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17Mar2015 Market Update: US Markets Opens Lower Ahead Of FOMC Meeting, WTI Oil Actively Testing Major Support, DOW Down One Percentage Point

Written by Gary

Markets opened down as expected but traded mostly sideways during the morning session. Weakening averages are melting further as we approach the afternoon FMOC meeting and many investors are particularly concerned on what Ms. Yellen might or might not say as the Fed is in a lose, lose situation.

The German DAX is off 1.72% amid popular demand that Greece leaves the EU promising a greater sell-off as the Friday deadline approaches.

By noon the averages were trending lower fractionally as WTI oil is actively testing its support supporting investors concerns of selling if this support is breached.


Here is the Market Open from CNN Money

North and South American markets are mixed. The Bovespa is higher by 1.46%, while the S&P 500 is leading the IPC lower. They are down 0.67% and 0.28% respectively.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 66
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 40
Investors Intelligence sets the breath Above 50 bullish 57.5
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -19.92
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 54.75
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 60.89
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 71.20
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 20.56
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 75.47
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,819

What Is Moving the Markets

Here are the headlines moving the markets.

It's Time For Angela Merkel To Stand Up

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

I need to start of off the bat with an update to this piece, which I started writing yesterday, since I now know that Angela Merkel actually did invite Alexis Tsipras on Monday. It only took her two months.... But that doesn't take away anything from my point that Merkel has been sorely lacking and missing, it just goes to prove that point.

And if she doesn't get her act together very quickly (why not ask Tsipras to be in Berlin tomorrow morning?!), this will, I've said it before, go down as her main legacy. She will be known as the person who let Europe slip into war, for no good reason whatsoever. Here's what I started off with last night (Oz time):

The increasing ugliness of the 'negotiations' between the Greek Syriza government and the rest of the eurozone, which is ruled by the German government, needs to be halted and put in reverse. There is an urgent need for a detente, for cooler heads and for trust. And there is only one person who can act to create these things: Angela Merkel. But Merkel is nowhere to be found or seen.

The increasing ugliness of the propaganda war the west is waging against Russia and its president Vladimir Putin, also needs to be halted. There is an even more urgent need there for a detente, for cooler heads and for trust. There is only one person who can act to create these things: Angela Merkel. But Merkel is AWOL.

There are German voices in the Putin case that call for reason and quiet, and that have labeled people like NATO head Stoltenberg, NATO General Breedlove and US State Department 'Assistant' Victoria Nuland more or less insane. But Merkel's voice is not ...

Defying U.S., European allies say they'll join China-led bank

BERLIN/WASHINGTON (Reuters) - Germany, France and Italy said on Tuesday they would join a new China-led Asian investment bank after close ally Britain defied U.S. pressure to become a founder member of a venture seen in Washington as a rival to the World Bank.

The 5 Most Crowded Trades on Wall Street: Part 2

By EconMatters

Note: This is part 2 of a 5-part market series by EconMatters. Read Part 1 here.

Wall Street Poised For Another Revenue Bloodbath After Harbinger Jefferies Reports 56% Fixed Income Plunge

We have previously explained why Jefferies, arguably the last standalone (despite its purchase by Leucadia a year ago) investment bank on Wall Street is so informative:

Jefferies is best known for among Wall Street shareholders is that, by still reporting a Nov. 30 fiscal year end, 1 month ahead of everyone else, it provides an invaluable glimpse into the fortunes of its Wall Street peers with a 4 week advance notice, especially when it comes to its bread and butter: fixed income trading (recall that CEO Rich Handler was a Drexel bond trader when the firm blew up).

And just like last quarter, earlier today Jefferies reported its earnings for the quarter ended February 28, which capture the trailing two-thirds of every other bank's first quarter period (those who now have a December 31 year end).

The result, just like last quarter, was a disaster and indicative of nothing short of a trading bloodbath on Wall Street in the past three months of trading. In fact, if this is what one should expect out of the larger Wall Street names in a few weeks when the big banks close the quarter, then it may be best to skip earnings season altogether... for the second quarter in a row.

The bottom line, and what everyone who is awaiting the latest FICC numbers from the balance of the banks will be focusing on, is the 56% drop in Q1 revenue from fixed-income trad ...

Rig Shutdown Cannot Stop US Oil Production

Crude Oil futures are teetering above near-term support, as US production continues to rise, flooding the market. Oil prices have also been under pressure due to a rising US Dollar. The US Dollar Index has actually consolidated around the 100.00 level, which can be seen as a significant level.

If the index is able to convincingly break through this level, Crude Oil could find itself under further pressure. In Germany, the popular opinion against Greece staying in the Euro currency has been increasing. More than half of Germans believe it may be time for Greece to leave the currency, which could eventually pressure politicians to echo similar statements.

