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13Mar2015 Market Close: Does Anyone Know What Do?

Written by Gary

Afternoon markets traded sideways in a narrow band on low volume. Investors are apparently not sure what to do next as they await their next dose of 'Hopium' from Ms. Yellen. From what I can ascertain, many investors are positive oil will not fall further and the U.S. Dollar has topped out - NOT!

The Debt Ceiling Drama Is Back: Two Days Until US Borrowing Capacity Is Exhausted and politics is on center stage once again as these idiots play with America's "credit card". It is O.K. as it is NOT their money - ha, ha, ha, the joke is on us it seems as we elected them to look out for our best interest.

By 4 pm the averages had climbed down from late afternoon highs to being fractionally lower. At any rate all of the averages closed in the red and at this point I would 'guess' that we may see another day down unless . . .

Todays S&P 500 Chart

. . oil goes up and the U.S. Dollar goes down, which is a distinct possibility.

WTI oil fell to 44.78 (Chart Here), Brent fell to 54.58 (Chart Here), and the U.S. Dollar remains above $100 at 100.33 (Chart Here). I have increased my position in SCO which is showing a nice profit since I first looked at it over a month ago. And it ins not getting any better as the rig count drops for 14th week in a row the fastest fastest rate in 29 years. For the 14th week in a row, the US rig count fell 67 rigs to 1125, (a 5.6% drop to 41.4%, bigger than March 09's previous record 14-week decline of 41%).

The U.S. dollar is rising and many think it has topped. Heavens no! At least not any time soon, says David Stockman. "The reason is simply that the other three big economies of the world-Japan, China and Europe-are in even more disastrous condition."

For those who are expecting a rate increase from the Fed need to realize that U.S. producer prices fell in February for a fourth straight month, pointing to tame inflation that could argue against an anticipated June interest rate hike from the Federal Reserve.

Our medium term indicators are leaning towards Hold portfolio of non-performers and the session market direction meter (for day traders) is 78 % Bearish up from 67 % Bearish at noon and 21% at the opening bell. We remain mostly conservatively bullish, but with a bearish slant. 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 below zero at -2.72. It is expect to move lower over the next few sessions before turning back up.

The Market in Perspective

Here are the headlines moving the markets.

Trinity Guardrails Said to Pass Federal Safety Tests, but Some Are Skeptical

Critics questioned the testing standards and pointed to the one test in which a bent piece of rail pushed a driver's door in 6.75 inches.

Michael Lewis is Right "Spoofing" Proves Market Rigged on Daily Basis

By EconMatters

Watch the Michael Lewis video where he discusses Rigged Markets here.

Brent Spoofing & HFT As the European Market closes today and oil has some bearish sentiment to the trading day, one of the common techniques is to bang the European close in the Brent contract which being a much less liquid contract than WTI can be quite profitable. Usually this takes place around 10:00 to 10:30 am CST but with the time changes this week everything is pushed back an hour here in the US with the European close now being 11:00 to 11:30 am CST. Specific Example of Spoofing Well as this bang the close strategy is happening in Brent pushing the futures contract down $56.50 to $55.50 in 10 minutes a nice illustration of HFT Algo strategy plays out, in other words blatant market manipulation also called spoofing was conducted by some large firm. Here is the case and this isn`t specific to Brent, Oil, or an unusual event this happens in all markets throughout the trading day. So as Brent is going lower some firm wants it to go lower some more so around t ...

The Cost To Taxpayers Of Obama's Christmas In Paradise

Despite Janet Yellen's best efforts to eradicate poverty in America by explaining why it's important to be rich, we learned today, courtesy of the UMich Consumer Sentiment survey, that low-income citizens not only still exist, but they in fact spoiled the March print by feeling exactly 6.5% less optimistic about their situation than they did last month.

As depressing as that is, the good news is that according to the survey, rich people are still feeling optimistic about their buying plans (presumably because they have money). If you need further confirmation that things are still going well for some US citizens, consider the following, from Sputnik News:

The Obama family's 2014 Christmas vacation to Hawaii cost taxpayers more than $3.6 million in flight expenses alone, according to Air Force records obtained by Judicial Watch.

The president grew up in Hawaii, and Christmas there is an annual family tradition. The most recent trip marked the seventh consecutive time the Obamas have spent the holidays in Hawaii aeuro " the sixth as the first family. All told, those Christmas vacations have cost taxpayers $15.5 million just in transportation expenses, according to figures obtained by Judicial Watch over the past three yearsaeuro -

Last July, Obama headed to the West Coast fo ...

