Demand Weak But Prices Still Rise- S&P 500 Price/Volume Heat Map Nov. 6 Trading Day

Another day and another gain, with the S&P 500 gaining roughly 40 basis points in value. This is as all sectors except for the discretionary and healthcare stocks gained ground, the latter group losing group by about 20 to 30 basis points.

It looks like the operators were jamming the market higher ahead of the Twitter IPO. Would it not look poorly on Goldman if one of the biggest of IPO's of year came off into a sign of market weakness. I say this as despite the gain in value on the S&P 500, overall market demand remained weak, representing yet another day when equity prices rose overall but demand remained weak. That said, there were some sectors that showed signs a strength, most notably the defensive groups. More so, telecoms and utilities gained in price on higher demand, despite bond rates that continue to bounce off the 200 day moving average. Is this traders positioning themselves for lower interest rates? Time will tell. 

And the ECB Delivers- QE Infinity Going Global

Here is the press release from the ECB....

At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:

1. The interest rate on the main refinancing operations of the Eurosystem will be decreased by 25 basis points to 0.25%, starting from the operation to be settled on 13 November 2013.
   
2. The interest rate on the marginal lending facility will be decreased by 25 basis points to 0.75%, with effect from 13 November 2013.
   
3. The interest rate on the deposit facility will remain unchanged at 0.00%.
   

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.

I cannot get the chart(s) at this moment but the stampede into the dollar is ongoing, with shares of the US dollar long ETF (ticker UUP) gaining about 1% in the pre-open market while the Euro funds are getting slammed. For instance, the Currency Shares Euro Trust (ticker FXE) is trading down by 150 basis points. Both are large moves for the currency related funds.

As you would expect,  gold related funds are trading down in the pre-market, a response to the stronger dollar.

That all said, I am unconcerned with the short-term fluctuations here. The idea that the dollar will strengthen in a currency or the Fed will pull back on their own QE injections is preposterous. At some point, the dollar will gain the lead in the global currency race to bottom.

Ten Investing Tips From Roger's Street Smarts

1. If you were smart at the start of the 19th century, you made your way to London. If you were smart at the start of the 20th century, you moved to New York. And if you are smart at the start of the 21st century, you will find your way to Asia.

2. We are in a long secular bull market in commodities worldwide. Like all bull markets, it will end in a bubble. But the bull market still has several years to go.

3. It is good to lose money, to go broke at least once, and preferably twice. But if you are going to do it, do it early in your career. Do it early and it is not the end of the world. . . it teaches you how much you do not know.

4. The way you become a successful investor is by investing only in what you yourself have a wealth of knowledge about. Everybody knows a lot about something. Cars, fashion, whatever it is. . . just take a look at your daily life. Concentrate on what you know. . . you will see a major change coming long before anybody on Wall Street will.

5. Most successful investor do nothing most of the time. Do not confuse movement with action. Know when to sit and wait.

6. If I were to tell you that you could only make twenty-five investments in your lifetime, chances are you would be extremely careful about investing. Invest very rarely.

7. If you want to make a lot of money, resist diversification. Brokers promote the motion that everybody should diversity. But that is mainly to protect themselves. The way to get rich is to find what is good, focus on it, and concentrate your resources there.

8. New York is the economic and cultural capital of what is now the largest debtor nation in the world, the largest debtor nation in the history of the world. The world’s largest creditor nations are in Asia. That is where the assets are. That is where the dynamism and energy are.

9. Alan Greenspan’s greatest strengths were those of a politician. The way capitalism is supposed to work is that when people get in trouble, they fail. Smart, competent people come in, take over the assets, reorganize, and start again from a sound base. Greenspan’s way was to prop up failure. He and the politicians were taking money from competent people, giving it to the incompetent people, and telling the incompetent people, “Here, the government is on your side. Now you can compete with the competent people with their money and our support.”

10. I am dying to find a way to invest in both North Korea and Myanmaar. The major changes in these two countries are among the most exciting things I see right now, looking to the future. Another think I am extremely bullish on for the next twenty or thirty years is Chinese tourism. The Chinese have not been able to t ravel for decades, and now they can. Both inside and outside the country, Chinese tourism will explode

Is Inflation a Good Thing- the Mises View

The Mises Institute's Mark Thornton delves into the growing thought that all the economy needs is a shot of inflation adrenaline.

Bubble In the Broth- Roubini

Roubini writes at Project Syndicate, a portion of which I present below, about the growing concern about market bubbles, realizing that QE has distorted the markets. 

As below-trend GDP growth and high unemployment continue to afflict most advanced economies, their central banks have resorted to increasingly unconventional monetary policy. An alphabet soup of measures has been served up: ZIRP (zero-interest-rate policy); QE (quantitative easing, or purchases of government bonds to reduce long-term rates when short-term policy rates are zero); CE (credit easing, or purchases of private assets aimed at lowering the private sector’s cost of capital); and FG (forward guidance, or the commitment to maintain QE or ZIRP until, say, the unemployment rate reaches a certain target). Some have gone as far as proposing NIPR (negative-interest-rate policy).

And yet, through it all, growth rates have remained stubbornly low and unemployment rates unacceptably high, partly because the increase in money supply following QE has not led to credit creation to finance private consumption or investment. Instead, banks have hoarded the increase in the monetary base in the form of idle excess reserves. There is a credit crunch, as banks with insufficient capital do not want to lend to risky borrowers, while slow growth and high levels of household debt have also depressed credit demand.

As a result, all of this excess liquidity is flowing to the financial sector rather than the real economy. Near-zero policy rates encourage “carry trades” – debt-financed investment in higher-yielding risky assets such as longer-term government and private bonds, equities, commodities and currencies of countries with high interest rates. The result has been frothy financial markets that could eventually turn bubbly.

The rest can be read here.

IPO's Up, Mergers & Acquisitions Down

As equity prices have firmed, private companies have taken advantage of increased investor sentiment (or Fed balance sheet, whatever you want to call it) and have come to market with initial public offerings, a trend that will come to head later this week with the IPO of Twitter. Although companies have come to market, management teams sentiment toward mergers & acquisitions has waned. So far in 2013, Renaissance Capital data suggests 222 companies have held IPO's versus just 140 last year and 104 in 2008.

Annual Count of IPO's

Compare this to the annual count of mergers and acquisitions, which I compiled via Capital IQ. Following the bounce in the number deals following the 2008/2009 market bottom, the number of deals has tailed in 2013.

Annual Count of Mergers & Acquisitions

So as management teams have wanted to sell shares into the market, monetizing their equity, they have also (at least collectively) been reluctant to use their capital to make acquisitions.

High Volume High- Nov. 5 Trading Day Edition

Quite a few names making new high despite the overall market weakness. More interestingly, a bunch of stocks broke out long-term bases. These include AEIS, NTLS, ORIG, ZBRA, DGI, DWRE, FN, and PMC. Yes, that is a lot.