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Dismal Equity Volume Day As Gold And Treasuries Surge

Tyler Durden's picture




 

UPDATE: AA beats (headlines - at first glance) though Adjusted EBITDA is half Q2 2011's) and is holding modest gains after-hours - though well of initial knee-jerk reaction highs. And AMD (-7% after-hours) just pre-announced cutting revenue from sequentially +3% to -11%!!

Despite the ubiquitous late-day surge to day-session highs in S&P 500 e-mini futures (ES), equities ended the day marginally lower - rejecting the late-Friday surge unreality (as VIX also snapped back up and went sideways at pre-Friday-surge levels all day). The narrowest range in two months for the day-session in stocks (with major financials underperforming and only the Healthcare sector green on the day) was the antithesis of the strength in Treasuries with 5Y at record-low yields and 10Y testing back to 1.50%. Gold also led the day - notably outperforming both the USD-implied weakness and stocks - though the two now-QE-sensitive assets converged into the close - leaving Treasuries in the dust. ES drifted lower all night through the European session and converged with broad risk asset's far less sanguine levels from Friday into the US day-session. CONTEXT and ES tracked each other very well all day long until the last 30 minutes or so when stocks pushed 4-5pts rich. Credit modestly outperformed equities on the day but this was more catch-up from Friday than a new leg up as markets were dismally quiet in both stocks and bonds today - much quieter than Thursday and Friday of last week with ES (day) closing below its 50DMA (despite the late-day grind). EURUSD roundtripped from opening strength to weakness and back to modest strength leaving USD -0.2% (and only AUD weaker against the USD on the day).

Gold outperformed all day but note the convergence pull between gold and stock into the close today - even as Treasury yields just kept dropping to that 1.50 handle...

 

Stocks recoupled with broad risk assets into the day-session close - shrugging off Friday';s late day exuberance - but the again into the close today they pushed to their own new reality...

The USD roundtripped from its modestly weaker open after jumping into the European open last night and then leaking back all day - providing some momentum for both stocks and commodities. USD ended the day -0.2% from Friday's close (interestingly with only AUD weaker against the USD among the majors)...

 

But stocks remain notably hopeful relative to Treasuries as they drift lower and lower in yield...

 

Alcoa reported better than expected earnings and is +1.4% After-Hours (but the reality is not so pretty):

  • Alcoa projects global aluminum supply deficit in 2012 and reaffirmed its forecast that global aluminum demand would grow 7 percent in 2012
  • AA aluminum products Q2 shipments: 1,305,000 vs 1,295,000 in Q1, and 1,268,000 in Q2 2011
  • AA Adjusted EBITDA Q2 2012: $517, half of $1,039 in Q2
    2011.
  • AA Adjusted EBITDA margin plunges to 8.7%, from 10.4% in Q1, and
    15.8% year ago
  • Q2 Positive free cash flow of $246 million
  • Cash from operations of $537 million

 

 

and AMD dismal pre-announcement (and -6% after-hours):

  • AMD, which is expected to announced earnings at 5pm on July 19, just dropped the preannouncement bomb, and cut revenues from +3% sequentially, to down 11%. It is still keeping gross profit margin in line with prior guidance.
  • AMD is also lowering operating expenses guidance by 8% than prior guidance of $605MM.
  • The lower preliminary revenue results are primarily due to business conditions that materialized late in the second quarter, specifically softer-than-expected channel sales in China and Europe as well as a weaker consumer buying environment impacting the company's Original Equipment Manufacturer (OEM) business.

 

Charts: Bloomberg

 

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Mon, 07/09/2012 - 16:16 | 2599800 LawsofPhysics
LawsofPhysics's picture

Paper promises burning everywhere.  Got physical?

Mon, 07/09/2012 - 16:19 | 2599816 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1, yes of course I have physical.

And I will be buying more soon.  I have been the physical PM game since the 1980s.  I see NO END to our financial problems.

I would rather own PMs than the mines (ref ZH article this afternoon re Bolivia nationalizing silver mines).

