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18Mar2015 Market Update: Opening Market Commentary: FMOC Statement Looms Ahead, Equities In The Red, WTI Oil Trading Below Support, U.S. Dollar Consolidating

Written by Gary

The markets opened lower as expected and have traded sideways throughout the morning on light volume. The overwhelming investor view of the FMOC statement at 2 pm is not favorable among investors polled this morning all citing various views why the Fed is in a lose, lose situation.

By noon not a lot was happening as we await the FMOC statement. The U.S. Dollar is trading just below 100.00 as oil consolidates below 44.77 which was a key support.

Here is the Market Open from CNN Money

North and South American markets are mixed. The Bovespa is higher by 1.13%, while the S&P 500 is leading the IPC lower. They are down 0.38% and 0.23% respectively.

Traders Corner - Health of the Market

Index Description Current Value
Investors Intelligence sets the breath Above 50 bullish 57.8 Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -24.40 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 54.07 NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 61.01 S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 70.40 10 Year Treasury Note Yield Index ($TNX) ten year note index value 20.21 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 75.08 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,844

What Is Moving the Markets

Here are the headlines moving the markets.

Beijing 'would welcome' U.S. joining China-led bank - report

BERLIN (Reuters) - Chinese deputy finance minister Shi Yaobin has told a German newspaper his country would welcome the United States joining a new China-led Asian development bank.

Exclusive: Jetmakers intervene on Zodiac seat delivery delays

PARIS/SEATTLE (Reuters) - Planemakers Airbus and Boeing have stepped up pressure on French supplier Zodiac Aerospace over persistent delays in the delivery of aircraft seats that are disrupting jetliner assembly, industry sources said.

DoubleLine's Gundlach says Fed may change 'patient' to 'flexible'

NEW YORK (Reuters) - The Federal Reserve on Wednesday will likely discard a pledge to remain "patient" before hiking rates, replacing it with the word "flexible," said widely followed investor Jeffrey Gundlach, co-founder of DoubleLine Capital.

GM says 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 to try to survive a deepening downturn in the auto market, the U.S. carmaker said on Wednesday.

Citigroup cannot quit Argentine custody business -govt source

BUENOS AIRES/NEW YORK (Reuters) - Argentina will not allow Citigroup Inc. to exit its local custody business, a senior source in the government said on Wednesday, a day after the bank said it planned to do so after a U.S. judge denied it permission to process some sovereign debt payments.

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.

Sweden Cuts Key Interest Rate to Minus 0.25%

The Swedish central bank's move followed a similar cut last month, and it came just hours before a meeting of the Federal Reserve in Washington.

Patching Up the Social Safety Net

Universal programs financed by broader taxes could appear unfair, but targeted social insurance financed by progressive taxes is likely to be politically weak. Above, Senator Edward M. Kennedy, right, and others celebrated the 20th birthday of Medicaid and Medicare in 1985.

Herbalife wins dismissal of U.S. 'pyramid scheme' lawsuit

(Reuters) - Herbalife Ltd won the dismissal of a lawsuit that claimed the maker of weight-loss and nutritional products fraudulently portrayed itself as a legitimate company, and that shareholders lost money because it was actually an illegal pyramid scheme.

Surprise: Tech Company Valuations Are Completely Made Up

Talk of a massive bubble in the red hot world of private tech companies is getting louder of late. As we noted last week, Prem Watsa recently highlighted what he called excessive "speculation" in tech stocks and predicted that at the end of the day, habitually slapping billion-dollar valuations on unproven companies that often have little more than an app and a dream will end "very badly." This comes on the heels of Mark Cuban's warning that stretched valuations in private tech companies are far more dangerous than any perceived Nasdaq bubble 2.0, as at least with overvalued publicly traded firms there's liquidity.

Well, now that everyone is jumping on the "there's no way that app is worth $50 billion" bandwagon, Bloomberg is out with a startling revelation: "Snapchat, the photo-messaging app raising cash at a $15 billion valuation, probably isn't actually worth more than Clorox."

No, probably not, but it sure is more fun than doing laundry, which is why it absolutely makes sense that the number VCs are putting on the app makes absolutely no sense. Here's Bloomberg:

Here's the secret to how Silicon Valley calculates the value of its hottest companies: The numbers are sort of made-up. For the most mature startups, investors agree to grant higher valuations, which help the companies with recruitment and building ...

