Interdum stultus opportuna loquitur...

Thursday, April 28, 2005

USRant: Gave It ALL Back, And Then Some...

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

Well, it started out looking like the market would shrug off another batch of squishy economic numbers, and after the repo moonshot countdown was complete the market did as expected. The just 30 minutes after the Repo Express left the station, it all turned into a dog's breakfast (what do dogs have for breakfast that makes it such a good metaphor for extreme untidiness?).

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 2 repurchase operations.

  • a $7billion, overnight repurchase with $6.883billion in T-backed collateral ; and
  • a $8billion, 14-day repurchase entirely in T-backed collateral.

Now that's a spicy meat-a-ball.... and yet the only benefit from a long position at 10 a.m. (the usual kickoff time for the repo jamjob) was a decent scalp long for about 5 S&P points. If you can do that consistently you wind up exceedingly well-off, but even so the amount of fuel poured into the tank did not result in a decent squeeze of the shorts.

It also reinforces my long-held suspicion that the Fed gets a "heads up" on economic data, and if it's bad they try and mitigate the market fallout by doing a huge repo. (Sure, the 14-day repo is just a renewal, but the overnight is larger than liquidity requires).

Major US Indices

When that amount of rocket fuel doesn't get a genuine and significant move happening, something's awry. Sure, 5 points in half an hour is not to be sneezed at, but $14 bill is a lot of liquidity for an outcome of that size. The GDP numbers were much worse than expectations (+3.1% versus expectations of +3.5%) and the GDP deflator is starting to heat up (+3.2% versus expectations of +2.0%). The Personal Consumption Expenditure (PCE) deflator rose a whopping 3.5%... tell me again how inflation is not an issue? [Also, why the hell didn't bonds fall? Because professional nuffnuffs think the world only has two assets].

The Dow Jones Industrial Average declined 128.43 points (1.26%), closing out the day at 10070.37 points (less than 0.25 points from its session low). The index hit an intraday high of 10194.58 (at the open) and after the repurchase-pump at 10 a.. (which only lasted half an hour) everything turned to a big steaming pile.

Within the blue-chip index, 4 stocks rose, the biggest gainers being Merck (MRK, +0.90% to $33.79) and Procter & Gamble (PG, +0.86% to $53.99), which accounted for 6 Dow points between them. Losers in the Dow numbered 26 and were led by Exxon Mobil (XOM, -4.08% to $56.00) and Walt Disney (DIS, -3.50% to $25.90), with these two stocks contributing -25 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 359.1m shares to 47.8m.

The broader S&P500 declined 13.16 points (1.14%), ending the day at 1143.22. Within the index, gainers numbered 73, while 425 S&P500 stocks fell for the day. Volume was tilted 5:1 in favour of the losers with 1678.98 million units traded in the losers as compared with 336.76 million traded in the winners .

Over at Times Square, the Nasdaq Composite declined 26.25 points (1.36%), to close at 1904.18, while larger-cap technology issues fared better with the Nasdaq100 losing 14.47 points (1.02%), to end at 1409.29 points. Within the tech benchmark, gainers numbered 15, while 85 Nasdaq100 stocks fell for the day. Volume was tilted 3.9:1 in favour of the losers with 673.67 million traded in the losers compared to 170.58 million in the winners .

NYSE Volume was super-chunky, with 2.17 billion shares changing hands, while Nasdaq Volume was chunky, with 1.87 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).

Major Market Statistics
Dow Jones Industrial Average10070.37-128.43-1.26%
Nasdaq Composite1904.18-26.25-1.36%
NYSE Volume2.17bn--
Nasdaq Volume1.87bn--


My 9-stock "bellwethers" group fell by an average of 1.21%; the two toxic waste dumps of the mortgage market reversed from their little bounce, and now things look technically pig-ugly for Fannie and Freddie. (Why pig ugly? Pigs are lovely animals; clever, sensitive, expressive. Maybe I should use the term ?Greenspan Ugly" from now on)...