Your Money Adviser: Contract Worker or Employee? Tax Liability Rests on the Difference

The I.R.S. has strict criteria on when a worker should be considered an employee, and it's not just the difference between a babysitter and a nanny.

Peak Crony Capitalism: First Citi Writes US Financial Laws, Now Boeing Tells Ex-Im Bank What To Do

Back in December, the US population was briefly but dramatically shaken, when it was revealed that none other than Citigroup - a Wall Street firm - had drafted the Congressional language for the Derivatives swaps push-out provision, the add on that assured that taxpayers/depositors would be on the hook for any future derivatives fiasco at the TBTF banks (whose total derivative holdings amounted to $303 trillion with a T) component of the Omnibus funding bill.

Screen Shot 2014-12-05 at 3.32.12 PM

Confirming that cronyism in Congress is alive and has never been better, was the further discovery that the main backer of the bill is notorious Wall Street lackey Jim Himes (D-Conn.), a former Goldman Sachs employee who has discovered lobbyist payoffs can be just as lucrative as a career in financial services.

Subsequently Zero Hedge first exposed just why Citi was so intent on making sure taxpayers would be saddled with the bill: while all other banks were actively deleveraging their derivative exposure, Citi was piling in, and just in Q3, had boosted its derivative holdings by a record $9 trillion in just the third quarter to a whopping $70 trillion, surpassing even JPM. Worse: all of these derivatives would be housed precisely in the FDIC-insured silo, so ...

NASA Scientist Warns "California Has One Year Of Water Left"

Authored by NASA Senior Water Scientist Jay Famiglietti, originally posted Op-Ed at The LA Times,

Given the historic low temperatures and snowfalls that pummeled the eastern U.S. this winter, it might be easy to overlook how devastating California's winter was as well.

As our "wet" season draws to a close, it is clear that the paltry rain and snowfall have done almost nothing to alleviate epic drought conditions. January was the driest in California since record-keeping began in 1895. Groundwater and snowpack levels are at all-time lows. We're not just up a creek without a paddle in California, we're losing the creek too.

Data from NASA satellites show that the total amount of water stored in the Sacramento and San Joaquin river basins - that is, all of the snow, river and reservoir water, water in soils and groundwater combined - was 34 million acre-feet below normal in 2014. That loss is nearly 1.5 times the capacity of Lake Mead, America's largest reservoir.

Statewide, we've been dropping more than 12 million acre-feet of total water yearly since 2011. Roughly two-thirds of these losses are attributable to groundwater pumping for agricultural irrigation in the Central Valley. Farmers have little choice but to pump more groundwater during droughts, especially when their surface water allocations have been slashed 80% to 100%. But these pumping rates are excessive and unsustainable. Wells are running dry. In some areas of the Central Valley, the land is sinking by one foot or more per year.

As difficult as it may be to face, the simple fact is that California is running out of water - and the problem started before our current drought. NASA data reveal that total wat ...

The World's Top Five Energy MegaStructures

Submitted by Nick Cunningham via,

Royal Dutch Shell plans on shutting down its iconic Brent oil field after it reaches the end of its life. The field has played a critical role in the United Kingdom's energy history, having accounted for about 10 percent of the country's total oil and gas production since the 1970's.

But with the aging field hitting retirement, the massive platform used to drill the field must be dismantled. The structure is the size of the Eiffel tower and sits 450 miles offshore in the rough waters of the North Sea.

How does Shell plan on removing such a structure? It will hire a truly massive ship to do the task. The ship in question is included in the following non-scientific and non-comprehensive list of some of the largest energy structures in the world.

The Pieter Schelte.

The Pieter Schelte is one of the largest ships on the planet.

Owned by the Swiss company Allseas, the Pieter Schelte cost $1.7 billion to build. It is almost as long as the Empire State building and as wide as the Big Ben's Elizabeth Tower.

As Mexico Oil Industry Falters, the Search for Private Investment Gains Urgency

As oil prices plunge, the government has scaled back its heady predictions of big-time investing.

EU executive warns of Grexit 'catastrophe', urges euro solidarity

BRUSSELS (Reuters) - The European Commission warned of "catastrophe" if Greece has to abandon the euro and its chief executive, Jean-Claude Juncker, urged EU governments to show solidarity as Athens struggles to secure more credit.

Debt Ceiling Drama Is Back: Two Days Until US Borrowing Capacity Is Exhausted

And so, a little over a year after the last debt ceiling melodrama, in which the US kicked the can on its maximum borrowing capacity to this Sunday, March 15, in the meantime raking up total US public debt to $18.149 trillion...