German court imposes national ban on some Uber services

FRANKFURT (Reuters) - A German regional court on Wednesday issued a nationwide ban on online taxi service Uber, barring it from operating commercial services and levelling stiff fines for any violations of the country's local transport laws.

Greece is Just the Tip of the Iceberg for the $100 Trillion Bond Bubble

Greece, as a country, represents 2% of Europe's GDP. The country lied in its financial to enter the EU. Since that time, it's been officially bankrupt since 2010.

The country has since gone through a series of "bailouts" and experienced a 25% collapse in GDP (roughly equivalent to what Argentina experienced in its 2001 implosion).

And yet, despite all the bailouts and claims that Greece was "fixed," the country is set to default on some of its debt this Friday.

How on earth does this farce continue? How can Greece be broke FIVE years after it was first allegedly "fixed"?

The answer is very simple. Greece was never fixed. The Greek bailout was about getting money to German and French banks, many of which would go broke if Greece defaulted on its debts.

This story has been completely ignored in the media. But if you read between the lines, you will begin to understand what really happened during the previous Greek bailouts.


1) Before the second Greek bailout, the ECB swapped out all of its Greek sovereign bonds for new bonds that would not take a haircut.

2) Some 80% of the bailout money went to EU banks that were Greek bondholders, not the Greek economy.

Regarding #1, going into the second Greek bailout, the ECB had been allowing European nations and banks to dump sovereign bonds onto its balance sheet in exchange for cash. This occurred via two schemes called LTRO 1 and LTRO 2 which happened in December 2011 and February 2012 respectively. Collectively, these moves resulted in EU financial entities and nation ...

Fed set to ditch 'patient' rate vow as it eyes U.S., world growth

WASHINGTON (Reuters) - The Federal Reserve on Wednesday is expected to lay the groundwork for its first interest rate hike in nearly a decade, as it continues to weigh whether the U.S. recovery can hold up against collapsing oil prices and a soaring dollar.

Uber 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.

WTI Slumps As Cushing Inventory & Production Hit New Record High

Following last night's massive 10.5mm barrel build (according to API), this morning's DOE inventories data was highly anticipated (with an expectation of just over 5 million barrels). It did not disappoint... printing at 9.622 million barrel inventory build, this is now the fastest inventory build on record... with record total inventory and record Supplies at Cushing. Storage concerns are growing. But, despite the collapse in rig counts, high-grading and cash-flow deparation remains as crude production also hit a new record high.

The reaction...

10th weekly inventory build in a row... the biggest in 10 weeks ever...

and Production continues to rise...

For a sense of just how crazy this level of inventory is...

Wall Street falls with eyes on Fed statement

NEW YORK (Reuters) - U.S. stocks fell in early trading on Wednesday ahead of a highly anticipated statement and news conference by the Federal Reserve later in the session, with the Fed expected to give clearer clues on how soon it plans to tighten monetary policy.

WTI Nears $41 Handle After Saudi Comments

WTI is now down over $2 from the massive API inventory build last nihgt and is testing down to a $41 handle. The latest leg is not halped by Saudi officials' comments that it "will not interfere with the oil market," and that "the oil market will fix itself," as they continue the line taken at the last OPEC meeting and pressure US Shale even further.




EU to require sharing of corporate deals to curb tax avoidance

BRUSSELS (Reuters) - European Union countries will have to share information on tax deals agreed with major corporations under European Commission plans to limit the ability of big business to avoid tax across the 28-nation bloc.

ECB Prepares For Grexit, Anticipates 95% Loss On Greek Debt

Dear Greek readers: the writing is now on the wall, and it is in very clear 48-point, double bold, and underlined font: when the ECB "leaks" that it is modelling a Grexit, something Draghi lied about over and over in 2012 and directly in our face too, take it seriously, because it is time to start planning about what happens on "the day after." And incidentally to all those curious what the fair value of peripheral European bonds is excluding ECB backstops, the ECB has a handy back of the envelope calculation: a 95% loss.

Which also is the punchline, because while the ECB is making it very clear what happens next in the case of a "Graccident", it has yet to provide an explanation how it will resolve the billions of Greek debt held on its own balance sheet which are about to be "marked-to-default"...

