Interdum stultus opportuna loquitur...

Friday, September 17, 2004

Quad-Witching - and a Midnight Booster-Shot

Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.

The Federal Reserve's Open Market Operations desk did a $5.25 billion weekend repurchase, with $4.4billion in market-goosing Treasury-backed collateral.
Last night was Quadruple Witching, with the simultaneous expiration of
  • options;
  • futures;
  • options on futures; and
  • single stock futures.

There was also the release of the University of Michigan's Consumer Sentiment report at 12:45 a.m. our time. The survey showed that consumer sentiment fell negligibly - from 95.9 to 95.8 - but it was well short of the 97.0 reading expected by the market.

It seemed that nobody cared, although looking at an intraday chart it's pretty obvious that the number helped slow what was otherwise an absolute moonshot off the morning low.

And the morning low was hit at what time, you ask....

Midnight, of course.

Actually it was 22 past midnight for the absolute low for the day session, but that was only a point lower than midnight's level - close enough. The high was set just half an hour after the low, and 7 points higher. For the rest of the session the major indices rattled around within the range set in the first 90 minutes - spending most of the session in the top half of that range.

Hurricane Ivan touched land in Alabama, but nobody in the New York financial district gave a rat's ass - after all it happened waaaay away from anybody they care about. Early estimates put the damage bill at US$7 billion - that's almost the same cost as a month's worth of war in Iraq, but Ivan caused far fewer dead, innocent children.

Still, it must be hard for evangelical "End of Days" fundamentalist-Christian whackballs to write off all this destruction... seems like someone is sending the US a message.

Who am I kidding? The Yankee Taliban crowd would be absolutely revelling in all this destruction, because their ludicrous Roald-Dahl-style fantasies require mayhem before they all get their blotchy fat white-bread asses lifted into the sky to be with Jee-ssuss. That's why they get that glassy-yet-fiery look in their eyes when the US bombs yet another Third World country - always in the name of freedom, of course.

I've got no religious impulse whatsoever (except a desire to prevent evangelicals from breeding - does that count?). But honestly... three hurricanes in a month (and possibly a fourth - Jeanne - on the way), all hitting the state where the incumbent's brother rigged the polls in 2000? Call it karma, or natural justice...

I also think it does Christianity a disservice to refer to the US style religious fundamentalists as "Christian". Their doctrine is further removed from the basic philosophical message of the four canonical Gospels, than Wahhabism is from the Qu'ran.

The theology of the US fundamentalists doesn't even sit well with the Pauline apostasy outlined in the various Epistles; the Yank Whackballs are absolutely obsessed with Revelation (a book with such tenuous provenance that it almost wasn't included in Luther's canon, and certainly wasn't viewed as equal in status to either the Gospels or the Epistles). But Revelation reads like a peyote-induced hallucination, so it is amenable to all manner of whacky interpretation - and so the American evangelical community love to use it. But most of the "theology" they employ comes from a series of novels - the "Left Behind" series - plus a fairly rabid form of psuedo-Christian-Zionism that dates from the late 1800's.

But I digress (boy, do I ever).

Suffice it to say that it will all be over soon; like every group of uneducated nuffnuffs in history, they will be sorely disappointed. The only "End of Days" that is coming to the planet is the end of the US Empire. I first said it when Bubbles was still at IWL; the US will disintegrate, and probably within 25 years (don't worry, you're not obliged to believe it will happen; almost nobody thought the British Empire would collapse within a generation, either).

And now the numbers...

The DJIA gained 39.97 points (0.39%), closing out the day at 10284.46 points; the broader S&P500 gained 5.05 points (0.45%), finishing the session at 1128.55.

Over at Times Square, the Nasdaq Composite gained 6.01 points (0.32%), to close at 1910.09, while the larger-cap stocks fared better with the Nasdaq100 adding 8.33 points (0.59%), to end at 1426.3 points.

The main "drivers" for this - as far as the journalistic, reach-for-a-reason crowd is concerned - was Ford's upgraded outlook and Texas Instrument's share buyback and dividend increase.

Note that Ford did not say that sales were going to be stronger than previously expected. No.... costs have been cut, and their finance arm will provide a bigger-than-expected boost to the bottom line.

So Ford - like GM and GE - is deriving a larger and larger share of its profits from its finance arm. In short it is becoming less a manufacturer of cars and more a maufacturer of Collateralised Debt Obligations (CDO's). And it goes without saying that reliance on cost cutting as a profit driver, is a management strategy with a short lifespan.

And Texas Instruments? It is spending $1 billion to buy back shares - that's 0.3% of market cap. And management can think of no better use of $1 billion, than to buy a stock trading at 21x forward earnings. What that tells you, is that management is more interested in the price of the stock for options purposes (i.e., their options).

And the dividend announcement? It raises the total dividends per year to 10c - giving TXN a dividend yield of a massive 0.5%. Why even bother?

