The slump in the data is confirmed by the price action. The USCI, which is a commodity sector Index fund, was down about 3% in recent trading action This fund invests in precious metals, industrial metals, energy, and agricultural products such as livestock, softs, and grains…a very diverse portfolio.

The gold section of the commodity space has been getting a lot of hate from the news. “The main driver behind gold’s weakness this year has been the focus on global growth and that’s meant rotation out of defensive assets like gold,” says UBS analyst Joni Teves.

The GLD’s RSI recently hit 22.5. A reading below 30 is normally considered ‘oversold.’ Moreover, GLD’s current IV is above its 20 year annual, perhaps it is prudent to take to other side of the recent commodity slump through a nice short vol bullish-to- neutral trade.

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salerno.mark.a@gmail.com

Paper bought 929 GNK Jan 2014 1 Puts for $.14 when stock was trading $2.66
Paper bought 800 SANM April 11 Puts for $.50 (2.7 times usual volume) when stock was trading $10.76
Paper bought 2000 EWC Sep 25 Puts for $.55 (5.0 times usual volume) when stock was trading $27.44
Paper bought 700 FSL April 14 Puts for $.80 when stock was trading $13.55
Paper bought 2000 EQR July 52.5 Puts for (2.5 times usual volume) when stock was trading $57.97

Paper bought 2661 EWA May 27 Calls for $.35 (3.2 times usual volume) when stock was trading $26.18
Paper bought 1000 PEG Sep 40 Calls for $.10 (3.3 times usual volume) when stock was trading $34.52
Paper bought 16,371 SU May 32 Calls for $.11 (4.1 times usual volume) when stock was trading $28.45
Paper bought 9200 PWE June 10 Calls for $.625 (10.8 times usual volume) when stock was trading $9.97
Paper bought 7350 DWJ May 47 Calls for $.65 (5.3 times usual volume) when stock was trading $44.14

Paper bought 8800 CX Jan 2014 7 Puts for $.28 when stock was trading $12.17
Paper bought 8700 LO May 37.5-32.5 Put Spread for $.36 (10.2 times usual volume) when stock was trading $40.30
Paper bought 9200 PWE June 10 Calls for $.625 (10.8 times usual volume) when stock was trading $9.97
Paper sold 2000 HOLX April 22 Puts for $.575 (8.8 times usual volume) when stock was trading $21.61
Paper bought 2661 EWA May 27 Calls for $.35 (3.2 times usual volume) when stock was trading $26.18

A confluence of bearish news hit the tape today. Overnight, Japanese Government Bonds reversed hard causing yields to spike and this morning unemployment was rather disappointing. 

According to economic sources, the real unemployment rate hit 11.6% in March. Headline unemployment declined to 7.6%, but this decline was mostly due to unemployed folks leaving the labor force. Some economists think that this is a natural phenomenon during a recovery, but others argue that this time is different.  According to the data, the LFPR (Labor force participation rate) is back down to 1979 levels.

Internationally, Japan is starting to make headlines too. Just about all of the investment community knows that Japan’s situation is rather dire, with debt to GDP levels of over 240% and a shrinking population. 

The Japanese government has over a quadrillion Yen on their balance sheet. To put this figure into prospective, hedge fund titan Kyle Bass has stated numerous time that if your were to count one Yen per second, it would take you 31 million years to get to a quadrillion Yen. Perhaps the market will soon be a tad more skeptical when analyzing JGBs (Japanese government bonds).

Below is a chart of old Japanese rates.

salerno.mark.a@gmail.com

Despite the overall dreariness of the report, some industries performed well relative to others.  The service sector and health care industries added 51,000 and 23,000 jobs, respectively.  Retail contracted, losing 24,000 jobs, while the United States Postal Service cut its payrolls by 12,000.  There remains the possibility of an upward revision in the employment numbers; in each of the two months prior to March the numbers were revised upwards by approximately thirty thousand.

Many remain bullish, however, as the report this morning is in direct opposition to the long-term trend. The S&P 500 has experienced record highs as of late, and many traders feel that the Bureau of Labor Statistics report is an anomaly or a product of seasonal weakness.  Certain industries continue to perform well, healthcare in particular (UnitedHealth Group Inc. was the lone winner of the 30 Dow stocks). The robust showing in German factory orders this morning could also prove to be a stabilizing element in stock prices, and continued support for growth-oriented policies from the Federal Reserve and its worldwide counterparts is likely to bolster growth in the long-run.