Interdum stultus opportuna loquitur...

Monday, December 13, 2004

USRant: It's Just Weight of Money...

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Economic Statistics

Retail Sales were reported, with the number at 0.1%. This was better than the market expected (the consensus - lowball - guess was for a contraction of 0.1%). Furthermore, history was even rosier than we remember... October's figures were revised up from +0.1% to +0.8%. Just like an aging footballer, the older the data gets teh better it was...

Retail Sales less autos rose 0.5% which was better than the consensus guess, which expected +0.3%.

Business Inventories rose 0.2%, which was considerably softer than the consensus estiamte of +0.6%; I can never understand why inventory build is supposed to be a good thing (at the aggregate level), because to me it means that firms are making more stuff than they're selling. It's OK to do that from a position of low accumulated aggregate inventories, but that's not where things stand at present.

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 $6.75billion, overnight repurchase with $6.75billion in T-backed collateral .

Well, with a repurchase of that magnitude, what should we have expected at 10 a.m. NY time? Yes, that's right, chillun... a buying opportunity.

There was a problem with that though - the market didn't particularly like the Business Inventories report, which was expected to be stronger than it was. So after a little wiggle upwards into the report, there was a very minor selloff, and the session low in the S&P futures was set at 10:35, some 3 points lower than the 10 a.m. level - enough to stop out the less confident traders. From there it was the usual greased-up jamjob that happens when the Fed injects that amount of liquidity... check out the chart...

S&P Mar05 Futures - Intraday 5 minute chart

Major US Indices

After the disappointment of the inventories report, the underlying bullish tone took over and there was a coast-to-coast rally. The market's bullishness is near-bulletproof at the moment (and of course the Fed has been pumping money like there's no tomorrow). The bull minor trend has even had me calling for a year-end rally to above 1200 (basis the futures)... ... tick that off. Now 1220 - basis the futures - is still the target, and 1210 this week).

Apart from obvious technical and speculative tendencies, the market also had some "good news" for tech touts, with Oracle's (ORCL, +10.17%) bid for PeopleSoft (PSFT, +10.27%) finally being accepted.

Like I've said before, once managements (and the merchant wankers that feed off) them get deal fever, there is no amount of waste that they will not undertake to get their target. This deal benefits existing shareholders of PSFT, and will not accrete any shareholder valuefor ORCL. Think "Carly Fiornia's HP-Compaq" deal fever and you're on the money.

The DJIA rose 95.1 points (0.9%), closing out the day at 10638.32 points; the broader S&P500 posted a rise of 10.68 points (0.9%), to 1198.68. Over at Times Square, the Nasdaq Composite rose 20.43 points (0.96%), to close at 2148.5, while larger-cap technology issues fared better with the Nasdaq100 adding 16 points (1%), to end at 1621.16 points.

NYSE Volume was chunky, with 1.43 billion shares changing hands, while Nasdaq Volume was super-chunky (over 2 bill), with 2.07 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).

Nasdaq Composite2148.520.430.96%
NYSE Volume1.43bn--
Nasdaq Volume2.07bn--

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 2318 to 1014 for a single-day A/D reading of 1304 (that's as mindless as a labrador puppy - and eventually just as destructive); Nasdaq gainers trumped losers by 1923 to 1206.

NYSE advancing volume exceeded volume in decliners by 1063.38 to 354.67 million shares; Nasdaq advancing volume was greater than volume in decliners by 803.85 to 308.41 million shares.

179 NYSE-listed stocks rose to new 52-week highs, and 5 posted fresh 52-week lows, while on the Nasdaq there were 117 stocks that hit new 52-week highs, and 6 which fell to fresh 52-week lows

Advancing Volume (m)1063.38803.85
Declining Volume (m)354.67308.41
New Highs179117
New Lows56

Bond Market

Bonds rose at the long end, with the yield on the benchmark 30-year Treasury bond shedding 1.7 basis points to 4.805%. the short end fell as the FOMC meeting approaches and everybody in yield-land dials in another two rate hikes (in Feb and April 05).

