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Bah! Today, Zoidberg reminds you of his prescience when the VIX was a waaaaay down at 10... buying volatility was the thing to then, no? A similar situation exists today in the Euro, I'm telling you. People somehow think that the US can finagle its way out of the shithole it's got itself in, but it can't, I'm telling you. When the Iranian oil bourse (denominated in Euro) gives the globe an alternative to the massively-inflating (and still massively overvalued) USD, its one remaining justification as a reserve asset will have gone out the window.
Today's little runner in the Euro (which was hinted at in yesterday's USRant. but was not specifically advocated) was a prelude of things to come. At present there are a load of absolute nuffnuffs who think that the only monetary policy in the world is undertaken by the Fed - they will be absolutely blindsided by the ECB"s upcoming rate decision (if the ECB raises rates, that is).
Now, I've said before that interest rate arbitrage is a stupid justification for an expected move in the currency - since so many other things inveigh against the USD. But adding a rate-gap-narrowing on top of the huge economic dislocations I mentioned yesterday, makes a decent bounce in the Euro almost a lock.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation: a measly $1.75billion, overnight repurchase entirely in T-backed collateral undertaken at a 20.3 basis point premium to the Fed Funds Rate (FFR) that prevailed at the time (although it was notionally at a 4.7 basis point discount to the FFR that everyone knew was going to prevail in the afternoon... the Fed repo rate is one mechanism by which the Fed telegraphs its intentions a week in advance).
Major US Indices
The Dow Jones Industrial Average declined 33.3 points (0.32%) in an excruciating session. The session had two salient features: the mind-numbing tightness of the pre-FOMC range, and the mindlessness of the post-FOMC bum's rush to 1210 (on the S&P futures). A semi-interesting thing that occurred as all of the post-FOMC squeeze was being given back, was the extent to which someone kept soaking up selling pressure in the futures. There was obvioulsy a perceived need to keep the indices above their nearest key numbers (Dow 10400, S&P 1200, Nasdaq100 1575).
It worked, with the Dow holding up and closing at 10406.77 points. The index hit an intraday high of 10455.28, and fell as low as 10406.04 during the session (i.e. the Dow closed as near to its low as makes no odds).
Within the blue-chip index, 13 stocks rose, the biggest gainers being Alcoa (AA, +1.28% to $24.60) and Walt Disney (DIS, +1.19% to $24.66), which accounted for 5 Dow points between them. Losers in the Dow numbered 17 and were led by Intel (INTC, -3.62% to $22.65) and 3M (MMM, -1.47% to $74.86), with these two stocks contributing -16 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 274.4m shares to 201.9m.
The broader S&P500 shed 4.25 points (0.35%), to 1202.76. Within the index, gainers numbered 200, while 283 S&P500 stocks fell for the day. Volume was tilted 1.6:1 in favour of the losers with 1394.13 million units traded in the losers as compared with 862.93 million traded in the winners .
Over at Times Square, the Nasdaq Composite dipped 6.25 points (0.29%), to close at 2114.05, while larger-cap technology issues fared better with the Nasdaq100 losing 2.66 points (0.17%), to end at 1576.52 points. Within the tech benchmark, gainers numbered 47, while 49 Nasdaq100 stocks fell for the day. Volume was tilted 1.0:1 in favour of the losers with 458.96 million traded in the losers compared to 455.22 million in the winners .
NYSE Volume was super-chunky, with 2.46 billion shares changing hands, while Nasdaq Volume was also pretty chunky, with 1.98 billion shares traded.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10406.77 | -33.3 | -0.32% |
| S&P500 | 1202.76 | -4.25 | -0.35% |
| Nasdaq Composite | 2114.05 | -6.25 | -0.29% |
| Nasdaq100 | 1576.52 | -2.66 | -0.17% |
| NYSE Volume | 2.46bn | - | - |
| Nasdaq Volume | 1.98bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 0.63%; recall that I mentioned C's behaviour yesterday...
