Interdum stultus opportuna loquitur...

Wednesday, December 29, 2004

USRant: Happy Birthday, Littlest Brother...

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

Economic Statistics

The Mortgage Bankers Association's reported a 2.7% increase in its Purchase Application index to 483.8 (the data reported today were for the pre-Christmas week). Demand in the housing sector is still at mind-boggling levels - although this datapoint is not an end in itself, since there is a gap between applications to get a mortgage and the granting, and any construction and/or sale that happens. Many a slip, as they say - the best laid plans of mice and men gang aft agly.

The refinancing index bounced a little in the prior week's data release, but today's release saw that gain evaporate, with interest (things always happen "with interest" in the mortgage market). The refi measure dropped 7.9%. The refi binge seems to be over, despite mortgage rates still near multi-decade lows (the recent average rate for a 30-year fixed mortgage was 5.72%).

Existing Home Sales rose 2.7% to an annualised rate of 6.940 million units: this beat the consensus guess by a wide margin, but was within the consensus range (consensus was centred on 6.75m annual rate, with a range of 6.650m to 7.03m).

Existing home sales are up 13.2% year-over-year, and prices are up 10.4% for the year (basis the median home price).

Crude oil inventories dropped by 800,000 barrels to 295.1 million. The surprise drawdown sent a shiver through the oil market, with crude spiking immediately after the report, and closing with a gain of over 3%. Prior to the report crude oil futures had been up about a dime. Distillate stocks also fell (by the same amounts): this component of the report includes heating oil - which felt increased demand due to a pre-Christmas cold snap in the North-East.

The US Treasury auctioned $24 billion of 2-year notes. The auction cleared at 3.12%, 17.5 basis points higher than the November auction (bear in mind there has been an interest rate hike since then). The bid-to-cover ratio fell to 2.00x, well below the 2.61 for November. Foreign central banks and retail demand fell away sharply, with "indirect bidders" dropping to just 34% of the total offering - that's the lowest reading of the year

Forthcoming US Economic Data

Tomorrow's US Economic Data Calendar

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 1 repurchase operation last night:

  • a $4.75billion, overnight repurchase with none of it in T-backed collateral .

That's not playing fair, Greensplatt... if you don't give the vermin some scraps from the monetary policy table, how on earth are they supposed to goose the markets up to my year-end target?

Major US Indices

The trade for the session was almost entirely futures-led; the market topped for the session at 10875 on the Dow futures, and bottomed at 10801 in that same instrument. In other words, some large hedge fund was trading in a bracket.

After some bad news from Beoing, it was always going to be nigh impossible for the Dow to post a gain for the session - however it closed with some decent power and by the closing print had only fallen a little over 25 points. To be more precise, the DJIA dipped 25.35 points (0.23%), closing out the day at 10829.19 points.

The broader S&P500 was almost unchanged, closing with a drop of just 0.09 points (0.01%), at 1213.45.

It was a similar story in the Nasdaq: the Nasdaq Composite dipped 0.19 points (0.01%), to close at 2177, while larger-cap technology issues fared better with the Nasdaq100 adding 0.76 points (0.05%), to end at 1624.95 points.

NYSE Volume was soft, with 0.93 billion shares changing hands, while Nasdaq Volume was well below ints recent average, with 1.5 billion shares crossing the tape.

Nasdaq Composite2177-0.19-0.01%
NYSE Volume0.93bn--
Nasdaq Volume1.5bn--


My 9-stock "bellwethers" group rose by an average of 0.18%

  • IBM (IBM) -$0.12 (0.12%) to $98.18;
  • Intel (INTC) -$0.03 (0.13%) to $23.25;
  • Fannie Mae (FNM) +$0.54 (0.77%) to $70.38;
  • Wal Mart (WMT) +$0.21 (0.39%) to $53.44;
  • Freddie Mac (FRE) +$0.20 (0.28%) to $72.69;
  • Ebay (EBAY) +$1.41 (1.21%) to $117.57;
  • Cisco Systems (CSCO) +$0.05 (0.26%) to $19.31;
  • General Electric (GE) -$0.13 (0.35%) to $36.56;
  • Citigroup (C) -$0.34 (0.7%) to $48.01;

Market Breadth & Internals

On the NYSE advancing Issues exceeded decliners by 1924 to 1380 for a single-day A/D reading of 544; and Nasdaq losers exceeded gainers by 1648 to 1438.

NYSE advancing volume exceeded volume in decliners by 522.7 to 377.06 million shares; Nasdaq advancing volume was greater than volume in decliners by 457.75 to 391.18 million shares.

180 NYSE-listed stocks rose to new 52-week highs, and 1 posted a fresh 52-week low. On the Nasdaq there were 159 stocks that hit new 52-week highs, and 3 which fell to fresh 52-week lows

Advancing Volume (m)522.7457.75
Declining Volume (m)377.06391.18
New Highs180159
New Lows13

Market Sentiment

There's not a lot that can be said about the sentiment table that I haven't said before; it tells the story of a dumb-money top-buying spree. Call sellers aren't even prepared to dump on to the bid, because volatility is so damned low... that's the primary reason that call volume is down so hard (which tidies up the put-call ratio a bit).

Equity Call Volume (000)1622.58-985.71-37.79%
Equity Put Volume (000)1270.67225.3121.55%
CBOE Volatility Index11.62-0.38-3.17%
CBOE Nasdaq Volatility Index17.72-0.07-0.39%
Equity Put-Call Ratio0.780.3895.4%
10-day PCR0.5700%
SPX-VIX Ratio104.433.33.26%

Bond Market Analysis

The bond market wasn't very impressed about the homebuilding data, nor was it too keen on the results of the Treasury auction; Bonds fell everywhere except the "anchor" (13-wk bills, which are tied to Fed Funds pretty hard). The yield on the benchmark 30-year Treasury bond rising 2.3 basis points to 4.938%; it's coming up to 5% again - having breached it late on my previous timetable - and this time it looks like it's for real.