US production of Crude Oil continues to climb, despite rigs being shut down at a feverish pace in recent months.

From FuturesBlogs.com


U.S. influence challenged in global financial institutions -Lew

WASHINGTON (Reuters) - The Obama administration warned on Tuesday that rising powers were challenging U.S. leadership in global financial institutions, and urged Congress to approve a deal it says would help preserve U.S. influence.

Bits Blog: IBM Introduces Twitter-Fueled Data Services for Business

IBM and Twitter rolled out their data services for business. They are the first products of a venture that is strategically important to both companies.

Wall St. Moves Lower in Early Trading

The price of oil continued to swoon after hitting a six-year low on Monday.

Treasury Secretary Lew Admits US "International Credibility & Influence Is Being Threatened"

While we try to our patriotic duty every day, Jack Lew's comment that: U.S. ECONOMIC RECOVERY WELL ESTABLISHED, LEW SAYS was too much to bear... so we provide the following 3 charts for guidance in comprehending the propaganda. Why would he blatantly lie in the face of unequivocally bad data? Simple, they are desparate to spin US economic strength as the world comes to realize it no longer needs to rely on a unipolar US-based model...

Economic Growth expectations for the US in 2015 are collapsing...

as Macro data crashes on a scale not see since Lehman...

In fact its the worst start to a year on record...

"well established"? Well perhaps Lew has had a little too much Irish spirit today.

* * *

Why would simply lie about unequivocally bad data? Simple - 4 letters - A I I B!!

Gold Spikes On Sudden $1.2 Billion Bid

For no good reason aside from the algos had their fun to the downside and crude ran its stops, precious metals' futures have suddenly exploded higher on heavy volume... The surge in gold saw approximately $1.2 billion notional traded...

Silver also surged...

Seemingly triggered by a flush of volume as WTI hit stops at yesterdsay's NYMEX close...

Nothing to see here, move along...

Charts: Bloomberg

Actavis says Allergan's Pyott won't join new company's board

NEW YORK (Reuters) - Actavis Plc said on Tuesday that Allergan Inc's top executive David Pyott will not join the combined company's board of directors after all.

Greece Faces Cash Crunch This Friday Without "Plan A Or Plan B": What Happens Next

Greece's day of reckoning may be fast approaching. Athens will have to pony up more than €2 billion in debt payments this Friday to the ECB, the IMF, and (get this) Goldman Sachs, for an interest payment on a derivative and it's not entirely clear where the money will come from. On Wednesday, the government will vote on a "plan" to boost liquidity which includes tapping public funds and diverting bank bailout money. Here's Bloomberg:

Greece will begin debating measures to boost liquidity as the cash-starved country braces for more than 2 billion euros ($2.12 billion) in debt payments Friday…

The government's revenue-boosting plan includes eliminating fines on those who submit overdue taxes by March 27 to encourage payment, helping cover salaries and pensions due at the end of the month. The bill also requires pension funds and public entities to invest reserves held at the Bank of Greece in government securities and repurchase agreements, and transfers 556 million euros from the country's bank recapitalization fund to the state. A vote on the measures is scheduled for Wednesday…

The Goldman Sachs derivative, now held by the National Bank of Greece, masked the country's growing debt when it was agreed in 2001, helping it meet European Union rules for entering the euro area. The interest payment adds to the country's funding woes as the government misses budget targets and the ECB refuses to allow Greek banks to keep the country afloat with additional short-term debt.

Despite government claims that it can meet its obligations, outside observers aren't so sure. German FinMin ...

Crude oil weaker, higher U.S. inventory expected

LONDON (Reuters) - Brent crude oil prices pared losses in choppy trading on Tuesday, but remained at the lowest levels since early February as traders refocused attention on the mounting supply glut.

France, Germany and Italy Say They'll Join China-Led Bank

The three said they would be part of the Asian Infrastructure Investment Bank, which Washington views as a rival to the World Bank.

U.S. and Gulf airlines set to clash at aviation summit

WASHINGTON (Reuters) - Top executives of U.S. and Gulf airlines will take their dispute over whether "open skies" deals have led to unfair competition to a high-profile public forum in Washington on Tuesday as each side ramps up efforts to sway U.S. regulators.

Boeing eyes satellite deal with tech giant this year

WASHINGTON (Reuters) - Boeing Co on Monday said it could clinch a deal this year to build a high-throughput communications satellite for top technology companies such as Google Inc , Amazon.com Inc , Facebook Inc or Apple Inc .

