Interdum stultus opportuna loquitur...

Friday, June 03, 2005

USRant: Big Repo, Awful Data... Repo Wins...

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

You might read somewhere that the Oil Inventory Data - which showed a 1.4 million barrel increase for the week - was the catalyst for the big intraday reversal in Crude. Do not believe a word of it; crude rose for fully half an hour after the EIA Report, setting its session high at $55.40 just prior to 11:00 a.m. NY time.

No, the reality is that someone stuck their foot on Crude's neck - again. This has been a par for the course in recent months, and nobody should be terribly surprised.

It's also clear that everyone is getting quite agitated about the health of 'King' Fahd of Saudi Arabia - ignoring that he has been largely 'non compos' for about five years, the ramifications for Saudia Arabia (and therefore, all that oil that Cheney and Bush have wet dreams about) are enormous. If the succession can't be handled adequately, the likelihood of a political explosion in the region is high... which means that the Salafists win and the Yanks lose yet another puppet.

If the common man in the Arab street sees his Saudi fellow-man throw off one bunch of western puppets, how long d'you think other puppet governments will last? By 'puppet government' I mean any government which continues to exist primarily as a result of appeasement of the US child-killing machine... Mubarak in Egypt, Hussein in Jordan, Assad in Syria, Karami in Lebanon... sure, some of these dictators have made modest anti-US noises, but they are quislings nonetheless. There is enormous potential for the lid to come off the entire area, and the US war machine has already shown that it can't even handle a tenth-rate, decrepit military power (not even after committing ten years of war crimes against the civilian infrastructure of the same country).

But I digress...

The rest of the data was also soft-to-awful... New Jobless Claims rose to 350k (consensus was for 325k); Productivity was 2.9% (consensus 3%); Unit Labour Costs rose 3.3% (consensus 2.5%); Factory Orders rose 0.9% (consensus 1.2%), although within that report the key number - non-defence capex excluding aircraft - was up 1.6%.

The big thing for Unit Labour Costs was the revision to prior data. Prior to today's revision, Q4 data had shown the usual Orwellian "wages under control" that government knew people wanted to see... a 1.7% increase, which was slower than productivity growth.

Well, now that the Q4 numbers are ancient history and have served their initial propaganda purpose, it's time to change the record to reflect something more like reality; history will forever show that unit labour costs rose 7.7% compared to revised productivity growth of 2.6%.

So when some poor deluded graduate student ten years from now, is trying to examine the reaction of the market to economic data releases, he will look at that 7.7% number and compare it to how the market reacted on the day of release, and scratch his head... "Why would the market congratulate wage inflation" he will mutter...

Keep that in mind, folks - the Memory Hole is full of data of this sort. I've banged on about it for five years.

What the data shows is this: despite a decline in real wages (and the impoverishment of 65% of the poor schlubs in the working proletariat), wages are still outstripping productivity growth. Over the last year, productivity (badly measured and biased upwards) has increased 2.6%, while unit labour costs are up 4.3%. That's not good for employment.

Federal Reserve Open Market Operations

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

  • a $4.25billion, overnight repurchase entirely in T-backed collateral; and
  • a $12billion, 14-day repurchase entirely in T-backed collateral.
Plenty repo - plenty momentum-o... although, honestly, not so much.

Shortly before 10 a.m., the S&P was stuck below 1200, the Dow was testing 10500 and the tech indices were looking a bit squishy. Then all that lovely money arrived and made the bad feelings go away... the fact that it only generated a 4-point bounce in the S&P (and that took hours to achieve) is not a good sign.

Major US Indices

The Dow Jones Industrial Average rose a meagre 3.62 points (0.03%), closing out the day at 10553.49 points. The index opened weak, hitting 10510.41 within 10 minutes of the opening bell. At 10 a.m. with all that repo money in their pockets, the averages were stabilised and then started clawing their way back toward the gain line.

The Dow didn't make it back above the zero line until almost 2:30 p.m., after which it seesawed around between 10540 and 10560 for the rest of the session, hitting a high of 10559.93.

Within the blue-chip index, 15 stocks rose, the biggest gainers being Intel (INTC, +1.10% to $27.59) and Home Depot (HD, +1.00% to $40.34), which accounted for 5 Dow points between them. Losers in the Dow numbered 14 and were led by Du Pont (DD, -1.06% to $46.56) and 3M (MMM, -0.56% to $76.57), with these two stocks contributing -7 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 141.1m shares to 118.2m.

The broader S&P500 posted a rise of 2.07 points (0.17%), closing at 1204.29. Within the index, gainers numbered 270, while 225 S&P500 stocks fell for the day. Volume was tilted 1.2:1 in favour of the winners with 897.07 million units traded in the winners as compared with 752.07 million traded in the losers .

