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I'll get over you, I know I will
I'll pretend my ship's not sinking
And I'll tell myself I'm over you
Cuz I'm the King of Wishful Thinking
Aaaah, 80's pop music.... is there anything it doesn't know? Go West's second hit captures the spirits of global investors perfectly - because within that lyric you can see that the writer is aware of what lies ahead, but nevertheless resolves to ignore it (somehow). None of James Taylor's brilliant maudlinisms, none of Tom Waits' gravelly expositions of urban subculture. Hell no - upbeat to the very bitter end.
Speaking of Tom Waits... is Blue Valentine the best album ever in terms of connecting white-bread folks like me with inner-urban subculture? It's some truly awful tales told well. It beats the hell out of "angry black man shouting semi-coherently" music.
Economic Statistics
Business inventories beat expectations, with the he November reading rising 1% while consensus had guessed for a 0.4% increase: the inventory-to-sales ratio increased to 1.31x.The biggest sectoral increase in inventories was in the automotive dealerships - which posted a rise of 1.6%. Now paint me green and call me a cabbage, but car dealerships do not intentionally accumulate inventories at the end of a product cycle (new "2005 Models" will be rolled out in January).
The Producer Price Index was tipped to fall by 0.1% and the headline level, and to rise by 0.2% excluding food and energy. Well, the headline number fell by 0.7% and the ex-food and energy number rose by 0.1%.
Guess which number the journo-shills concentrated on? Yep - after months of focussing on the "core" number to show that inflation was under control, one good headline number and they're all over it like politicians over tsunami corpses. (Speaking of the tsunami-ravaged area - it's is a shame, but who would have given a solitary shit if it wasn't a tourist destination? NOBODY. I was hoping for another tsunami when all the politicians descended on the chaos like blowflies on roadkill... Mother Nature has no sense of timing).
Industrial Production rose by 0.8% for the December month, right at the top end of the consensus forecast range (0.0-0.8%) and double the consensus mid-point (0.4%). the highlight sector was Utilities, whose output was up 2.7% .
The Capacity Utilisation rate rose to 79.2% as compared with a consensus
guess of 78.9 and a consensus range of 77.9 to 79.4. So only one piece of plant
in four is sitting idle - hardly a basis for excitement considering we're supposed
to have been in an expansion for two years.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation last night:
- a $8billion, 5-day repurchase entirely undertaken in Treasury-backed collateral .
Folks who get the RantPro Futures mailing list will be the recipients of a sheaf of book-larnin' on the subject of how to use the daily Fed repurchase amounts as an intraday market timing mechanism. Although I constantly refer to the $5bill notional cutoff, there's an interplay between the amount, term, and unsatisfied bids for the Treasury-backed collateral. To my way of thinking, the brain-scrapings that are congealed in the document, represent an improvement - if such were possible - on the old Mr Moto's Monetary Signal (which I believe is no longer around - but in any case it had a weekly focus). As such, the brain-scrapings are one of the few things that I request that people do not redistribute.
But anyhow - looking at the T-backed number ($8 bill) will have given folks the gumption to buy as soon as they saw the number itself. Doing that caught the bulk of the session's gains - as did buying at 10 a.m. NY time precisely. Things like this should, in principle, get "found out"... but this has worked for years.
Check out the chart...
Dow Intraday 5 minute chart
(Click on Chart to Enlarge)
Major US Indices
When the PPI came in well under expectations, and the inventories data came in well over expectations, everything was set for an interesting ride. Of course it made sense to wait for the Industrial Production data, but when that hit the wires at 9:15 a.m. (just before the open of the cash market), it was all over bar the shouting.
(As an aside - "All Over bar the Shouting" has nothing to do with talking loudly: a "shout" is a turn at buying drinks for everyone... once one has officially "won" something - say, a game of cricket - it makes sense that you would be sufficiently chuffed to "shout" the bar... so AOBTS means that the game is over, and only thing left to do is order the drinks)
The DJIA added 52.17 points (0.5%), closing out the day at 10558 points, less than 10 points from the session high - which is a fair achievement for a Friday afternoon. The broader S&P500 posted a rise of 7.07 points (0.6%), to end the session at 1184.52.
