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13Mar2015 Market Open Commentary: Markets Down One Percent, U.S. Dollar Up Over 1.00, WTI And Brent Oil Down And Trending Indicators Point Down

Written by Gary

The foremost indicator of US consumer sentiment, U. of Michigan Confidence fell to 91.2 expecting 95.7 helping the averages to fall over one percent. The U.S. Dollar climbed to 100.28 breaking recent records and WTI oil fell to 45.12, also adding to the pushing of the averages lower.

By noon the averages were solidly in the red with the DOW down 242 points and the $VIX climbing into the mid 16's.


Here is the Market Open from CNN Money

North and South American markets are broadly lower today with shares in Brazil off the most. The Bovespa is down 1.36% while U.S.'s S&P 500 is off 1.06% and Mexico's IPC is lower by 0.49%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 63%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 43
Investors Intelligence sets the breath Above 50 bullish 58.1
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -19.09
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 54.52%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 60.88
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 71.00
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 20.91
StockChart.com Consumer Discretionary ETF (XLY) As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy 74.93
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,683

What Is Moving the Markets

Here are the headlines moving the markets.

Energy drags Wall St. lower; S&P set to drop for third week

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.

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.

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.

EU's Juncker pushes for deal with Greece

BRUSSELS (Reuters) - EU chief executive Jean-Claude Juncker and Greek Prime Minister Alexis Tsipras called on Friday for European governments to show solidarity with Greece and resolve a credit crunch that risks dumping it out of the euro zone.

U.S. consumer sentiment falls in March

NEW YORK (Reuters) - U.S. consumer sentiment fell in March as optimism slipped among lower- and middle-income households, a survey released on Friday showed.

"Race To The Bottom" In Oil Continues: ENI (Europe's "Chevron") Raises Production, Slashes Capex, Suspends Buybacks

Oil prices legged lower in the last few minutes as Italy's largest energy company ENI has made a series of rather major announcements. The company plans to sell $8bn in assets, slash capex by 17%, and suspednds buybacks. But perhaps most worryingly for the oil-patch, ENI plans to increase production 3.5% each year until 2018 as the race to the bottom in energy markets continues.

*ENI PLANS TO SELL $8BLN IN ASSETS OVER NEXT 4 YEARS

*ENI WILL CUT CAPEX OVER NEXT 4 YEARS BY TOTAL OF 17%

*ENI SAYS NEW PROJECTS AVERAGE BREAKEVEN AT $45/BBL (BRENT)

*ENI SEES E&P PRODUCTION INCREASING 3.5% A YR IN 2015-2018

The buy-back plan is suspended. It will assess its reactivation when the strategic progress and the market scenario allow.

It appears the presentation was leaked early, which tumbled the shares and was halted... when it re-opened it was down over 6%...

And crude oil prices also began tyo fall as the production raise was leaked...

Lumber Liquidators defense not convincing enough: analysts

(Reuters) - Shares of Lumber Liquidators Holdings Inc's fell 8 percent on Friday, reversing some gains from a day earlier, after brokerages cut price targets, saying the hardwood flooring retailer's defense of its products left some questions unanswered.

Oil slips toward $56 as IEA predicts growing glut

LONDON (Reuters) - Oil fell toward $56 a barrel on Friday after the International Energy Agency said that a global oil glut is building and U.S. oil production shows no signs of slowing.

06 March 2015: ECRI's WLI Improves but Remains in Negative Territory

ECRI's WLI Growth Index was improved but has remained in negative territory for 21 weeks. According to ECRI, this index is forecasting slower economic growth in 1H2015 and now into 2H2015.

