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I
magine the outcry there would be if some guy on the internet made a smallish fortune trading based on what turned out to be inside information. He would be hounded, set upon by the regulators, and probably imprisoned. Hell, they went after Martha Stewart for a stock trade that only gained her about $30k.
Yet some Arab 'prince' buys a shitload of Citigroup during a trip to America during which he meets with Henry "Goldman Insider" Paulson, and three days later Henry "Goldman Insider" Paulson demands a bailout for Citigroup and the 'prince's Citi stock doubles.
(I say 'prince' because this guy is one of the Saud family of goatherds who fraudulently became 'Kings' and fraudulently affixed the particle 'al-' to their names... after being installed by the Yanks after the betrayal of the Ikhwan).
By some estimates, this 'prince' pocketed over a billion dollars - all based on insider dealing that would get anyone else on the planet arrested. Goldman Insider and the rest of the anointed insist on being called 'public servants'; in reality they serve their cronies.
Goebbels was right - repeat a lie often enough and eventually the public will just internalise it: we have a parasitic structure that insists we obey it and feed it, and yet not five people in a hundred understand that they are slaves.
The intraday reversal in US markets - 6.9% from low to high - was basically inexplicable: look no further than the stupidity of the justifications to which journalists had to sink. Bloomberg and AP tried to pretend that a primary driver was an announcement by an insurance company with a market cap which is less than 0.03% of the S&P500's total (that will have gone up today, to almost 0.06%).
At the close yesterday, Hartford Financial was about the same size as the Bendigo Bank. Hartford lost money last year, and its balance sheet is a nightmare.
The announcement itself: that Hartford would exceed the current estimates for its full year earnings (estimates that Hartford guided down and down and down all year).
Hartford might be the same size as BEN, but the S&P is a lot bigger than the All Ords. HIG is 423rd in the S&P500, so to put it in perspective it would be like the All Ordinaries reversing a 3% decline because Jabiru Metals or Citigold issued an upwardly-revised forecast.
Furthermore, the management of Hartford protest too much: in a world where every financial firm on the planet has a massively distressed balance sheet, Hartford's management claim that they have no need for new capital. Now where have we heard that before?
Let's list - in no particular order - some firms whose management declared that their asset positions were just dandy...
- Lehman Brothers
- Merrill Lynch
- Freddie Mac
- Washington Mutual
- IndyMac
- Enron (going back a bit further)
- Citigroup
There have been others, but frankly I think my point is made - you can no longer believe any pronouncement by any CEO of a US financial firm.
And in any event, the idea that optimism from a miniscule insurer can be the catalyst for a 7% drive in stock prices? If anybody tried to sell me that lemon a research meeting, they would leave the meeting swearing.
Something you'll notice is that breadth and internals were mind-bogglingly strong for the major indices - the sort of numbers you would expect to see at a swing high. Something ain't right.
Perhaps the US investor class got confused, thought that Prozac cured economic Depression, and gobbled it down by the handsful; that's the only thing I can think of.
Economic News
Non-farm Payrolls were well below expectations - the report showed that 533,000 jobs had gone to the Employment Graveyard as compared with expectations for a 335,000 decline. The 533k outcome was the seasonally adjusted number - the actual number was -634,000. The 533k seasonally adjusted number was the largest decline in non-farm payrolls in 34 years.
Interestingly, the Household Survey element of the employment report shows an unemployment rate of 9.8% - and yet reported unemployment was 6.8%. I guess that the statistical authorities think it's far better to base unemployment numbers on enterprise-level data than on household level data, even though both surveys are sufficiently large to provide a statistically valid sample. It will be interesting in the coming months to see if the journalistic community is smart enough to notice when the Household survey measurement of unemployment tops 10%.
At 3p.m., data was released on Consumer Credit; recall that last month I said that if October's number for credit was solid, the bailout was a sham and should be repealed? Well, the bailout is still a sham, but consumer credit contracted by $3.5 billion.
And finally, the Mortgage Bankers Association released data showing that a record 7% of all US mortgages are delinquent (up from 5.6% last year - keep in mind that the subrpime mess had already started by then so last year's number was already quite high).
