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For some reason, they never learn. The revision to GDP was softer than expectations (3.5% growth compared to consensus of 3.7%), but the GDP deflator was also lower than the consensus guess (3.1% vs consensus of 3.2%). Taking into account the 1.25% hedonic massaging, that growth rate is nothing to write home about. So - given the fact that GDP failed to 'beat the Street', you would expect a decline, right?
No. you would expect a big repurchase agreement. that's the way the Sovietised U.S. markets are working at the moment. But it's nearly the end of May, so the bill will become due shortly.
On the plus side, the highly
flawed NIPA
measure of corporate profits
showed a 36.6% increase over last year. That's just a joke, in part
because it ignores capital consumption and other depreciation costs.
Still, if the State's Department of Genuine, No
Bullshit, No-Honestly-Would-We-Lie-To-You Statistics
keeps churning out numbers that show expansion, that's all we've got to
go on.
A word of warning about taking
government statistics at face value: if we follow that course, we also
have to believe that from 1930 until its complete economic collapse,
the Soviet Union outgrew the United States by a factor of 3...
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 2 repurchase operations.
- a $9.75billion, overnight repurchase entirely in T-backed collateral; and
- an $8billion, 14-day repurchase entirely in T-backed collateral.
Major US Indices
The Dow Jones Industrial Average added 79.8 points (0.76%), closing out the day at 10537.6 points. The index opened at its low (10458.61) but within 3 minutes is was above 10500 (again, the opening spurt is usually just a 'gap' which is not reflected in the index because of the way the Dow is calculated at the open). Within 10 minutes it was above 10510... then it softened back to 10493, hitting that little swing low right on 10 a.m... the repo numbers above should tell you what happened from there.
Oddly, the 10 a.m. repo surge
wasn't as electrifying as you would expect from a market with $17.75
billion of crack in its system; over the next 30 minutes you would only
have bagged 3 S&P points or about 38 Dow points. At that stage
the indices went into a very narrow-ranged holding pattern for the rest
of the session; the Dow closed just 5 points above its 10:30 level.
There was one little 'swoop' down to the 10500 again during the lunch
interval, but that proved to be the afternoon low... the only tradable
rally of the day (apart from the 10 a.m. jamjob) happened from there,
but stalled before it broke 10550 (the high was hit an 10544.1).
Within the blue-chip index, 23 stocks rose, the biggest gainers being American International Group (AIG, +3.01% to $55.71) and Boeing (BA, +2.51% to $62.99), which accounted for 23 Dow points between them. Losers in the Dow numbered 7 and were led by Merck (MRK, -0.58% to $32.35) and Altria Group (MO, -0.40% to $67.68), with these two stocks contributing -3 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 242.1m shares to 40.4m.
The broader S&P500 added 7.61 points (0.64%), closing at 1197.62. Within the index, gainers numbered 399, while 96 S&P500 stocks fell for the day. Volume was tilted 4.6:1 in favour of the winners with 1263.74 million units traded in the winners as compared with 276.24 million traded in the losers .
Over at Times Square, the Nasdaq Composite added 21.12 points (1.03%), to close at 2071.24, while larger-cap technology issues fared better with the Nasdaq100 adding 16.09 points (1.05%), to end at 1548.8 points. Within the tech benchmark, gainers numbered 85, while 14 Nasdaq100 stocks fell for the day. Volume was tilted by a massive 12.7:1 in favour of the winners with 643.08 million traded in the winners compared to 50.51 million in the losers.
NYSE Volume was chunky but not spectacular, with 1.65 billion shares changing hands, while Nasdaq Volume only just qualified as chunky, with 1.65 billion shares being bet on like so many greyhounds.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10537.6 | 79.8 | 0.76% |
| S&P500 | 1197.62 | 7.61 | 0.64% |
| Nasdaq Composite | 2071.24 | 21.12 | 1.03% |
| Nasdaq100 | 1548.8 | 16.09 | 1.05% |
| NYSE Volume | 1.65bn | - | - |
| Nasdaq Volume | 1.65bn | - | - |
Bellwethers
My
9-stock "bellwethers" group rose by an average of 1.28% - thanks
largely to Fannie
Mae and Freddie Mac
- those two toxic waste dumps will eventually be one of the death blows
to the markets, but for the moment the furious back-room finagling is
holding everything together.
