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18Mar2015 Market Close: FMOC Report Sends Markets Higher, Oils Close Higher As Does Gold, The U.S. Dollar Plummets

Written by Gary

The FMOC report sent the DOW from a minus triple digit to a plus triple digit in a matter of minutes after the report was released, primarily due to dropping the word 'patient' from its policy statement. In effect lifting one of the few remaining barriers to the first interest rate hike since 2006, but fund rates are unlikely to be raised at the April FMOC meeting. The U.S. Dollar plunged to 98.30, considerably below support consolidation over the past 5 sessions, but looks to improve, gold rose higher (1173) just below resistance while oil rose significantly, it did not rise into its resistance. Bottom line, same 'ol, same 'ol as skeptics see toady's Wall Street euphoria as a flash in the pan.

By 4 pm the SP500 ended with an bullish 'Engulfing Doji Pattern' that points possibly to another green day tomorrow. The DOW ended up +227 (+1.27%), the SP500 closed up at 2099 (+1.21%) and the Small caps followed closely behind.

Todays S&P 500 Chart

Oil is very much in today's news as it climbs higher and tends to move markets in the same direction, but note WTI oil has NOT climbed into its resistance and the trend is still down. Seen here in a daily chart of WTI oil, it will most likely correct to the downside.

WTI oil rose to 47.11 (Chart Here), Brent rose to 56.33 (Chart Here), and the U.S. Dollar fell to 98.02 (Chart Here).

Our medium term indicators are leaning towards Hold portfolio of non-performers and the session market direction meter (for day traders) is 100+ % Bullish up from 40 % bearish 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 flat, but remains above zero at +0.87.

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'.

As of now, I do see some leading indicators that are warning of a 'long-term' reversal within six months. I believe one is most likely to occur later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market. If you are not worried, then at least be cautious. A good rule is that one cannot be prepared for a situation if you do not anticipate the possibility of that situation materializing.

Brett Arends described the U.S. stock market as "one of the most dangerous in the world ," based on the research of Wellershoff & Partners, and suggested it may be a good idea to diversify with some international or emerging markets funds. Which of course, I would disagree on the emerging market funds and would go to cash if anything. members' sentiments are 68 % bearish.

CNN's Fear & Greed Index is 36. Above 50 = greed, below 50 = fear. (At 'fear') (Chart Here) The number of stocks hitting 52-week highs exceeds the number hitting lows and is at the upper end of its range, indicating extreme greed.

The Market in Perspective

Here are the headlines moving the markets.

Oil prices turn higher after Fed, but EIA shows U.S. supplies hit another record

Crude oil prices, in the doldrums yet again after U.S. inventories hit record highs for a 10th week and supplies at the futures' Cushing delivery hub hit a peak, turned around to finish higher following the Fed policy statement.

  • Nymex crude rose 2.5% to settle at $44.66/bbl, pushing off earlier lows of $42.25 and the lowest intraday level since March 2009; Brent is up 4.5% at nearly $56.

  • The gain could prove only a momentary recovery, however, as "speculation is going to grow about operational capacity being hit in Cushing and what that portends for prices," according to Again Capital John Kilduff, adding that he sees U.S.crude testing $40 soon.

Wall St. surges as Fed statement offers relief

NEW YORK (Reuters) - U.S. stocks rallied on Wednesday after the Federal Reserve cut its expected pace of growth and inflation, suggesting a less aggressive timeline for raising interest rates even as it opened the door for the first rate hike in almost a decade.

Ben Bernanke Was Right: "No Rate Normalization During My Lifetime"

With the Fed's credibility terminally smeared across the windshield of the Marriner Eccles-mobile, courtesy of the latest "dots" projection which proved yet again - and beyond any doubt - that the FOMC members are just a pack of chimps throwing darts, and perhaps feces, at a fed funds dart board, we can now honestly say that the one Fed (ex) member who was 100% accurate (if only in this case), and who saw the writing on the wall early on and got the hell out of Marriner Eccles while he could, is Ben Bernanke.

As a reminder, this is what he said (via Reuters):

"At least one guest left a New York restaurant with the impression Bernanke, 60, does not expect the federal funds rate, the Fed's main benchmark interest rate, to rise back to its long-term average of around 4 percent in Bernanke's lifetime. "Shocking when he said this," the guest scribbled in his notes. "Is that really true?" he scribbled at another point, according to the notes reviewed by Reuters."

Yes, it really is.

February 2015 Sea Container Count Contraction Continues. Not Economically Positive.