Headline Indices
The Dow Jones Industrial Average index (DJI) added 259.18 points (3.09%) to 8635.42 points after slipping to the low 8100s after the jobs report. The index high for the day was 8682.89, while the low of 8118.50 was set at about 10:45 a.m. - the news stuck in investors' minds for a total of 2 hours... which in the Ritalin States of America is longer than most things stick.
Total volume traded in the 30 components of the index was 1.35bn shares. Advancers outpaced decliners by 14 to one, with 28 advancers to 2 decliners. Advancing volume exceeded declining volume by 1.25bn to 94.86m shares The biggest gainers (percentage-wise) were -
- JPMorganChase (JPM) +2.27 (7.3%) to $33.35 on volume of 72.11m shares;
- Bank Of America (BAC) +0.9 (6.3%) to $15.24 on volume of 137.63m shares;
- Merck (MRK) +1.49 (6%) to $26.49 on volume of 22.08m shares;
- Wal-Mart (WMT) +3.1 (5.6%) to $58.21 on volume of 37.02m shares; and
- AIG (AIG) +0.1 (5.4%) to $1.94 on volume of 57m shares.
The S&P500 index (SPX) gained 30.85 points (3.65%) to 876.07 points. Total volume traded in the 500 components of the index was 4.97bn shares. Advancers outpaced decliners by 10 to one, with 442 advancers to 44 decliners. Advancing volume exceeded declining volume by 4.36bn to 523.99m shares. The biggest gainers (percentage-wise) were -
- Hartford Financial Svc.Gp. (HIG) +7.38 (102.4%) to $14.59 on volume of 119.39m shares;
- Lincoln National (LNC) +5.15 (42.2%) to $17.36 on volume of 13.09m shares;
- Principal Financial Group (PFG) +5.56 (40.8%) to $19.2 on volume of 7.62m shares;
- ProLogis (PLD) +1.26 (34.8%) to $4.88 on volume of 21.17m shares; and
- Prudential Financial (PRU) +7.35 (34.7%) to $28.52 on volume of 21.55m shares.
The Nasdaq Composite added 63.75 points (4.41%) to 1509.31 points while the Nasdaq100 gained +50.12 points (4.44%) to 1177.87 points..
Total volume traded in the 100 components of the index was 1.02bn shares. Advancers outpaced decliners by 23.3 to one, with 93 advancers to 4 decliners. Advancing volume exceeded declining volume by 925.32m to 90.3m shares. The biggest gainers (percentage-wise) were -
- Leap Wireless International (LEAP) +3.27 (15.7%) to $24.11 on volume of 4.19m shares;
- SanDisk (SNDK) +1.15 (14.2%) to $9.23 on volume of 12.72m shares;
- Sears Holdings (SHLD) +5.58 (13.6%) to $46.62 on volume of 1.73m shares;
- Akamai Technologies (AKAM) +1.54 (13.4%) to $13.03 on volume of 4.68m shares; and
- Steel Dynamics (STLD) +0.93 (12.9%) to $8.15 on volume of 8.59m shares.
Volatility
The CBOE Volatility Index dropped 3.85 points (6.05%) to 59.79 points and the CBOE Nasdaq100 Volatility Index dropped 3.69 points (5.9%) to 58.90 points..
Breadth and Internals
A total of 3905 issues traded today on the NYSE; today's total volume was 2.73bn shares. A total of 2619 stocks posted gains for the day, and volume in advancing issues totalled 1.44bn shares. Exerting downwards pressure on the index were 1204 losers, which accounted for a total declining volume of 1.24bn shares. 27 stocks made new 1-year highs on the NYSE, while 306 shares plumbed new 52-week depths.
