Interdum stultus opportuna loquitur...

Tuesday, November 30, 2004

Data Disconnect; Market Lower

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The SBS doco on Conrad Black last night was a laff riot. The very idea that he is supposedly a "genius", but that he found his intellectual equal in that unpalatable platycolpian (loook it up, Conrad) harridan Barbara Amiel, just had me in stitches. She was a teleprompter hag for God's sake!

Intellectuals don't have Imelda Marcos style shoe collections; overweeningly fake "mutton dressed as lamb" trollops do (seen Sex and the City?). You can give a slattern all the money in the world, but all they do is make themselves look more garish. Taki Theodorakopolous might have a soft spot for the Black-Amiel duumverate of excess, but I am at an absolute loss as to why.

And the fact that journalists are in awe of Black's rather pedestrian vocabulary, is yet another reason why James Dunn is the only journalist for whom I have any respect whatsoever.

Look at that... two paragraphs and I am disgressing already...

Economic Statistics

ICSC-UBS Same Store Sales fell by 1.5% and the year-on-year growth rate fell do 2.4%: try squaring that with the 5.1% growth in consumer spending in the GDP report (below). Admittedly, the comparison was a difficult one, given that last year people had fresh tax refund cheques (which they promptly spent, to the last penny... then they found another roughly 3% and spent that too).

The Redbook survey - which measures a similar type of spending but uses a different sample - showed only a 0.9% increase over the sme period last year.

Corporate Profits (excluding inventory and capital consumption adjustments - i.e., excluding depreciation) rose 9.5% for the quarter - which you might think is pretty fast. It still represents a significant (>2%) slowdown from the first quarter. Also, since NIPA (National Income and Product Account) numbers are almost uncorrelated with S&P earnings, it means nothing for the market. And of course, the NIPA numbers are seasonally (and politically) adjusted.

GDP data is not only seasonally adjusted, it is also hedonically adjusted - to the tune of an overstatement of real growth by over 1% a year, and an understatement of price inflaiton by the same proportion. The GDP revision showed a growth rate of 3.9%, with consumption spending up 5.1%. the consensus guess was looking for a rise of 3.7% in GDP.

Ask yourself how an economy that's supposedly growing at 3.5% is creating ZERO job growth (more accurately, is not creating enough jobs to bring the unemployment rate down). Can't find a sensible answer? That's OK... it's because the US is doing what the Soviet Union used to do - fudging its numbers. It keeps the sheep happy.

Within the GDP report, non-residential fixed investment (which is supposed to measure investment in plant and equipment, but includes things like software) rose an unbelievable 17.2% annualised. So you ought to ignore the data that show that non-defence capex ex aircraft is FALLING...

Prices continue to rise far less in the GDP report than they do in the real world: the GDP deflator was revised to show a 1.3% increase, while the "core" GDP deflator rose 1.7%. The inflation rate as measured by the Personal Consumption Expenditure (PCE) Deflator remains at a 42-year low at 0.7%; tell that to anybody who's pension is indexed to the CPI, who now have farts that smell like dog food.

The consensus estimate for the Consumer Confidence Index was 96.0; the actual result was 90.5... yikes. 28% of respondents thought that jobs were difficult to acquire (which is at odds with the payrolls report last month which showed the easiest job conditions for three years).

Finally, the Chicago NAPM fell to 65.2 (from last month's 68.5). Within the index, the production component fell a staggering 14.1%. The employment section of the survey rose to the highest level in 16 years... indicating that the survey isn't worth reading.

This week's 4-week bill auction for $19 billion cleared at a yield of 2.035%, which is a 4 basis point rise in yield form last week's auction; the bid-to cover ratio was 2.26x compared to last week's 2.12x.

Forthcoming US Economic Data

Tomorrow's US Economic Data Calendar

Federal Reserve Open Market Operations

The Fed's Open Market Operations did not enter the market last night.

Major US Indices

The DJIA lost 47.88 points (0.46%), closing out the day at 10428.02 points; the broader S&P500 dipped 4.75 points (0.4%), closing at 1173.82.

Over at Times Square, the Nasdaq Composite lost 10.06 points (0.48%), to close at 2096.81, while larger-cap technology issues fared worse with the Nasdaq100 losing 8.94 points (0.57%), to end at 1571.5 points.

NYSE Volume was solid, with 1.55 billion shares changing hands, while Nasdaq Volume was chunky, with 1.87 billion shares crossing the tape.

Nasdaq Composite2096.81-10.06-0.48%
NYSE Volume1.55bn--
Nasdaq Volume1.87bn--
US 30-yr yld5.01%0.04%0.74%

Market Breadth & Internals

On the NYSE declining Issues beat out advancers by 1933 to 1413, for a single-day A/D reading of -520; and Nasdaq losers exceeded gainers by 1734 to 1385

NYSE declining volume was greater than volume in advancing issues by 879.39 to 650.37 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 624.45 to 462.15 million shares.

220 NYSE-listed stocks rose to new 52-week highs, and 2 posted fresh 52-week lows, while on the Nasdaq there were 178 stocks that hit new 52-week highs, and 9 which fell to fresh 52-week lows.

