Interdum stultus opportuna loquitur...

Friday, June 10, 2005

USRant: Greensplatt Drinks His Own Kool-Aid...

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

So the new jobless claims numbers were slightly down (330k vs. expectations of 335k). Big whoop - that's not the reason for the rise. Greenstain crapped on for an hour in front of the parasitic jackasses in the US Congress... and of course there's nothing but blue sky for the Soviet Union of States of America as far as the geriatric loser Greenstain can see. Big deal - that's not the reason either.

The reason is the same reason as always - huge wads of freshly printed (but temporary) electronic balances at major financial institutions.

As an aside - is Greenstain turning into a copy of the late Yassir Arafat (sans kaffiyeh, of course), or what? That strange frog-mouth of his seems to have taken on an Arafat-style lip-wobble in recent times. I hope that all my invective at this hopeless twat is not the result of actions brought about by incipient senile dementia (in him, not me). After all, it's not fair to blame a divvie for abandoning all of their supposed free-market principles, if the abandonment is caused by their brain turning to mush.

Federal Reserve Open Market Operations

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

  • a $7.5 billion, overnight repurchase entirely in T-backed collateral; and
  • a $5 billion, 14-day repurchase - also entirely in T-backed collateral.
So with $12.5 billion in 'guaranteed carry' (funds that banks could invest at the Fed Funds rate and still make money on the repurchase as a whole), there was always likely to be some upward momentum after 10 a.m. NY time. And so it was - although there was some teensy weakness (not more than a couple of S&P points) between 10 and 10:30 a.m., the market after 10:30 was a typical 'repo-pump' induced by the financial markets equivalent of a $20 crack hit.

Since the anti-freedom War on Drugs has been so manifestly inadequate, $20 actually buys a hell of a lot of crack, or so I'm told; $20 worth would get a user about 2 hour's respite from their addiction. And so it was for the financial markets; they rose uninterrupted for almost precisely 2 hours after their crack dealer (Greenstain) pushed them another hit and told everyone that it was good for them.

Major US Indices

After opening pretty soft (just before 10:01 a.m., the Dow was down at 10444.7) the Dow rose 40 points in 5 minutes when the double-whammy of repo crack and crack-dealer hype hit its veins. Of course the crack dealer-in-chief - Grease-splatt - told anyone who would listen that the US economy is in perfect health. That's to be expected though, from a man who is so illiterate of economics that he had to become a bureaucrat to 'earn' a crust. Show me a central planner who is willing to confess to the failure of his system and I will show you a character from a work of fiction.

After a sneaky dip to break the first-hour's prior low, and get the nuffnuff breakout traders to jump short, the tourniquet was loosed (I'm mixing my drug metaphors here...). When the repo dose hit the market's bloodstream, the market rose from the new, "ha ha nuffies now buy them back" low at  10443.31 to its session high at 10526.37 in exactly two hours. Notice how the new low (set literally 2 minutes after 11:30, so that it showed up as a 'first hour breakout') was less than a Dow point below the pre-10:30 low? Classic.

From there, it was hard sledding for both bulls and bears - as has been the case a lot in recent times; the market gets to where it's going, then just sits there, clipping everybody's ticket.

The Dow Jones Industrial Average managed to hold on to 26.16 points (0.25%) of the repo-induced gains, closing out the day at 10503.02 points. Within the blue-chip index, 15 stocks rose, the biggest gainers being Exxon Mobil (XOM, +3.01% to $58.44) and Intel (INTC, +2.21% to $27.70 on a revenue forecast upgrade), which accounted for 17 Dow points between them. Losers in the Dow numbered 15 and were led by Alcoa (AA, -1.14% to $26.97) and Merck (MRK, -0.89% to $31.35), with these two stocks contributing -4 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 211m shares to 108.9m.

The broader S&P500 rose 6.26 points (0.52%), at 1200.93. Within the index, gainers numbered 313, while 176 S&P500 stocks fell for the day. Volume was tilted 2.4:1 in favour of the winners with 1195.14 million units traded in the winners as compared with 500.31 million traded in the losers .

Over at Times Square, the Nasdaq Composite added 16.73 points (0.81%), to close at 2076.91 points. Larger-cap technology issues was not quite as strong in percentage terms,  with the Nasdaq100 adding 11.78 points (0.77%), to end at 1539.46 points. Within the tech benchmark, gainers numbered 70, while 27 Nasdaq100 stocks fell for the day. Volume was tilted 3.1:1 in favour of the winners with 543.09 million traded in the winners compared to 177.07 million in the losers .

NYSE Volume was super-chunky, with 1.82 billion shares changing hands, while Nasdaq Volume was chunky, with 1.68 billion shares traded.