Over at Times Square, the Nasdaq Composite added 9.94 points (0.48%), to close at 2097.8, while larger-cap technology issues fared better with the Nasdaq100 adding 9.46 points (0.61%), to end at 1568.96 points. Within the tech benchmark, gainers numbered 71, while 28 Nasdaq100 stocks fell for the day. Volume was tilted 1.5:1 in favour of the winners with 441.51 million traded in the winners compared to 298.87 million in the losers .

NYSE Volume was chunky, with 1.8 billion shares changing hands, while Nasdaq Volume was chunky, with 1.79 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).

Major Market Statistics
Index Close Gain(Loss) %
Dow Jones Industrial Average 10553.49 3.62 0.03%
S&P500 1204.29 2.07 0.17%
Nasdaq Composite 2097.8 9.94 0.48%
Nasdaq100 1568.96 9.46 0.61%
NYSE Volume 1.8bn - -
Nasdaq Volume 1.79bn - -


My 9-stock "bellwethers" group rose by an average of 0.39%

  • General Electric (GE) -$0.03 (0.08%) to $36.90;
  • Citigroup (C) -$0.01 (0.02%) to $47.71;
  • Wal Mart (WMT) +$0.30 (0.63%) to $48.22;
  • I.B.M. (IBM) +$0.51 (0.66%) to $77.35;
  • Intel (INTC) +$0.30 (1.1%) to $27.59;
  • Cisco Systems (CSCO) +$0.24 (1.22%) to $19.88;
  • eBay (EBAY) -$0.06 (0.15%) to $39.05;
  • Fannie Mae (FNM) +$0.60 (1.02%) to $59.56; and
  • Freddie Mac (FRE) -$0.56 (0.84%) to $66.08.

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 1980 to 1339 for a single-day A/D reading of 641; Nasdaq gainers trumped losers by 1607 to 1428. The 10-day moving average of the A/D line fell to 645.0 on the NYSE, while the 10dma of the Nasdaq A/D fell to 274.9.

NYSE advancing volume exceeded volume in decliners by 989.5 to 767.2 million shares; Nasdaq advancing volume was greater than volume in decliners by 1123.3 to 646.6 million shares.

187 NYSE-listed stocks rose to new 52-week highs, and 19 posted fresh 52-week lows, while on the Nasdaq there were 98 stocks that hit new 52-week highs, and 41 which fell to fresh 52-week lows.

Market Breadth Statistics

NYSE Nasdaq
Advancers 1980 1607
Decliners 1339 1428
Advancing Volume (m) 989.52 1123.27
Declining Volume (m) 767.19 646.56
New Highs 187 98
New Lows 19 41

Market Sentiment Statistics
Index Close Gain(Loss) %
CBOE Volatility Index 11.84 -0.52 -4.21%
CBOE Nasdaq Volatility Index 14.95 -0.92 -5.8%
Equity Put-Call Ratio 0.74 0.14 23.33%
10-day PCR 0.67 0.02 2.58%
SPX-VIX Ratio 101.7 4.45 4.57%

Bond Market Analysis

Bonds rose at the long end, with the yield on the benchmark 30-year Treasury bond shedding 3.4 bps to 4.229%. Bonds are now in some sort of manic blowoff... the 30-year Treasury future got as high as 118&26/32 during the session, and the continuous contract for the 30-year is within a couple of points of a five-year high.

The middle of the yield curve was mixed: five year yields rose to 3.642%, and ten-year yields rose a tick to 3.89%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 1.0 bps wider at 6.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 61.0 bps for 10-year AAA, and 93.0 bps for 20-years.

Credit spreads (spreads between corporate bonds of the same maturity profile but different creditworthiness) were broadly tighter with the AAA-A spread on 20-years 16.0 bps wider at 66.0 basis points and the 10-year AAA-A spread 14.0 bps wider at -5.0 bps. Could it be that the 10-year credit spectrum is returning to sanity?

Treasury Yields
Index Close Gain(Loss) %
UST 13wk (yld) 2.908 0 0%
UST 2Y (yld) 3.5 0.04 1.16%
UST 5Y (yld) 3.642 0.007 0.19%
UST 10Y (yld) 3.89 -0.017 -0.44%
UST 30Y (yld) 4.229 -0.034 -0.8%

The Banks Index lost 0.2 points (0.2%), ending the day at 99.28; within the index,

  • Keycorp (KEY) -$0.54 (1.61%) to $33.02;
  • BB&T Corp (BBT) -$0.46 (1.13%) to $40.25;
  • Golden West Financial (GDW) -$0.65 (1.04%) to $61.78;
  • Fifth Third Bancorp (FITB) -$0.39 (0.9%) to $42.85; and
  • Mellon Financial (MEL) -$0.22 (0.78%) to $28.13.

