell it goodbye!” Silver broke below $18 yesterday and is now $16.99 +.22. Crude is $44.45 -.06, in a very tighter inside session, following yesterday’s NEW LOW!

Thursday’s Market Summary:

We went from TB’s term yesterday, HEADFAKE to a rally (sic) that couldn’t even hit yesterday’s high on the Dow (support just below the close yesterday and low today (plus we had a lower high and lower low! Ditto SPX, NDQ 100, Comp (although it is hanging in just below the 40/50 day which are merged only not even as good); Dow Transports, while the Russell 2000 is ok…it is hemmed in by a triple top at 1200 (closed at 1290!). Ah bounced back and are just off the high…and what a high it is…how long can this last? THAT index was up 1.4%, followed by the Dow and Russell 2000, with – get this: S&P, and BOTH Nasdaq’s up 1% some coincidence, NOT!!! Transport brought up the rear at just +0.6%. Volume was steady at 4.1B shares, A/D’s and Breadth were positive but didn’t offset yesterday, while new highs dropped to 294 from 394 AND new lows went from 187 to 275!!! S&P VIX settled down a bit but only back to 18.76 with a high of 21.66.Could you have guessed that tomorrow is monthend? A lot of red out there!

Total NYSE Volume slightly higher at 4.1B shares vs 4B vs 3.31B, a low 2nd only to Jan.2, vs 3.4B vs 3.6B vs 4.1B – 12/24’s 12-month low was 1.4B shares. Shares traded on the NYSE floor also slightly higher at 863M shares vs 856M vs 711M – 2nd lowest of ’15; vs 796M vs 785M shares vs 890M – 976M shares is the ‘15 high. 12/24’s 349M was the 12-month low…average is 739M shares! Since 1/5 the average is 840M shares – heavily waited to the downside. The average for Dec. peaked at 979M shares on Dec. 22nd and has been declining steadily.

Advance/Declines were positive for only the 5th time in 13 sessions. NYSE: +2.1x vs -2.8x vs -1.3x vs +2.2x; Nasdaq +2.0x vs -3.1x! vs -1.7x vs +1.8x vs -1.3x; Breadth was similar: NYSE +1.5x vs -8.7x!!! vs -1.8x vs +2.7x vs -2x; Nasdaq +2.1x vs -2.7x vs -2.4x vs +1.9x vs +1.3x; New 52 Week Highs plunged to 294 vs 457 vs 374 vs 369 vs 433 – their range for the last 12 mos. is 39-612!!! New Lows soared to 275 vs 187 vs 100 vs 117 vs 112 – 2015 high is 386 (12/16’s high was 712!!!) The 12-month range is 24-1043!!! S&P VIX consolidated (best one can say) to 18.76 -1.68 vs 20.44 +3.22 – an 18.7% gain…need TB say: bearish sentiment is alive and kicking? The range was 18.66-21.66! Last Thursday’s high was highest since 12/16’s 25.20, which was second only to 10/17’s (31.06!) – highest since 11/2//11!!! Average of the past 12 months is 14.56 and steadily climbing, with a low of 10.28!…high close was 26.25 on 10/15/14!

U.S. Bond Market closed a little weaker off its new lows Wednesday: 10’s 1.75% –5/32 (1.72% low yield); 30’s 2.32% -9/16 (2.29% new low!); Long TIP 0.57% -9/16 (0.55% new low!).

Gold broke down, ending the ‘rally attempt which culminated in 1/22’s high, $1307.80, highest since 8/19/14 – and the ONLY close above $1300 since 8/15/14! Yesterday’s low was $1251.00, $3 BELOW the 200 day ($1254)! The close of $1254.60 was lowest since 1/14 when the rally began. 11/7’s low, $1130.40 is the current 12-month low! 7/17’s session high was $1346.60, highest since March 19th!!! After the 200 day, support is $1224.90, the 1/14 low, then the 40 day $1224, followed by the 50 day at $1218. The 12-month high is $1392.60 on 3/17/14, highest high since 9/4/13. Silver also traded down but to the 40 day ($16.74), then closed at $16.77 -$1.17! The 200 day ($18.48) is back to res. $14.12 is the recent low (12/1/14), not seen in more than five years!

Crude, traded in a very narrow range, and very weak eking out a new 12-month low of $43.58 which hit $51.27, highest since 1/5, came out of its ennui with a new low of $44.08 1/5, still lowest since 3/09, closing at $44.52 +.07; better pay attention to those ‘negative’ key reversals like the one from 1/22! $50-52 remains formidable resistance. 12/17’s high was $58.98. Consider: 10/25/14’s high was $84.83. There NOW have been 64!!! handles since peaking at $107.73 on June 13th, highest since 9/19/13, and if is off 59% since then! The record high of $147.27 was on 9/30/08. RES at the 40 day ($53.34!!!), then the 50 day ($57.88), and lastly the 200 day ($86.38) – all continuing to fall and will someday be support – albeit the hard way! The range is now $43.58-$112.24 since 3/1/12. 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%!!!). So much for TB’s prediction of a bounce at $43.83, and a a test of that $32.40 March ’09 low looks like it could well occur…by the way that decline from the 9/20/08 high to the low took EXACTLY 6 months – we are now in the 7th month of decline!!!

Just try to make it through the day and then prepare for the Stupor Bowl! TB’s ‘line’: Pats by 4…got a hunch? Bet a bunch!



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