Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.
As you all will know by now, usually the ratings a agencies can be relied on as the butt of derision. They are hopelessly compromised by their desire to retain 'access' to the companies they rate - in this they share a mind with the White House Press Corps.
I have always believed that you can rate any security based solely on the financial reports of the company that underlies them, plus an understanding of the broad economy. Anything else - going fishing with the CEO, being taken out to lunch by the BDMs - is embroidery. If the reports are so complex that a competent analyst requires guidance from some dill in Management at the company, then something is being hidden, and that should be an immediate red flag.
The other big problem - already identified in these pages years ago - is that the ratings agencies get paid by those they rate. This is a very big problem when the fees to get rated are counted in the millions of dollars. You can get away with it at lower price points: at InvestorWeb, the Managed Funds team was paid by the fund manager, for example. While that introduced some issues (e.g., when I slapped a SELL on BT's Imputation Fund), the fees were never enough to give the manager the sense that he was paying for a specific rating (i.e., nothing lower than a 'Buy').
Anyhow... ratings agencies are hopeless as a guide - unless you want a list of companies on which the market has already passed judgment.
Which brings me to the issue of US sovereign debt.
I and others like me (Marc Faber, JIm Grant, Fleckenstein and others) have said that US government debt does not deserve to be rated AAA. Ratings agencies disagree, despite the massive budgetary black hole into which the US government has pushed its citizens. Somehow the idea that government can raise taxes at will, leads S&P, Moody's and Fitch to all think that nothing could possibly go wrong.
Well, lately the 'madman in the wilderness' hypothesis - US government default - has actually been canvassed in interviews... on CNBC of all places.
Economic News
None.
Fed Open Market Operations
The Fed's Open Market Operations desk did not perform any repurchases today.
Headline Indices
Someone is 'saving' this market every time it threatens a genuine washout. Today someone from the Black Helicopter crowd forced some dill from Blackstone to announce - on a holiday, with the bond market closed and with volume preternaturally light - that the old Bear Stearns mortgage book was 'probably worth more than its market value'... for cryin' out loud.
Just as that news was being promulgated, a strange thing happened in the S&P futures: the advent of a buyer swinging a large axe without any care in the world as to price paid... buying at market, in volume.
The S&P shot up 30 points in an hour, and the Dow got all the way back to UNCH.
When that wore off, it looked like the session low would be retested... then the Mystery Buyer reappeared and the market shot up 15 points... and then gave back the bulk of that surge, too. Finally, in the closing minutes there was an attempt to close the market above 900 (basis the S&P cash); FAIL.
The Dow Jones Industrial Average lost 176.58 points (1.99%) to 8693.96 points. The index high for the day was 8867.51, while the low was 8561.66.
The Dow Jones Industrial Average index (DJI) contains 30 components; the total volume traded in the index was 1083.46m units. Within the index, just 1 stock (Pfizer) rose, on volume of 37.39m units; 29 Dow components fell, with aggregate volume of 1.05bn units.
The main decliners (in percentage terms) were -
- General Motors (GM) -0.44 (13.1%) to $2.92 on volume of 75.03m shares;
- Alcoa (AA) -0.84 (7.1%) to $10.94 on volume of 20.74m shares;
- American Express (AXP) -1.58 (6.6%) to $22.4 on volume of 19.81m shares;
- Boeing (BA) -2.17 (4.7%) to $43.97 on volume of 7.91m shares; and
- Du Pont (DD) -1.34 (4.5%) to $28.76 on volume of 8.11m shares.
The S&P500 Index lost 20.26 points (2.2%) to 898.95 points.Total volume traded in the index was 3.79bn units. Within the index, 65 issues rose, with aggregate volume of 494.66m units; 423 issues fell, with aggregate volume of 3293.38m units.
The main decliners (in percentage terms) were -
- Genl Growth Properties (GGP) -0.881 (64.3%) to $0.489 on volume of 53.68m shares;
- Genworth Financial Inc. (GNW) -1.48 (54.4%) to $1.24 on volume of 43.31m shares;
- Tyson Foods (TSN) -1.58 (23.6%) to $5.11 on volume of 19.91m shares;
- CB Richard Ellis Group (CBG) -1.41 (23.2%) to $4.68 on volume of 9.98m shares; and
- Hartford Financial Svc.Gp. (HIG) -3.31 (22.7%) to $11.24 on volume of 26.1m shares.
The Nasdaq Composite lost 35.84 points (2.22%) to 1580.90 points and the Nasdaq100 lost 25.41 points (2.03%) to 1225.59 points.
The Nasdaq100 index (NDX) contains 100 components; the total volume traded in the index was 651.71m units. Within the index, 14 issues rose, with aggregate volume of 33.29m units; 83 issues fell, with aggregate volume of 617.56m units.