Russia Escalates Military Posture: Deploys Strategic Bombers To Crimea, Launches Massive Drills Across Nation

All those who were wondering where Putin had "disappeared" to, and spreading rumors whether it was more likely his girlfriend had given birth in Switzerland or aliens had abducted him, will probably be satisfied if he were to promptly disappear once more following news that not only yesterday had he put 40,000 troops on full alert as part of "snap-readiness exercises", but less than 24 hours followed this up with even more demonstrative military "drills" after Sputnik reported that Russian strategic Tu-22M3 (Backfire) strike bombers have been deployed to the Crimean Peninsula to hold snap combat readiness drills, a source in the Russian Defense Ministry said Tuesday, in addition to further massive troops and equipment deployment tests in the western part of the nation as well as around the Arctic circle.

As a reminder, Crimea was recently in the news following a weekend report citing Putin that he was ready to use nukes to secure the recently repossessed peninsula. So one can perhaps look at this as de-escalation.

"During the snap combat readiness drills by the Armed Forces, strategic Tu-22M3s will be deployed to Crimea," the source said.

Then, perhaps to counter the build of NATO troops in the Baltics, Russia also deployed fighters and bombers to the country's western exclave of Kaliningrad for snap combat ...

Bad Weather Wallops U.S. Housing Starts; Setback Seen as Temporary

U.S. housing starts plunged to their lowest level in a year in February likely as harsh weather kept building crews at home, in the latest indication that the economy hit a soft patch in the first quarter.

Residential Building Sector Again Mixed in February 2015. This Sector Is NOT Strong.

Written by Steven Hansen

Residential building permits recovered from its terrible data last month, but Construction completions crashed this month. This only shows that the data is noisy and considering backward revisions, the rolling averages are the best metric to view this series. Overall, our view is that the data is mixed and can be spun any way a pundit wants - but it is hard to argue that this sector is improving.

And Q€ Breaks The Spanish Stock Exchange...

Now where have we seen this before... just a week into Draghi's big money-printing fiesta, European stock exchanges are already breaking as the algos run wild on a notable selling day...

Spanish stocks tumble...

And then the exchanges break...

Are the good times over for growth in U.S. shale gas?

(Reuters) - U.S. natural gas production could decline in 2016 for the first time in 10 years, driven by low oil prices after a decade of gangbusters growth from shale plays.

House Republican Budget Overhauls Medicare and Repeals the Health Law

The Republicans' proposed budget partly privatizes Medicare, repeals the Affordable Care Act and reaches balance in 10 years.

Macerich Rejects Takeover Offer From Simon, a Rival Mall Owner

Macerich adopted a poison pill and said the Simon Property Group's proposal undervalued the company.

Housing Starts Collapse Most In 8 Years To 18 Month Lows

Housing Recovery? Yellen, we have a problem. Housing Starts for February collapsed 17% - this is the biggest MoM percentage drop since February 2011, and at -184K units down, this was the single biggest monthly decline in absolute terms since January 2007! At 897k SAAR, this is the first sub-900k print since September 2013 and biggest miss since Feb 2007. Multi-family starts are the lowest since June 2014. The collapse was dominated by the Northeast (-56.5%) and Midwest (-37%) so it must be the weather, right? Not so fast, The West region saw starts collapse 18.2%.

Ugly:

California ("West") housing was crushed by heavy, heavy snow:

Multi-family starts are the lowest since June 2014.

America's European "Allies" Desert Obama, Join China-led Infrastructure Bank

It appears the sea of de-dollarization has reached the shores of Europe. With Australia and UK having already moved in the direction of joining the China-led AIIB, The FT reports that France, Germany, and Italy have now all agreed to join the development bank as 'pivot to Asia' appears to be Plan B for Europe. As Greg Sheridan previously noted, "the saga of the China Bank is almost a textbook case of the failure of Obama's foreign policy," but as The FT concludes, the European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside. As Forbes notes, this leaves Obama with 3 uncomfortable options...

As The FT reports,

France, Germany and Italy have all agreed to follow Britain's lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution.

The decision by the three European governments comes after Britain announced last week that it would join the $50bn Asian Infrastructure Investment Bank, a potential rival to the Washington-based World Bank.

The European decision ...

WTI Slumps To New Cycle Lows As Iran Supply Fears Loom

Just a few short days ago we were the first to bring attention to the potential of an Iran nuclear deal being a catalyst for the next big leg lower in the energy complex and sure enough, not only is the market startuing to leg lower in a hurry as the deadline looms, but the mainstream media is catching on too. WTI hit fresh cycle lows this morning at $42.63 with the contango continuing to surge.

WTI makes new cycle lows...

As the contango continues to surge higher...

As Bloomberg noticed today,

Iran could raise oil exports by 1 million barrels a day without international sanctions, its oil minister said as talks resumed with the U.S. over the nation's nuclear program.

"If sanctions are lifted, we can raise our exports by one million barrels per day within a few months," Oil Minister Bijan Namdar Zanganeh said Monday in Assaluyeh, Iran. The Persian Gu ...

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