On the Nasdaq 2954 tickers traded today; total Nasdaq volume was 2.18bn shares. A total of 1965 stocks posted gains for the day, with aggregate volume of 1.87bn shares changing hands in the day's winners. The red zone of the Nasdaq exchange comprised 849 losers, and total declining volume was 280m shares. 2 Nasdaq-listed stocks hit new 52-week highs, while 183 shares dipped to new 1-year lows.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 8635.42 | +259.18 | 3.09% |
| S&P500 Index | 876.07 | +30.85 | 3.65% |
| Nasdaq Composite | 1509.31 | +63.75 | 4.41% |
| Nasdaq100 | 1177.87 | +50.12 | 4.44% |
| CBOE Volatility Index | 59.79 | -3.85 | -6.05% |
| CBOE Nasdaq100 Volatility Index | 58.90 | -3.69 | -5.9% |
Dow Darlings
- JPMorganChase (JPM) +2.27 (7.3%) to $33.35 on volume of 72.1m units
- Bank Of America (BAC) +0.9 (6.3%) to $15.24 on volume of 137.6m units
- Merck (MRK) +1.49 (6%) to $26.49 on volume of 22.1m units
- Wal-Mart (WMT) +3.1 (5.6%) to $58.21 on volume of 37m units
- Home Depot (HD) +1.18 (5.1%) to $24.4 on volume of 32.4m units
Dow Duds:
- General Motors (GM) -0.03 (0.7%) to $4.08 on volume of 44.5m units
- AT&T (T) -0.02 (0.1%) to $28.15 on volume of 50.4m units
Most Traded Dow stocks:
- Citigroup (C) +0.31 (4.2%) to $7.71 on volume of 212.8m units
- Bank Of America (BAC) +0.9 (6.3%) to $15.24 on volume of 137.6m units
- General Electric (GE) +0.3 (1.7%) to $17.85 on volume of 106.3m units
- Microsoft (MSFT) +0.76 (4%) to $19.87 on volume of 89.6m units
- Intel (INTC) +0.52 (4.1%) to $13.29 on volume of 83m units
Precious Metals
Precious metals futures were soft yet again.
| Precious Metals Futures | |||
| Index | Close | Gain(Loss) | % |
| Gold | 757.7 | -7.8 | -1.02 |
| Silver | 9.515 | -0.005 | -0.05 |
| Palladium | 162.75 | -8.75 | -5.1 |
| Platinum | 800.2 | 1.4 | 0.18 |
The Gold Bugs index (XAU) lost -0.12 points (0.14%) to 87.58 points. Total volume traded in the 16 components of the index was 144.65m shares. Advancers and decliners were split evenly, 8 decliners to 8 advancers. Declining volume was greater than advancing volume by 110.67m to 33.98m shares. The main decliners (in percentage terms) were -
- Freeport McMoran (FCX) -0.71 (4.1%) to $16.8 on volume of 40.82m shares;
- GoldCorp (GG) -0.57 (2.5%) to $21.93 on volume of 15.38m shares;
- Barrick Gold (ABX) -0.56 (2.2%) to $25.14 on volume of 13.83m shares;
- Silver Wheaton (SLW) -0.05 (1.5%) to $3.19 on volume of 9.28m shares; and
- Agnico Eagle Mines (AEM) -0.36 (1.2%) to $28.71 on volume of 5.6m shares.
Energy Complex
Energy futures are now so deeply oversold that it's ridiculous - if the stock market is 'discounting a future economic rebound', why aren't Energy traders? how come it's only the stock market that is assumed to be forward looking (hint - the stock market is about as forward looking as week-old meatloaf. I've done plenty of work on expectations formation and I'll show it to you if you like)
| Energy Futures | |||
| Commodity | Close | Gain(Loss) | % |
| Crude Oil | 42.02 | -1.65 | -3.78 |
| Heating Oil | 1.4519 | -0.0572 | -3.79 |
| Natural Gas | 5.765 | -0.252 | -4.19 |
| Gasoline RBOB | 0.9274 | -0.0421 | -4.34 |
| Ethanol | 1.398 | -0.091 | -6.11 |
The Oil Services index (OSX) rose 2.53 points (2.43%) to 106.67 points. Total volume traded in the 15 components of the index was 144.86m shares. Advancers outpaced decliners by 2.8 to one, with 11 advancers to 4 decliners. Advancing volume exceeded declining volume by 112.52m to 32.34m shares The biggest gainers (percentage-wise) were -
- Global Industries (GLBL) +0.22 (10.1%) to $2.4 on volume of 2.53m shares;
- Tidewater (TDW) +1.89 (5.8%) to $34.74 on volume of 1.41m shares;
- National Oilwell Varco (NOV) +1.1 (5.6%) to $20.86 on volume of 11.58m shares;
- Cameron International (CAM) +0.84 (4.9%) to $18.09 on volume of 6.67m shares; and
- Baker Hughes (BHI) +1.15 (4.4%) to $27.17 on volume of 5.44m shares.
