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Hardly a day goes by without some bureaucrat saying something stupid, but in the world of finance there is nobody who spouts assfullness as often or as deeply as Greensplatt. Yesterday he assured anyone stupid enough to listen, that even if the yield curve inverted it wouldn't mean the economy was weakening. It would just mean that inflation expectations were low...
I mean, come on, Brownstain. One of the best indicators of recession is an inverted yield curve. They are as rare as hen's teeth - in fact they're slightly rarer than recessions.
Of course you have to be
careful in defining 'recession'. I've given up on deferring to the
Soviet-style government statistics; if GDP was still being compiled the
way it was before the Clinton years, the US would have been in
recession without
pause since 2001.
Instead, I think that commentators should completely ignore government statistics - put them in the same bin as the 'mainstream' media... whores-for-government who parrot every press statement as if it was an ex cathedra statement from the Vatican. If we define 'recession' to mean a period of economic activity where a large portion of the population go backwards, the US has been doing that for twenty years (even according to the Orwellian statistics of the Ministry of Honestly-This-Is-How-It-Is)...
Speaking of the mainstream media, here are a few factoids to chew on. Yahoo and Google, between them, now accrue more advertising revenue than the three major US TV networks combined. New Corpse's Fox generates revenue of less than 25¢ per subscriber per month (revenue, not profit). Newspaper readership has halved since the 60's. So let's start thinking of the blogosphere as the new mainstream...
Statistics last night: Redbook and
ICSC-UBS
measures of store sales were mixed, showing roughly 3.3% year-on-year
increases in sales at major department stores. Later in the day, Consumer Credit
was well below expectations ($1.3 billion versus expectations of $8
billion).
| <tr
class="TableContentRow"><td>US Dollar
Index</td><td>87.49</td><td>-0.21</td><td>-0.24%</td></tr> |
Federal Reserve Open Market Operations
The Fed's Open
Market Operations desk performed
1 repurchase operation - a $7.25billion, 2-day repurchase entirely in
T-backed collateral. Trades taken in line with the usual "buy at 10
a.m. if repo is big" mantra, made out nicely - there were 4.75
S&P points to be had in a single 20-minute burst after 10 a.m.;
trouble is, it didn't hold... the intrasession high in the S&P
futures (1209.75) was tested two more times in the following 3 hours,
and then at 1 p.m. NY time everything started turning brown. By the end
of the session every tick of that burst had been given back, along with
all the opening strength as well. Let's think of today as a genuine
'intraday reversal', coz that's what it was.
Major US Indices
Despite a massive intraday
reversal (95 points from session high to the close), the Dow
Jones Industrial Average managed
to cling to an advance of 16.04 points (0.15%) for the session, closing
out the day at 10483.07 points.
The index hit an intraday high of 10578.84 twice - once either side of 1 p.m., after opening at its session low of 10465.92 points. Keep in mind here that when the low (or high) is set at the open, it represents a bit of a fiction - the numbers for the Dow start being promulgated before all Dow stocks are open, and so the during the first few minutes of the session, the Dow only moves if stocks that open first (like Alcoa or American Express) open with a 'gap'.
Within the blue-chip index, 20 stocks rose, the biggest gainers being General Motors (GM, +1.02% to $30.73) and American Express (AXP, +0.98% to $54.77), which accounted for 6 Dow points between them. Losers in the Dow numbered 10 and were led by Mcdonalds (MCD, -2.76% to $29.57) and Intel (INTC, -1.14% to $26.86), with these two stocks contributing -8 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 172.2m shares to 147.3m.
The broader S&P500 declined 0.25 points (0.02%), ending the day at 1197.26. Within the index, gainers numbered 242, while 252 S&P500 stocks fell for the day. Volume was tilted 1.3:1 in favour of the losers with 973.71 million units traded in the losers as compared with 753.50 million traded in the winners .
Over at Times Square, the Nasdaq Composite shed 8.6 points (0.41%), to close at 2067.16, while larger-cap technology issues fared worse with the Nasdaq100 losing 14.15 points (0.92%), to end at 1531.12 points. Within the tech benchmark, gainers numbered 27, while 71 Nasdaq100 stocks fell for the day. Volume was tilted 3.2:1 in favour of the losers with 581.32 million traded in the losers compared to 183.90 million in the winners.