... and on which it is prohibited from suffering a loss, or else Draghi will have to fabricate even more on the run rules about how the ECB balance sheet is loss-proof... expect in this case, or that, or the other.

From Manager Magazin, google-translated:

Wall St. Is Lower Ahead of Fed Statement

The substance of the central bank's statement on interest rates has unsettled investors worried about an earlier increase.

VIX Just Flash-Crashed

We suspect any second now, one (or all) of the exchanges will break as VIX just flash-crashed from 16 to 13.69...

We suspect it is some remnant of Quad-witching...

As is "normal" nowadays, VIX has ripped back up to 16 now...

Brent oil falls below $53 as industry data shows record U.S. inventories

LONDON (Reuters) - Brent oil prices fell below $53 a barrel on Wednesday on oversupply concerns as industry data indicated U.S. crude stocks had hit a new record high.

Grexit Contagion Resumes After IMF Slams "Most Unhelpful Client Ever"

Draghi, we have a problem. Despite the omnipotent buying power of the all-knowing ECB, peripheral European bond spreads are blowing out again (and stocks dropping) as Grexit fears start to spread contagiously across the continent. As Greece's cash crunch looms ever closer (with capital controls looming) and bulls "throw in the towel" on the "nuts" Greeks, the IMF has come out and rubbed Mediterranean salt into that wound by telling the Eurogroup that Greece is the most unhelpful country the organization has dealt with in its 70-year history. As Bloomberg reports, in a short and bad-tempered conference call on Tuesday, officials from the 'Troika' complained that Greek officials aren't adhering to a bailout extension deal leaving Dijsselbloem hinting at Cypriot templates for Greece.

The 'Troika' is not happy... International Monetary Fund officials told their euro-area colleagues that Greece is the most unhelpful country the organization has dealt with in its 70-year history, according to two people familiar with the talks. As Bloomberg reports,

In a short and bad-tempered conference call on Tuesday, officials from the IMF, the European Central Bank and the European Commission complained that Greek officials aren't adhering to a bailout extension deal reached in February or cooperating with cr ...

G.M. Says Will Shut Russian Plant and Wind Down Opel Brand

General Motors said it would close its assembly plant in St. Petersburg and wind down its Opel brand, reducing its presence in Russia's market.

Crash Landing: China Home Prices Plunge At Fastest Pace On Record, Surpass Post-Lehman Collapse

Less than three weeks ago, when the PBOC proceeded with its latest "surprise" rate cut, we showed a chart that should scare everyone who is hoping that China will avoid a hard-landing would prefer would never have been revealed: the annual collapse in Chinese home prices is now so sharp and so widespread, that it has surpassed the housing collapse in the aftermath of the Lehman collapse."

Overnight things went from bad to worse, when China's National Bureau of Statistics reported that contrary to hopes for a modest rebound, China's average new home prices fell at the fastest pace on record in February from a year earlier.

As Reuters reported earlier, average new home prices in China's 70 major cities dropped 5.7 percent last month from a year ago, the sixth consecutive fall, following January's 5.1 percent decline. It was the biggest annual decline in the nationwide survey since it began in 2011.

The monthly fall in February from January was 0.4 percent, the same as in the previous month, and pointing to sustained risks to the government' ...

Sweden Slides Further Into NIRP: Cuts To -0.25%; Expands QE

Ahead of The Fed's 'impatience' today, and amid a tumbling EUR, the oldest central bank in the world has decided it is time to go further into the illustrious ranks of NIRP/QE'ers:


So as opposed to Denmark's roundabout "bizarro QE", Sweden just jumps in and monetizes that debt direct by expanding their QE program and shifts from small NIRP to bigger NIRP. All this while suggesting the labor market is strengthening and inflation has bottomed out. The reaction - SEK is plunging and OMX surges.






Having already cut to -0.1% in Feb, Riksbank is at it again.

Here is the full Riksbank statement:

There are signs that inflation has bottomed out and is beginning to rise, but the recent appreciation of the krona risks breaking this trend. The Executive Board of the Riksbank has decided to make monetary policy even more expansionary by cutting the repo rate by 0.15 p ...

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