... the soap opera with the self-imposed borrowing ceiling on America's "credit card" is back, and the US is once again faced with sad reality of its debt ceiling (now at well over 100% of America's upward revised GDP of $17.7 trillion). Tthe reason: two days from today Congress's temporary suspension of the debt ceiling, which was approved in February 2014, ends.

As Bloomberg reports, Treasury Secretary Jacob J. Lew called on lawmakers to raise the country's borrowing limit and avoid playing politics when the U.S. government's credit rating is at stake.

The creditworthiness of the United States is not a bargaining chip, and I again urge Congress to address this matter without controversy or brinksmanship," Lew wrote in a letter Friday to House Speaker John Boehner and the rest of the legislature. The Treasury Department on Friday suspended sales of its state and local government series of non-marketable securities, one of the initial moves it makes to avoid exceeded the federal government's debt limit.

Lew said he's also declaring a "debt issuance suspension period" as of Monday with respect to the Civil Service Retirement and Disability Fund, and will suspend daily reinvestment of Treasury securities held by the Government Securities Investment Fund of the Federal Employees' Retirement System Thrift ...

Why The Dollar Is Rising As The Global Monetary Bubble Craters

Submitted by David Stockman via Contra Corner blog,

Contra Corner is not about investment advice, but its unstinting critique of the current malignant monetary regime does not merely imply that the Wall Street casino is a dangerous place for your money. No, it screams get out of harms' way. Now!

Yet I am constantly braced with questions about the US dollar and its impending demise. The reasoning seems to be that if America is a debt addicted dystopia--and it surely is-- won't the US dollar sooner or later go down in flames as the day of reckoning materializes? Won't you make money shorting the doomed dollar?

Heavens no! At least not any time soon. The reason is simply that the other three big economies of the world-Japan, China and Europe-are in even more disastrous condition. Worse still, their governments and central banks are actually more clueless than Washington, and are conducting policies that are flat out lunatic--meaning that their faltering economies will be facing even more destructive punishment from policy makers in the days ahead.

Indeed, Draghi, Kuroda and the commissars of red capitalism in Beijing make Janet Yellen and Stanley Fischer (Fed Vice-Chairman) appear to be slightly sober. So as trite as it sounds, the US dollar is the cleanest dirty shirt in the laundry. And on a relative basis, its is going to look even cleaner as two decades of monetary madness around the world finally hit the shoals.

You have to start with a stark assessment of the other three major economies.To hear the Wall Street analysts and economists tell it, Japan, China and Europe are just variants of the US economy with differ ...

Lumber and Lumber Liquidators Liquidated

When the chairman of your company comes on CNBC to defend its reputation and the stock drops 11%... perhaps it's time to reconsider the strategy. Lumber liquidators is plunging lemming-like and Lumber futures are being liquidated at the fastest rate in over a year...

Lumber Liquidators liquidated...

And Lumber is having its worst week since early March last year...

Charts: Bloomberg

People linked to Pershing Square probed over Herbalife: Ackman

(Reuters) - Billionaire investor Bill Ackman said some people hired by a consulting group working for his hedge fund had received subpoenas from federal agencies investigating possible manipulation of Herbalife Ltd's stock.

Valeant Said to Be Planning to Raise Its Bid for Salix Pharmaceuticals

The company is said to be teaming up with shareholders including Pershing Square Capital Management to bring its offer above $160 a share.

Weak Profit Margins Dampen U.S. Producer Inflation

U.S. producer prices fell in February for a fourth straight month, pointing to tame inflation that could argue against an anticipated June interest rate hike from the Federal Reserve.

US Attacks "Closest Ally" UK For "Constant Accommodation" With China

On the heels of a diplomatic spat between Hanoi and Washington regarding Russia's use of a former US air base in Vietnam to refuel nuclear-capable bombers on the way to conducting "provocative" runs in the Pacific, we get yet another, larger, sign that it may indeed be the US that's isolated and not (as Western media would have you believe) the Kremlin. The UK (Washington's "special" friend) has announced it's joining the Asian Infrastructure Investment Bank, which is essentially China's answer to the Asian Development Bank over which Beijing feels the US has undue influence.

The bank, which will fund infrastructure projects across the region and may indeed be part and parcel of China's implicit attempt to establish a Sino-Monroe Doctrine, represents "an unrivaled opportunity for the UK and Asia to invest and grow together," according to Britain's George Osborne. Unsurprisingly, the US doesn't see it that way and although Washington was generously willing to concede that this was the UK's decision to make for itself, US officials are clearly perturbed that Britain didn't ask for permission:

A spokesman for the National Security Council says the US will allow the UK to make its own decisions...