  • General Electric (GE) -$0.73 (2.01%) to $35.67;
  • Citigroup (C) -$0.42 (0.9%) to $46.19;
  • Wal Mart (WMT) -$0.24 (0.51%) to $47.05;
  • I.B.M. (IBM) -$1.14 (1.48%) to $75.91;
  • Intel (INTC) -$0.32 (1.36%) to $23.19;
  • Cisco Systems (CSCO) -$0.11 (0.64%) to $17.14;
  • eBay (EBAY) +$0.32 (1.02%) to $31.80;
  • Fannie Mae (FNM) -$1.24 (2.32%) to $52.24; and
  • Freddie Mac (FRE) -$1.69 (2.74%) to $60.05.

Market Breadth & Internals

NYSE declining Issues beat out advancers by 2250 to 1023, for a single-day A/D reading of -1227; and Nasdaq losers exceeded gainers by 2291 to 781. The 10-day moving average of the A/D line fell to -252.4 on the NYSE, while the 10dma of the Nasdaq A/D fell to -553.3.

On the NYSE declining volume was greater than volume in advancing issues by 1758 to 382.9 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 1471.4 to 372.4 million shares.

32 NYSE-listed stocks rose to new 52-week highs, and 144 posted fresh 52-week lows, while on the Nasdaq there were 29 stocks that hit new 52-week highs, and 217 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)382.86372.39
Declining Volume (m)1757.991471.42
New Highs3229
New Lows144217

Market Sentiment Statistics
CBOE Volatility Index16.821.9513.11%
CBOE Nasdaq Volatility Index20.121.357.19%
Equity Put-Call Ratio0.83-0.12-12.63%
10-day PCR0.770.021.99%
SPX-VIX Ratio68-9.8-12.6%

Bond Market Analysis

Bonds rose at the long end, with the yield on the benchmark 30-year Treasury bond shedding 4.8 basis points to 4.505%. The 30-year Treasury bond is getting riper an riper for a short (again); last night it closed above 115.

The middle of the yield curve was broadly higher: five year yields fell to 3.844%, and ten-year yields fell to 4.173%. That's what happens when your economy is falling off a cliff while you try to use guns and working class kiddies to steal other people's resources. The Romans tried that (well, they used the pilum and gladius rather than the Apache and Depleted Uranium, but the eventual outcome is the same... it is always massively economically inefficient to try and accumulate resources by conquest). Of course the NeoTrots think "this time it's different" - they have the same idiotic mindset as people who bought CSCO at $60.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 3.0 basis points tighter at 8 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 64.0 basis points for 10-year AAA, and 88.0 basis points for 20-years.

Credit spreads (spreads between corporate bonds of the same maturity profile but different creditworthiness) were mixed with the AAA-A spread on 20-years 2.0 basis points wider at 50.0 basis points and the 10-year AAA-A spread 3 basis points wider at a minuscule 4.0 basis points.

Treasury Yields
UST 13wk (yld)2.81100%
UST 2Y (yld)3.55-0.06-1.66%
UST 5Y (yld)3.844-0.077-1.96%
UST 10Y (yld)4.173-0.064-1.51%
UST 30Y (yld)4.505-0.048-1.05%

The Banks Index dipped 0.98 points (1.01%), closing at 96.11; within the index,

  • Northern Trust (NTRS) -$1.07 (2.36%) to $44.24;
  • Mellon Financial (MEL) -$0.63 (2.27%) to $27.13;
  • Golden West Financial (GDW) -$1.40 (2.2%) to $62.26;
  • National City Corp (NCC) -$0.63 (1.86%) to $33.23; and
  • State Street (STT) -$0.86 (1.86%) to $45.42.

The Broker-dealer Index slid 2.98 points (2.15%), at 135.67; the ticket clippers lined up as follows -

  • Legg Mason (LM) -$2.32 (3.17%) to $70.91;
  • Jeffries Group (JEF) -$1.16 (3.16%) to $35.57;
  • Ameritrade (AMTD) -$0.32 (3.02%) to $10.27;
  • Charles Schwab (SCH) -$0.31 (3%) to $10.03; and
  • E*Trade (ET) -$0.28 (2.46%) to $11.09.