Over at Times Square, the Nasdaq Composite advanced 17.35 points (0.84%), to close at 2087.91, while larger-cap technology issues fared better with the Nasdaq100 adding 15.93 points (1.03%), to end at 1561.11 points.
NYSE Volume was chunky, with 1.34 billion shares changing hands, while Nasdaq Volume was super-chunky (over 2 bill), with 2.09 billion shares churning their way through the cybersphere.
| Index | Close | Gain(Loss) | % |
| DJIA | 10558 | 52.17 | 0.5% |
| S&P500 | 1184.52 | 7.07 | 0.6% |
| Nasdaq Composite | 2087.91 | 17.35 | 0.84% |
| Nasdaq100 | 1561.11 | 15.93 | 1.03% |
| NYSE Volume | 1.34bn | - | - |
| Nasdaq Volume | 2.09bn | - | - |
Bellwethers
My 9-stock "bellwethers" group rose by an average of 0.39% - aided mostly by high-beta stocks (EBAY, INTC and CSCO), although GE also contributed.
- Freddie Mac (FRE) -$0.12 (0.17%) to $69.99;
- Citigroup (C) -$0.09 (0.19%) to $47.50;
- Intel (INTC) +$0.20 (0.88%) to $23.02;
- General Electric (GE) +$0.29 (0.82%) to $35.52;
- Wal Mart (WMT) +$0.35 (0.65%) to $53.99;
- Ebay (EBAY) +$1.99 (1.93%) to $105.20;
- Cisco Systems (CSCO) +$0.10 (0.53%) to $18.88;
- IBM (IBM) -$0.35 (0.37%) to $94.10;
- Fannie Mae (FNM) -$0.43 (0.61%) to $69.51;
Market Breadth & Internals
NYSE advancing issues exceeded decliners by 2252 to 1073 for a single-day A/D reading of 1179; that's pretty exuberant at the end of a down week. Nasdaq gainers trumped losers by 2024 to 1035.
NYSE advancing volume exceeded volume in decliners by 940.59 to 363.06 million shares; Nasdaq advancing volume was greater than volume in decliners by 640.06 to 349.32 million shares.
81 NYSE-listed stocks rose to new 52-week highs, and 14 posted fresh 52-week lows, while on the Nasdaq there were 48 stocks that hit new 52-week highs, and 19 which fell to fresh 52-week lows.
| NYSE | Nasdaq | |
| Advancers | 2252 | 2024 |
| Decliners | 1073 | 1035 |
| Advancing Volume (m) | 940.59 | 640.06 |
| Declining Volume (m) | 363.06 | 349.32 |
| New Highs | 81 | 48 |
| New Lows | 14 | 19 |
Market Sentiment
Look at how call buying exploded at the slightest hint of good news; this makes me very nervous. Given that my retracement target of 1175 has been achieved, I'm supposed to have a mildly bullish intraday bias - although with the obvious caveat of "if and only if the Fed gives enough repo-per-session to aid the rise". With such massively tilted options turnover, however, the likelihood of a sustained advance is reduced (which puts even more strength to the "Fed Must Pump" caveat).
| Index | Close | Gain(Loss) | % |
| Equity Call Volume (000) | 3202.64 | 631.07 | 24.54% |
| Equity Put Volume (000) | 1749.39 | -339.47 | -16.25% |
| CBOE Volatility Index | 12.43 | -0.13 | -1.04% |
| CBOE Nasdaq Volatility Index | 18.57 | -0.71 | -3.68% |
| Equity Put-Call Ratio | 0.55 | -0.27 | -32.75% |
| 10-day PCR | 0.57 | 0 | 0% |
| SPX-VIX Ratio | 95.3 | 0.73 | 0.78% |
Bond Market Analysis
Bonds fell at the short end, and rose at the long end. The yield on the benchmark 30-year Treasury bond fell 3.4 basis points to 4.734%. the short take on that, is that the bond market sees inflation as genuinely in check, thereby reducing the requirement for the Fed to accelerate its tightening program.
The behaviour at the short end is a little more perplexing - perhaps the "read" from the inventories data is not so much the assumption that producers are over-producing in response to increased demand, but rather that demand itself is weaker than expected. Even so, I can't see how that translates into higher short rates - but the move was not terribly significant anyhow.
