Interdum stultus opportuna loquitur...

Tuesday, July 26, 2005

USRant: Narrower Than Bush's Vision...

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

There have been many words written in these pages about the uselessness of Consumer Confidence indices. All they mimic is the behaviour of the stock market over the period 2 weeks prior to the survey period - although other things that trigger a full-court press by the bullshit industry ('court' journalism) also have some impact. The underlying reality though, is that ConCon indices have bugger-all to do with current or future consumption spending. Still, they go to great lengths to pretend that the  numbers matter, so let;s look at last night's...

The Conference Boards ConCon number was expected to be 106.4; it tuned out to be 103.2. Is that bad? Who the hell knows? The ConCon number includes an assessment of present conditions (which fell modestly) and future conditions, (which fell more sharply) - but at the end of the day the numbers don't really measure anything except the willingness of some dolts to write down things they think the surveyor wants them to believe.

The market reaction to the COnCon number was a big "Who gives a...".

In news of a more immediately tangible nature, the eBay $40 put option (XBATH) advocated here last week rose to close at $85 (intraday it traded as high as $115), and thus shows us a gain of 41.6% relative to the Rant entry price of $60. Unfortunately I can't see any developments on eBay's chart that make me exude confidence in this position; at its peak the option traded 91.6% above the Rant entry price, so it doesn't qualify as a bad call per se... just one that might go to zero despite having had a good run. In an ideal world, eBay would crack $40 tonight and one half of the position would be liquidated at 100% gain (the standard Rant practice), leaving the other half to go wherever the hell it wants.

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 1 repurchase operation - a $10.25billion, overnight repurchase entirely in T-backed collateral undertaken at a 1.9 basis point discount to the Fed Funds Rate (FFR).

It seems that the Fed is only prepared to give out repurchase dough with minimal discount to the FFR. The flip side of that statement is that there is someone in the repo market who is prepare to pay up (i.e., accept much lower discounts) in order to get their hands on large chunks of the dough. For example, last night's bids for repo totalled $27b, and yet $10.25b of that was obviously within a couple of basis points of Fed Funds.

This points up what can be seen from repo 'fails' data - that some recipients of repurchase dough have been neglecting to unwind some of their repurchases. Naughty naughty.

Major US Indices

The Dow Jones Industrial Average lost 16.71 points (0.16%), closing out the day at 10579.77 points. Finishing near the bottom of a narrow-range day is not necessarily a bad thing. A teensy little divergence that emerged when an intraday swing  high was set (at 10615 at about 2:50 p.m. - a retest of the 10616 first-hour secondary peak)  was the only extreme exhibited by the market for the entire session.

The index hit an intraday high of 10626 in the opening 2 minutes, then proceeded to zigzag low (although not very aggressively) setting its intraday low at 10572.92 points just before 12:20 p.m. NY time. As mentioned above ,the bounce that ensued got all the way to within one point of the secondary peak set in the first hour, and then the market fell away in the closing hour.

Within the blue-chip index, 14 stocks rose, the biggest gainers being General Motors (GM, +3.04% to $36.96) and Home Depot (HD, +1.46% to $43.69), which accounted for 14 Dow points between them. Losers in the Dow numbered 16 and were led by Du Pont (DD, -6.56% to $41.15) and Johnson & Johnson (JNJ, -1.06% to $62.67), with these two stocks contributing -28 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 180.4m shares to 144.9m.

The broader S&P500 added 2.13 points (0.17%), to end the session at 1231.16. Within the index, gainers numbered 293, while 195 S&P500 stocks fell for the day. Volume was tilted 1.5:1 in favour of the winners with 981.61 million units traded in the winners as compared with 646.24 million traded in the losers.

Over at Times Square, the Nasdaq Composite posted a rise of 9.25 points (0.43%), to close at 2175.99, while larger-cap technology issues fared worse with the Nasdaq100 adding 5.36 points (0.34%), to end at 1598.93 points. Within the tech benchmark, gainers numbered 64, while 29 Nasdaq100 stocks fell for the day. Volume was tilted 1.7:1 in favour of the winners with 382.42 million traded in the winners compared to 220.09 million in the losers.