Notice something in those
preceding paragraphs? The more 'beta' an index contains, the less
salubrious the breadth and volume. that's interesting, and shows that
some smart money thinks that Greensplatt was talking through his hat
(or through other points... rearward and about 2'6" lower).
NYSE Volume was pretty chunky, with 1.88 billion shares changing hands, and Nasdaq Volume was likewise chunky, with 1.9 billion shares traded.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10483.07 | 16.04 | 0.15% |
| S&P500 | 1197.26 | -0.25 | -0.02% |
| Nasdaq Composite | 2067.16 | -8.6 | -0.41% |
| Nasdaq100 | 1531.12 | -14.15 | -0.92% |
| NYSE Volume | 1.88bn | - | - |
| Nasdaq Volume | 1.9bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 0.40%
- General Electric (GE) +$0.23 (0.63%) to $36.84;
- Citigroup (C) -$0.03 (0.06%) to $47.66;
- Wal Mart (WMT) +$0.03 (0.06%) to $47.76;
- I.B.M. (IBM) +$0.04 (0.05%) to $75.04;
- Intel (INTC) -$0.31 (1.14%) to $26.86;
- Cisco Systems (CSCO) +$0.03 (0.15%) to $19.41;
- eBay (EBAY) -$0.83 (2.15%) to $37.81;
- Fannie Mae (FNM) -$0.37 (0.63%) to $58.22; and
- Freddie Mac (FRE) -$0.37 (0.56%) to $65.63.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 1856 to 1405 for a single-day A/D reading of 451; and Nasdaq losers exceeded gainers by 1579 to 1437. The 10-day moving average of the A/D line fell to 480.6 on the NYSE, while the 10dma of the Nasdaq A/D fell to 62.7.
NYSE advancing volume exceeded volume in decliners by 983.1 to 839.1 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 1179.1 to 695 million shares.
261 NYSE-listed stocks rose to
new 52-week highs, and 21 posted fresh 52-week lows, while on the
Nasdaq there were 125 stocks that hit new 52-week highs, and 44 which
fell to fresh 52-week lows. The new highs-new lows numbers are getting
out of whack...
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1856 | 1437 |
| Decliners | 1405 | 1579 |
| Advancing Volume (m) | 983.14 | 694.95 |
| Declining Volume (m) | 839.05 | 1179.06 |
| New Highs | 261 | 125 |
| New Lows | 21 | 44 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 12.39 | 0.11 | 0.9% |
| CBOE Nasdaq Volatility Index | 15.61 | -0.13 | -0.83% |
| Equity Put-Call Ratio | 0.72 | -0.02 | -2.7% |
| 10-day PCR | 0.71 | 0 | 0.43% |
| SPX-VIX Ratio | 96.6 | -0.89 | -0.91% |
Bond Market Analysis
Bonds rose at the long end, with the yield on the benchmark 30-year Treasury bond shedding 5.4 bps to 4.195%. While some smart money in the equities market saw today as a mechanism to distribute some stock, the bond market took Greensplatt's blabberings at face value, it would appear... so many people are going to lose money by being bond buyers at these prices.
It's always the same though -
when T-bonds are cheap as chips (e.g., when they were yielding 17% in
the 1980s) no bugger wants them... but get the price rolling upward
(and the yield moving proportionately downward) and all of a sudden
everyone is interested.
The middle of the yield curve was broadly higher (in price): five year yields fell to 3.688%, and ten-year yields fell to 3.911%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were unchanged at 4.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 71.0 bps for 10-year AAA, and 108.0 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 8.0 bps tighter at 50.0 basis points and the 10-year AAA-A spread unchanged at -12.0 bps.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.947 | 0 | 0% |
| UST 2Y (yld) | 3.54 | -0.02 | -0.56% |
| UST 5Y (yld) | 3.688 | -0.039 | -1.05% |
| UST 10Y (yld) | 3.911 | -0.051 | -1.29% |
| UST 30Y (yld) | 4.195 | -0.054 | -1.27% |
The Banks Index lost 0.29 points (0.29%), at 98.38; within the index,
- State Street (STT) -$0.91 (1.78%) to $50.17;
- US Bancorp (USB) -$0.32 (1.09%) to $29.03;
- Fifth Third Bancorp (FITB) -$0.41 (0.97%) to $41.86;
- Wachovia (WB) -$0.44 (0.87%) to $50.21; and
- M&T Bank Corp (MTB) -$0.80 (0.77%) to $102.57.