Written by Steven Hansen

The West Coast Ports labor dispute was over in January but contraction continues in the data in February. On one hand we know that trade is slowing, but what portion of these low counts are attributable to the remnants of the labor issues - and how much to economic slowing? Container movements shows both exports and imports were down about 17% from one year ago - which is an improvement over last month..

Goldman's FOMC Post-Mortem - "More Dovish Than Expected" But Hike Coming In September

Via Goldman Sachs' Jan Hatzius,

The March FOMC statement and projections suggested that September rather than June appears to be the most likely date for the first hike of the fed funds rate. Although the change to the "patient" forward guidance was close to expectations, the shift in the "dot plot" was most consistent with two rather than three 25 basis point hikes to the target range occurring in 2015. In addition, changes to the Committee's economic assessment were a bit more dovish.


1. As widely expected, the FOMC decided to drop its "patient" formulation in its forward guidance regarding the date of the first rate hike. It explicitly noted that a hike at the upcoming April meeting was unlikely, while stating that the Committee will hike "when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term."

2. Changes to the Committee's assessment of economic activity were generally dovish, with growth at a "solid pace" downgraded to growth having "moderated somewhat." In particular, "export growth weakened."

3. The median projection for the fed funds rate (or "dot") fell 50bp to 0.625% at end-2015, fell 62.5bp to 1.875% at end-2016, and fell 50bp to 3.125% at end-2017. Two participants again indicated that a hike would not be appropriate until 2016, while one indicated a target range of 25-50bp at end-2015 and seven indicated a target range of 50-75bp at end 2015 (a group that is highly likely to include the leadership of the Committee), most likely consistent with a first hike in September. The median longer run projection was unchanged at 3.75%, but many participants reduced their longer run dot by 25bp.

4. The FOMC also released a new Summary of Economic Projections. The mid-point of the central tendency of the unemployment rate fel ...

PlayBuzz Rides Quizzes and Lists to $16 Million in Financing

A partner at the venture capital fund 83North, which led the round of investment, said that his firm had been drawn to PlayBuzz because it provided a means for any website to attract readers.

Small Business: Crowdfunded Entrepreneurs, Tripped Up by the Taxman

Campaigns on sites like Kickstarter can help a small business get started. But the complex income and sales tax reckoning can come as a surprise.

Yellen Admits "Market Valuations Are On The High Side", Adds "No Comment" On Biotech, Social Media Stocks

With a firm "no comment" Janet Yellen shied away from burstng the bubble in "extremely stretched" Biotech and Social Media stocks, but was forced to admit that "overall measures of equity valluations are on the high side." Then, rather oddly, she notes that The Fed sees unusually low spreads in corporate bond markets... which is odd since they have actually widened dramatically in the last year or so, perhaps signalling just how "high" valuations are in stocks...

Yellen "no comment" on Biotechs... but "market valuations on the high side."

And Corporate bond spreads are unusually low... which is odd given this...

But then again, why not just keep lying - its worked for the last 6 years.

U.S. Oil Prices Erase Losses After Fed Statement

U.S. oil prices turned positive after the Federal Reserve policy committee pushed back market expectations for higher U.S. interest rates. That statement weakened the dollar, making oil more affordable to buyers using other currencies.

Fed Opens Door to Rate Increase but Remains Cautious on Growth

The Federal Reserve offered several reasons it is still in no great rush to raise short-term interest rates and said it would move when it is reasonably confident that low inflation is on track to return to its 2% target.

Mexican retailer Walmex to invest 12.4 billion pesos in 2015

(Reuters) - Wal-Mart de Mexico , the country's biggest retailer, will invest 12.4 billion pesos ($809.45 million) this year in maintenance and expansion of its sales floor, its chief finance officer, Rafael Matute, said on Wednesday.

U.S. Stocks Rally as Fed Signals Caution

U.S. stocks and bonds rallied, while the dollar slumped, after the Federal Reserve signaled a more cautious approach to raising interest rates than investors had expected.

Starbucks to debut delivery in Manhattan, Seattle this year

(Reuters) - Starbucks Corp will begin offering delivery in New York City and Seattle later this year, when it also plans to expand mobile order and pay services across the United States.

Market Rises After Fed Outlines Approach to Raising Rates

The Dow Jones industrial average jumped after the Fed news, rising more than 100 points after being down 115 points just before the announcement.

Fed opens door for rate hike even as it downgrades economic outlook

WASHINGTON (Reuters) - The Federal Reserve on Wednesday moved a step closer to a much anticipated first rate hike since 2006 by removing "patient" from its language, although markets bet on a September hike after it downgraded the expected pace of growth and inflation.

An Uber Service Is Banned in Germany Again

The decision overturns a ruling from September that had lifted an injunction against the service, which had been sought by a taxi trade group.

