April 24. Tech companies’ results vs gasoline sales. Which better reflect the domestic economy?
–Treasury yields fell yesterday as New Home sales tumbled 14%, with ten yr down 4 bps to 268.4. Eurodollar calendar spreads eased modestly off their highs, with red/green pack spread down 2.25 at 115.75. Tuesday’s close of 118 was not only the high for this calendar year, but for 2013 as well. At the long end, bonds are maintaining a stubborn bid, with 30 yr yield now below 3.5% to 347. May treasury options expire Friday. TYK 124c have the most call open interest at 58k. TYK 124p have 44k open, 123.5p have 69k open. May straddle settled 21.
–During regular trading hours Nasdaq posted an outside day and closed near the low down 30 pts. However, AAPL earnings, split announcement and buyback increase (from $60 to $90 billion), caused an immediate 35 pt jump in Nasdaq after hours, more than erasing the day’s loss. FB also beat. While stock indices surged, treasuries remained strangely well bid. Even this morning, in front of today’s 7 yr auction, tens are only down 3/32’s to 123-27.5. With yesterday’s military jockeying and several reports of jets scrambled in repsonse to Russian incursion of airspace, perhaps geopolitical fears are supporting an underlying bid in treasuries. Obama’s Asian visit and commitment to Japan’s defense may also figure in the mix. In any case, it appears as if weekend risk is again important, and could be exaggerated this week given option expiry.
–Data today, Ind Pro expected +2.0 and Job Claims 315k.
–In an interesting juxtaposition to tech earnings and modes of communication, this article on gasoline sales volume and per capita usage is quite illuminating.
http://advisorperspectives.com/dshort/updates/Gasoline-Sales.php
The author shows that on a 12 month moving average, the volume of gasoline sales is down 8.4% from the high set in 2005. Further, per capita usage has plunged since 2003. The reasons are partially due to urbanization, non-physical communication, better mileage, etc. “What does this analysis suggest about the state of the economy? From an official standpoint, the Great Recession ended 57 months before the most recent gasoline sales monthly data point. But if we want a simple confirmation that the economy is in recovery, gasoline sales continues to be the wrong place to look.”