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.332 | 0.02 | 0.78% |
| UST 2Y (yld) | 3.224 | 0.022 | 0.69% |
| UST 5Y (yld) | 3.711 | 0.01 | 0.32% |
| UST 10Y (yld) | 4.218 | -0.018 | -0.42% |
| UST 30Y (yld) | 4.734 | -0.034 | -0.71% |
The Banks Index posted a rise of 0.18 points (0.18%), at 100.12; within the index,
- Washington Mutual (WM) +$0.58 (1.42%) to $41.32;
- Northern Trust (NTRS) +$0.49 (1.08%) to $46.06;
- Bank Of America (BAC) +$0.39 (0.88%) to $44.89;
- Mellon Financial (MEL) +$0.20 (0.68%) to $29.56;
- Comerica Inc (CMA) +$0.37 (0.63%) to $58.72;
The Broker-dealer Index added 1.57 points (1.09%), at 146.23; the ticket clippers lined up as follows -
- Legg Mason (LM) +$1.99 (2.92%) to $70.18;
- Jeffries Group (JEF) +$0.70 (1.85%) to $38.46;
- Merrlll Lynch (MER) +$0.95 (1.65%) to $58.57;
- Raymond James (RJF) +$0.47 (1.61%) to $29.69;
- Charles Schwab (SCH) +$0.14 (1.28%) to $11.12;
The Philadelphia SOX (Semiconductor) index posted a rise of 6.97 points (1.76%), to end the session at 403.14
- Altera (ALTR) +$0.18 (1%) to $18.12;
- Maxim Integrated (MXIM) +$1.59 (4.15%) to $39.90;
- KLA-Tencor (KLAC) +$1.46 (3.36%) to $44.91;
- Novellus Systems (NVLS) +$0.84 (3.24%) to $26.80;
- Taiwan Semiconductor (TSM) +$0.21 (2.73%) to $7.91;
Gold & Silver Markets
Gold fell by $3.3 (0.77%) to close at $423.3 per ounce.
Gold Bugs Index dipped 2.05 points (1%), to 202.2
- Eldorado Gold (EGO) -$0.08 (2.87%) to $2.71;
- Kinross Gold (KGC) -$0.15 (2.2%) to $6.66;
- Harmony Gold (HMY) -$0.19 (2.07%) to $8.97;
- Randgold Res (GOLD) -$0.18 (1.75%) to $10.13; and
- Glamis Gold (GLG) -$0.24 (1.48%) to $15.95.
Silver fell by $0.13 (1.86%) to close at $6.6 per ounce. The Gold and Silver Index (XAU) lost 0.87 points (0.92%), closing at 93.25 points.
- Kinross Gold (KGC) -$0.15 (2.2%) to $6.66;
- Harmony Gold (HMY) -$0.19 (2.07%) to $8.97;
- Placer Dome (PDG) -$0.33 (1.83%) to $17.71; and
- Anglogold Ashanti (AU) -$0.52 (1.53%) to $33.41.
| Index | Close | Gain(Loss) | % |
| Gold | 423.3 | -3.3 | -0.77% |
| Silver | 6.6 | -0.125 | -1.86% |
| PHLX Gold and Silver Index | 93.25 | -1.77 | -1.86% |
| AMEX Gold BUGS Index | 202.2 | -3.57 | -1.73% |
Oil Market
A couple of people have emailed me asking why I always make reference to the relationships between the various oil companies (especially Halliburton, Occidental, ChevronTexaco, and UnoCal) and the high-ranking members of the Bush administration (and their current Afghan stooge-of-convenience, CIA asset Hamid Karzai).
Well, I make these references because I think it's important that someone - anyone - continues to let people know precisely why the West is being whipped into a state of panic and frenzy.
In short, "they" are using precisely the same methods - vis a vis the Western view of Islam - as Goebbels used in the second quarter of the 20th century to reinforce the centuries old European distrust of Jewry.
