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27Mar2015 Market Update: Markets Start Afternoon Session In The Green, U.S. Dollar Off Highs, WTI Oil Trending Down

Written by Gary

Oil prices were lower, a day after a sharp increase related to worries about supply amid conflict in the Middle East. As the afternoon session begins both the US dollar and the oils have started to trade sideways a trend ever-so-slightly downward.

The averages are in the green after a morning of choppiness that left them in the red for much of the time.

Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.20%, while the Bovespa is leading the IPC lower. They are down 3.56% and 0.72% respectively.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 61
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 38
Investors Intelligence sets the breath Above 50 bullish 58.0 Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -24.35 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 54.51% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 62.23 S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 70.80 10 Year Treasury Note Yield Index ($TNX) ten year note index value 19.65 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 74.94 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,863

What Is Moving the Markets

Here are the headlines moving the markets.

Neither Grexit, nor Grexident. Euro and 'drachma' in parallel?

BRUSSELS (Reuters) - Greece is unlikely to exit the euro, either intentionally or accidentally. But it might be forced to introduce an alternative means of payment, in parallel to the euro, to pay some domestic bills if a reform-for-cash deal with its creditors is not secured soon, several euro zone officials said.

Are We In A Biotech Bubble? You Decide

To let everyone's favorite "diminutive" Fed chair tell it, biotech valuations have been "substantially stretched" for the better part of a year. Despite that, blockbuster M&A deals and IPOs for pre-revenue newcomers have managed to sustain the insanity despite the objections of both bubble-spotting naysayers and some industry insiders like Roche Ventures' Carole Nuechterlein who recently predicted that "the end is coming." Earlier this week we saw the sector slide amid a broad market decline and you can count us among those who think the fact that 109 out of the 150 companies in the NBI lost money over the last year is cause for concern given the sector's absurd outperformance. Credit Suisse has now weighed in on the subject, as a new note out today asks "Are We In A Biotech Bubble?"

Here are a few fun facts to kick things off, including the rather astonishing note that biotechs have been the best performing sector for a half decade:

(a) Since 1/1/2011 the BTK has delivered 204% performance vs. 64% for the S&P500. The BTK is up nearly 400% since the previous peak reached during the mother of all bull markets, i.e. the dotcom fuelled 1999/2000 frenzy. The cumulative market cap of the 5 large caps is $513B currently up from $128B at the beginning of 2011 (and $82B at the beginning of 2001); (b) Biotech was the top performing sector for the last 5 years - 2011-2015; (c) The number of IPO's in 2014 (82 IPOs) has eclipsed the previous peak (67 IPOs) in 2000. There have been 12 IPOs YTD; (d) Multi $B valuations for SMID caps are now the norm. There are currently 44 public biotechs with > ...

Oil Slides As Inventories Trump Iran-Yemen Push-Pull

Crude oil prices have rallied sharply this week on headlines that a coalition of Sunni-ruled nations initiated airstrikes on Yemen against Shiite Houthi rebels. Goldman's Damian Courvalin notes that this rally reversed the sell-off that occurred in part on the rising odds of a deal with Iran being reached. Courvalin expects both events to have negligible near-term supply impacts, with the build in crude inventories set to continue in 2Q15. Longer term, a deal with Iran could lead to greater OPEC supplies although the timing of the sanction relief remains uncertain. It appears today's weakness indicates a dawning realization that there's still too much...

Big roundtrip in crude but supply will build...

YEMEN: While Yemen is a small producer (145 kb/d in 2014), the price rally is driven by fears of potential escalation and the proximity of the Bab el-Mandeb strait. While the conflict points to worsening Shiite-Sunni relations in the region, the near-term potential impact on oil production is limited, with the conflict far from Saudi's oil fields and limited to targeting the Houthi rebels. While closure of the strait could impact 3.8 mb/d of crude and product flows (2013 EIA estimate), the strait is a transit point rather than a chokepoint. Its closure would keep tankers departing the Persian Gulf from reaching the Suez Canal and the SUMED Pipeline, diverting them around Africa, for an additional 10 to 15 days transit time.

IRAN: Repo ...

20 March 2015: ECRI's WLI Again Improves but Continues in Negative Territory

ECRI's WLI Growth Index again improved but has remained in negative territory for 23 weeks. According to ECRI, this index is forecasting slower economic growth in 1H2015 and now into 2H2015.

Read more ...

Deal Professor: Reading the Fine Print in the Heinz-Kraft Deal

A look under the hood at everything from the makeup of the board of directors to the payment of a dividend, and not cash, to Kraft shareholders.

Euro Basis Swaps Keep Diving

Submitted by Pater Tenebrarum via Acting-Man blog,

An Accelerating Trend

While the euro itself has recovered a bit from its worst levels in recent sessions, euro basis swaps have fallen deeper into negative territory. In order to bring the current move into perspective, we show a long term chart below that includes the epic nosedive of 2011. We are not quite sure what the move means this time around, since there is no obvious crisis situation - not yet, anyway.

