TB’s Wine Quote of the Day: “Age us just a number. It’s totally irrelevant unless, of course, you happen to be a bottle of wine.” – Joan Collins…like: fifty isn’t old for a tree…
Bloomberg Quote of the Day: “When you come to the end of your rope, tie a knot and hang on.” – Franklin Delano Roosevelt
This week’s economic calendar is full of important indicators. The highlight of the week will be the Q4 GDP advance (Friday). We will also get January Dallas Fed Manufacturing (Monday), December Durable Goods Orders, November Case-Shiller Home Prices, December New Home Sales, January Consumer Confidence and January Richmond Fed Manufacturing (Tuesday), Q4 Employment Cost Index, January Chicago PMI and January Consumer Sentiment Final (Friday). In addition, the Federal Reserve FOMC will be meeting on January 27th – 28th with an announcement on the 28th. Courtesy of Economic Advisory Service
Overnight Global Markets:
Global equity markets rallying, except U.K. and Japan, India closed: UK – vs +0.2% vs 0.3% vs +0.7% vs +0.5%; France +0.4% vs +1.7%! vs +0.7% vs +1.4% vs +0.5%; Germany +0.9% vs +1.9%!!! vs +0.4% vs +0.3% vs +0.7%; Japan -0.3% vs +1.1% vs +0.3% vs +2.1%!!! vs +0.9%; Hang Seng +0.2% vs +1.3% vs +0.7% vs +1.9%!!! vs +0.9%; Korea – vs +0.8% vs flat vs +0.2% vs +0.8%; India closed vs +0.9% vs +0.4% vs +1.9%!!! U.S. equity futures little changed after opening weak: DOW +11 (range 61); SPX +2.40 (21); NDQ +10 (36). I.S. Markets opening lower.
Global Money Markets: Libor: 0.256% 3 mos.; 0.354%; 6 mos. – still hovering near their recent record lows! The Fed Funds rate has averaged 0.09% and is 0.12-0.14%, still at the 9-month high. T-Bills: 0.01%, 1 mo; 0.02%, 3 mos; 0.07% 6 mos.; 0.15% 1-yr. – back from 0.25% – the 12-month high, like watching paint dry!
U.S. Treasury Bonds: slightly weaker after Friday’s strong rally: 10’s 1.82% -3/16; 30’s 2.38% -1/4; Long TIP: 0.61%! -1/8.
European Bonds: Yields rising…especially Greece pos-elections – Friday’s rally MUST have been short-covering; Portugal and Italy lower: Germany 0.38% +2; UK 1.50% +3 (low is 1.46%); France 0.57% +3; Italy 1.50%! -2; Spain 1.39% +2; Portugal 2.37%!!! -6; Greece 8.74% +56!!! vs 8.21% -36!!! – recent range: 7.03% to 10.29%!!! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.22% — low is 0.19%!
Dollar Index struck a new high o/n of $95.527, highest since 9/30/03! Currently 94.862 +.10. Euro: fell again to 1.1098 o/n, now 1.1270 +.0042 – at an 11-year low!!! Sterling barely off its $1.4952 low from Thursday at $1.5024,+.0015, with critical support at $1.48, a double-bottom from 3/29-31/2013! Yen still consolidating at 118.47 +.29 – 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 weaker for a 2nd session after closing at $1300.70 – first above $1300 since 8/15! Currently $1286.60 -$6.00, with $1275.60 the session low. (Note Gold stocks did NOT rally with it! Major Res at $1296.40, the 8/28/14 high! Support is the 200 day ($1255). Silver hanging in at $18.12 -.18 with an $18.49 high just below the 200 day (tested three times in last four sessions)! Crude is at $45.90 +.31, after trading down to $44.35 just 15 cents above 1/13’s low: $44.20, lowest since 4/21/09!!! $32.40-.70 is the 12/19/08 and 1/20/09 low is final support!
Friday’s Market Summary:
A weird session – again? The indices were mixed with Dow Transports diving 1.8% after that nice 2.9% gain – nobody said it would be easy…except the talking heads on CNBC.
The rest ranged from DOWN 0.8% (Dow 30), to +0.2% (both Nasdaqs).S&P 500 wsa -0.6%; Russell 2000 off just 01%; struggling NYSE Financials -0.8% with KBW Banks off 1.4%! Sorry, left out Dow Utilities, +0.3% – what a surprise…it took honors – again!
Note that volume dropped 500M shares to 3.6B; A/D’s and Breadth were negative (ex-Nasdaq Breadth +1.3x?; new 53 233k highs up sharply to 433, with new lows a tad lower at an average 112. VIX broke its four day decline – which never took it out of a bearish state – closing at 16.66 +.26.
Total NYSE Volume fell to an average 3.6B shares vs 4.1B vs 3.64B vs 3.9B vs 4B vs 4.18B vs 4.37B – 12/24’s 12-month low was 1.4B shares. Shares traded on the NYSE floor also declined to a still above average 785M shares vs 890M vs 771M (2nd lowest of ’15) vs 861M vs 976M shares – the ‘15 high. 12/24’s 349M was the 12-month low…average is 739M shares! Since 1/5 the average is 849M shares – still heavily waited to the downside. The average for Dec. peaked at 979M shares on Dec. 22nd and has been declining steadily.