- General Electric (GE) -$0.31 (0.91%) to $33.60;
- Citigroup (C) -$0.38 (0.83%) to $45.40;
- Wal Mart (WMT) -$0.32 (0.68%) to $46.99;
- I.B.M. (IBM) -$0.29 (0.35%) to $81.59;
- Intel (INTC) -$0.85 (3.62%) to $22.65;
- Cisco Systems (CSCO) +$0.03 (0.17%) to $17.48;
- eBay (EBAY) +$0.66 (1.67%) to $40.27;
- Fannie Mae (FNM) -$0.32 (0.67%) to $47.20; and
- Freddie Mac (FRE) -$0.26 (0.42%) to $61.09.
Market Breadth & Internals
NYSE declining Issues beat out advancers by 1731 to 1550, for a single-day A/D reading of -181; and Nasdaq losers exceeded gainers by 1740 to 1266. The 10-day moving average of the A/D line fell to 139.2 on the NYSE, while the 10dma of the Nasdaq A/D fell to 21.8.
On the NYSE declining volume was greater than volume in advancing issues by 1447.2 to 982.3 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 1045.3 to 916.3 million shares.
93 NYSE-listed stocks rose to new 52-week highs, and 107 posted fresh 52-week lows, while on the Nasdaq there were 97 stocks that hit new 52-week highs, and 73 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1550 | 1266 |
| Decliners | 1731 | 1740 |
| Advancing Volume (m) | 982.25 | 916.28 |
| Declining Volume (m) | 1447.23 | 1045.33 |
| New Highs | 93 | 97 |
| New Lows | 107 | 73 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 14.85 | -0.02 | -0.13% |
| CBOE Nasdaq Volatility Index | 17.39 | -0.24 | -1.36% |
| Equity Put-Call Ratio | 0.65 | 0 | 0% |
| 10-day PCR | 0.68 | 0 | 0% |
| SPX-VIX Ratio | 81 | -0.18 | -0.22% |
Bond Market Analysis
Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 1.4 bps to 4.769%.
The middle of the yield curve was broadly lower: five year yields rose to 4.466%, and ten-year yields rose to 4.577%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 9.0 bps wider at 17.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 57.0 bps for 10-year AAA, and 78.5 bps for 20-years.
Credit spreads (spreads between corporate bonds of the same maturity profile but different creditworthiness) were broadly tighter with the AAA-A spread on 20-years 9.0 bps tighter at 38.0 basis points and the 10-year AAA-A spread 4.0 bps tighter at 4.0 bps.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 3.862 | 0.057 | 1.5% |
| UST 2Y (yld) | 4.39 | 0.02 | 0.46% |
| UST 5Y (yld) | 4.466 | 0.019 | 0.43% |
| UST 10Y (yld) | 4.577 | 0.018 | 0.39% |
| UST 30Y (yld) | 4.769 | 0.014 | 0.29% |
The Banks Index declined 0.48 points (0.48%), to 99.02; within the index,
- Northern Trust (NTRS) -$1.20 (2.24%) to $52.40;
- M&T Bank Corp (MTB) -$1.47 (1.37%) to $106.11;
- Washington Mutual (WM) -$0.52 (1.31%) to $39.08;
- Suntrust Banks (STI) -$0.85 (1.17%) to $71.63; and
- Citigroup (C) -$0.38 (0.83%) to $45.40.
The Broker-dealer Index advanced 0.25 points (0.14%), at 183.22; the ticket clippers lined up as follows -
- Raymond James (RJF) +$0.97 (2.85%) to $35.00;
- E*Trade (ET) +$0.38 (2.05%) to $18.93;
- Lehman Brothers (LEH) +$1.04 (0.87%) to $120.71;
- Legg Mason (LM) +$0.79 (0.74%) to $108.10; and
- Goldman Sachs (GS) +$0.23 (0.18%) to $126.60.
The Philadelphia SOX (Semiconductor) index declined 4.1 points (0.95%), closing at 428.54
- Intel (INTC) -$0.85 (3.62%) to $22.65;
- National Semiconductors (NSM) -$0.56 (2.47%) to $22.07;
- Applied Materials (AMAT) -$0.33 (2.02%) to $16.03;
- ST Microelectronic (STM) -$0.29 (1.76%) to $16.18; and
- Xilinx (XLNX) -$0.42 (1.75%) to $23.53.
