After some sea-sawing the averages finally squeaked out a mixed gain, but any green seen today is expected to be short lived unfortunately. Indicators do indicate that we are at a cross road in that we will have just one more down session and move back up or . . .
The IMF approved a $17.5 billion bailout for the Ukraine while the leaders of Greece and the lenders meet to work on methods to start reforms. U.S to send heavy weapons to Ukraine as Moscow may "deploy nuclear weapons to Crimea". So much for the second Minsk ceasefire.
By 4 pm the U.S. Dollar had almost reached the 100 handle at 99.97, but backed off until tomorrow at least. The small caps closed lower than the large caps and the $VIX is trending upward in the low 17's up from the low 16's this morning.
Todays S&P 500 Chart
Technically speaking the market should have completed their 5 session down period and tomorrow would be a return to the on-going bull market, but with oil trending lower it is a crap shoot for guessing anything.
Our medium term indicators are leaning towards Hold portfolio of non-performers and the session market direction meter (for day traders) has fallen from 37 % bearish at noon up from 2 % bearish at the opening bell to 11 % at the close. We remain mostly conservatively bullish, but with a bearish slant as we expect oil to seek lower levels depressing equities along the way.
I am very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals that will only please the day traders. The SP500 MACD has turned down, but remains above zero at +1.01. It is expect to move lower over the next few sessions before turning back up.
Having some cash on hand now is not a bad strategy as negative market changes are happening everyday. Many investors are starting to take in some profits from 'high-fliers' as a precaution and to build a better cash base for the 'dips'.
Just under two years ago, we presented a full breakdown of the student loan bubble, broken down by state, in which among other things, we found that Washington D.C. stuck out like a sore thumb as the "students" residing in it had on average just under $40,000 in student loans.
Yesterday, as part of Obama's most reent push to change the bankruptcy law and promote legislation that facilitates the reduction or outright forgiveness of student debt, the White House provided a full state-by-state breakdown of where the 43.2 million borrowers on the hook for some $1.135 trillion in student loans.
But before we present the results, it will likely come as no surprise to anyone that once again, it is the students in the nation's capital, the District of Columbia, where the debt burden is once again heaviest: As Bloomberg recaps, "at an average of $40,855 per borrower, the student loans of debtors in the nation's capital are 140 percent higher than the national average of $28,400, and they exceed by more than $10,000 what borrowers owe in Georgia, the state with the second-highest student debt level."
Here is state breakdown, ranked by highest to lowest average per student debt:
NEW YORK (Reuters) - The euro's unrelenting fall accelerated on Wednesday, shedding 1.5 percent to trade near $1.05 for the first time in 12 years, as the European Central Bank's 1.1 trillion euro bond-buying program sent the region's bond yields to record negative levels.
Simply put - the Greek economy still consumes more than it earns. Despite a 25% contraction in its economy, a plunge in domestic consumption and a sharp decline in imports, as WSJ reports, Greece is still exporting less than it imports, i.e. its current account is still negative. The reason... Shipping.
Greece has enough problems, from food shortages and cash shortages to unemployment and suicides, but, as The Wall Street Journal blog notes, without a large current-account surplus, the Greek government and Greek companies will have big problems repaying the debt owed to creditors throughout the eurozone and at the International Monetary Fund.
Why haven't those surpluses materialized? One reason was the sheer size of Greece's current-account deficit: It peaked at 16.5% of gross domestic product in 2008. Without the ability to devalue its currency within the eurozone, erasing that deficit through cuts in relative wages and prices was always going to be a long and grueling process.
Wages across the Greek economy have fallen sharply, but Greece's performance in the export of goods and services has been among the weakest in the eurozone over the last seven years:
As crude prices drop back to cycle lows, breaking the back of the stability-meme, we thought a quick reminder of the world's major energy projects that are completely FUBAR given the current prices, record production, and record inventories...
Goldman maps the places "Not To Be"...
and here is Citi's massive cost curve expectations for all IOC projects...
Who could have seen this coming? The French government, having deployed military to its streets during the attacks by Islamic extremists last month, has - just as every other government in the world in the new normal - decided that this temporary militarization of French streets is now permanent. As RT reports, President Hollande has decided to "maintain the level of the army on the national territory at 10,000 troops," with a total of 7,000 troops monitoring (and protecting) religious buildings.
As RT reports,
As the threat of attacks by Islamist extremists remains high in France, President Francois Hollande has decided to continue the deployment of 10,000 troops on the streets across the country.
"The threat of terrorist attack against our country remains high. The head of state has decided to maintain the level of the army on the national territory at 10,000 troops in support of security forces from the Interior Ministry," Hollande's office said in a statement after a meeting of senior ministers, AFP reported.
A total of 7,000 troops will be monitoring and protecting religious buildings that are "particularly threatened," the statement added.
BRUSSELS/ATHENS (Reuters) - Greek representatives started talks with official international creditors in Brussels on Wednesday, taking the first step toward an agreement on the reforms Greece must implement to unblock further aid as Athens runs out of money.
Predicting and diagnosing the trajectory of oil prices has become something of a cottage industry in the past year. But along with all of the excess crude flowing from the oil patch, there is also an abundance of market indicators that while important, tend to produce a lot of noise that makes any accurate estimate nearly impossible.
First there is the oil price itself. The crash began last summer, and accelerated in November. Since then, predictions for oil prices for 2015 have been all over the map - from Citigroup's $20 per barrel, to T. Boone Pickens' prediction of a return to $100 per barrel. OPEC's Secretary-General even said prices could shoot up to $200 in the coming years as a result of overly drastic cutbacks and a failure to invest in new production. With those estimates at the extremes, most analysts think prices will continue to seesaw within a rough band of $40 to $70 for the rest of the year. Still that is quite a large range, highlighting the fact that everyone is merely guessing.
