2/9/15…much ado about…payrolls!!! What about wages, hours wkd?

TB’s Wine Quote of the Day: “Champagne is appropriate for breakfast, lunch or dinner.” – Madame Puckette…works as a nice mouthwash too! TB

TB’s Quote of the Day: ”I never think of the future, it comes soon enough.” – Albert Einstein

Bloomberg Quote of the Day: “Action is the foundational key to all success.” – Pablo Picasso

This week’s economic calendar is fairly light. The highlight of the week will be the January Retail Sales (Thursday). We will also get December Wholesale Trade and December JOLTs Job Openings (Tuesday), January Treasury Budget (Wednesday), December Business Inventories (Thursday), January Import & Export Price and February Consumer Sentiment Preliminary (Friday). Courtesy of Economic Advisory Service

 Overnight Global Markets:

GLOBALequity markets SLAMMED, ex-Japan: UK -0.8% vs -0.2% vs -0.2% vs -0.6% vs +1.1%; France -1.3%!!! vs –0.3% vs -0.1% vs -0.3% vs +1.1%; Germany -1.8% vs –0.6% vs -0.1% vs -0.4% vs +0.7%; Japan +0.4% vs 0.8% vs -1% vs +2% vs -1.3%; Hang Seng -0.6% vs -0.4% vs +0.4% vs +0.5% vs +0.3%; Korea -0.4% vs +0.1% vs -0.5% vs +0.6% vs –; India -1.7%!!! vs -0.5% vs -0.1% vs -0.4% vs -0.4% vs -0.2% vs -1.7%. U.S. equity futures gapped down and following suit: DOW -93 (range 71 +40 gap); SPX-10.60! (8 +5) NDQ -19 (16 +17!). Looks like that December payrolls revision wasn’t worth much with Jan. slipping, wages puny, hours worked nil.

Global Money Markets: Libor: 0.256% 3 mos; 0.362%; 6 mos – still inching up!…but remain near their recent record lows! The Fed Funds rate has averaged 0.09% and remains 0.12-0.14% – 0.14% is the 9-month high! T-Bills: 0.01%, 1 mo; 0.02%, 3 mos; 0.08% 6 mos; 0.13% 1-yr – 0.25% is the 12-month high!

U.S. Treasury Bonds are higher o/n – a dead-cat bounce? Stay tuned: 10’s 1.92% +3/8; 30’s 2.49% +7/8; Long TIP: 0.66% +7/8

European Bonds: back in rally mode after retreating Friday pm…except Greece and the other PIIGS! Germany 0.34% -2; UK 1.60% -5; France 0.65% -2; Italy 1.64% +6!; Spain 1.53% +5!; Portugal 2.49% +11!!!; Greece 10.47% +69 – incredible volatility!!! Recent range is: 7.03% to 10.79%!!! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.34% +2; low is 0.19%!

Dollar Index rallying again while Greece has dampened the Euro. Currently 94.79 +.08. 1/26’s 95.527 was highest since 9/30/03! Euro weaker at 1.1283!!! -.0036. 1/26’s 1.1098 – an 11-year low!!! Sterling 1.5209 –.0009; topped out at 1.5352 on 2/6, after bottoming out 1/26 at $1.4952, with critical support at $1.48, a double-bottom from 3/29-31/2013! Yen weaker at $118.56 -0.10, and at 40/50 day…looks like rally attempt is over – 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: Gold barely higher following Friday’s thrashing: $1240.20 +$5.70 – that’s it? On 1/25 The 200 day ($1233) is major support. Silver slightly better at $16.91 +.21 in a narrow inside session. Friday’s low was $16.54. Crude is trading meaninglessly higher at $52.44 +.75 with resistance at $54.24 so a lot ‘could’ happen but probably won’t Caveat emptor!

Friday’s Market Summary:

Much ado about a December revision which was a strong number and combined with January’s relatively weak number produced the biggest three month gain since 2011. So…what…what about hours worked? FLAT! Hourly Earnings? FLAT. Question; with a weak Euro, strong Dollar, Europe in deflation, do YOU really think the Fed will tighten?

Now picture this: the payrolls report came out and everyone hyperventilated…for less than an hour, then flatlined before heading south around noon. At the end of the day all indices are DOWN but from 0.3% (Dow, S&P; Russell 2000) to 0.7% (NDQ 100???). One exception, the bullet-proof Dow Utilities took one in the gut: -4.0%!!! So…let’s look at the ytd scoreboard: Dow 30 FLAT; Dow Transports -2.8%; Dow Utilities -0.7%!!!; S&P 500 -0.2%; Nasdaq Comp +0.1%; NDQ 100 -0.2%; Russell 2000 +0.1%. Look at Financials -2.5%: KBW Banks -4%! Nasdaq Banks -2.6%. Philly Gold/Silver +11.8%!!!

