Traders are Insane Buying this Market

Stocks generally rose Wednesday, but I cannot see why. After all, just about every economic data point deteriorated on the day or reflected a poor state of affairs despite improving. Producer prices declined, but that reflects poorly on economic demand. Homebuilder pessimism got less bad. Manufacturers and American industry stinks. More money is going overseas, and considering the state of affairs over there, we should be terrified about what that says about the U.S. economy. Even so, the SPDR S&P 500 (NYSE: SPY) climbed a half a point? Go figure. No really, go figure out how the heck that happened! Traders must be insane buying this market. Follow our blog here for more.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Traders are Insane

Economic Events

Just a day after the import and export price release, we got producer level pricing info. The Producer Price Index (PPI) showed an April decrease of 0.7%, in line with economists’ expectations. The result followed the March decline of 0.6%. The Core PPI, which excludes volatile food and energy influence, increased 0.1% versus expectations for a 0.2% increase; and it matched the prior month increase. This is bad news folks, because if prices fall or growth slows, it reflects poorly on economic demand.

The Empire State Manufacturing Survey General Business Conditions Index fell into contraction territory in May, falling to an index mark of negative 1.43, from +3.05 the month before. The result also fooled economists, who saw the index improving slightly this month to 3.75. Manufacturing is slipping into the doldrums.

Industrial Production fell 0.5% in April, which was a worse slide than economists’ expected (-0.2%). Furthermore, the prior month result was revised lower today to 0.3%, from 0.4%, and that should have supported the April change. Capacity Utilization deteriorated to 77.8% in April, down from 78.3% last month (revised). Economists were far off again here, with the consensus expectation set at 78.3%. Data has been softening in manufacturing generally speaking, and this report showed manufacturing production down 0.4% in April, versus economists’ expectations for a 0.1% gain. The April decline matched against the revised March figure of negative 0.3%, cut from -0.1% previously. It’s all over for American industry… it’s all over.

The Treasury International Capital (TIC) Report for March reached the wire today. This report sheds light on foreign demand for long-term U.S. securities. The Treasury reported a second straight net outflow of capital, as more American dollars went to buy foreign long-term securities than foreigners bought U.S. instruments. When money goes overseas, given the state of affairs overseas, it’s a sad statement about American opportunity.

The National Association of Homebuiders’ (NAHB) Housing Market Index (HMI) reached the wire today. This measure of the mood of homebuilders can be skewed by its inclusion of great numbers of smaller independent builders. In today’s market, where the large well-capitalized publicly traded builders have gobbled up market share from bankrupt and troubled smaller players, two very separate sets of opinions exist about the market. The report showed the HMI increased to a mark of 44, matching economists’ expectations, however, the prior month’s result was cut lower to 41, from 42. Readings above 50 indicate a mostly positive perspective of the housing market, and so you can see the issue for smaller builders has a voice here.

The latest mortgage activity data arrived this morning from the Mortgage Bankers Association. The report covering the period ending May 10 showed mortgage applications decreased by 7.3%, after increasing by 7.0% the prior week. Applications tied to the purchases of homes decreased by 4.0%, after increasing by 2.0% the prior week. The Refinance Index decreased by 8.0%, after increasing by 8.0% in the prior week. Effective interest rates mostly rose significantly, except for FHA sponsored loans. Look how quickly things change when rates edge higher; that’s scary to me.

Quarterly E-Commerce Retail Sales rose at a slower pace in Q1 2013. This report for Q1 showed quarter-over-quarter growth of 2.7%, less than Q4’s pace of 4.4%; Q3 2012 growth was 3.8% (revised from 3.7%). E-Commerce Retail Sales have of course been rising faster than overall sales, gaining market share. That was evidenced again this quarter, as e-commerce accounted for 5.5% of total sales, versus 5.4% in the preceding period. We can’t even sell stuff on the internet?

The National Association of Business Economics (NABE) hosted a forum entitled, “Will the Oil and Gas Boom Reignite the Economy?”

Commodity Markets (CLOSE)

WTI Crude	+0.2%
Brent Crude	+1.1%
RBOB Gasoline	+1.1%
NYMEX Natural Gas	+1.2%
Gold Spot	-2.3%
Silver Spot	-3.4%
COMEX Copper	-0.6%
CBOT Corn	-0.3%
CBOT Wheat	-2.4%
CBOT Soybeans	-0.1%
ICE Sugar	-0.4%
ICE Cocoa	-0.4%
ICE Orange Juice Conc.	-1.5%
CME Live Cattle	-0.25%

The EIA’s regular Petroleum Status Report for the period covering the week ending May 10 showed crude oil inventory decreased by 0.6 million barrels, and remained above the upper limit of the average range for this time of year. Total motor gasoline inventory increased by 2.6 million barrels and was in the upper half of the average range.