Major Market Statistics
Index Close Gain(Loss) %
Dow Jones Industrial Average 10503.02 26.16 0.25%
S&P500 1200.93 6.26 0.52%
Nasdaq Composite 2076.91 16.73 0.81%
Nasdaq100 1539.46 11.78 0.77%
NYSE Volume 1.82bn - -
Nasdaq Volume 1.68bn - -


My 9-stock "bellwethers" group rose by an average of 0.34%

  • General Electric (GE) -$0.01 (0.03%) to $36.79;
  • Citigroup (C) -$0.07 (0.15%) to $47.68;
  • Wal Mart (WMT) +$0.25 (0.53%) to $47.82;
  • I.B.M. (IBM) +$0.13 (0.17%) to $74.93;
  • Intel (INTC) +$0.60 (2.21%) to $27.70;
  • Cisco Systems (CSCO) +$0.06 (0.31%) to $19.47;
  • eBay (EBAY) +$0.11 (0.3%) to $37.21;
  • Fannie Mae (FNM) +$0.03 (0.05%) to $58.19; and
  • Freddie Mac (FRE) -$0.21 (0.32%) to $64.85.

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 1885 to 1343 for a single-day A/D reading of 542; Nasdaq gainers trumped losers by 1819 to 1184. The 10-day moving average of the A/D line rose to 357.9 on the NYSE, while the 10dma of the Nasdaq A/D rose to 86.5.

NYSE advancing volume exceeded volume in decliners by 1181.4 to 618.7 million shares; Nasdaq advancing volume was greater than volume in decliners by 1240.5 to 374.8 million shares.

122 NYSE-listed stocks rose to new 52-week highs, and 22 posted fresh 52-week lows, while on the Nasdaq there were 72 stocks that hit new 52-week highs, and 49 which fell to fresh 52-week lows.

Market Breadth Statistics

NYSE Nasdaq
Advancers 1885 1819
Decliners 1343 1184
Advancing Volume (m) 1181.37 1240.47
Declining Volume (m) 618.69 374.79
New Highs 122 72
New Lows 22 49

Market Sentiment Statistics
Index Close Gain(Loss) %
CBOE Volatility Index 12.08 -0.62 -4.88%
CBOE Nasdaq Volatility Index 15.27 -0.53 -3.35%
Equity Put-Call Ratio 0.72 -0.07 -8.86%
10-day PCR 0.72 0 -0.12%
SPX-VIX Ratio 99.4 5.35 5.68%

Bond Market Analysis

Bonds fell a little at the long end, with the yield on the benchmark 30-year Treasury bond rising 2.1 bps to 4.246%. The 30-year T-bond didn't like the jobless claims data, and dipped into the high 117's (117&20/32), but recovered most of that following a decent outcome for the 10-year note auction (bid-to-cover at 2.5x, high yield at 3.99% on a coupon rate of 4.125%... that's actually a mindlessly bullish outcome). A late dip took the 30-year future to a close at 118&1/32.

The middle of the yield curve was broadly lower (in price): five year yields rose to 3.757%, and ten-year yields rose to 3.965%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 3.0 bps wider at 4.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 68.0 bps for 10-year AAA, and 105.0 bps 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 bps tighter at 47.0 basis points and the 10-year AAA-A spread 2.0 bps wider(i.e., moving towards sanity)  at-8.0 bps.

Treasury Yields
Index Close Gain(Loss) %
UST 13wk (yld) 2.927 0 0%
UST 2Y (yld) 3.6 0.02 0.56%
UST 5Y (yld) 3.757 0.033 0.89%
UST 10Y (yld) 3.965 0.025 0.63%
UST 30Y (yld) 4.246 0.021 0.5%

The Banks Index slid 0.02 points (0.02%), at 98.53; within the index,

  • Washington Mutual (WM) -$0.28 (0.7%) to $39.95;
  • JPMorganChase (JPM) -$0.17 (0.48%) to $35.50;
  • Bank Of NY (BK) -$0.11 (0.38%) to $28.99;
  • National City Corp (NCC) -$0.12 (0.35%) to $33.93; and
  • Suntrust Banks (STI) -$0.24 (0.33%) to $72.45.

The Broker-dealer Index added 1.18 points (0.79%), to end the session at 149.68; the ticket clippers lined up as follows -

  • E*Trade (ET) +$0.26 (1.98%) to $13.41;
  • Goldman Sachs (GS) +$1.60 (1.63%) to $99.95;
  • Bear Stearns (BSC) +$1.12 (1.13%) to $99.88;
  • Charles Schwab (SCH) +$0.12 (1.02%) to $11.83; and
  • Jeffries Group (JEF) +$0.35 (0.96%) to $36.62.

