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Pre-market data was significantly better than expectations - the Personal Income and Outlays report showed personal income pegging a 1.7% growth for the month (compared to consensus expectations of 0.3%), while consumption spending ran at a 0.5% growth rate (consensus guess was for 0.5%). The 'redefined whenever it goes negative' savings rate fell to the lowest number in the 50-year history of the series (although that history was changed recently when they redefined savings so that the number wouldn't be negative). Call me a cynic, but frankly any economic system that relies - as its core GDP 'engine' - on consumption spending which in turn is based on 'negative aggregate saving from current income... well, if you've done any economics at all, you know how that ends.
(Leave aside for a minute that demand can't drive an open economy since there is absolutely no link that forces domestic demand to be satisfied by domestic supply for anythhing except non-tradeable goods).
And I hate Daylight Savings. It's neutral when only the Australian end of the thing is considered, but since the US went off daylight savings over the weekend, it now means that the US markats open at 1:30 a.m. Australian time and close at 8:00 a.m. the following morning (which is why the USRant might seem late to Oz-domestic readers.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation: a $4billion, overnight repurchase with $2.61billion in T-backed collateral undertaken at a -21 basis point discount to the Fed Funds Rate (FFR).
Major US Indices
If you view this session's behaviour as bullish, then I don't expect you to take in what follows... doubtless you're too busy fending off telephone calls from that Nigerian e-mail you responded to, where the guy told you that he had million of dollars that he would share with you if you helpde him get it out of the country - you gullible sap.
Anyhow - a bullish market is not one in which the S&P futures drop 11 points in the last half-hour (the Dow futures dropped back to a new session low at 10403 - implying a cash Dow of sub-10400). The last half-hour incldues the last quarter-hour of the cash market, during which time the Dow fell from a re-test of its session high at (10486.65... the re-test got to 10485.90) to its close at 10440.07; as near to a 50-point drop as makes no odds.
However the closing print still says that the Dow Jones Industrial Average advanced 37.3 points (0.36%), closing out the day at 10440.07 points. After opening at the Friday close of 10403.17 (which served as the low of the day, too), the index blasted upwards, hitting 10486.7 at the end of the first hour. As I mentioned above, the Dow futures continued to slide after the cash market closed, and the current futures reading (10401) is a new session low and would imply a cash Dow under of about 10390.
Within the blue-chip index, 17 stocks rose, the biggest gainers being Wal Mart (WMT, +3.98% to $47.31) and Caterpillar (CAT, +2.98% to $52.59), which accounted for 27 Dow points between them. Losers in the Dow numbered 13 and were led by Mcdonalds (MCD, -2.14% to $31.60) and Boeing (BA, -1.52% to $64.64), with these two stocks contributing -14 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 309.2m shares to 169.1m.
The broader S&P500 rose 8.6 points (0.72%), to end the session at 1207.01 - again, well off the highs (the session high for the S&P was 1211.43). The S&P futures continued to dive after the cash market closed, and are currently at 1203.75 - which implies a cash index below 1200. Within the index, gainers numbered 387, while 94 S&P500 stocks fell for the day. Volume was tilted 3.2:1 in favour of the winners with 1712.17 million units traded in the winners as compared with 527.33 million traded in the losers .
Over at Times Square, the Nasdaq Composite rose 30.42 points (1.46%), to close at 2120.3, while larger-cap technology issues fared worse with the Nasdaq100 adding 22.07 points (1.42%), to end at 1579.18 points. Again, the NQ futures continued dropping (although not quite to a new session low); the implied cash index is under 1570. Within the tech benchmark, gainers numbered 82, while 13 Nasdaq100 stocks fell for the day. Volume was tilted 4.8:1 in favour of the winners with 716.41 million traded in the winners compared to 148.12 million in the losers .