UST 2Y (yld)2.9480.020.82%
UST 5Y (yld)3.534-0.074-2.05%
UST 10Y (yld)4.149-0.12-2.81%
UST 30Y (yld)4.805-0.136-2.75%

The Banks Index posted a rise of 0.97 points (0.96%), closing at 102.48; within the index,

  • North Fork Bancorp (NFB) +$0.80 (2.84%) to $29.01;
  • State Street (STT) +$1.05 (2.32%) to $46.35;
  • Citigroup (C) +$0.86 (1.87%) to $46.77;
  • Derivative Pyramid JPMorgan Chase (JPM) +$0.62 (1.65%) to $38.25;
  • Comerica Inc (CMA) +$0.88 (1.49%) to $60.08;

The Broker-dealer Index advanced 0.87 points (0.58%), closing at 150.78; the ticket clippers lined up as follows -

  • Charles Schwab (SCH) +$0.24 (2.13%) to $11.50;
  • Merrill Lynch (MER) +$0.82 (1.39%) to $59.77;
  • Morgan Stanley (MWD) +$0.70 (1.3%) to $54.40;
  • Legg Mason (LM) +$0.80 (1.14%) to $71.08.

The Philadelphia SOX (Semiconductor) index rose 2.35 points (0.56%), ending the day at 425.1

  • Taiwan Semiconductor (TSM) +$0.18 (2.29%) to $8.05;
  • Marvell Tech (MRVL) +$0.72 (2.14%) to $34.33;
  • Micron Tech (MU) +$0.24 (2.12%) to $11.54;
  • National Semiconductor (NSM) +$0.31 (1.85%) to $17.11;
  • Infineon Tech (IFX) +$0.15 (1.4%) to $10.89;

Gold & Silver Markets

Gold strengthened by $5.20 (1.2%) to $439.10 per ounce. The Gold Bugs Index gained 3.82 points (1.79%), to end the session at 217.38 points. Within the index, the major movers were as follows:

  • Hecla Mining Co (HL) +$0.44 (7.86%) to $6.04;
  • Coeur D'Alene (CDE) +$0.13 (3.25%) to $4.13;
  • Randgold Rscs (GOLD) +$0.32 (2.74%) to $12.02;
  • Freeport-McMoran (FCX) +$0.95 (2.59%) to $37.56;
  • Meridian Gold (MDG) +$0.44 (2.48%) to $18.16;

Silver rose $0.13 (1.94%) to close at $6.83 per ounce. The Gold and Silver Index (XAU) gained 1.48 points (1.51%), closing at 99.8 points.

  • Freeport-McMoran (FCX) +$0.95 (2.59%) to $37.56;
  • Meridian Gold (MDG) +$0.44 (2.48%) to $18.16;
  • Newmont Mining (NEM) +$0.97 (2.18%) to $45.55;
  • Kinross Gold (KGC) +$0.14 (1.97%) to $7.24;
PHLX Gold and Silver Index99.8-4.05-3.9%
AMEX Gold BUGS Index217.38-9.86-4.34%

Oil Market

Oil was firmer, rising by $0.53 per barrel, closing at $41.10 per barrel.

The Oil and Gas Index (XOI) posted a rise of 12.12 points (1.72%), ending the day at 717.04; leading the index higher were -

  • Occidental Petroleum (OXY) +$1.30 (2.35%) to $56.60;
  • Repsol Ypf (REP) +$0.56 (2.32%) to $24.69;
  • Amerada Hess (AHC) +$1.80 (2.2%) to $83.55;
The Oil service stocks (OSX) Index added 1.25 points (1.05%), closing at 120.13, withi leadership provided by
  • Transocean Inc (RIG) +$0.84 (2.19%) to $39.20;
  • Rowan Co Inc (RDC) +$0.47 (1.94%) to $24.75;
  • Baker Hughes Inc (BHI) +$0.73 (1.76%) to $42.22;
Reuters CRB278.952.450.89%
Crude Oil Light Sweet41.10.531.31%
AMEX Oil Index717.04-0.3-0.04%
Oil Service Index120.13-0.12-0.1%

Currency Markets

US Dollar Index82.22-0.46-0.56%
Australian Dollar0.75870.00771.03%
Swiss Franc1.1532-0.0072-0.62%
Canadian Dollar0.8147-0.0007-0.09%

European Markets

France's benchmark CAC-40 Index rose 37.52 points (1%), to end the session at 3805.94; the German DAX-30 Index advanced 44.69 points (1.07%), at 4219.24; and in the UK, the FTSE-100 Index added 42.8 points (0.91%), to 4736.8.


Tonight's Pivots (US Futures Market)

R2107111207.371632.67114 17/32
R1106811203.931627.33114 8/32
Pivot106191197.071617.67113 29/32
S1105891193.631612.33113 20/32
S2105271186.771602.67113 9/32