The Philadelphia SOX (Semiconductor) index posted a rise of 8.22 points (1.91%), closing at 438.49

  • National Semiconductors (NSM) +$1.79 (8.99%) to $21.69;
  • Marvell Tech Group (MRVL) +$1.31 (3.31%) to $40.90;
  • Applied Materials (AMAT) +$0.51 (3.02%) to $17.40;
  • Micron Technology (MU) +$0.29 (2.72%) to $10.97; and
  • Broadcom (BRCM) +$0.91 (2.64%) to $35.42.

Gold & Silver Markets

Gold fell by $0.90 (0.21%) to close at $423.80 per ounce. The June05 futures dipped as low as $422 during the session (from next week onwards, the front-month becomes August), but the contango was unchanged at the short end (i.e., over the next few months) and actually rose for the 2007 series. (Wait til you see the contango charts next week, and the Price/DBR charts... )

Gold Bugs Index rose 0.53 points (0.29%), at 184.74

  • Golden Star (GSS) +$0.07 (2.41%) to $2.98;
  • Randgold Resources (GOLD) +$0.30 (2.39%) to $12.86;
  • Coeur d'Alene (CDE) +$0.07 (2.19%) to $3.26;
  • Hecla Mining (HL) +$0.06 (1.35%) to $4.51; and
  • Newmont Mining (NEM) +$0.12 (0.33%) to $36.87.

Silver fell by $0.14 (1.88%) to close at $7.29 per ounce. The Gold and Silver Index (XAU) gained 0.16 points (0.19%), closing at 85.37 points.

  • Anglogold Ashanti (AU) +$0.29 (0.88%) to $33.37;
  • Newmont Mining (NEM) +$0.12 (0.33%) to $36.87;
  • Barrick Gold (ABX) +$0.07 (0.31%) to $22.77; and
  • Gold Fields (GFI) +$0.03 (0.29%) to $10.23.
Precious Metals and Indices
Index Close Gain(Loss) %
Gold 423.80 -0.90 -0.21%
Silver 7.29 -0.14 -1.88%
PHLX Gold and Silver Index 85.37 0.16 0.19%
AMEX Gold BUGS Index 184.74 0.53 0.29%

Oil Market

Oil was firmer, rising by $1.69 per barrel, closing at $54.19 per barrel. Part of the bounce was due to the news that the EU had sent its first-ever delegation to meet with OPEC, in the hope of securing more Middle-East sourced oil. See, the North Sea is depleting, and Russia is having problems with kleptocrats like Khodorovsky (do not believe for one second that he is the 'persecuted' in the Yukos/Government argy-bargy.

The Eurocrats are also very keen to be seen to be doing something in the wake of their resounding defeat at the hands of the French and Dutch electorates - they have to take the public's eyes off the ball while they feverishly remove the possibility of their plans to expand their trough being undermined by something as irrelevant as The Masses. What I'm saying is this: expect a change to the requirements for Euro-Constitution ratification to be watered down to a plurality of countries rather than unanimous consent... that way, all of the Eastern-Bloc reffo countries will vote in favour, and the SuperState will be spawned to fatten yet another layer of bullshit artists and hucksters.

The Oil and Gas Index (XOI) posted a rise of 22.25 points (2.65%), at 861.84

  • Amerada Hess (AHC) +$4.60 (4.7%) to $102.47;
  • Sunoco (SUN) +$4.84 (4.65%) to $108.97; and
  • ConocoPhillips (COP) +$1.76 (3.23%) to $56.26.

The Oil service stocks (OSX) Index advanced 4.72 points (3.43%), closing at 142.16

  • Transocean (RIG) +$2.31 (4.54%) to $53.15;
  • Baker Hughes (BHI) +$1.84 (3.91%) to $48.84; and
  • Tidewater (TDW) +$1.37 (3.83%) to $37.17.
Energy Complex
Index Close Gain(Loss) %
Reuters CRB 304.18 0.45 0.15%
Crude Oil Light Sweet 54.19 1.69 3.22%
Heating Oil 1.6241 0.08 4.85%
Natural Gas 7.05 0.03 0.43%
Unleaded Gas 1.565 0.07 4.58%
AMEX Oil Index 861.84 22.25 2.65%
Oil Service Index 142.16 4.72 3.43%

Currency Markets

USD Exchange Rates
Index Close Gain(Loss) %
US Dollar Index 88.01 0.13 0.15%
Euro 1.2229 -0.0005 -0.04%
Yen 107.43 0.14 0.13%
Sterling 1.8203 -0.003 -0.16%
Australian Dollar 0.7677 0.0028 0.37%
Swiss Franc 1.2545 -0.0004 -0.03%
Canadian Dollar 0.7956 -0.0038 -0.48%