Today the index fell by 25.41 points (2.03%) to 1225.59 points. The main decliners (in percentage terms) were -
- Focus Media Holding (FMCN) -7.26 (45.1%) to $8.83 on volume of 21.06m shares;
- DISH Network (DISH) -1.76 (13.3%) to $11.48 on volume of 6.85m shares;
- Liberty Media (LINTA) -0.48 (11.3%) to $3.76 on volume of 2.63m shares;
- Baidu.com (BIDU) -20.45 (9.7%) to $190.83 on volume of 3.44m shares; and
- Millicom International Cellular (MICC) -3.6 (8.9%) to $36.8 on volume of 0.95m shares.
Volatility
The CBOE Volatility Index advanced +1.46 points (2.43%) to 61.44 points..
The CBOE Nasdaq100 Volatility Index advanced +2.39 points (4.09%) to 60.83 points..
Breadth and Internals
A total of 3621 issues traded today on the NYSE; today's total volume was 761m shares. A total of 672 stocks posted gains for the day, and volume in advancing issues totalled 710m shares. Exerting downwards pressure on the index were 2885 losers, which accounted for a total declining volume of 40m shares. 9 stocks made new 1-year highs on the NYSE, while 348 shares plumbed new 52-week depths. {Note - I reckon those volume numbers are wrong}.
On the Nasdaq 2945 tickers traded today; total Nasdaq volume was 1.91bn shares. A total of 723 stocks posted gains for the day, with aggregate volume of 230m shares changing hands in the day's winners. The red zone of the Nasdaq exchange comprised 2116 losers, and total declining volume was 1.66bn shares. 6 Nasdaq-listed stocks hit new 52-week highs, while 352 shares dipped to new 1-year lows.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 8693.96 | -176.58 | -1.99% |
| S&P500 Index | 898.95 | -20.26 | -2.2% |
| Nasdaq Composite | 1580.90 | -35.84 | -2.22% |
| Nasdaq100 | 1225.59 | -25.41 | -2.03% |
| CBOE Volatility Index | 61.44 | +1.46 | 2.43% |
| CBOE Nasdaq100 Volatility Index | 60.83 | +2.39 | 4.09% |
Dow Darlings
- Pfizer (PFE) +0.17 (1%) to $16.77 on volume of 37.4m units
Dow Duds:
- General Motors (GM) -0.44 (13.1%) to $2.92 on volume of 75m units
- Alcoa (AA) -0.84 (7.1%) to $10.94 on volume of 20.8m units
- American Express (AXP) -1.58 (6.6%) to $22.4 on volume of 19.8m units
- Boeing (BA) -2.17 (4.7%) to $43.97 on volume of 7.9m units
- Du Pont (DD) -1.34 (4.5%) to $28.76 on volume of 8.1m units
Most Traded Dow stocks:
- Citigroup (C) --0.41 (3.7%) to $10.8 on volume of 139.4m units
- General Electric (GE) --0.64 (3.5%) to $17.81 on volume of 103.8m units
- Bank Of America (BAC) --0.79 (4.1%) to $18.69 on volume of 103.1m units
- Microsoft (MSFT) --0.1 (0.5%) to $21.2 on volume of 77.8m units
- General Motors (GM) --0.44 (13.1%) to $2.92 on volume of 75m units
Precious Metals
Precious metals futures were soft...
| Precious Metals Futures | |||
| Index | Close | Gain(Loss) | % |
| Gold | 731.2 | -15.3 | -2.05 |
| Silver | 9.78 | -0.44 | -4.31 |
| Palladium | 215.5 | -6.5 | -2.93 |
| Platinum | 826.1 | -33.8 | -3.93 |
The Gold Bugs index (XAU) contains 16 components; the total volume traded in the index was 88.78m units. Within the index, 2 issues rose, with aggregate volume of 4.7m units; 14 issues fell, with aggregate volume of 84.08m units.
Today the index fell by 5.46 points (6.13%) to 83.62 points. The main decliners (in percentage terms) were -
- Pan-American Silver (PAAS) -1.41 (10.8%) to $11.67 on volume of 1.05m shares;
- Silver Stand Resources (SSRI) -1.03 (10%) to $9.27 on volume of 0.68m shares;
- Freeport McMoran (FCX) -2.68 (9.8%) to $24.78 on volume of 21.31m shares;
- Yamana Gold (AUY) -0.39 (7.9%) to $4.54 on volume of 12.74m shares; and
- Silver Wheaton (SLW) -0.29 (7.8%) to $3.41 on volume of 3.15m shares.
Energy Complex
Energy futures were very weak -
| Energy Futures | |||
| Commodity | Close | Gain(Loss) | % |
| Crude Oil | 58.78 | -3.63 | -5.82 |
| Heating Oil | 1.9222 | -0.0834 | -4.16 |
| Natural Gas | 6.718 | -0.53 | -7.31 |
| Gasoline RBOB | 1.2902 | -0.0777 | -5.68 |
| Ethanol | 1.672 | -0.065 | -3.74 |
The Oil Services index (OSX) contains 15 components; the total volume traded in the index was 82.77m units. Within the index, 1 issues rose, with aggregate volume of 1.43m units; 14 issues fell, with aggregate volume of 81.33m units.