NYSE Volume was super-chunky, with 2.55 billion shares changing hands, while Nasdaq Volume was solid but not spectacular, with 1.87 billion shares traded.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10440.07 | 37.3 | 0.36% |
| S&P500 | 1207.01 | 8.6 | 0.72% |
| Nasdaq Composite | 2120.3 | 30.42 | 1.46% |
| Nasdaq100 | 1579.18 | 22.07 | 1.42% |
| NYSE Volume | 2.55bn | - | - |
| Nasdaq Volume | 1.87bn | - | - |
Bellwethers
My 9-stock "bellwethers" group rose by an average of 0.86%: look at Citigroup
- General Electric (GE) -$0.14 (0.41%) to $33.91;
- Citigroup (C) -$0.12 (0.26%) to $45.78;
- Wal Mart (WMT) +$1.81 (3.98%) to $47.31;
- I.B.M. (IBM) +$0.46 (0.56%) to $81.88;
- Intel (INTC) +$0.17 (0.73%) to $23.50;
- Cisco Systems (CSCO) +$0.31 (1.81%) to $17.45;
- eBay (EBAY) +$1.18 (3.07%) to $39.61;
- Fannie Mae (FNM) -$0.52 (1.08%) to $47.52; and
- Freddie Mac (FRE) -$0.40 (0.65%) to $61.35.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 2485 to 808 for a single-day A/D reading of 1677; Nasdaq gainers trumped losers by 2197 to 863. The 10-day moving average of the A/D line rose to 209.5 on the NYSE, while the 10dma of the Nasdaq A/D rose to 130.6.
NYSE advancing volume exceeded volume in decliners by 1910.6 to 559.4 million shares; Nasdaq advancing volume was greater than volume in decliners by 1504.3 to 306.3 million shares.
106 NYSE-listed stocks rose to new 52-week highs, and 90 posted fresh 52-week lows, while on the Nasdaq there were 111 stocks that hit new 52-week highs, and 54 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 2485 | 2197 |
| Decliners | 808 | 863 |
| Advancing Volume (m) | 1910.57 | 1504.26 |
| Declining Volume (m) | 559.37 | 306.25 |
| New Highs | 106 | 111 |
| New Lows | 90 | 54 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 14.87 | 0.62 | 4.35% |
| CBOE Nasdaq Volatility Index | 17.63 | 0.11 | 0.63% |
| Equity Put-Call Ratio | 0.65 | 0 | 0% |
| 10-day PCR | 0.68 | 0 | 0% |
| SPX-VIX Ratio | 81.2 | -2.93 | -3.48% |
Bond Market Analysis
Bonds rose at the long end, with the yield on the benchmark 30-year Treasury bond shedding 1.9 bps to 4.755%.
The middle of the yield curve was broadly higher: five year yields fell to 4.447%, and ten-year yields fell to 4.559%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 4.0 bps wider at 16.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 53.0 bps for 10-year AAA, and 74.0 bps for 20-years.
Credit spreads (spreads between corporate bonds of the same maturity profile but different creditworthiness) were broadly wider with the AAA-A spread on 20-years 5.0 bps wider at 47.0 basis points and the 10-year AAA-A spread 3.0 bps wider at 8.0 bps.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 3.805 | -0.02 | -0.52% |
| UST 2Y (yld) | 4.37 | 0 | 0% |
| UST 5Y (yld) | 4.447 | -0.003 | -0.07% |
| UST 10Y (yld) | 4.559 | -0.008 | -0.18% |
| UST 30Y (yld) | 4.755 | -0.019 | -0.4% |
The Banks Index posted a rise of 0.26 points (0.26%), closing at 99.5; within the index,
- Washington Mutual (WM) +$0.70 (1.8%) to $39.60;
- PNC Financial Services (PNC) +$1.02 (1.71%) to $60.71;
- North Fork Bancorp (NFB) +$0.31 (1.24%) to $25.34;
- Bank Of NY (BK) +$0.35 (1.13%) to $31.29; and
- Mellon Financial (MEL) +$0.29 (0.92%) to $31.69.
The Broker-dealer Index rose 3.57 points (1.99%), to 182.97; the ticket clippers lined up as follows -
- Charles Schwab (SCH) +$0.60 (4.11%) to $15.20;
- Jeffries Group (JEF) +$1.43 (3.49%) to $42.46;
- Legg Mason (LM) +$3.31 (3.18%) to $107.31;
- E*Trade (ET) +$0.48 (2.66%) to $18.55; and
- Ameritrade (AMTD) +$0.53 (2.59%) to $21.03.