The same techniques as were used to sow pubic distrust of US (and Australian - don't kid yourselves) citizens of Japanese and German descent... on the off-chance that maybe some of the 200,000 imprisoned were sympathisers with Imperial Tokyo or Berlin: that's the same idea that spawned the Holocaust - "some of them are bad, so if we get rid of all of them, problem solved by default".
Oddly, the Third Reich had no problem with Zionism... they had an entire department dedicated to liaison with Jews who wanted to migrate to Palestine, and Irgun Zvai Luemi - the terrorist organisation headed by Menachem Begin whose members were fond of throwing grenades into hotels in Jerusalem - wrote to volunteer to fight on the German side. But that's a story for another day...
Anyhow - it's the same warped worldview that Papal Legate and Abbott of Citeaux Arnaud Amaury showed at the siege (no, let's call it a massacre) of Cathars at Beziers in 1209: "Kill them all... the Lord will know his own."
That's a "back of the envelope" overview of how religions deal with competitors; the oil linkup is just a way of funding it (and yes, I think that the Third Reich was a religion of sorts - it used the same methods, and the glassy but euphoric look in the eyes of the faithful was precisely as you see in the eyes of evangelicals at Republican conventions).
Where were we? Oh, yes... Oil.
Oil was firmer, rising by $1.89 per barrel, closing at $48.40 per barrel. The Oil and Gas Index (XOI) added 4.49 points (0.63%), closing at 722.14
- Occidental (OXY) - former employer of Donald "Himmler" Rumsfeld - +$1.15 (2.02%) to $58.13;
- Amerada Hess (AHC) +$1.17 (1.42%) to $83.77;
- Exxon Mobil (XOM) +$0.52 (1.03%) to $51.07;
- Varco International (VRC) +$0.62 (2.14%) to $29.56;
- Weatherford (WFT) +$0.99 (1.92%) to $52.50;
- Global Industries (GLBL) +$0.15 (1.91%) to $8.00;
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 283 | 1.25 | 0.44% |
| Crude Oil Light Sweet | 48.4 | 1.89 | 4.06% |
| AMEX Oil Index | 722.14 | 8.7 | 1.22% |
| Oil Service Index | 125.62 | 3.15 | 2.57% |
Currency Markets
How odd... the US dollar index strengthening, even as the Yen heads towards 100. Last night everyone got friendly with the USD after some Fed jerkoff warbled on about how the Fed was prepared to increase the pace of its hiking program if necessary. Add in some liberal sloshing of liquidity and a few friendly faces in the currency pits, and all of a sudden the USD looks like it's a viable entity again.
What a crock - the Fed bubblehead statement was nothing more than a cloak to give journalists a line-item with which to explain the intervention by the US Treasury in the currency markets.
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 83.15 | 0.95 | 1.16% |
| Euro | 1.3107 | -0.0148 | -1.12% |
| Yen | 101.98 | -0.37 | -0.36% |
| Sterling | 1.8707 | -0.0201 | -1.06% |
| Australian Dollar | 0.7588 | -0.0076 | -0.99% |
| Swiss Franc | 1.1796 | 0.0119 | 1.02% |
| Canadian Dollar | 0.8206 | -0.0116 | -1.39% |
European Markets
France's benchmark CAC-40 Index added 20.49 points (0.53%), to end the session at 3854.6; the German DAX-30 Index added 20.22 points (0.48%), to end the session at 4232.36 points; and in the UK, the FTSE-100 Index gained 20.5 points (0.43%), closing at 4820.8
| Index | Close | Gain(Loss) | % |
| CAC-40 | 3854.6 | 20.49 | 0.53% |
| DAX-30 | 4232.36 | 20.22 | 0.48% |
| FTSE-100 | 4820.8 | 20.5 | 0.43% |
Monday's Pivots (US Futures Market)
| Dow | S&P500 | Nasdaq | Bonds | |
| R2 | 10601 | 1190.67 | 1576.83 | 114 16/32 |
| R1 | 10574 | 1187.13 | 1569.67 | 113 31/32 |
| Pivot | 10541 | 1183.07 | 1562.33 | 113 19/32 |
| S1 | 10514 | 1179.53 | 1555.17 | 113 2/32 |
| S2 | 10481 | 1175.47 | 1547.83 | 112 22/32 |