Europe Has A Modest Proposal For Greece; "Don't Pay Wages For One Or Two Months"

The Greek liquidity, pardon "cash flow" problems are so bad, not only Zero Hedge, but also Bloomberg has launched a daily maturity tracker of how much money Greece has to pay either to the IMF or to prefund T-Bill rollovers. This is what Bloomberg blasted out earlier today:

Greece is preparing for another week of hurdles that ends with a ~EU2b repayment on March 20. Most economists say that it will be difficult for Greece to get past end of March without fresh EU funds. Here's a timeline of the most important events scheduled this week:

Monday, March 16: Greece to repay about EU577m in IMF loans

Wednesday, March 18: Greece's debt agency PDMA to sell 13- week treasury bills

Which explains why as we reported yesterday, Greece passed a law to plunder pension funds, one which would allow the government to fully invest reserves of pension funds and other public entities kept in Bank of Greece deposit accounts in Greek sovereign notes.

None of this is news: that Greece will run out of cash absent another check from the Troika, pardon Instituions, pardon creditors, is clear. The only question is what happens after, if Europe indeed leaves Greece hanging.

Gold Up 11% in Euro This Year As Currency Wars Intensify

Gold Up 11% in Euro This Year As Currency Wars Intensify

Gold has risen 11% versus the euro in 2015

Builds on 12% gains against the euro in 2014

Sentiment poor despite reasonable performance

Gold performing well considering significant gains in stocks and dollar

Dollar centric view misleading

Currency wars intensifying

Complacency and hubris rife

Gold rose 12% against the euro in 2014 and so far in 2015, gold has risen a further 11% versus the euro. The euro has fallen 23% against gold since January 2014. Gold has risen from EUR 880 per ounce in January 2014 to EUR 1,090 per ounce today.

goldcore_bloomberg_chart6_13-03-15

The dollar-centric nature of most financial media and the tendency to focus on gold solely in dollars would give one the impression that gold has been devastated this year.

In dollar terms gold has not fared terribly well, it's true, but that is more a function of the surge in the dollar than of weakness in gold. Gold's performance has been quite good considering the significant strength in the dollar and the gains seen in stock markets.

Gold has an inverse correlation with the dollar and stocks over the long term.

How much longer the stock and dollar boom can continue in the face of deteriorating macro-economic data - the worst since the 2008 crisis - is anyone's guess. The Federal Reserve, like its other central bank counterparts, ...

Wealth Matters: Designing a Bespoke Perfume

Getting your own signature scent can cost thousands of dollars, by one estimate $30,000 to $50,000. For some women, it's worth it.

Harper Lee Agent Says Author Is aeuro Delighted' New Book Will Be Published

The author's agent, Andrew Nurnberg, said Ms. Lee was entirely capable of understanding and agreeing to the release of "Go Set a Watchman."

Apple pies and iPads sweeten China's dreaded TV expose

SHANGHAI (Reuters) - From cut-price apple pies to free iPads, companies in China are transforming Sunday's dreaded consumer rights day into a shopping frenzy, to blunt the impact of being named and shamed in state broadcaster CCTV's annual expose.

Preliminary March 2015 Michigan Consumer Sentiment Falls off 4.4 Points

by Doug Short, Advisor Perspectives/dshort.com

The University of Michigan preliminary Consumer Sentiment for March came in at 91.2, down 4.4 points from the final reading of 95.4 in February.Investing.com had forecast 95.5 for the Michigan preliminary number.

UMich Consumer Sentiment Tumbles, Misses By Most Since 2006; Weather & Poor People Blamed

Despite record high net worth and record high stock markets, the US Consumer is not amused. UMich survey of Consumer Sentiment for March tumbled from 95.4 to 91.2 (against expectations of a rise to 95.5) for the biggest miss since Feb 2006. This was the biggest one-month drop since Oct 2013. Quite unbelievably, the survey director says the drop was driven by a slide in lower-income group sentiment caused by weather!