Advance/Declines slightly negative for the 6th time in 9 sessions. NYSE: -1.2x+3.5x! vs +1.7x vs -1.6x vs +4.4x! Nasdaq -1.3x vs +2.7x vs -1.4x vs -1.5x vs +3x! vs -3.5x!!! Breadth was mixed: NYSE -2x vs +4.2x!!! vs +2.8x vs -1.5x vs +6.9x!!!; Nasdaq +1.3x vs +3.7x!!! vs +1.3x vs 1:1? vs +3.3x! vs -4.9x!!!. New 52 Week Highs surged to 433 vs 259 vs 200 vs 327 vs 323 – their range for the last 12 mos. is 39-612!!! New Lows fairly even at 112 vs 122 vs 177 vs 237 vs 216 vs 282 vs 386 (12/16’s high was 712!!!) The 12-month range is 24-1043!!! S&P VIX had a range of 15.81-17.09 but closed higher at 16.66 +.26 – first increase in five sessions. Thursday’s high is 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 14.53 and now steadily climbing, with a low of 10.28!…high close was 26.25 on 10/15/14!
U.S. Bond Market closed strong: 10’s 1.80%! +5/8 (1.72% low yield); 30’s 2.37% +1-1/2 (2.36%); Long TIP 0.60% +1-7/8 (0.57%). The score is now 13 rally days in the last 20.
Gold closed weaker at $1292.60 -$8.10 in an inside session following Thursday’s high of $1307.80, highest since 8/19/14! – and closed at $1307.00 +$13.30. Just one close above $1300 since 8/15/14! (note gold stocks did not benefit). Res again at $1300-02, with support at the 200 day ($1255) again! 11/7’s low, $1130.40 is the current 12-month low! This is the first close above $1300 since 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! MAJOR SUP at the 200 day $1255, then the 40 day $1216, followed by the 50 day at $1209. The 12-month high is $1392.60 on 3/17/14, highest high since 9/4/13. Silver, Ran up to $18.54 – taking out a double top with Wednesday’s $18.50 – and touched the 200 day ($18.54), before closing at $18.30 -.06. Is this the long awaited breakout? $14.12 is the recent low (12/1/14), not seen in more than five years!
Crude, which hit $51.27 last Thursday, highest since 1/5, had a new low close of $45.59 -.72, in the wake of Thursday’s ‘negative’ key reversal – this follows the fifth straight, and most significant direction reversal without going anywhere! The pain trade is still not over as $50-52 remains formidable resistance. Tuesday’s low was $44.20, lowest since 3/09. 12/17’s high was $58.98 Consider: 10/25/14’s high was $84.83. There have been 63!!! handles since peaking at $107.73 on June 13th, highest since 9/19/13, and if is off 57% since then! The record high of $147.27 was on 9/30/08. RES at the 40 day ($55.90!!!), then the 50 day ($59.88!!!), and lastly the 200 day ($87.55) – be careful as the averages continue to fall so fast that they could become support soon, precipitating a rally! The range is $44.20-$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%!!!). TB’s bet? $43.83, or else…that is the June 2009 low if that fails, a test of that $32.40 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!!!
Some Random thoughts:
You may hate the Dems and/or Obama, but 60 Minutes interviewed House Speaker Boehner, and Senate Majority Leader McConnell last night. TB will grant you that he wasn’t pleased with Harry Reid or Nancy Pelosi (who hails from arguably the farthest left district in the country), but listen to what these two clowns said:
Did you hear anything in SOTU that you feel could get done in this term?
Boehner: a few but not much
What about tax increases?
That is a dead issue…D-E-A-D
Note this is any increases, as in the gospel according to Grover Norquist; also Obama’s proposal was to close loopholes – anyone doubt that this should be done (carried interest, etc.)? Also, the tax increase keeps all incomes below $250k unchanged or lower, and the $250k marginal rate is extended to $1MM…and above that it is just the amount OVER $1MM…something they refuse to mention!
What about immigration?
Boehner: We are in favor of helping those in country but not the way the president did it.
What about free education at junior colleges?
Boehner: We want to help people but have to review the cost (then launched into a dissertation on the deficit that was without merit as it has declined under Obama
McConnell chimed in that Obama wants to eliminate ‘529’ college savings plans which will ‘hurt the middle class.’
Guess McConnell doesn’t read the studies that show the biggest users are the wealthy, and what Obama obviously meant to was reform it. In case you didn’t know, it has to be used for education by the age of 25 BUT that person can then pass it on to someone else (not necessarily a family member). This can be repeated over and over again. That is insane and only benefits one class: the wealthy. Reform it! As with the ACA, neither Boehner, McConnell, or anyone in the GOP has offered any suggestions for reform, choosing to eliminate ACA with a ‘promise’ to enact a new law…just trust them!
What about infrastructure? It is in dire need of upgrading
Boehner: We agree on the importance of it but you know, with more efficient cars, revenues are declining so we will have to see…
What about raising the gasoline tax? It hasn’t been raised in decades (only ONCE, since initiated by Eisenhower)?
Boehner” No increase.
McConnell then launched into a statement that Obama doesn’t get it. His popularity is declining (ignoring that it has risen since SOTU), and that the people have rejected his plans.
What about the polls that show congressional approval at just 15% – a new low?
Boehner: That needs work.
Note the Iowa confab last week organized by an extremist conservative which is why Jeb Bush, Mitt Romney, and Mark Rubio ducked it. Instead they had such luminaries as Donald Trump (who blasted Romney), Ted Cruz, Chris Christie, and the indomitable Carly Fiorina (who failed at running H-P and now wants to run the country? Keep talking, Carly and you will chase more people away from the Grand OLD Party. Huckabee went off the deepend on a statement about God. Newt Gingrich praised (didn’t sound convincing) the broad number of wannabe’s…perhaps forgetting that that is what happened in the last primary which forced Mitt to the right without being able to state how he implemented state health insurance in Massachusetts.
That is the government we have…it will be interesting to see what happens in two years: reversal of fortune? Pun intended…have a great week! Non corundum illegitimi!!!