Currency Futures
Currency futures - particularly the Euro - reversed in favour of the USD... somehow idiots seem to think they have to buy the currency of the economy that just showed it's in the biggest employment hole since the 1970s...
| Currency Futures | |||
| Index | Close | Gain(Loss) | % |
| U.S. Dollar Index | 86.9 | 0.355 | 0.41 |
| Euro FX | 1.2688 | -0.0101 | -0.79 |
| Swiss Franc | 0.8181 | -0.0183 | -2.19 |
| Australian Dollar | 0.6441 | -0.0008 | -0.12 |
| Canadian Dollar | 0.7814 | -0.001 | -0.13 |
| Japanese Yen | 1.0749 | -0.0074 | -0.68 |
| New Zealand Dollar | 0.5326 | -0.0002 | -0.04 |
Bellwethers
The nine-stock group that makes up the Rant bellwethers advanced on average by 2.8%. The fallout occurred as follows:
- General Electric (GE) +0.30 (1.71%) to $17.85 on volume of 106.29m units.
- Citigroup (C) +0.31 (4.19%) to $7.71 on volume of 212.82m units.
- Wal-Mart (WMT) +3.10 (5.63%) to $58.21 on volume of 37.02m units.
- IBM (IBM) +3.15 (4.07%) to $80.59 on volume of 10.86m units.
- Intel (INTC) +0.52 (4.07%) to $13.29 on volume of 83.04m units.
- Cisco Systems (CSCO) +0.61 (3.98%) to $15.94 on volume of 65.95m units.
- Google (GOOG) +9.65 (3.52%) to $283.99 on volume of 6.45m units.
- Fannie Mae (FNM) -0 (0%) to $0.87 on volume of 27.08m units.
- Freddie Mac (FRE) -0.02 (2.27%) to $0.86 on volume of 17.28m units.
Other Indices of Interest...
The Banks index (BKX) gained 2.98 points (6.72%) to 47.32 points. Total volume traded in the 24 components of the index was 696.61m shares. Advancers outpaced decliners by 22 to one, with 22 advancers to 1 decliners. Advancing volume exceeded declining volume by 681.58m to 15.02m shares The biggest gainers (percentage-wise) were -
- National City (NCC) +0.22 (12.2%) to $2.02 on volume of 39.75m shares;
- Wachovia (WB) +0.58 (11%) to $5.85 on volume of 42.99m shares;
- PNC Financial (PNC) +4.66 (9.7%) to $52.48 on volume of 6.71m shares;
- Northern Trust (NTRS) +4.41 (9.6%) to $50.58 on volume of 2.62m shares; and
- M&T Bank (MTB) +5.71 (9.2%) to $67.88 on volume of 1.48m shares.
The Semiconductor index (SOX) rose 5.92 points (3.17%) to 192.56 points. Total volume traded in the 18 components of the index was 270.06m shares. Advancers outpaced decliners by 7.5 to one, with 15 advancers to 2 decliners. Advancing volume exceeded declining volume by 248.18m to 19.5m shares The biggest gainers (percentage-wise) were -
- Sandisk (SNDK) +1.15 (14.2%) to $9.23 on volume of 12.72m shares;
- Micron Technology (MU) +0.23 (12.7%) to $2.04 on volume of 28.47m shares;
- KLA-Tencor Cp (KLAC) +0.97 (5.3%) to $19.22 on volume of 4.13m shares;
- Applied Materials (AMAT) +0.48 (5%) to $10 on volume of 23.74m shares; and
- Taiwan Semiconductor (TSM) +0.3 (4.7%) to $6.72 on volume of 8.71m shares.
The ChildKiller ("Defence") index (DFX) gained 8.55 points (3.63%) to 244.15 points. Total volume traded in the 17 components of the index was 147.86m shares. 16 stocks in the index advanced - the biggest gainers (percentage-wise) were -
- Gencorp (GY) +0.23 (9.1%) to $2.76 on volume of 0.61m shares;
- FLIRr Systems (FLIR) +2.17 (8.2%) to $28.72 on volume of 1.82m shares;
- Esterline Tech (ESL) +2.11 (6.4%) to $34.91 on volume of 0.35m shares;
- Teledyne Tech (TDY) +1.84 (5%) to $38.52 on volume of 0.21m shares; and
- Lockheed Martin (LMT) +3.04 (3.9%) to $80.19 on volume of 3.69m shares.