Biggest miss since 2006... biggest drop since Oct 2013

So why did it fall - given how great stocks are:

*UNIV. OF MICHIGAN'S CURTIN SAYS DROP CAUSED BY LOW-INCOME GROUP

*MICHIGAN'S CURTIN SAYS DROP IN INCOME CAUSED BY BAD WEATHER

*MICHIGAN'S CURTIN SAYS UPPER INCOME FEELING MORE UPBEAT

The market's reaction.. not good

Currently seen on every computer in the NY Fed's trading floor pic.twitter.com/pDrNVTiEqW

- zerohedge (@zerohedge) March 13, 2015

And finally, it appears the data was 'leaked' 3-4 minutes early as Nanex noted, liquidity disappeared from e-minis at 0956ET.

eMini depth of book - note the early fall off just after 9:56 $ES_F

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

All 10 industry groups in the S.&P. 500-stock index fell in early trading.

Flash Boys' Michael Lewis Warns "The Problem's Not Just HFT, The Problem Is The Entire System"

As HFT shops begin to turn on each other, it seems appropriate to reflect on the impact that Michael Lewis' Flash Boys book had on exposing the ugly truth that many have been discussing for years in US (and international) equity (and non-equity) markets. As Lewis concludes, after explaining the attacks he has suffered from the HFT industry, "If I didn't do more to distinguish 'good' H.F.T. from 'bad' H.F.T., it was because I saw, early on, that there was no practical way for me or anyone else... to do it. ... The big banks and the exchanges [have] been paid to compromise investors' interests while pretending to guard those interests. I was surprised more people weren't angry with them."

Authored by Michael Lewis, originally posted at Vanity Fair,

When I sat down to write Flash Boys, in 2013, I didn't intend to see just how angry I could make the richest people on Wall Street. I was far more interested in the characters and the situation in which they found themselves. Led by an obscure 35-year-old trader at the Royal Bank of Canada named Brad Katsuyama, they were all well-regarded professionals in the U.S. stock market. The situation was that they no longer understood that market. And their ignorance was forgivable. It would have been difficult to find anyone, circa 2009, able to give you an honest account of the inner workings of the American stock market-by then fully automate ...

Ackman Bets Draw U.S. Scrutiny

Federal prosecutors and the FBI are probing potential manipulation of Herbalife stock and have interviewed people hired by hedge-fund billionaire William Ackman.

Oil Prices Will Stay Low Despite "Misguided Retail Investors", Goldman Says

Last week we outlined how the economics of the floating storage play can help determine the future course for oil prices. We said that the main takeaway from SocGen's analysis is that storage availability and contango should be taken into account when thinking about where crude prices may be headed. We followed that up by showing that the US is set to run out of on-land storage capacity in June (a theme everyone is now picking up on):

Come June, when all available on-land storage is exhausted, each incremental barrel will have to be dumped on the market forcing prices lower and inflicting further pain on the entire US shale complex (just as Q1 results are released which will invariably show huge writedowns as companies will no longer be able to hide behind the SEC-mandated accounting trick that made Q4 results appear respectable).

We also noted that retail investors hoping to play for a rebound have piled into oil ETFs at just about the worst time imaginable, with contango widening the most in 4 years:

Don't look now, but the sharp slide in crude prices may be leading the proverbial sheep to slaughter. ...

What Happens To The Stock Market If The U.S. Follows The World Into Recession?

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

History is rather unkind to blind faith in central banks, just as the rising U.S. dollar and stagnant sales are being very unkind to corporate profits.

The quasi-religious faith that central banks can push stock markets ever higher regardless of real-world realities may well be tested in 2015-2016. The global economy spiraling into recession (a.k.a. a period of slow growth--heh) raises two questions:
1. Can the U.S. economy decouple from the global economy, i.e. keep expanding production, sales, income and payrolls while the rest of the global economy falters?
2. What happens to the U.S. stock market if/when the U.S. follows the rest of the world into recession?
My colleague Dave P. at Market Daily Briefing has posted information on arecession detector based on the work of economists Chauvet and Piger. In essence, the model considers four data series: real personal income, nonfarm payrolls, industrial production and real final sales (as a percentage of change). If all four are rising, the probability of recession is low. If all four roll over and decline, the probability of recession (generally defined as a decline in gross domestic product for two consecutive quarters) ...

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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