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Thursday, June 16, 2005

USRant: Stinky Data, But Plenty Repo...

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Check it out, Pez: 7:12 a.m., man!!

More economic data, again 'mixed, at best'. New Jobless Claims came in at 333k (consensus was for 330), but Housing Starts stayed above 2 million despite being slightly soft compared with consensus(actual 2.009, expected 2.089). Single-occupant dwellings continued to set the pace (growing 4.7%) while multi-family dwellings (apartments and such) were soft. The forward look for the housing market is less sanguine, with Permits data falling 4.8%.

Those data points were out before the physical market opened, but futures reactions were muted. The worse was yet to come - the Philly Fed showed its first negative reading in 2 years (actual -2.2, consensus +10). Still, the spin-meisters can point to the fact that 90% of the US industrial base no longer exists (it's moved to China, Taiwan, or Mexico), so anything to do with manufacturing is irrelevant.

Federal Reserve Open Market Operations

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

  • a $9billion, 14-day repurchase with $1.189billion in T-backed collateral ; and
  • a $8billion, overnight repurchase with $7.5billion in T-backed collateral.
The second of the two tranches was struck at a rate 3 basis points below the Fed Funds rate - da Boyz would be thankul for that. The past few session have ben odd in that the money doled out to da Boyz has not been given out with 'guaranteed carry': that makes it riskier to use part of the repo funds to goose the stock indices. Today that was not a problem, and the move from 10 a.m. was the 'corrupt business as usual' that normally accompanies a large repurchase.

The first tranche is interesting - $7 billion of the $9 billion was performed in Agency-backed collateral (i.e., to prop up Fannie Mae and Freddie Mac). It did the job, as both rose.

Major US Indices

After a soft opening (the Dow was down 26 points at the end of the first 20 minutes), all that repo dough gushed into the market's nervous system, and the crack-induced rush was there for all to see. In the 40 minutes following 10 a.m., the Dow rose 50 points, eventually topping out at 10595.45 (let's call that "10600-ish"). After two pullbacks to 'test' 10550, the market rose to test the high again in the finaly ten minutes - when that failed there was some teensy selling into the close.

For the day, the Dow Jones Industrial Average had some impressive swings, but only added 12.28 points (0.12%), closing out the day at 10578.65 points. The index hit an intraday high of 10595.45, and fell as low as 10540.06 during the session. within the blue-chip index, 17 stocks rose, the biggest gainers being Honeywell (HON, +2.09% to $38.08) and Exxon Mobil (XOM, +1.47% to $60.12), which accounted for 13 Dow points between them. Losers in the Dow numbered 13 and were led by General Motors (GM, -1.98% to $35.62) and Boeing (BA, -1.12% to $63.69), with these two stocks contributing -11 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 169.1m shares to 147.6m.

The broader S&P500 posted a rise of 4.35 points (0.36%), ending the day at 1210.93. Within the index, gainers numbered 346, while 147 S&P500 stocks fell for the day. Volume was tilted 2.2:1 in favour of the winners with 1147.61 million units traded in the winners as compared with 516.91 million traded in the losers .

Over at Times Square, the Nasdaq Composite advanced 14.23 points (0.69%), to close at 2089.15, while larger-cap technology issues fared worse with the Nasdaq100 adding 7.93 points (0.52%), to end at 1537.42 points. Within the tech benchmark, gainers numbered 68, while 30 Nasdaq100 stocks fell for the day. Volume was tilted 2.4:1 in favour of the winners with 569.25 million traded in the winners compared to 240.55 million in the losers .

NYSE Volume was chunky, with 1.75 billion shares changing hands, while Nasdaq Volume was chunky, with 1.84 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).

Major Market Statistics
Dow Jones Industrial Average10578.6512.280.12%
Nasdaq Composite2089.1514.230.69%
NYSE Volume1.75bn--
Nasdaq Volume1.84bn--


My 9-stock "bellwethers" group rose by an average of 0.44%

  • General Electric (GE) -$0.21 (0.58%) to $36.11;
  • Citigroup (C) +$0.14 (0.3%) to $47.54;
  • Wal Mart (WMT) -$0.50 (1%) to $49.35;
  • I.B.M. (IBM) +$0.75 (0.98%) to $77.05;
  • Intel (INTC) +$0.18 (0.67%) to $27.12;
  • Cisco Systems (CSCO) +$0.21 (1.09%) to $19.53;
  • eBay (EBAY) +$0.22 (0.59%) to $37.56;
  • Fannie Mae (FNM) +$0.85 (1.46%) to $58.90; and
  • Freddie Mac (FRE) +$0.31 (0.48%) to $64.91.

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 2222 to 1062 for a single-day A/D reading of 1160; that's strange considering the lack of strength in the headline indices. Nasdaq gainers trumped losers by 1994 to 1035. The 10-day moving average of the A/D line rose to 579.1 on the NYSE, while the 10dma of the Nasdaq A/D rose to 313.8.

NYSE advancing volume exceeded volume in decliners by 1223.3 to 504.3 million shares; Nasdaq advancing volume was greater than volume in decliners by 1278.8 to 483.6 million shares.

244 NYSE-listed stocks rose to new 52-week highs, and 34 posted fresh 52-week lows, while on the Nasdaq there were 137 stocks that hit new 52-week highs, and 31 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)1223.321278.8
Declining Volume (m)504.3483.62
New Highs244137
New Lows3431

Market Sentiment Statistics
CBOE Volatility Index11.15-0.31-2.71%
CBOE Nasdaq Volatility Index14.98-0.47-3.04%
Equity Put-Call Ratio0.6100%
10-day PCR0.630-0.61%
SPX-VIX Ratio108.63.323.15%

Bond Market Analysis

Bonds rose at the long end, with the yield on the benchmark 30-year Treasury bond shedding 5.1 bps to 4.371%. the September05 30-year Bond future rose 18/32 to close at 116 & 22/32. The strength wasn't solely due to the data - the bond's respone at the time of the data was pretty muted.