The Broker-dealer Index rose 0.38 points (0.26%), to 147.45; the ticket clippers lined up as follows -

  • Legg Mason (LM) +$2.63 (3.12%) to $86.92;
  • Charles Schwab (SCH) +$0.24 (2.09%) to $11.71;
  • A G Edwards (AGE) +$0.67 (1.61%) to $42.40;
  • E*Trade (ET) +$0.09 (0.72%) to $12.57; and
  • Raymond James (RJF) +$0.16 (0.59%) to $27.46.

The Philadelphia SOX (Semiconductor) index advanced 7.96 points (1.84%), to 440.07

  • Teradyne (TER) +$0.56 (4.22%) to $13.82;
  • Infineon Tech (IFX) +$0.32 (3.6%) to $9.20;
  • KLA-Tencor (KLAC) +$1.57 (3.47%) to $46.87;
  • Broadcom (BRCM) +$1.02 (2.86%) to $36.64; and
  • Xilinx (XLNX) +$0.66 (2.35%) to $28.80.

Gold & Silver Markets

Gold rose $6.40 (1.54%) to close at $421.7 per ounce. It blew out of the blocks at the open, and never took a backward step for the entire session. It strikes me that folks in this market are spooked by the whole 'King' Fahd thing, too.

Despite the gains in gold, the Gold Bugs Index slid 1.74 points (0.91%), ending the day at 188.93

  • Coeur d'Alene (CDE) -$0.15 (4.27%) to $3.36;
  • Gold Fields (GFI) -$0.48 (4.2%) to $10.94;
  • Hecla Mining (HL) -$0.09 (1.96%) to $4.51;
  • Iamgold (IAG) -$0.10 (1.48%) to $6.67; and
  • Harmony Gold (HMY) -$0.11 (1.38%) to $7.84.

Silver rose $0.02 (0.27%) to close at $7.54 per ounce. The Gold and Silver Index (XAU) lost 0.62 points (0.7%), closing at 87.35 points.

  • Gold Fields (GFI) -$0.48 (4.2%) to $10.94;
  • Barrick Gold (ABX) -$0.38 (1.63%) to $22.89;
  • Harmony Gold (HMY) -$0.11 (1.38%) to $7.84; and
  • Anglogold Ashanti (AU) -$0.48 (1.38%) to $34.26.
Precious Metals and Indices
Index Close Gain(Loss) %
Gold 421.70 6.40 1.54%
Silver 7.54 0.02 0.27%
PHLX Gold and Silver Index 87.35 -0.62 -0.7%
AMEX Gold BUGS Index 188.93 -1.74 -0.91%

Oil Market

Oil lost ground, shedding $1.02 per barrel, closing at $53.58 per barrel after surging above $55 shortly after the inventory data was released. The 'information leakage' I mentioned yesterday served its purpose - those who were fed the information positioned themselves yesterday morning for the burst upwards, and then - replete with short term gains, shorted the living shit out of Crude once everyone else thought "Gee, that inventory data's not very good".

The Oil and Gas Index (XOI) added 1.14 points (0.14%), to 842.02

  • Royal Dutch Shell (RD) +$1.12 (1.92%) to $59.50;
  • Amerada Hess (AHC) +$1.45 (1.52%) to $96.88; and
  • TotalFinaElf S.A. (TOT) +$0.54 (0.48%) to $112.52.

The Oil service stocks (OSX) Index rose 0.36 points (0.27%), to 136.16

  • Noble Corp (NE) +$0.93 (1.66%) to $56.92;
  • Rowan Companies (RDC) +$0.37 (1.33%) to $28.17; and
  • Cooper Cameron (CAM) +$0.68 (1.16%) to $59.50.
Energy Complex
Index Close Gain(Loss) %
Reuters CRB 304.16 -0.17 -0.06%
Crude Oil Light Sweet 53.58 -1.02 -1.87%
Heating Oil 1.5403 0 0.02%
Natural Gas 6.825 0.04 0.53%
Unleaded Gas 1.514 -0.03 -1.96%
AMEX Oil Index 842.02 1.14 0.14%
Oil Service Index 136.16 0.36 0.27%

Currency Markets

USD Exchange Rates
Index Close Gain(Loss) %
US Dollar Index 87.83 -0.27 -0.31%
Euro 1.2265 0.0088 0.72%
Yen 108.26 -0.48 -0.44%
Sterling 1.8152 0.0062 0.34%
Australian Dollar 0.7542 0.0049 0.65%
Swiss Franc 1.2519 -0.0055 -0.44%
Canadian Dollar 0.8006 -0.0001 -0.01%