NYSE Volume was  pretty chunky, with 1.91 billion shares changing hands, while Nasdaq Volume was solid, with 1.7 billion shares wafting around in cyberspace during the day.

Major Market Statistics
Dow Jones Industrial Average10579.77-16.71-0.16%
Nasdaq Composite2175.999.250.43%
NYSE Volume1.91bn--
Nasdaq Volume1.7bn--


My 9-stock "bellwethers" group rose by an average of 0.26%

  • General Electric (GE) -$0.07 (0.2%) to $34.70;
  • Citigroup (C) +$0.07 (0.16%) to $44.60;
  • Wal Mart (WMT) +$0.08 (0.16%) to $49.53;
  • I.B.M. (IBM) -$0.08 (0.1%) to $84.12;
  • Intel (INTC) +$0.37 (1.4%) to $26.89;
  • Cisco Systems (CSCO) +$0.21 (1.11%) to $19.06;
  • eBay (EBAY) -$0.46 (1.13%) to $40.42;
  • Fannie Mae (FNM) +$0.19 (0.33%) to $57.70; and
  • Freddie Mac (FRE) +$0.39 (0.6%) to $65.09.

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 1907 to 1369 for a single-day A/D reading of 538; Nasdaq gainers trumped losers by 1779 to 1290. The 10-day moving average of the A/D line rose to -75.4 on the NYSE, while the 10dma of the Nasdaq A/D rose to -41.3.

NYSE advancing volume exceeded volume in decliners by 1075.4 to 772.2 million shares; Nasdaq advancing volume was greater than volume in decliners by 1034.9 to 565.9 million shares.

222 NYSE-listed stocks rose to new 52-week highs, and 27 posted fresh 52-week lows, while on the Nasdaq there were 136 stocks that hit new 52-week highs, and 27 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)1075.441034.86
Declining Volume (m)772.22565.92
New Highs222136
New Lows2727

Market Sentiment Statistics
CBOE Volatility Index10.99-0.18-1.61%
CBOE Nasdaq Volatility Index13.56-0.09-0.66%
Equity Put-Call Ratio0.64-0.09-12.33%
10-day PCR0.5400%
SPX-VIX Ratio11221.81%

Bond Market Analysis

Bonds rose at the long end, with the yield on the benchmark 30-year Treasury bond shedding 0.6 bps to 4.459%.

The middle of the yield curve was broadly higher: five year yields fell to 4.065%, and ten-year yields fell to 4.239%.

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 43.0 bps for 10-year AAA, and 71.0 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 6.0 bps looser at 56.0 basis points and the 10-year AAA-A spread 4.0 bps tighter at 9.0 bps.

The VIX futures again ignored the cash VIX - this time, while the cash dropped back a little, the futures rose - leaving our long VIX futures position only $200 underwater (during a period in which the cash VIX has risen a tad under 10%... bastards).

Treasury Yields
UST 13wk (yld)3.35900%
UST 2Y (yld)3.9200%
UST 5Y (yld)4.065-0.001-0.02%
UST 10Y (yld)4.239-0.008-0.19%
UST 30Y (yld)4.459-0.006-0.13%

The Banks Index added 0.16 points (0.16%), closing at 101.26; within the index,

  • Zions Bancorp (ZION) +$0.87 (1.2%) to $73.60;
  • Fifth Third Bancorp (FITB) +$0.43 (1.01%) to $42.85;
  • North Fork Bancorp (NFB) +$0.27 (0.97%) to $28.24;
  • Comerica (CMA) +$0.46 (0.74%) to $62.66; and
  • Golden West Financial (GDW) +$0.48 (0.73%) to $66.06.

The Broker-dealer Index lost 1.64 points (0.96%), to 169.31; the ticket clippers lined up as follows -

  • Legg Mason (LM) -$8.72 (7.78%) to $103.30;
  • Bear Stearns (BSC) -$1.14 (1.09%) to $103.08;
  • Ameritrade (AMTD) -$0.16 (0.82%) to $19.32;
  • A G Edwards (AGE) -$0.37 (0.81%) to $45.06; and
  • Jeffries Group (JEF) -$0.26 (0.62%) to $41.84.