Advancing Volume (m)650.37462.15
Declining Volume (m)879.39624.45
New Highs220178
New Lows29

Market Sentiment

CBOE options volume still has not picked up to any extent after the holiday, and as a result the put-call ratio and option volume numbers are starting to gyrate a bit.

Everything still says "this market is maddeningly ebullient", even though the actual action in priceslooks very very tired.

CBOE Equity Call Volume (000)470.77-197.12-29.51%
CBOE Equity Put Volume (000)328.15-31.11-8.66%
CBOE Volatility Index13.24-0.06-0.45%
CBOE Nasdaq Volatility Index18.840.010.05%
Equity Put-Call Ratio0.700.1629.59%
10-day PCR0.5400%
SPX-VIX Ratio88.660.040.05%

Bond Market Analysis

Hurray!!! 30-year bond yields finally got past 5%... it was the easiest thing to forecast in the world, but I was early by over two weeks.

Bonds fell along the curve, with the yield on the benchmark 30-year Treasury bond rising 0.037 points to 5.012%. The 30-year bond futures fell to close at 111&3/32, a gain of just under $3000 per contract since the entry at 114&1/32, on margin of (I can't remember the bond margins, and can't be bothered to look it up... but it's a gain of over 100% of margin).

UST 2Y (yld)2.993-0.06-1.87%
UST 5Y (yld)3.693-0.007-0.19%
UST 10Y (yld)4.3530.030.62%
UST 30Y (yld)5.0050.0370.74%

The Banks Index lost 0.27 points (0.27%), to end the session at 101.17; within the index,

  • the Derivative King - JPMorganChase gained $0.34 (0.91%) ending the day at $37.65; and
  • Citigroup shed $0.21 (0.47%) at $44.75

The Broker-dealer Index declined 1.47 points (1.01%), to 144.4; the ticket clippers lined up as follows -

  • Merrill Lynch shed $0.56 (1%) to end the session at $55.71
  • Morgan Stanley Dean Witter shed $0.38 (0.74%) to end the session at $50.75
  • Goldman Sachs declined $0.32 (0.3%) to end the session at $104.76
  • Lehman Brothers lost $0.74 (0.88%) to end the session at $83.78

The Philadelphia SOX (Semiconductor) index shed 6.02 points (1.4%), at 423.87

  • Triquint declined $0.01 (0.23%) at $4.33
  • Micron Technology dipped $0.11 (0.98%) to end the session at $11.08
  • Intel dipped $0.68 (2.95%) ending the day at $22.38
  • Altera added $0.06 (0.27%) ending the day at $22.68
  • JDS Uniphase rose $0.02 (0.63%) closing at $3.17

Gold & Silver Markets

Gold weakened by $2.10 (0.46%) to $451.20 per ounce - but held $450. The Gold Bugs Index lost 5.99 points (2.47%), closing at 236.94 points.

Silver fell by $0.05 (0.64%) to close at $7.72 per ounce. The Gold and Silver Index (XAU) lost 3.28 points (2.98%), to 106.75 points.

PHLX Gold and Silver Index106.75-3.28-2.98%
AMEX Gold BUGS Index236.94-5.99-2.47%

Oil Market

Oil lost ground, shedding $0.63 per barrel, closing at $49.06 per barrel. The Oil and Gas Index (XOI) advanced 1.66 points (0.22%), closing at 743.85 points while the Oil service stocks (OSX) Index dipped 0.26 points (0.21%), ending the day at 125.51 points.

Reuters CRB289.5-0.5-0.17%
Crude Oil Light Sweet49.06-0.63-1.27%
AMEX Oil Index743.851.660.22%
Oil Service Index125.51-0.26-0.21%

Currency Markets

For a little while there, it looked like we were going to get that intervention I was looking for; the Yen ticked up strongly, and the Euro dived... but the US Dollar Index could not get its head out of the porridge - its session high was only 82.20.

This is starting to get serious. Every journalist and taxi driver is talking about dollar weakness, and thus the dollar is overdue for a significant bounce.

That said, the currencies that I said I would "bet against" at 82 on the USDX, have fallen the hardest recently; the Australian dollar in particular, following the Australian trade deficit figures and softer retail spending numbers. I don't give a crap about why it fell, just that it did what I thought it would... just kidding.

US Dollar Index81.82-0.13-0.16%
Australian Dollar0.7723-0.0107-1.37%
Swiss Franc1.1398-0.0021-0.18%
Canadian Dollar0.8431-0.0006-0.07%

European Markets

France's benchmark CAC-40 Index slid 26.86 points (0.71%), to 3753.75; the German DAX-30 Index lost 20.98 points (0.51%), closing at 4126 points; and in the UK, the FTSE-100 Index dipped 46.6 points (0.98%), to end the session at 4703.2 points.

The EuroRant debuts tomorrow... it is a very very sexy thing.

Tonight's Pivots (US Futures Market)

R2105191182.21591.67111 26/32
R1104841178.91584.33111 15/32
Pivot104581176.21578.17111 4/32
S1104231172.91570.83110 25/32
S2103971170.21564.67110 14/32