Today the index fell by 6.9 points (4.68%) to 140.39 points. The main decliners (in percentage terms) were -
- Rowan Co (RDC) -1.47 (7.6%) to $17.85 on volume of 3.17m shares;
- Smith International (SII) -1.96 (6.2%) to $29.56 on volume of 3.74m shares;
- National Oilwell Varco (NOV) -1.71 (6.2%) to $25.98 on volume of 8.15m shares;
- Baker Hughes (BHI) -2.02 (6%) to $31.37 on volume of 4.12m shares; and
- Cameron International (CAM) -1.3 (5.7%) to $21.46 on volume of 5.06m shares.
Currency Futures
Currency futures performed as follows -
| Currency Futures | |||
| Index | Close | Gain(Loss) | % |
| U.S. Dollar Index | 87.8 | 1.41 | 1.63 |
| Euro FX | 1.2532 | -0.0208 | -1.63 |
| Swiss Franc | 0.8432 | -0.0058 | -0.68 |
| Australian Dollar | 0.6512 | -0.016 | -2.4 |
| Canadian Dollar | 0.8289 | -0.0072 | -0.86 |
| Japanese Yen | 1.0237 | -0.0003 | -0.03 |
| New Zealand Dollar | 0.569 | -0.0123 | -2.12 |
Bellwethers
The nine-stock group that makes up the Rant bellwethers declined on average by 3.2%. The fallout occurred as follows:
- General Electric (GE) -0.64 (3.47%) to $17.81 on volume of 103.79m units.
- Citigroup (C) -0.41 (3.66%) to $10.80 on volume of 139.43m units.
- Wal-Mart (WMT) -0.43 (0.78%) to $54.75 on volume of 23.68m units.
- IBM (IBM) -1.13 (1.35%) to $82.74 on volume of 9.46m units.
- Intel (INTC) -0.42 (2.93%) to $13.93 on volume of 56.84m units.
- Cisco Systems (CSCO) -0.39 (2.22%) to $17.18 on volume of 32.72m units.
- Google (GOOG) -7.32 (2.3%) to $311.46 on volume of 7.94m units.
- Fannie Mae (FNM) -0.038 (5.28%) to $0.682 on volume of 20.34m units.
- Freddie Mac (FRE) -0.06 (6.82%) to $0.82 on volume of 10.06m units.
Other Indices of Interest...
The Banks index (BKX) contains 24 components; the total volume traded in the index was 554.02m units. Within the index, 5 issues rose, with aggregate volume of 138.8m units; 18 issues fell, with aggregate volume of 415.22m units.
Today the index fell by 0.96 points (1.84%) to 51.2 points. The main decliners (in percentage terms) were -
- Northern Trust (NTRS) -4.02 (8%) to $46.51 on volume of 1.7m shares;
- PNC Financial (PNC) -2.74 (4.1%) to $64.03 on volume of 5.02m shares;
- Bank Of America (BAC) -0.79 (4.1%) to $18.69 on volume of 103.11m shares;
- Citigroup Inc (C) -0.41 (3.7%) to $10.8 on volume of 139.43m shares; and
- Suntrust Banks (STI) -1.37 (3.7%) to $36.16 on volume of 5.45m shares.
The Semiconductor index (SOX) contains 18 components; the total volume traded in the index was 171.51m units. Within the index, 1 issues rose, with aggregate volume of 3.84m units; 17 issues fell, with aggregate volume of 167.67m units.
Today the index fell by 3.05 points (1.42%) to 211.43 points. The main decliners (in percentage terms) were -
- Micron Technology (MU) -0.26 (6.5%) to $3.73 on volume of 24.96m shares;
- Sandisk (SNDK) -0.32 (3.5%) to $8.76 on volume of 3.52m shares;
- Taiwan Semiconductor (TSM) -0.26 (3.4%) to $7.4 on volume of 10.52m shares;
- Intel (INTC) -0.42 (2.9%) to $13.93 on volume of 56.84m shares; and
- Xilinx (XLNX) -0.48 (2.9%) to $16.02 on volume of 4.62m shares.
The ChildKiller ("Defence") index (DFX) contains 17 components; the total volume traded in the index was 135.62m units. Within the index, 1 issues rose, with aggregate volume of 0.27m units; 15 issues fell, with aggregate volume of 135.29m units.
Today the index fell by 6.41 points (2.48%) to 251.85 points. The main decliners (in percentage terms) were -
- Boeing (BA) -2.17 (4.7%) to $43.97 on volume of 7.91m shares;
- Embraer Empresa (ERJ) -0.73 (4.5%) to $15.59 on volume of 0.85m shares;
- Lockheed Martin (LMT) -3.1 (4%) to $74.41 on volume of 3.05m shares;
- ITT Corporation (ITT) -1.65 (3.8%) to $41.35 on volume of 0.99m shares; and
- General Electric (GE) -0.64 (3.5%) to $17.81 on volume of 103.79m shares.