Mon, 07/09/2012 - 16:26 | 2599826 LawsofPhysics
LawsofPhysics's picture

Yes, no suprise that possession is becoming 100% of the law.  Trust is dead.  Any physical asset (especially revenue generating) that can be physically defended or safeguarded will be of value.  Russia went through this in the early 90's.  The U.S.S.A. is simply coming to the same endgame from a different direction, that's all.  Makes you wonder which states will leave the union first.  Better do it now, while all the troops are spread around the world and already upset with the status quo.  The again, there are a few states that contribute more people to our volunteer military to begin with.  These states have resources and may have an easier time leaving anyway.

Mon, 07/09/2012 - 18:16 | 2600208 flacon
flacon's picture

Perhaps gold "surged", compared to last week's hyper-galactic-smash, but still.... "surge" is pushing it. 

 

http://www.kitco.com/images/live/gold.gif

Mon, 07/09/2012 - 16:28 | 2599849 walküre
walküre's picture

It made sense to own mining shares in a Depression when the mines were located within a jurisdiction that you knew.

Nationalizition of mines is a common theme going forward. The equity in a company operating a license to extract precious metals from the ground of another nation will mean squat.

Own physical and understand what it means when nations seize the foreign operations to keep the precious metals at home or at least benefit 100% from the sale of the metals.

Mon, 07/09/2012 - 16:29 | 2599858 LawsofPhysics
LawsofPhysics's picture

Same thing for oil, which was also up a bit today.

Mon, 07/09/2012 - 16:45 | 2599903 walküre
walküre's picture

Who is buying?

Mon, 07/09/2012 - 16:59 | 2599934 LawsofPhysics
LawsofPhysics's picture

BRICs, selling treasuries, buying physical.  Been going on for a while now.

Mon, 07/09/2012 - 18:44 | 2600288 walküre
walküre's picture

Brazil won't buy physical oil. They are sitting on enough themselves. China is most definitely buying and securing supply. India? Not so sure they can actually afford it.

If I suspected anyone of buying and storing, I'd say the US is buying up what it can from around the world and storing it here BEFORE they're crashing the USD.

Mon, 07/09/2012 - 16:29 | 2599855 sudzee
sudzee's picture

Been buying since Dec 87 and add every week.

Mon, 07/09/2012 - 17:01 | 2599945 Silver Bug
Silver Bug's picture

Continue to accumalte gold and silver. Good call.

 

Buy Silver, Save in Silver. Protect your Wealth.

Mon, 07/09/2012 - 16:56 | 2599925 Silver Bug
Silver Bug's picture

Hold tight your gold. One of the few remaing real assets left.

 

http://ericsprott.blogspot.ca/

Mon, 07/09/2012 - 16:17 | 2599802 Money 4 Nothing
Money 4 Nothing's picture

 

"As Gold And Treasuries Surge"

 

Until tommorow. then down again. It's just idled in trading ranges.

Mon, 07/09/2012 - 16:27 | 2599844 LawsofPhysics
LawsofPhysics's picture

moreover, other things and other paper is losing value.

But hey, if your investment strategy only goes to tomorrow, well then, good luck with that.

Mon, 07/09/2012 - 16:18 | 2599814 midgetrannyporn
midgetrannyporn's picture

Everyone beats estimates by a penny but it isn't a conspiracy.

Mon, 07/09/2012 - 16:21 | 2599824 walküre
walküre's picture

AA

EBITDA margins down 50% from a year ago? Who cares that their sales are up? What aren't they reporting?

Mon, 07/09/2012 - 16:28 | 2599852 veyron
veyron's picture

Given the smackdown in aluminum prices, the fact that they werent completely decimated is impressive ...

Mon, 07/09/2012 - 16:24 | 2599830 gatorengineer
gatorengineer's picture

half is the new double....

Mon, 07/09/2012 - 16:33 | 2599869 yogibear
yogibear's picture

Bernake and the Fed say they weapon is the printing press. Print and devalue until the US dollar dies is their motto.

Mon, 07/09/2012 - 16:33 | 2599870 Silvertrader
Silvertrader's picture

I had a nice profitable day today trading gold. I was long a few cfd's on gold and closed it with a nice profit.

Mon, 07/09/2012 - 16:35 | 2599875 john_connor
john_connor's picture

Harder to fudge EBITDA

Mon, 07/09/2012 - 16:36 | 2599878 IMA5U
IMA5U's picture

dismal tape for Da Bearz

Mon, 07/09/2012 - 16:42 | 2599894 Balmyone
Balmyone's picture

Being long silver miners is the biggest losing proposition ever. I've held CDE from $30 to $16 and change today. I am a bagholder, plain and simple. I know these nationalization worries are among the factors pounding these company shares, but it would seem the shares are also pricing in a collapse in precious metal prices.