Volume surged to 4.24B shares; A/D’s and Breadth were negative; New 52 week highs stagnant, new lows dipped to a weak 44. The S&P VIX inched higher at 17.28 +.44

Total NYSE Volume surged back to 4.24B shares vs 3.8B vs 4.12B shares from 4.6B vs 3.98B – ytd low is 2.7B on Jan. 2; while 12/24’s 1.4B shares is the 12-month low. Shares traded on the NYSE floor catapulted to 927M shares (742M at the bell) vs 794M vs 900M vs 981M (2nd highest of ’15) vs 912M – 1.22B on 1/30 ishighest since 8/8/11!!! – 646M is the ytd low while 12/24’s 349M is the 12-month low…average is 743M shares! Since 1/5 the average is 869M shares. The Dec. ave peaked at 979M shares on Dec. 22nd.

Advance/Declines were negative for the 11th time in 19 sessions! NYSE: -1.7x vs +3.1x! vs -1.8x vs +3.8x! vs +2.7x; Nasdaq -1.2x vs +2.8x vs -1.6x vs +2.7x vs +1.8x. Breadth was similar: NYSE -1.2x vs +4.2x! vs -1.9x vs +7.4x!!! vs +4.5x! Nasdaq -1.2x vs +3x! vs +1.04x vs +3.8x! vs +2.4x. New 52 Week Highs slightly higher at 250 vs 242 vs 215 vs 290 vs 239 – their range for the last 12 mos. is 39-612!!! New Lows dropped to a weak 44 vs 56 vs 58 vs 55 vs 162 vs 275 – 2015 high is 386 (12/16’s high was 712!!!) The 12-month range is 24-1043!!! S&P VIX traded in a range of 16.06-18.74 before closing at 17.28 +.44 – never got out of bear country. The recent high is 12/16’s 25.20, second only to 10/17’s (31.06!) – highest since 11/2/11!!! Average of the past 12 months is 14.59 and slowly climbing, with a low of 10.28!…high close was 26.25 on 10/15/14!

U.S. Bond Market was a bloodbath…but was it real? Fear is a terrible thing. Had stocks rallied TB might be concerned but let’s just chalk this up as a ‘down’ day and wait an see – remember payrolls were soft…it was the December revision that scared everyone – sustainable? With a strong dollar and plunging crude, highly unlikely: 10’s 1.96%!!! -1-1/4!!! (1.64% low yield); 30’s 2.53% -2-1/8!!! (2.22% new low!); Long TIP 0.69% -1-5/8 (0.49% new low!), why did TIPS perform the best? No inflation?!?

Gold was CRUSHED. It plunged to $1228 before bouncing and then closed at $1234.60 -$28.10!!! Lowest close since 1/12/15. It had been morose since last Friday’s biggest daily gain to the high since 2012 ($28.10) on Friday, but well below the highs of a week ago. That was the first time in 7 sessions without a lower high since peaking at $1307.80 on 1/22, with a session low <$4 above the 200 day. Friday’s close was $19 BELOW the 200 day ($1253). 11/7’s low, $1130.40 is the current 12-month low! 7/17’s session high was $1346.60, highest since March 19th!!! RESISTANCE is the 200 day, $1253, with support at the 40 day $1233, and the 50 day at $1227. The 12-month high is $1392.60 on 3/17/14, highest high since 9/4/13. Silver had seemed unaware of gold’s ills until Friday, closing at $16.69 -.59. The 200 day ($18.41) is resistance as is the 50 day, $16.76, then the 50 day, $16.81. $14.12 is the recent low (12/1/14), first time in more than five years!

Crude closed higher, but meaningless so, at $51.69 +$1.20. 1/28’s low was $44.08, lowest since 3/09. $50-52 is now resistance/support. 12/17’s high was $58.98. Consider: 10/25/14’s high was $84.83. There 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. SUP at the 40 day ($51.04!!!), RES is the 50 day ($54.37!!!), and lastly the 200 day ($84.79)! 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%!!!). Recall TB’s prediction of a bounce at $43.83? It WILL test that $32.40 March ’09 low…by the way the decline from the 9/20/08 high to the low took EXACTLY 6 months – we are now in the 8th month of decline!!!

Have a great day!

TB

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