There is a lot of debate about what the Fed is going to say regarding rates next Wednesday at the FOMC Meeting, will they change the language, will they signal rate hikes, etc. but pundits haven`t really addressed the main reason the Fed has to raise rates in June.
A sudden plunge in EURUSD - bashing it down towards the 1.04 handle (which would be the lowest since Jan 2003) has sparked a recoupling of equity fantasy down to everything else's reality. Given its weight in EUR, The USD Index has surged to 100.00 - highest since March 2003. EURUSD is now down 35 handles since Draghi started jawboning... when does this "good" collapse morph into "capital flight" concerns?
Who knows what to believe? Aside, that is, from the fact that the world appears to believe that it's better to have a weaker currency than stronger currency.. apart, that is, from Larry Kudlow and The Fed's Richard Fisher...
As Reuters reports,
Sharp gains in the U.S. dollar are good for the U.S. labor market, a top Federal Reserve official said on Friday, downplaying a crescendo of complaints from top executives over the dent to their profits.
"CEOs that have international operations complain about it," Dallas Fed President Richard Fisher told Reuters in an interview. "I hear from every one of them - it offsets their powerful earnings here domestically."
Fisher takes those complaints with a grain of salt.
"It brings to my mind the vision of Edward Munch's painting 'The Scream'," he said, adding, "It's not the end of the world."
Fisher, who plans to retire from his post in March, holds views that are often far from those at the Fed's core. Still, the former hedge-fund manager says he feels his views are heard at the policy-setting table.
"The more income and investment flows we get, the better it is for our companies big and small to go out and hire American workers," Fisher said. "And it does help on the consumption side, if, for example, oil is denominated in dollars, it just helps us have cheaper goods."
The idea of the "zombie bank" has become rather ubiquitous since 2008 and in a landscape characterized by both multi-billion dollar legal settlements stemming from crisis-era malfeasance (the public utility vs. bankruptcy trade-off) and hopelessly depressed NIM thanks to artificially suppressed rates, we're not surprised that a bit of creativity is required to keep both regulators and shareholders pacified. As Reuters notes, one preferred (pardon the pun) route for banks of late has been a simple version of left-to-right pocket accounting:
Big U.S. banks, including JPMorgan Chase & Co (JPM.N) and Citigroup Inc(C.N), are expected to win Federal Reserve backing on Wednesday to buy back more shares and increase their dividends in the coming year, but the approvals may be as much about the institutions' financial engineering as any improvement in their health.
Much of the money for buybacks and higher dividends is coming from the banks issuing securities known as preferred shares. These shares are a type of equity that pays regular, relatively high dividends. To investors they look a lot like bonds that pay interest. But for regulators, preferred shares serve as a cushion against any future losses, in part because they never have to be repaid.
Critics of the strategy question how sustainable it is, as banks essentially take money from one set of investors and give it to another, and at an added cost.
Earlier today, the leader of Britain's UKIP, eloquent wordsmith and member of the EU Parliament, Nigel Farage, unleashed one of his most memorable and finest diatribes in recent years.
"We ourselves in the European Union provoked the conflict through our territorial expansionism in the Ukraine. We poked the Russian bear with a stick, and unsurprisingly, Putin reacted. But this now is to be used as an opportunity to build a European army... And Mr. Juncker said, we must convey to Russia that we are serious. Who do you think you are kidding, Mr. Juncker?"
Farage at his best...
As Liberty Blitzkrieg's Mike Krieger notes, while the topic of conversation was the recent push for an "EU Army," at its core the conversation was really about the dangerous and simmering catalyst for World War III, which continues to provoked in Ukraine.
Perhaps inspired by our article that the 10 Year was trading very special in repo this morning, touching -1.79%...
... as shorts had piled into the auction on hopes of covering ahead of what many had expected would be a weak auction, some "experts" predicted an imminent tail in today's auction. Well, moments ago the 10 year closed about as solid as they come, with the High Yield of 2.139% pricing 0.4 bps through the When Issued of 2.143%, dampening any hopes to cover profitable shorts into the auction, and ending any speculation about a tail.
The Bid to Cover rose from 2.62 to 2.65, in line with the TTM average of 2.71, with the biggest wildcard once again being Indirect, aka mostly foreign central banks, bidders taking down 58.6% of the auction, a fraction below the 59.5% in February, and except for last month's auction, the highest indirect takedown since December 2011. Directs ended up with 31.2% of the total.
And with the second of this week's three auctions down, we now look forward to tomorrow's 30 Year, which as the table above shows, was also trading special in early repo markets. Will the shortage accelerate into tomorrow as even more shorts pile up, or will tomorrow be different, find out in just about 24 hours.
Since 2010, The Bank of Japan has 'openly' - no conspiracy theory here - been a buyer of Japanese stock ETFs. Their bravado increased as the years passed and Abe pressured them from their independence to 'show' that his policies were working to the point that in September 2014, The BoJ bought a record amount of Japanese stock ETFs taking its holdings to over 1.5% of the entire market cap, surpassing Nippon Life as the largest individual holder of Japanese stocks. However, as WSJ reports, The BoJ has now gone full intervention-tard - buying Japanese stocks on 76% of the days when the market opened lower.
As The Wall Street Journal reports,
The Bank of Japan's aggressive purchasing of stock funds has helped Japanese shares climb to multiyear highs in recent months. But some within the central bank are growing uncomfortable about the fast-paced rally and the bank's own role in fueling it.
Since Gov. Haruhiko Kuroda took office in March 2013 and introduced monetary easing of what he called a "different dimension," the central bank has sharply increased its buying of baskets of stocks known as exchange-traded funds. By ...
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