UST 13wk (yld)2.206-0.06-2.69%
UST 2Y (yld)
UST 5Y (yld)3.680.030.85%
UST 10Y (yld)4.320.0280.65%
UST 30Y (yld)4.9380.020.41%

The Banks Index slid 0.3 points (0.29%), ending the day at 104.13; within the index,

  • Fifth Third Bancorp (FITB) -$0.76 (1.59%) to $47.05;
  • Wachovia (WB) -$0.39 (0.73%) to $52.72;
  • Citigroup (C) -$0.34 (0.7%) to $48.01;
  • Bank Of NY (BK) -$0.17 (0.51%) to $33.41;
  • PNC Financial Services (PNC) -$0.26 (0.45%) to $56.93;

The Broker-dealer Index slid 0.84 points (0.55%), closing at 151.89; the ticket clippers lined up as follows -

  • Charles Schwab (SCH) -$0.16 (1.34%) to $11.81;
  • Jeffries Group (JEF) -$0.53 (1.32%) to $39.60;
  • A G Edwards (AGE) -$0.42 (0.97%) to $43.06;
  • Raymond James (RJF) -$0.28 (0.9%) to $30.92;
  • Bear Stearns (BSC) -$0.61 (0.6%) to $101.83;

The Philadelphia SOX (Semiconductor) index rose 3.78 points (0.89%), at 430.53

  • Altera (ALTR) +$0.15 (0.74%) to $20.43;
  • Micron Technology (MU) +$0.29 (2.42%) to $12.26;
  • Texas Instruments (TXN) +$0.43 (1.8%) to $24.33;
  • Freescale Semiconductors (FSL-B) +$0.30 (1.69%) to $18.05;
  • Taiwan Semiconductor (TSM) +$0.14 (1.68%) to $8.45;

Gold & Silver Markets

Gold fell hard- dropping $7.60 (1.71%) to close at $437.40 per ounce.

Gold Bugs Index shed 1.81 points (0.83%), ending the day at 215.15

  • Iamgold (IAG) -$0.33 (4.76%) to $6.61;
  • Hecla Mining (HL) -$0.15 (2.52%) to $5.81;
  • Eldorado Gold (EGO) -$0.05 (1.69%) to $2.90;
  • Kinross Gold (KGC) -$0.08 (1.13%) to $6.99;
  • Glamis Gold (GLG) -$0.18 (1.03%) to $17.32;

Silver fell by $0.19 (2.63%) to close at $6.86 per ounce. The Gold and Silver Index (XAU) lost 0.42 points (0.42%), to end the session at 98.93 points.

  • Kinross Gold (KGC) -$0.08 (1.13%) to $6.99;
  • Agnico Eagle Mine (AEM) -$0.14 (1.01%) to $13.73;
  • Barrick Gold (ABX) -$0.20 (0.83%) to $23.81;
  • Anglogold Ashanti (AU) -$0.29 (0.79%) to $36.50;
PHLX Gold and Silver Index98.93-0.42-0.42%
AMEX Gold BUGS Index215.15-1.81-0.83%

Oil Market

Oil was firmer, rising by $1.81 per barrel after the surprise drawdown in crude oil inventories. The front month contract in the crude futures closed at $43.66 per barrel.

The Oil and Gas Index (XOI) advanced 4.66 points (0.65%), closing at 723.01

  • Sunoco Inc (SUN) +$0.93 (1.15%) to $82.08;
  • Marathon (MRO) +$0.35 (0.95%) to $37.17;
  • Unocal (UCL) (former employer of US stooge Hamid Karzai)+$0.40 (0.94%) to $43.05;
The Oil service stocks (OSX) Index posted a rise of 1.71 points (1.39%), at 124.69

  • Nabors (NBR) +$1.09 (2.15%) to $51.84;
  • Global Santa Fe (GSF) +$0.65 (2.01%) to $33.02;
  • Noble (NE) +$0.94 (1.91%) to $50.05;
Reuters CRB28400%
Crude Oil Light Sweet43.661.814.32%
AMEX Oil Index723.014.660.65%
Oil Service Index124.691.711.39%

Currency Markets

That damned Yen is holding everything up; and it's only holding the market up because enough people think that there will be some co-ordinated intevention in the Yen cross.

Me? I believe that the Japanese and Chinese governments are about to rip the rug out; they understand that once you'vegot a bunch of capital, you can make stuff, and whether you sell it to faan gwai loh (as the Chinese would say... iteki or gaijin in Japanese) or not is a matter of insignificance.

If you're constantly making stuff and selling it to the lo faan, and all they give you is a depreciating piece of paper (which they are deliberately depreciating in order to try and save themselves), sooner or later you re-think the whole strategy.

In other words, while the US thinks it's winning in a game of tic-tac-toe (or checkers) the Chinese are playing Mah-Johngg and the Japanese are playing Go.

US Dollar Index81.120.320.4%
Australian Dollar0.7738-0.0041-0.53%
Swiss Franc1.133300%
Canadian Dollar0.82550.00340.41%

European Markets

France's benchmark CAC-40 Index gained 2.33 points (0.06%), to 3827.16 points; the German DAX-30 Index dipped 14.04 points (0.33%), at 4247.75; and in the UK, the FTSE-100 Index rose 21.7 points (0.45%), to 4819.8 points.


Next-Session Pivots (US Futures Market)

R2108951220.071644111 25/32
R1108691218.431638.5111 13/32
Pivot108351215.671633111 6/32
S1108091214.031627.5110 26/32
S2107751211.271622110 19/32