The middle of the yield curve was broadly higher: five year yields fell to 3.857%, and ten-year yields fell to 4.076%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 1.0 bps tighter at 4.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 46.0 bps for 10-year AAA, and 85.5 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 4.0 bps tighter at 43.0 basis points and the 10-year AAA-A spread 0.0 bps looser at11.0 bps.

Treasury Yields
UST 13wk (yld)2.90200%
UST 2Y (yld)3.66-0.03-0.81%
UST 5Y (yld)3.857-0.033-0.85%
UST 10Y (yld)4.076-0.039-0.95%
UST 30Y (yld)4.371-0.051-1.15%

The Banks Index added 0.21 points (0.21%), at 99.19; within the index,

  • Golden West Financial (GDW) +$1.20 (1.88%) to $64.91;
  • Zions Bancorp (ZION) +$0.91 (1.24%) to $74.38;
  • North Fork Bancorp (NFB) +$0.18 (0.65%) to $27.93;
  • Washington Mutual (WM) +$0.25 (0.62%) to $40.37; and
  • Northern Trust (NTRS) +$0.27 (0.59%) to $46.11.

The Broker-dealer Index added 2.29 points (1.54%), to end the session at 151.45; the ticket clippers lined up as follows -

  • Jeffries Group (JEF) +$1.98 (5.43%) to $38.44;
  • Goldman Sachs (GS) +$3.46 (3.49%) to $102.65;
  • Morgan Stanley (MWD) +$1.29 (2.55%) to $51.90;
  • Raymond James (RJF) +$0.55 (2.01%) to $27.93; and
  • Bear Stearns (BSC) +$1.75 (1.73%) to $103.09.

The Philadelphia SOX (Semiconductor) index gained 2.1 points (0.49%), at 429.33

  • Advanced Micro Devices (AMD) +$0.34 (1.99%) to $17.39;
  • Taiwan Semiconductors (TSM) +$0.16 (1.79%) to $9.12;
  • Infineon Tech (IFX) +$0.14 (1.53%) to $9.32;
  • Broadcom (BRCM) +$0.47 (1.33%) to $35.92; and
  • Teradyne (TER) +$0.16 (1.21%) to $13.35.

Gold & Silver Markets

Gold rose a whopping $6.70 (1.56%) to close at $436.20 per ounce, on no news in particular. I guess the bears blinked first. If journalistic explanations are to be believed, Gold was strong as a result of buying by 'funds' - the standard explanation used by hacks for any sizeable move.

Gold Bugs Index posted a rise of 7.1 points (3.65%), at 201.44

  • Glamis Gold (GLG) +$0.91 (5.72%) to $16.81;
  • Randgold Resources (GOLD) +$0.73 (5.26%) to $14.62;
  • Kinross Gold (KGC) +$0.27 (4.77%) to $5.93;
  • Coeur d'Alene (CDE) +$0.16 (4.48%) to $3.73; and
  • Meridian Gold (MDG) +$0.76 (4.28%) to $18.50.

Silver rose $0.03 (0.41%) to close at $7.36 per ounce. The Gold and Silver Index (XAU) gained 2.99 points (3.34%), to end the session at 92.4 points.

  • Durban Rooderpoert Deep (DROOY) +$0.06 (5.66%) to $1.12;
  • Kinross Gold (KGC) +$0.27 (4.77%) to $5.93;
  • Meridian Gold (MDG) +$0.76 (4.28%) to $18.50; and
  • Barrick Gold (ABX) +$0.90 (3.81%) to $24.51.
Precious Metals and Indices
PHLX Gold and Silver Index92.42.993.34%
AMEX Gold BUGS Index201.447.13.65%

Oil Market

Oil was firmer, rising by $1.08 per barrel, closing at $56.50 per barrel. People have finally started saying what I said the other day - that announcements by OPEC about increasing output are complete bollocks, because they are all pumping as fast as they can, and are all cheating on their quotas.

The Oil and Gas Index (XOI) posted a rise of 11.79 points (1.34%), at 893.82

  • ConocoPhillips (COP) +$1.27 (2.22%) to $58.60;
  • Kerr Mcgee (KMG) +$1.64 (2.21%) to $75.89; and
  • ChevronTexaco (CVX) +$1.08 (1.9%) to $57.92.

The Oil service stocks (OSX) Index posted a rise of 1.93 points (1.32%), closing at 147.65

  • Global Industries (GLBL) +$0.26 (2.87%) to $9.32;
  • National Oilwells/Varco (NOV) +$0.92 (1.95%) to $48.00; and
  • Baker Hughes (BHI) +$0.92 (1.85%) to $50.68.
Energy Complex
Reuters CRB308.591.610.52%
Crude Oil Light Sweet56.51.081.95%
Heating Oil1.62500.22%
Natural Gas7.570.152.01%
Unleaded Gas1.59120.032.07%
AMEX Oil Index893.8211.791.34%
Oil Service Index147.651.931.32%

Currency Markets

USD Exchange Rates
US Dollar Index88.670.010.01%
Australian Dollar0.77320.00360.47%
Swiss Franc1.27230.00130.1%
Canadian Dollar0.80910.00030.04%