Overseas Markets

EUROPE	CLOSE	ASIA/PACIFIC	CLOSE
EURO STOXX 50	+0.5%	NIKKEI 225	+2.3%
German DAX	+0.3%	Hang Seng	+0.5%
CAC 40	+0.4%	S&P/ASX 200	-0.6%
FTSE 100	+0.1%	Korean KOSPI	+0.1%
Greek ASE	+3.7%	BSE India SENSEX	+2.5%

Corporate Events

In corporate news, the J.P. Morgan Global Technology, Media & Telecom Conference offered presentations by Symantec (Nasdaq: SYMC) and Advanced Micro Devices (NYSE: AMD). The Bank of America Merrill Lynch Health Care Conference brought news from Intuitive Surgical (Nasdaq: ISRG), Quest Diagnostics (NYSE: DGX) and McKesson (NYSE: MCK). Investor and analyst meetings took place at Northrop Grumman (NYSE: NOC), Sunpower (Nasdaq: SPWR) and Questar (NYSE: STR). William Lyon Homes (Nasdaq: LWHS) priced its IPO and closed up 2.9% on its first day of trading.

The EPS schedule highlighted reports from Macy’s (NYSE: M), Deere (NYSE: DE), Cisco Systems (Nasdaq: CSCO), Computer Sciences (NYSE: CSC), Aegean Marine Petroleum Network (NYSE: ANW), Sapient (Nasdaq: SAPE) and Consolidated Graphics (NYSE: CGX). We also heard from Acxiom (Nasdaq: ACXM), Adecoagro (Nasdaq: AGRO), Aoxing Pharmaceutical (NYSE: AXN), Arctic Cat (Nasdaq: ACAT), Astrotech (Nasdaq: ASTC), Asure Software (Nasdaq: ASUR), Authentidate Holding (Nasdaq: ADAT), Auxilio (Nasdaq: AUXO), Bioanalytical Systems (Nasdaq: BASI), BIO-key International (Nasdaq: BKYI), Biostar Pharmaceuticals (Nasdaq: BSPM), Blonder Tongue Labs (NYSE: BDR), Bridgeline Digital (Nasdaq: BLIN), Capstone Therapeutics (Nasdaq: CAPS), Century Casinos (Nasdaq: CNTY), China Housing & Land (Nasdaq: CHLN), China Marine Food (Nasdaq: CMFO), China Natural Gas (Nasdaq: CHNG), China Pharma (Nasdaq: CPHI), Cogo Group (Nasdaq: COGO), Dillard’s (NYSE: DDS), Diversified Restaurant (Nasdaq: BAGR), Document Security Systems (NYSE: DSS), Dyadic Int’l (Nasdaq: DYAI), Eagle Bulk Shipping (Nasdaq: EGLE), ECOtality (Nasdaq: ECTY), E-House China (NYSE: EJ), Energy Focus (Nasdaq: EFOI), EntreMed (Nasdaq: ENMD), Feihe Int’l (NYSE: ADY), Fonar (Nasdaq: FONR), Forbes Energy Services (NYSE: FES), FriendFinder Networks (NYSE: FFN), Gasco Energy (Nasdaq: GXSN), GasLog (Nasdaq: GLOG), Global Telecom & Technology (Nasdaq: GTLT), Industrial Services of America (Nasdaq: IDSA), Jack in the Box (Nasdaq: JACK), Jeffersonville Bancorp (Nasdaq: JFBC), Jinpan (NYSE: JST), Kingold Jewelry (Nasdaq: KGJI), MFC Industrial (NYSE: MIL), Multiband (Nasdaq: MBND), Net Medical Express (Nasdaq: NMXS), NetEase (Nasdaq: NTES), New Source Energy Partners (Nasdaq: NSLP), NQ Mobile (NYSE: NQ), Onstream Media (Nasdaq: ONSM), Orient Paper (NYSE: ONP), Overland Storage (Nasdaq: OVRL), Oxford Resource Partners (NYSE: OXF), Pathfinder Cell Therapy (Nasdaq: PFND), PFSweb (Nasdaq: PFSW), Pinnacle Foods (NYSE: PF), Professional Diversity Network (Nasdaq: IPDN), QAD Inc. (Nasdaq: QADB), Quantum Fuel Systems (Nasdaq: QTWW), Radiant Logistics (Nasdaq: RLGT), Revolution Lighting (Nasdaq: RVLT), RLJ Entertainment (Nasdaq: RLJE), Safe Bulkers (NYSE: SB), Savient Pharmaceuticals (Nasdaq: SVNT), Shengkai Innovations (Nasdaq: VALV), Skechers Int’l (NYSE: SKX), Sorl Auto Parts (Nasdaq: SORL), Spanish Broadcasting (Nasdaq: SBSA), ThermoEnergy (Nasdaq: TMEN), Tri-Tech (Nasdaq: TRIT), Vermillion (Nasdaq: VRML), Vimpelcom (NYSE: VIP), VirtualScopics (Nasdaq: VSCP), WidePoint (NYSE: WYY), Xenonics (Nasdaq: XNNH), Youku Tudou (Nasdaq: YOKU) and more.

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