The broader stock market measures rose: NYSE Composite Index gained 29.39 points (0.45%), closing at 6604, while the broadest measure of US equities, the Wilshire 5000 posted a gain of 37.08 points (0.34%), finishing the session at 10993.6

NYSE Volume was pretty solid, with 1.44 billion shares traded, while Nasdaq Volume was above average, with 1.64 billion shares crossing the tape.

Nasdaq Composite1910.096.010.32%
NYSE Composite660429.390.45%
Wilshire 500010993.637.080.34%
NYSE Volume1.44bn--
Nasdaq Volume1.64bn--
US 30-yr yld4.92%0.04%0.84%

On the NYSE advancing issues exceeded decliners by less than 200 - 1736 stocks rose while 1543 fell for the session. It was even closer on the Nasdaq, where gainers outpaced losers by 1558 to 1507.

NYSE advancing volume exceeded volume in decliners by 862.97 to 561.8 million shares, while Nasdaq advancing volume outpaced volume in decliners by 589.2 to 362.53 million shares.

140 NYSE stocks hit new 52-week highs, and 10 went to fresh 52-week lows; on the Nasdaq 123 stocks posted new 52-week highs, and 29 fell to new 52-week lows.

Advancing Volume (m)862.97589.2
Declining Volume (m)561.8362.53
New Highs140123
New Lows1029
Equity Call Volume1.9m-0.44m-18.64%
Equity Put Volume1.38m-0.2m-12.48%
CBOE Volatility Index14.03-0.36-2.5%
CBOE Nasdaq Volatility Index20.130.211.05%

Bonds fell at the long end, with the benchmark US 30-yr yld rising 0.041 points to 4.917%. Yields rose more at the short end of the spectrum, however - that is, the yield curve flattened.

UST 2Y (yld)2.4650.062.37%
UST 5Y (yld)3.3250.0491.5%
UST 10Y (yld)4.1080.030.83%
UST 30Y (yld)4.9070.0250.51%
The Banks Index was basically flat for the session, adding just 0.1 points (0.1%), to finish at 99.77; within the index,
  • the Derivative King - JPMorganChase gained $0.07 (0.18%) to close at $39.65; and
  • Citigroup lost $0.23 (0.49%) to close at $46.95

The Broker-dealer Index lost 1.49 points (1.15%), finishing the session at 127.54; the ticket clippers lined up as follows -

  • Merrill Lynch lost $0.41 (0.79%) to close at $51.45
  • Morgan Stanley Dean Witter lost $0.80 (1.53%) to close at $51.45
  • Goldman Sachs lost $1.11 (1.19%) to close at $92.05
  • Lehman Brothers lost $1.27 (1.64%) to close at $76.38

The Philadelphia SOX (Semiconductor) index gained 7.05 points (1.85%), finishing the session at 388.5

  • Triquint gained $0.11 (2.87%) to $3.94
  • Micron Technology gained $0.50 (4.08%) to close at $12.76
  • Intel gained $0.48 (2.39%) at $20.59
  • Altera gained $0.38 (1.95%) closing at $19.88
  • JDS Uniphase gained $0.02 (0.58%) to $3.49

Other indices popular with the beta-chasers were up, with the

  • Biotech Index gained 9.83 points (1.87%), closing at 536.85
  • the Hi-Tech Index gained 3.24 points (0.73%), ending the week at 448.32

Gold strengthened by $1.20 (0.30%) and closed the week at $406.00. The Gold Bugs Index lost 1.46 points (0.71%), finishing the session at 204.97.

Silver fell by $0.03 (0.48%) per ounce, closing at $6.27 per ounce. The Gold and Silver Index (XAU) lost 0.86 points (0.92%), finishing the session at 92.31

PHLX Gold and Silver Index92.31-0.86-0.92%
AMEX Gold BUGS Index204.97-1.46-0.71%

Oil was firmer, rising by $1.42 per barrel (3.2%), closing at $45.62 per barrel. The Oil and Gas Index (XOI) gained 10.89 points (1.64%), ending the week at 673.44, while the Oil service stocks (OSX) Index added 1.92 points (1.67%), finishing the session at 117.22.

Reuters CRB275.752.250.82%
Crude Oil Light Sweet45.621.423.21%
AMEX Oil Index673.4410.891.64%
Oil Service Index117.221.921.67%
US Dollar Index89.110.110.12%
Australian Dollarar0.69770-0.1%
Swiss Franc1.2674-0.0002-0.02%

France's benchmark CAC-40 Index gained 34.54 points (0.94%), finishing the week at 3726.22; the German DAX-30 Index added 24.42 points (0.62%), closing at 3988.07; and in the UK, the FTSE-100 Index rose 34.5 points (0.76%), closing out the week at 4591.

At one stage the DAX and FTSE managed to break above "important" levels (4000 on the DAX and 4600 on the FTSE) but as usual, buying the breakout resulted in pain for the nuffnuffs.