- General Electric (GE) +$0.08 (0.22%) to $36.94;
- Citigroup (C) -$0.07 (0.15%) to $47.38;
- Wal Mart (WMT) +$0.01 (0.02%) to $47.31;
- I.B.M. (IBM) +$1.14 (1.5%) to $77.14;
- Intel (INTC) +$0.37 (1.37%) to $27.37;
- Cisco Systems (CSCO) +$0.28 (1.43%) to $19.90;
- eBay (EBAY) +$0.26 (0.69%) to $37.83;
- Fannie Mae (FNM) +$2.34 (4.1%) to $59.37; and
- Freddie Mac (FRE) +$1.47 (2.31%) to $64.99.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 2289 to 978 for a single-day A/D reading of 1311; madness. the GDP numbers simply weren't that good (and are always overstated by 1% real anyhow). Nasdaq gainers trumped losers by 2133 to 893. The 10-day moving average of the A/D line rose to 379.1 on the NYSE, while the 10dma of the Nasdaq A/D rose to 204.7.
NYSE advancing volume exceeded volume in decliners by 1260.8 to 335.5 million shares; Nasdaq advancing volume was greater than volume in decliners by 1322.7 to 303.5 million shares.
95 NYSE-listed stocks rose to new 52-week highs, and 23 posted fresh 52-week lows, while on the Nasdaq there were 85 stocks that hit new 52-week highs, and 45 which fell to fresh 52-week lows.
Volatility (as measured by the VIX) is getting ridiculously low again; there is no fear of a decline. You will all remember the exhortation
"Get in On Columbus Day; Get Out in May, and Stay Away".That would be sage advice this year, if my reading of the tea-leaves is right (I've moved on from entrails - too messy).
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 2289 | 2133 |
| Decliners | 978 | 893 |
| Advancing Volume (m) | 1260.75 | 1322.74 |
| Declining Volume (m) | 335.54 | 303.49 |
| New Highs | 95 | 85 |
| New Lows | 23 | 45 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 12.24 | -0.41 | -3.24% |
| CBOE Nasdaq Volatility Index | 15 | -0.7 | -4.46% |
| Equity Put-Call Ratio | 0.63 | -0.1 | -13.7% |
| 10-day PCR | 0.69 | -0.01 | -2% |
| SPX-VIX Ratio | 97.8 | 3.77 | 4.01% |
Bond Market Analysis
Bonds fell at the long end,
with the yield on the benchmark 30-year
Treasury bond rising 1.8 bps to
4.431%. The bond market seemed to be unimpressed by the GDP data (which
was soft relative to expectations, remember) - since rapid growth is
bond-bearish (because it presages more aggressive tightening by the
Fed). So the bond vigilantes
- who have been a dead-letter since before the Clinton era - are well
and truly out of Dodge.
The middle of the yield curve was broadly lower: five year yields rose to 3.819%, and ten-year yields rose to 4.081%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 1.0 bps tighter at 8.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 60.0 bps for 10-year AAA, and 98.5 bps for 20-years.
Credit
spreads (spreads between
corporate bonds of the same maturity profile but different
creditworthiness) were broadly wider with the AAA-A spread on 20-years
11.0 bps tighter at 37.0 basis points and the 10-year AAA-A spread 7.0
bps tighter at -5.0 bps - yet again this particular credit spread is
inverted.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.867 | 0 | 0% |
| UST 2Y (yld) | 3.62 | 0.04 | 1.12% |
| UST 5Y (yld) | 3.819 | 0.017 | 0.45% |
| UST 10Y (yld) | 4.081 | 0.009 | 0.22% |
| UST 30Y (yld) | 4.431 | 0.018 | 0.41% |
The Banks Index gained 0.4 points (0.4%), closing at 99.19; within the index,
- State Street (STT) +$0.75 (1.58%) to $48.16;
- MBNA Corp (KRB) +$0.26 (1.24%) to $21.20;
- Golden West Financial (GDW) +$0.75 (1.22%) to $62.04;
- Zions Bancorp (ZION) +$0.76 (1.08%) to $71.42; and
- M&T Bank Corp (MTB) +$1.03 (1%) to $103.86.