The Broker-dealer Index shed 0.36 points (0.24%), to end the session at 147.45; the ticket clippers lined up as follows -
- Ameritrade (AMTD) -$0.24 (1.61%) to $14.69;
- Legg Mason (LM) -$1.18 (1.35%) to $85.93;
- A G Edwards (AGE) -$0.44 (1.05%) to $41.64;
- Jeffries Group (JEF) -$0.24 (0.66%) to $35.95; and
- E*Trade (ET) -$0.04 (0.32%) to $12.61.
The Philadelphia SOX (Semiconductor) index dipped 4.76 points (1.1%), to end the session at 427.52
- National Semiconductors (NSM) -$0.66 (3.22%) to $19.84;
- Broadcom (BRCM) -$1.03 (2.87%) to $34.87;
- Xilinx (XLNX) -$0.48 (1.7%) to $27.83;
- Texas Instruments (TXN) -$0.47 (1.69%) to $27.28; and
- Applied Materials (AMAT) -$0.24 (1.43%) to $16.58.
Gold & Silver Markets
Gold
fell by $1.70 (0.4%) to close at $424.80 per ounce.
The Gold Bugs Index shed 3.83 points (2.03%), closing at 184.75
- Harmony Gold (HMY) -$0.31 (4.08%) to $7.29;
- Gold Fields (GFI) -$0.35 (3.3%) to $10.25;
- Kinross Gold (KGC) -$0.18 (3.24%) to $5.38;
- Meridian Gold (MDG) -$0.47 (2.72%) to $16.78; and
- Iamgold (IAG) -$0.15 (2.26%) to $6.50.
Silver fell by $0.09 (1.13%) to close at $7.44 per ounce. The Gold and Silver Index (XAU) lost 1.7 points (1.95%), ending the day at 85.44 points.
- Harmony Gold (HMY) -$0.31 (4.08%) to $7.29;
- Durban Rooderpoert Deep (DROOY) -$0.04 (3.88%) to $0.99;
- Gold Fields (GFI) -$0.35 (3.3%) to $10.25; and
- Kinross Gold (KGC) -$0.18 (3.24%) to $5.38.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 424.80 | -1.70 | -0.4% |
| Silver | 7.44 | -0.09 | -1.13% |
| PHLX Gold and Silver Index | 85.44 | -1.7 | -1.95% |
| AMEX Gold BUGS Index | 184.75 | -3.83 | -2.03% |
Oil Market
Oil lost ground, shedding $0.61 per barrel, closing at $53.77 per barrel. This time, the forward months fell as well - in other words, today's fall was largely the result of nuffie-following from the media blitz following yesterday's 'fall'.
The Oil and Gas Index (XOI) shed 5.31 points (0.63%), to 839.75
- Sunoco (SUN) -$2.47 (2.32%) to $104.21;
- Kerr Mcgee (KMG) -$1.43 (1.95%) to $71.92; and
- Occidental Petroleum (OXY) -$1.28 (1.7%) to $74.09.
The Oil service stocks (OSX) Index lost 1.18 points (0.86%), to 136.79
- Transocean (RIG) -$1.69 (3.26%) to $50.13;
- Global Industries (GLBL) -$0.19 (2.25%) to $8.27; and
- Baker Hughes (BHI) -$0.74 (1.56%) to $46.76.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 306.21 | -1.07 | -0.35% |
| Crude Oil Light Sweet | 53.77 | -0.61 | -1.12% |
| Heating Oil | 1.602 | -0.01 | -0.65% |
| Natural Gas | 7.18 | 0.06 | 0.84% |
| Unleaded Gas | 1.5195 | -0.01 | -0.64% |
| AMEX Oil Index | 839.75 | -5.31 | -0.63% |
| Oil Service Index | 136.79 | -1.18 | -0.86% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 87.49 | -0.21 | -0.24% |
| Euro | 1.2284 | 0.0028 | 0.23% |
| Yen | 106.59 | -0.33 | -0.31% |
| Sterling | 1.8349 | 0.0107 | 0.59% |
| Australian Dollar | 0.7686 | 0.0036 | 0.47% |
| Swiss Franc | 1.2451 | -0.0039 | -0.31% |
| Canadian Dollar | 0.8025 | -0.0008 | -0.1% |