Gold & Silver Markets
Gold fell by $3.20 (0.69%) to close at $463.40 per ounce.
The Gold Bugs Index declined 0.32 points (0.14%), ending the day at 222.52
- Hecla Mining (HL) -$0.13 (3.86%) to $3.24;
- Glamis Gold (GLG) -$0.40 (1.89%) to $20.82;
- Randgold Resources (GOLD) -$0.23 (1.69%) to $13.39;
- Meridian Gold (MDG) -$0.28 (1.49%) to $18.50; and
- Coeur d'Alene (CDE) -$0.05 (1.33%) to $3.72.
Silver fell by $0.03 (0.4%) to close at $7.55 per ounce.
The Gold and Silver Index (XAU) lost 1.94 points (1.8%), ending the day at 105.9 points.
- Placer Dome (PDG) -$0.58 (2.91%) to $19.37;
- Meridian Gold (MDG) -$0.28 (1.49%) to $18.50;
- Harmony Gold (HMY) -$0.10 (0.96%) to $10.35; and
- Barrick Gold (ABX) -$0.21 (0.83%) to $25.04.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 463.40 | -3.20 | -0.69% |
| Silver | 7.55 | -0.03 | -0.4% |
| PHLX Gold and Silver Index | 105.9 | -1.94 | -1.8% |
| AMEX Gold BUGS Index | 222.52 | -0.32 | -0.14% |
Oil Market
Oil was firmer, rising by $0.09 per barrel, closing at $59.85 per barrel - after dipping to $59.02 during the early part of the session (it then rallied over $1 - new bulls to to provide the next garmonbozia-fest when (if?) the bottom falls out).
As I said yesterday, the time window for oil's decline is starting to close: if the market can't get down to my long-held "$57-ish" target within a couple of sessions, it's going to bounce. Keep that in mind if you're one of those folks who is habitually late on a move - if you're short oil from below $65, you might have your nerve tested.
The Oil and Gas Index (XOI) added 3.01 points (0.31%), to end the session at 988.63
- Kerr Mcgee (KMG) +$1.21 (1.42%) to $86.25;
- ConocoPhillips (COP) +$0.76 (1.16%) to $66.14; and
- ChevronTexaco (CVX) +$0.57 (1%) to $57.64.
The Oil service stocks (OSX) Index gained 2.62 points (1.56%), ending the day at 170.37
- Weatherford International (WFT) +$2.12 (3.39%) to $64.72;
- Rowan Companies (RDC) +$1.11 (3.36%) to $34.10; and
- Noble Corp (NE) +$1.92 (2.98%) to $66.30.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 327.2 | 0.52 | 0.16% |
| Crude Oil Light Sweet | 59.85 | 0.09 | 0.15% |
| Heating Oil | 1.805 | -0.02 | -1.04% |
| Natural Gas | 11.86 | -0.35 | -2.83% |
| Unleaded Gas | 1.6036 | 0.01 | 0.85% |
| AMEX Oil Index | 988.63 | 3.01 | 0.31% |
| Oil Service Index | 170.37 | 2.62 | 1.56% |
Currency Markets
Told you the Euro would bounce. A quarter-cent (or just over that) is not the dramatic bounce I was looking for, but I'll take it. Considering it was a day when interest rate differentials between the Euro-zone and the US widened (the much-ballyhooed reason for a USD rise, according to those with shit-for-brains), the price action seen today is just right. (Again, there are loads of people shorting Euro - i.e., buying USD - on bounces... these are known as 'idiots' and will get hurt).
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 90.06 | -0.06 | -0.07% |
| Euro | 1.2016 | 0.0028 | 0.23% |
| Yen | 116.825 | 0.415 | 0.36% |
| Sterling | 1.7644 | -0.0053 | -0.3% |
| Australian Dollar | 0.7431 | -0.0053 | -0.71% |
| Swiss Franc | 1.2878 | -0.0011 | -0.09% |
| Canadian Dollar | 0.8495 | 0.0032 | 0.38% |