The Philadelphia SOX (Semiconductor) index gained 7.77 points (1.83%), to end the session at 432.64
- Marvell Tech Group (MRVL) +$2.01 (4.53%) to $46.41;
- Advanced Micro Devices (AMD) +$0.90 (4.03%) to $23.22;
- Freescale Semiconductors (FSL-B) +$0.75 (3.24%) to $23.88;
- Xilinx (XLNX) +$0.66 (2.83%) to $23.95; and
- Micron Technology (MU) +$0.32 (2.53%) to $12.99.
Gold & Silver Markets
Gold fell by $8.20 (1.73%) to close at $466.60 per ounce.
The Gold Bugs Index shed 1.36 points (0.61%), to 222.84
- Randgold Resources (GOLD) -$0.51 (3.61%) to $13.62;
- Golden Star (GSS) -$0.09 (3.49%) to $2.49;
- Newmont Mining (NEM) -$1.53 (3.47%) to $42.60;
- Meridian Gold (MDG) -$0.34 (1.78%) to $18.78; and
- Gold Fields (GFI) -$0.21 (1.57%) to $13.20.
Silver fell by $0.24 (3.07%) to close at $7.58 per ounce.
The Gold and Silver Index (XAU) gained 1.04 points (0.97%), to end the session at 107.84 points.
- Placer Dome (PDG) +$3.44 (20.84%) to $19.95;
- Goldcorp (GG) +$0.58 (2.99%) to $19.96;
- Kinross Gold (KGC) +$0.12 (1.75%) to $6.98; and
- Agnico Eagle (AEM) +$0.14 (1.04%) to $13.66.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 466.60 | -8.20 | -1.73% |
| Silver | 7.58 | -0.24 | -3.07% |
| PHLX Gold and Silver Index | 107.84 | 1.04 | 0.97% |
| AMEX Gold BUGS Index | 222.84 | -1.36 | -0.61% |
Oil Market
Oil lost ground and finally closd below $60. For the session it lost $1.46 per barrel, closing at $59.76 per barrel - still well off the session low of $59.25, but still more than $2 above my long-held "head & shoulders' target of 57-ish. If it's not there within a couple of sessions, it's unlikely to get there.
The Oil and Gas Index (XOI) posted a rise of 16.64 points (1.72%), to end the session at 985.62
- Sunoco (SUN) +$2.43 (3.37%) to $74.50;
- ConocoPhillips (COP) +$2.12 (3.35%) to $65.38; and
- Occidental Petroleum (OXY) +$1.98 (2.57%) to $78.88.
The Oil service stocks (OSX) Index gained 1.81 points (1.09%), to 167.75
- Cooper Cameron (CAM) +$2.33 (3.26%) to $73.73;
- Halliburton (HAL) +$1.47 (2.55%) to $59.10; and
- Weatherford International (WFT) +$1.45 (2.37%) to $62.60.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 326.68 | -4 | -1.21% |
| Crude Oil Light Sweet | 59.76 | -1.46 | -2.38% |
| Heating Oil | 1.8239 | -0.07 | -3.85% |
| Natural Gas | 12.205 | -0.85 | -6.51% |
| Unleaded Gas | 1.5901 | -0.08 | -4.53% |
| AMEX Oil Index | 985.62 | 16.64 | 1.72% |
| Oil Service Index | 167.75 | 1.81 | 1.09% |
Currency Markets
Negative private savings out of current income, a government budget in total disarray (with half of the deficit unreported), massive external imbalances... and the psycholocial certainty that the whole shebang is administered by liars and fools... of course the US dollar should be rising.
Seriously - if people are buying USD on an 'interest arbitrage' argument, they ought to be shot. Sure, the Fed will raise short-term rates tomorrow - but the ECB will do likewise. However the Euro-zone has a huge and growing aggregaste trade surplus (Germany is the country with the highest experts in the world); Euro-zone budgetary accounting is more honest than the US (and yet the zone still has a lower deficit to GDP ratio)... the Euro ought to bounce, and bounce hard.
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 90.12 | 0.53 | 0.59% |
| Euro | 1.1988 | -0.0082 | -0.68% |
| Yen | 116.41 | 0.725 | 0.63% |
| Sterling | 1.7697 | -0.0037 | -0.21% |
| Australian Dollar | 0.7484 | -0.0008 | -0.11% |
| Swiss Franc | 1.2889 | 0.0087 | 0.68% |
| Canadian Dollar | 0.8463 | -0.0032 | -0.38% |