Why the hell didn't I just buy U.S. Treasuries two years ago, instead of getting tricksy and buying alot of a silver miner that has done nothing but fall.

I can't wait for tomorrow where I'll probably lose more money.

Why don't you sell, you may ask. Cause its hard to accept the loss.

Mon, 07/09/2012 - 16:44 | 2599900 fuu
fuu's picture

It won't be any easier at $5.

Mon, 07/09/2012 - 16:54 | 2599917 ATM
ATM's picture

Or $.50

Mon, 07/09/2012 - 17:18 | 2600003 slaughterer
slaughterer's picture

Or .0005

Mon, 07/09/2012 - 16:54 | 2599916 walküre
walküre's picture

Do you own any physical? There's a difference when you own coins or bars and have them in your house vs. a certificate that entitles you to shared ownership. I can't see collapsing metal prices due to a strengthening Dollar. Perhaps if the government were to confiscate enough wealth from the 1% to balance the budget and pay down the national debt. Yes, then perhaps. But what are the chances of that happening?

Sell your shares. Don't look back. Buy physical and feel it. You'll soon understand the difference.

Mon, 07/09/2012 - 17:33 | 2600054 Hype Alert
Hype Alert's picture

They are running news releases saying Alcoa sites stong demand.  Seriously?

Mon, 07/09/2012 - 18:06 | 2600169 overmedicatedun...
overmedicatedundersexed's picture

hype,

"On a net basis, Alcoa lost $2 million, or nil cents per share, compared with a net profit of $322 million, or 28 cents per share, in the same quarter last year.

Revenue fell 9 percent to $6 billion, as aluminum prices dropped 18 percent from last year, Pittsburgh-based Alcoa said on Monday. But that also exceeded analyst expectations of $5.8 billion."

lower expectations the old game here..AA went from 322 mil profit in same qtr last year to 2 mil loss..LOL

Mon, 07/09/2012 - 17:41 | 2600087 marginview
marginview's picture

gold surges all the way to $1588 - the world is how you want to see it I suppose.

Mon, 07/09/2012 - 19:00 | 2600321 max2205
max2205's picture

Traders ect are making a fucking killing on these last hour pumps.

Mon, 07/09/2012 - 19:15 | 2600346 orangegeek
orangegeek's picture

Today's volume on the SP500 was a dismal as Friday's volume.

 

http://bullandbearmash.com/index/sp-500/daily/

Mon, 07/09/2012 - 22:42 | 2600940 Mugatu
Mugatu's picture

Sorry about your volume sir.

I see the problem though - you have a few algorithm trading programs locked up.

Just reboot your computer and volume should be normal tomorrow.

Mon, 07/09/2012 - 19:45 | 2600463 adr
adr's picture

Didn't you hear the great news, the economy is fixed and on its way to unbelievable growth because Alcoa beat earnings!!!!

It doesn't matter that the company actually lost money and compared to last year, revenue was down, profit was down, and everything else was down. IT COULD HAVE BEEN WORSE!!!!

Cock N Balls Channel actually ran a story claiming that Alcoas's strength shows earnings season may be far better than analysts thought. YES THE LOSSES MAY NOT BE AS BAD AS FEARED. Dow 15k here we come!!!

At this years Olympic games events will use the Wall St model. Hurdles will be 1" high, the pole vault will be 6" and you will no longer be required to use a pole, each olympic swimmer will get a jetski, and the 100 meter dash will now be the 1 meter dash.

Oh and I forgot, gold plated tungsten medals for everyone.

Tue, 07/10/2012 - 03:29 | 2601298 Tom Green Swedish
Tom Green Swedish's picture

I have sadly realized, that the stock market is no better an investment than Social Security with a 10 year return of 3.8 percent verusus Social Security returns of around 3.5.  Most people are saving for retirement, because sadly most people are just barely scraping by now.  Very sad.  I can honestly say the stock market is a joke, although SS is a total joke too,I have no idea how it is funded or makes a return on its money. All I know is if you were one of the first in on the pozni scheme you were making better returns than the market has given us in the last 10 years.  Even more sad.  WHen does it end?

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