"This is the U.K.'s sovereign decision."

...but the next time David Cameron thinks about appeasing a country that is a possible threat to US hegemony, he really needs to ask first...

"[The decision was made with] virtually no consultation with the US."

Weak profit margins dampen U.S. producer inflation

WASHINGTON (Reuters) - U.S. producer prices fell in February for a fourth straight month, pointing to tame inflation that could argue against an anticipated June interest rate hike from the Federal Reserve.

U.S. crude slumps 4 percent on stronger dollar, glut warning

NEW YORK (Reuters) - Oil prices fell on Friday, with U.S. crude down nearly 4 percent and headed for its worst week in three months, on a renewed rally in the dollar and warnings of an oil glut by the global energy watchdog.
< ...

Rig Count Drops For 14th Week In A Row, Fastest Rate In 29 Years

For the 14th week in a row, the US rig count fell 67 rigs to 1125, (a 5.6% drop to 41.4%, bigger than March 09's previous record 14-week decline of 41%). The decline in rigs contionues to tyrack the lagged oil price perfectly but has shown absolutely no impact on production levels as firms push for cashflows in a race to the bottom. As one analyst rightly noted, while rig counts continue to drop, companies are high-grading (shifting to more efficient wells), "the real thing that needs to change is U.S. production and that is not happening at the moment." April WTI Crude tested $45.01 before the data and bounced very modestly on the data.



The 14th weekly drop in a row continues to track the lagged oil price...

For an aggregate XX% plunge (the fastest plunge since 1986)

Rig counts drop but production rises...

Weak euro to help European companies, force U.S. rivals to adapt

LONDON (Reuters) - The euro's slide toward parity with the dollar will provide a much-needed boost for European companies this year and force U.S. rivals to adapt their businesses or risk losing market share.

Wall St. Lower as Oil Prices Sink in Response to Inventory Glut

Oil prices fell after the release of figures showing that stock levels continued to build in the United States.

ECB QE Week 1: Germany 3, Greece -9

And so the first week of Draghi Open Market Operations (DOMO) ends and while yields have been pushed lower, the benefits of massive money printing are very much skewed to The North and not The South. Spanish sovereign bond risk ended the week unchanged (not exactly the exuberance Draghi hoped for) and Italy only 2bps lower. In equity land, the divergenes were enormous - German stocks soared to new record highs (up 3% this week and 21% year-to-date) as the rest of the majors rose less than 1%. Spanish stocks fell 0.6% but Greek stocks cratered over 9% on the week. Inflation breakevens also fell 6bps on the week...and Europe's VIX rose 0.3 to 18.85... oops.

A divergent flood of capital to Germany...

Charts: Bloomberg

Energy, strong dollar drag Wall St. lower

NEW YORK (Reuters) - U.S. stocks slumped on Friday, putting the S&P 500 on track for its third straight weekly decline, as a robust dollar threatened to erode the profits of multinationals and tumbling crude oil prices pressured energy shares.

Smokey Joe Barton And Peter Jennings

Climate denier Joe Barton was a tobacco denier in his tender youth. See this interview with the late Peter Jennings around Barton's water-carrying for tobacco interests.

How The ECB Is Distorting Euro Money Markets

As we continue to pound the table about the effects central bank asset purchases are having on market liquidity, it's nice to know that there are at least a handful of people out there who agree that maybe aeuro " just maybe aeuro " depriving the market of high quality collateral by monetizing everything that's not tied down could serve to destabilize markets and may indeed introduce systemic risk. The list of those speaking out on the issue has grown with the size of central bank balance sheets and has recently come to include SEC officials, BoJ officials, and investment banks. Here's what we said on Thursday:

As central banks work to monetize all net (and sometimes gross) government bond issuance in their respective jurisdictions [they destabilize] markets by sapping liquidity which in turn inhibits price discovery and creates volatility. This is on display in Japan, where 2 out of 3 dealers think the JGB market is impaired thanks to BoJ asset purchases and where many officials are beginning to get more vocal about the possibility that a lack of liquidity could have "dire consequences." Similarly, market financing via shadow banking conduits has declined by nearly half since 2008 in the US, and with dealers unwilling to hold inventory of corporate paper thanks to tougher capital requirements, the stage is set for what the Center for Financial Stability recently called "an accident." As a reminder, here's what the SEC's Daniel Gallagher had to say recently about liquidity in the US corporate bond market (via Bloomberg): "Lack of liquidity in corporate bond market is aeuro systemic risk' not addressed by regulators, SEC Commissioner Daniel Gallagher says in public remarks."

< ...

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