10-Year Treasury Yield Falls After Fed Statement

Investors piled into U.S. government bonds on Wednesday, sending the benchmark 10-year note's yield below 2%, as the Federal Reserve's statement soothed concerns the central bank is in a hurry to raise rates.

Was This Morning's VIX Flash-Crash More "Signal" Than Noise?

Who knows?

Citigroup sues ex-Goldman partners' firm over Swiss franc losses

NEW YORK (Reuters) - Citigroup Inc has sued a Connecticut firm founded by two former Goldman Sachs partners for $25 million over losses incurred during the unexpected surge in the Swiss franc in January.

Starbucks says Tingyi to make Starbucks drink products in China

SEATTLE (Reuters) - Starbucks Corp said on Wednesday it signed an agreement with Tingyi Holding Corp for the Chinese food and drink maker to produce and expand the distribution of Starbucks ready-to-drink products in mainland China.

Nearly 40 percent of iPhone owners interested in Apple Watch: poll

SAN FRANCISCO (Reuters) - About 40 percent of adult Apple iPhone owners in the United States are interested in buying the company's new Apple Watch, according to a new Reuters/Ipsos poll.

Alibaba investors face lock-up battered but largely unbowed

NEW YORK (Reuters) - As Alibaba was preparing to sell shares to U.S. investors for the first time, Jerry Verseput tried to persuade his clients not to throw money at the giant China-based e-commerce company because he thinks IPOs are a gamble, especially those with a lot of hype.

Janet Yellen Explains That Losing "Patience" Does Not Mean She Lost Patience - Live Webcast

Having created quite a storm with her statement, it is time for Fed Chair Janet Yellen's press conference to confirm that nothing's changed, USD strength is a 'net positive', there are no bubbles (apart from in bonds, which you should sell...), and any economic weakness/crash is merely transitory and weather-based...

FOMC Press Conference Live Feed...(due to start at 1430ET)

Broadcast live streaming video on Ustream

18 March 2015 FOMC Meeting Statement: Mystery Remains On Timing for Raising the Federal Funds Rate

Econintersect: The Federal Open Market Committee (FOMC) - the board of directors of the Federal Reserve - continued to change its discussion and word engineering in their meeting statement relative to when to start raising the Federal Funds rate. Also the committee has lowered their economic projections (at the end of this post). It appears that the words "it can be patient in beginning to normalize the stance of monetary policy" has been replaced with:

Consistent with its previous statement, the Committee judges that an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range. ....

Here Is The Reason Why Stocks Are Soaring, Or Farewell "Recovery"... Again

Why are stock soaring in response to the Fed statement and latest set of projections? Because, as Bloomberg promptly calculated, the FOMC revised down all forecasts for 2015 since the previous SEP was released on Dec. 17.

The median dot for year end 2015 falls to 0.625% from 1.125% in Dec: a whopping 0.50% cut.

And there goes not only the "recovery" but any imminent rate hike.

The details:

The central tendency for GDP this year is 2.3%-2.7% vs 2.6%-3%. But the real hammer was 2016 and 2017: these were just slashed from 2.5%-3.0% and 2.3%-2.5% as of December, to 2.3-2.7% and 2.0-2.4%.

Unemployment rate 5.0-5.2% vs 5.2%-5.3%

The Fed now sees PCE inflation at 0.6%-0.8%. This was supposed to be 1%-1.6% just three months ago.

Core PCE 1.3%-1.4% vs 1.5%-1.8%

And the one that matters most, the "dot plot", saw the median dot for 2016 fall to 1.875% vs 2.5%, and decline to 3.125% from 3.625% for 2017.

And here is a comparison of the dots since September 2014 courtesy of @Not_Jim_Cramer. The Fed: wrong as ever.

In other words, what the Fed just said is the following: "it wasn't the snow, it was the economy."

End Result: Goodbye recovery, hello stock surge.

GM to shut Russian plant as sales slide

MOSCOW (Reuters) - General Motors Co will shut its Russian factory and wind down its Opel brand in the country, taking a $600 million charge as it restructures its business to cope with a deepening downturn, the U.S. carmaker said on Wednesday.

FOMC Reaction: Buy Stocks, Buy Bonds, Buy Gold, Buy Crude Oil, Sell Dollars

"Moar Trade" On... 10Y under 2.00%, Gold Spiking...

And stocks are just loving it...

And Crude explodes... which makes perfect sense of course with The Fed slashing growth expectations...

Charts: Bloomberg

Fed Signals It May Increase Interest Rates by Midyear

Dropping its promise to remain "patient" on a rate move, the central bank expressed optimism that the economy no longer needs quite as much help.

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