The Philadelphia SOX (Semiconductor) index slid 3.39 points (0.87%), to end the session at 384.34

  • Infineon Tech (IFX) -$0.35 (3.96%) to $8.48;
  • ST Microelectronic (STM) -$0.58 (3.93%) to $14.16;
  • Advanced Micro Devices (AMD) -$0.35 (2.41%) to $14.16;
  • Teradyne (TER) -$0.27 (2.41%) to $10.95; and
  • Intel (INTC) -$0.32 (1.36%) to $23.19.

Gold & Silver Markets

Gold fell by $1.70 (0.39%) to close at $431.30 per ounce. I've got a feeling that there's a stuffup in those numbers (the change and percentage change) because I think that the RantBuilder may have rolled over the front month to June without asking me (and without updating the "yesterday" figure used for comparisons. It's not supposed to be allowed to think for itself, but often supposedly digital things behave in modestly non-linear ways. If my computer ever asks to see Sarah Connor I will make sure I unplug it.

Gold Bugs Index shed 2.9 points (1.62%), to end the session at 175.99

  • Coeur d'Alene (CDE) -$0.13 (4.09%) to $3.05;
  • Iamgold (IAG) -$0.19 (3.11%) to $5.91;
  • Freeport McMoran (FCX) -$0.89 (2.55%) to $33.97;
  • Meridian Gold (MDG) -$0.37 (2.41%) to $14.96; and
  • Hecla Mining (HL) -$0.11 (2.33%) to $4.62.

Silver fell by $0.18 (2.58%) to close at $6.95 per ounce. The Gold and Silver Index (XAU) lost 1.42 points (1.7%), at 82.13 points.

  • Placer Dome (PDG) -$0.46 (3.33%) to $13.34;
  • Freeport McMoran (FCX) -$0.89 (2.55%) to $33.97;
  • Meridian Gold (MDG) -$0.37 (2.41%) to $14.96; and
  • Newmont Mining (NEM) -$0.87 (2.31%) to $36.83.
Precious Metals and Indices
PHLX Gold and Silver Index82.13-1.42-1.7%
AMEX Gold BUGS Index175.99-2.9-1.62%

Oil Market

Oil was firmer, rising by $0.77 per barrel, closing at $52.12 per barrel. The oil market had a significant intraday reversal - its low was under $50 (the second time it's dipped below that level in the last month), but by the close it had rallied over $2 and closed within 10c of its session high.

The Oil and Gas Index (XOI) slid 7.76 points (0.95%), closing at 809.02

  • Exxon Mobil (XOM) -$2.38 (4.08%) to $56.00;
  • Occidental Petroleum (OXY) -$2.24 (3.22%) to $67.30; and
  • Marathon Oil (MRO) -$1.39 (2.94%) to $45.86.

The Oil service stocks (OSX) Index declined 2.13 points (1.62%), to end the session at 129.25

  • Global Industries (GLBL) -$0.46 (4.55%) to $9.66;
  • National Oilwells/Varco (NOV) -$1.26 (3.05%) to $40.04; and
  • Halliburton (HAL) -$1.21 (2.83%) to $41.55.
Energy Complex
Reuters CRB304.4-1.48-0.48%
Crude Oil Light Sweet52.120.771.5%
Heating Oil1.49350.021.6%
Natural Gas6.790.040.62%
Unleaded Gas1.5490.010.91%
AMEX Oil Index809.02-7.76-0.95%
Oil Service Index129.25-2.13-1.62%

Currency Markets

USD Exchange Rates
US Dollar Index84.380.210.25%
Australian Dollar0.77880.00270.35%
Swiss Franc1.1930.00060.05%
Canadian Dollar0.7987-0.0017-0.21%