04/01/05 Market Soapbox Closing Update
Pre Opening: Non Farms Payroll came in at 110,000 new jobs for March, the whisper number was 220,000. Last year, double the number, this year, half the number. February had a downward revision from 262K to 243K, while the unemployment rate fell to 5.2% (from 5.4%), but hourly earnings increased 0.3%, above forecasts.
The dollar has fell back and the bond market is having a party. Prices went up and yields went down, lowering interest rates. The 10 year note fell to 4.44, 30 year to 4.74, gold and commodities rose, market index futures went up. Looks like a nice cash opening for the market and a rally today.
Midday: The market opened with a roar (DJIA +64), which faded to a meow by 1PM EST (DJIA -88). And heres why, the Institute of Supply Management's gauge of manufacturing activity erroneously reported next weeks March ISM Services data in place of the manufacturing number. This showed that the manufacturing number had soared to a 20 year high of 63.1, well above the 55.1 expected.
The mistake was corrected and the ISM manufacturing number checked in at 55.2, near expectations of 54.9 and in line with Feb.'s 55.3 figure, showing strong growth in manufacturing. However, the confusion was compounded because the cat was out of the bag on the ISM Services number, which was not supposed to be released until next Tuesday.
The mistakenly pre released March ISM Services cost component checked in at 63.1, consensus was 59.0. This data shows a large increase in the cost component. This turned the markets milk sour and the traders into sour pussed kitty kats.
Bond traders reacted immediately and sold off, lifting yields on the 10-year note briefly back above 4.50%. Crude oil futures jumped past $56.50 per barrel, adding to yesterday's 2.5% gain. Gasoline futures hit record highs above $1.69 a gallon amid fears about inadequate refining supplies and a refinery outage in Venezuela.
Treasuries, stocks and gold which started strong after the non farms payroll reversed. The dollar which initially weakened also reversed. Natural gas, oil, utilities are up with some commodities gains. Interest-rate sensitive issues like utilities have maintained some gains despite rising rates, but financials have been beat down.
Market Close: The market leader DJIA after being +64, was -123 and closed -99 points, thats a 163 point swing to the downside on a leaked report. Oil & Natural Gas were the big gainers. Utilities, Gold/Silver and Oil were in the green. Advance Decline ratios were negative AMEX 3-1, Nasdaq 2-1 and NYSE 2-1.
The ISM numbers leak has changed the way things would have played out. The market would have gone up today and Monday. Then on Tues todays action would have been seen. The ISM number would have coincided with next weeks options unwind for April 15th expiration, giving the market a double whammy. The question of the day, what will happen next week?
Given that the Brown Shoe Boys from Bermuda where tipped off to next weeks ISM number, their options unwind may have already played out today. If so, we could see a market bounce starting Monday, which might last until around the 13th. If not, more downside awaits next week. Alcoa kicks off the 05 Q1 reporting on Wen. April 6th, the deluge of reports starts on Mon. April 18th.
Final Comments: My comment in yesterdays Market Soapbox came home to roost in an unexpected way. "Yesterday's whipsaw head fake had me wondering if someone had leaked the number" refering to the non farm payrolls number.
Yesterday's call on the CSM data also turned out to be correct. Talk about leaking the number, I'll bet the administration will make sure that the employee responsible for the leak keeps their job. Just incredible, and it shows to go ya, the definition of paranoia is being in possesion of the facts.
In any event, I expect the markets to take a turn for the worse around the Wen. April 13th (if not sooner) as options expiration kicks in. This should be followed by a small bounce up which will be quickly aborted by some dismal Q1 05 results and lowered forward guidance.
The Small Cap RUT and Semiconductor SOX will suffer, as Semis, financials and interest rate sensitive issues will get hit the hardest. This should slide the market down through the end of April.
The dollar has fell back and the bond market is having a party. Prices went up and yields went down, lowering interest rates. The 10 year note fell to 4.44, 30 year to 4.74, gold and commodities rose, market index futures went up. Looks like a nice cash opening for the market and a rally today.
Midday: The market opened with a roar (DJIA +64), which faded to a meow by 1PM EST (DJIA -88). And heres why, the Institute of Supply Management's gauge of manufacturing activity erroneously reported next weeks March ISM Services data in place of the manufacturing number. This showed that the manufacturing number had soared to a 20 year high of 63.1, well above the 55.1 expected.
The mistake was corrected and the ISM manufacturing number checked in at 55.2, near expectations of 54.9 and in line with Feb.'s 55.3 figure, showing strong growth in manufacturing. However, the confusion was compounded because the cat was out of the bag on the ISM Services number, which was not supposed to be released until next Tuesday.
The mistakenly pre released March ISM Services cost component checked in at 63.1, consensus was 59.0. This data shows a large increase in the cost component. This turned the markets milk sour and the traders into sour pussed kitty kats.
Bond traders reacted immediately and sold off, lifting yields on the 10-year note briefly back above 4.50%. Crude oil futures jumped past $56.50 per barrel, adding to yesterday's 2.5% gain. Gasoline futures hit record highs above $1.69 a gallon amid fears about inadequate refining supplies and a refinery outage in Venezuela.
Treasuries, stocks and gold which started strong after the non farms payroll reversed. The dollar which initially weakened also reversed. Natural gas, oil, utilities are up with some commodities gains. Interest-rate sensitive issues like utilities have maintained some gains despite rising rates, but financials have been beat down.
Market Close: The market leader DJIA after being +64, was -123 and closed -99 points, thats a 163 point swing to the downside on a leaked report. Oil & Natural Gas were the big gainers. Utilities, Gold/Silver and Oil were in the green. Advance Decline ratios were negative AMEX 3-1, Nasdaq 2-1 and NYSE 2-1.
The ISM numbers leak has changed the way things would have played out. The market would have gone up today and Monday. Then on Tues todays action would have been seen. The ISM number would have coincided with next weeks options unwind for April 15th expiration, giving the market a double whammy. The question of the day, what will happen next week?
Given that the Brown Shoe Boys from Bermuda where tipped off to next weeks ISM number, their options unwind may have already played out today. If so, we could see a market bounce starting Monday, which might last until around the 13th. If not, more downside awaits next week. Alcoa kicks off the 05 Q1 reporting on Wen. April 6th, the deluge of reports starts on Mon. April 18th.
Final Comments: My comment in yesterdays Market Soapbox came home to roost in an unexpected way. "Yesterday's whipsaw head fake had me wondering if someone had leaked the number" refering to the non farm payrolls number.
Yesterday's call on the CSM data also turned out to be correct. Talk about leaking the number, I'll bet the administration will make sure that the employee responsible for the leak keeps their job. Just incredible, and it shows to go ya, the definition of paranoia is being in possesion of the facts.
In any event, I expect the markets to take a turn for the worse around the Wen. April 13th (if not sooner) as options expiration kicks in. This should be followed by a small bounce up which will be quickly aborted by some dismal Q1 05 results and lowered forward guidance.
The Small Cap RUT and Semiconductor SOX will suffer, as Semis, financials and interest rate sensitive issues will get hit the hardest. This should slide the market down through the end of April.
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