The Philadelphia SOX (Semiconductor) index added 4.87 points (1.03%), ending the day at 477.04

  • Texas Instruments (TXN) +$1.70 (5.56%) to $32.30;
  • Freescale Semiconductors (FSL-B) +$0.80 (3.24%) to $25.46;
  • National Semiconductors (NSM) +$0.54 (2.22%) to $24.81;
  • ST Microelectronic (STM) +$0.35 (1.99%) to $17.93; and
  • Micron Technology (MU) +$0.18 (1.54%) to $11.90.

Gold & Silver Markets

Gold fell by $2.60 (0.61%) to close at $423.30 per ounce. The US-benefits-from-China-revaluation story is getting some initial traction, which is really just as funny as could be. Nobodythinks it's a good thing whose work I respect ( Steven Roach of Morgan Stanley, for example, and Marc Faber), although Roach is equivocal, except with respect to bond markets... still, that doesn't stop the echo chamber and the CNBC BubbleVisionaries from trying to delude their audience. The entire 'mainstream'  financial press is to market analysis, what Fox News is to international diplomacy.

The Gold Bugs Index declined 2.85 points (1.43%), to 196.49

  • Eldorado Gold (EGO) -$0.11 (3.94%) to $2.68;
  • Kinross Gold (KGC) -$0.17 (2.81%) to $5.87;
  • Randgold Resources (GOLD) -$0.36 (2.65%) to $13.24;
  • Hecla Mining (HL) -$0.11 (2.61%) to $4.11; and
  • Golden Star (GSS) -$0.07 (2.26%) to $3.03.

Silver fell by $0.12 (1.69%) to close at $7 per ounce.

The Gold and Silver Index (XAU) lost 1.34 points (1.45%), closing at 90.76 points.

  • Kinross Gold (KGC) -$0.17 (2.81%) to $5.87;
  • Freeport McMoran (FCX) -$0.87 (2.16%) to $39.48;
  • Placer Dome (PDG) -$0.31 (2.09%) to $14.49; and
  • Anglogold Ashanti (AU) -$0.74 (2.08%) to $34.79.
Precious Metals and Indices
PHLX Gold and Silver Index90.76-1.34-1.45%
AMEX Gold BUGS Index196.49-2.85-1.43%

Oil Market

Oil was slightly firmer, rising by $0.18 per barrel, closing at $59.20 per barrel. Notice how nobody's been talking about oil since it dipped back below $60? And to think, people were worried about the inflationary impact when it hit $30 on the way up. Just goes to show - when you can force the press to trumpet whatever you want, you can take the public's mind off the ramifications of foolhardy foreign policy in a heartbeat. Next stop - Iran (Cheney has already had the Pentagon develop a strategy for nuking Iran, with the specific scenario involving another September 11 style attack on a major US city. Can anybody even spell 'false flag' anymore?)

The Oil and Gas Index (XOI) dipped 4.91 points (0.52%), ending the day at 937.68

  • BP (BP) -$1.38 (2.06%) to $65.50;
  • TotalFinaElf S.A. (TOT) -$1.47 (1.17%) to $124.08; and
  • ChevronTexaco (CVX) -$0.52 (0.89%) to $57.85.

The Oil service stocks (OSX) Index shed 0.36 points (0.22%), ending the day at 160.76

  • Smith International (SII) -$0.86 (1.26%) to $67.47;
  • Baker Hughes (BHI) -$0.59 (1.04%) to $56.21; and
  • GlobalSantaFe (GSF) -$0.46 (1.01%) to $44.95.
Energy Complex
Reuters CRB309.230.480.16%
Crude Oil Light Sweet59.20.180.3%
Heating Oil1.607500.06%
Natural Gas7.4250.141.92%
Unleaded Gas1.697-0.01-0.53%
AMEX Oil Index937.68-4.91-0.52%
Oil Service Index160.76-0.36-0.22%

Currency Markets

USD Exchange Rates
US Dollar Index90.040.490.55%
Australian Dollar0.7582-0.0052-0.68%
Swiss Franc1.29940.00490.38%
Canadian Dollar0.8135-0.0071-0.87%