The Broker-dealer Index posted a rise of 0.69 points (0.48%), to end the session at 144.02; the ticket clippers lined up as follows -
- Ameritrade (AMTD) +$0.29 (2.06%) to $14.39;
- E*Trade (ET) +$0.16 (1.33%) to $12.21;
- Merrill Lynch (MER) +$0.44 (0.81%) to $54.50;
- Charles Schwab (SCH) +$0.09 (0.8%) to $11.31; and
- Legg Mason (LM) +$0.45 (0.55%) to $82.12.
The Philadelphia SOX (Semiconductor) index added 7.91 points (1.86%), closing at 433.6
- ST Microelectronic (STM) +$0.47 (3.2%) to $15.16;
- Teradyne (TER) +$0.39 (3.03%) to $13.26;
- KLA-Tencor (KLAC) +$1.31 (2.94%) to $45.93;
- Micron Technology (MU) +$0.30 (2.8%) to $11.03; and
- Maxim Integrated (MXIM) +$1.08 (2.76%) to $40.15.
Gold & Silver Markets
Gold
fell by $1.70 (0.41%) to close at $417.80 per ounce. Its... just...
doing... nuthin'.
The Gold Bugs Index shed 2.24 points (1.24%), ending the day at 178.64
- Coeur d'Alene (CDE) -$0.09 (3.05%) to $2.86;
- Kinross Gold (KGC) -$0.16 (3.05%) to $5.09;
- Iamgold (IAG) -$0.17 (2.6%) to $6.37;
- Golden Star (GSS) -$0.07 (2.55%) to $2.67; and
- Meridian Gold (MDG) -$0.39 (2.41%) to $15.81.
Silver fell by $0.06 (0.83%) to close at $7.15 per ounce. The Gold and Silver Index (XAU) lost 0.87 points (1.03%), closing at 83.36 points.
- Kinross Gold (KGC) -$0.16 (3.05%) to $5.09;
- Meridian Gold (MDG) -$0.39 (2.41%) to $15.81;
- Goldcorp (GG) -$0.30 (2.24%) to $13.10; and
- Barrick Gold (ABX) -$0.35 (1.56%) to $22.14.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 417.80 | -1.70 | -0.41% |
| Silver | 7.15 | -0.06 | -0.83% |
| PHLX Gold and Silver Index | 83.36 | -0.87 | -1.03% |
| AMEX Gold BUGS Index | 178.64 | -2.24 | -1.24% |
Oil Market
Oil was firmer, rising by $0.26 per barrel, closing at $51.15 per barrel: after an early dip to the mid $50.60s, the front-month crude contract absolutely rocketed upwards from about 10:30 onwards - hitting $51.50 within ten minutes of that time. It eventually hit its session high of $51.70 an hour or so later, before softening markedly into the close. In short, nobody's got a damned clue as to where this market heads next.
The Oil and Gas Index (XOI) gained 3.25 points (0.4%), to 824.13
- Occidental Petroleum (OXY) +$1.20 (1.68%) to $72.69;
- Repsol YPF (REP) +$0.26 (1.02%) to $25.82; and
- Marathon Oil (MRO) +$0.47 (0.98%) to $48.37.
The Oil service stocks (OSX) Index posted a rise of 0.76 points (0.57%), at 133.23
- Global Industries (GLBL) +$0.27 (3.21%) to $8.67;
- Noble Corp (NE) +$0.78 (1.42%) to $55.70; and
- National Oilwells/Varco (NOV) +$0.51 (1.18%) to $43.74.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 300.09 | 0.85 | 0.28% |
| Crude Oil Light Sweet | 51.15 | 0.26 | 0.51% |
| Heating Oil | 1.4455 | 0.02 | 1.51% |
| Natural Gas | 6.123 | -0.18 | -2.89% |
| Unleaded Gas | 1.4481 | 0 | -0.2% |
| AMEX Oil Index | 824.13 | 3.25 | 0.4% |
| Oil Service Index | 133.23 | 0.76 | 0.57% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 86.85 | 0.54 | 0.63% |
| Euro | 1.2511 | -0.009 | -0.71% |
| Yen | 107.94 | 0.25 | 0.23% |
| Sterling | 1.8198 | -0.0114 | -0.62% |
| Australian Dollar | 0.7582 | -0.0039 | -0.51% |
| Swiss Franc | 1.2359 | 0.0096 | 0.78% |
| Canadian Dollar | 0.7892 | -0.0019 | -0.24% |