A negative FX basis usually indicates some sort of concern over the banking system's creditworthiness and has historically been associated with euro area banks experiencing problems in obtaining dollar funding. This time, the move in basis swaps is happening "quietly", as there are no reports in the media indicating that anything might be amiss. Still, something is apparently amiss:

Party like it's 2011: Three month, one year, three year and five year euro basis swaps - click to enlarge.

Worries About Greece?

It is possible that concerns over Greece find expression in this rather obscure market - apart from the Greek government bond market itself that is. The Greek yield curve remains steeply inverted, with 2 year notes yielding 20.14%, 5 year notes yielding 15.47% and 10 year bonds yielding 11.19%. Such steep yield curve inversions have been a typical feature of sovereign debt crisis ...

Wall Street little changed with focus on Yellen; biotechs up

NEW YORK (Reuters) - U.S. stocks edged up on Friday, with major indexes trying to avoid falling every day this week, ahead of a speech by Federal Reserve Chair Janet Yellen that could make for a volatile close on Wall Street.

Explaining The Latest War In The Middle East With One Cartoon

Because one cartoon is worth a thousand "sponsored post" all you need to know explainers.

h/t @ianbremmer

UMich Consumer Sentiment Drops For 2nd Month In A Row, First Time Since Oct 2013

For the first time since October 2013, UMich Consumer Sentiment dropped for consecutive months (printing a final 93.0 for March down from 95.4 in Feb, but above the flash print earlier in the month). Under the surface there are concerns with an increasing number of respondents noting that household finance are worse than 5 years ago, and an increasing number of people seeing now as a "bad time to buy" a house or car.

Charts: bloomberg

Economy Grew 2.2% in 4th Quarter, Final Estimate Shows

With recent data showing anemic activity, economists are expecting more subdued growth in the first quarter of this year.

U.S. consumer sentiment falls in March but above forecasts

NEW YORK (Reuters) - U.S. consumer sentiment fell month-over-month in March, a survey released on Friday showed, though the reading was better than expected.

Ford CEO Fields received $18.6 million in 2014 compensation

DETROIT (Reuters) - Ford Motor Co Chief Executive Officer Mark Fields made $18.6 million in salary and other compensation last year, below the $23.2 million that predecessor Alan Mulally received in 2013, the company said on Friday.

Euro Zone "Danger Zone" - Greek Bank Runs and UK, Irish Property Prices Falling ... Again

- Gold looks set for second consecutive week of gains
- Japan's QE fails - Returns to zero inflation
- â€'Master of the universe' central bank speeches today
- ETF and COMEX holdings fall as gold flows East
- JP Morgan to be part of new gold â€'fix'
- Greeks pull €8 billion from banks
- "No one knows how to solve the situation in Greece"
- Bundesbank warns debt in euro zone has entered "danger zone"
- UK and Irish house prices are falling … again

Today's AM fix was USD 1,198.00, EUR 1,106.70 and GBP 805.32 per ounce.
Yesterday's AM fix was USD 1,209.40, EUR 1,097.26 and GBP 809.23per ounce.

Gold climbed 0.65 percent or $7.80 and closed at $1,203.40 an ounce yesterday, while silver rose 0.47 percent or $0.08 at $17.05 an ounce.

Gold in U.S. Dollars - 1 Week Gold in U.S. Dollars - 1 Week

In the end of day trading in Singapore, gold prices climbed 0.3 percent to $1,199.95 an ounce after reaching a high on Thursday of $1,219.40. Gold surged after news of the bombing in Yemen but prices were capped at the $1,220 level prior to a retracement of much of the initial gains.

Wall St. Edges Up in Early Trading

Oil prices were lower, a day after a sharp increase related to worries about supply amid conflict in the Middle East.

Goldman climbs to top commodity bank ranking over JP Morgan

LONDON (Reuters) - Goldman Sachs became the top commodities bank last year, overtaking rival JP Morgan, a consultancy said on Friday.

Oil falls more than $1 as Middle East supply fears ease

LONDON (Reuters) - Oil prices fell more than $1 a barrel on Friday as worries receded over the threat of disruptions to Middle East supplies due to Saudi Arabia-led air strikes in Yemen.

How Strong Will The Next Precious Metals Rally Be?

gold trading COMEX

Exactly one week ago, gold was trading close to its multi-year low and a lot of observers were convinced that gold was ready to collapse to $1,000 per oz in a similar fashion as it did in April and June of 2013.

However, gold has repeatedly misguided investors in the past and it did so once again. A rally has started in the precious metals complex, namely, triggered by the Fed's announcement that it would not raise interest rates in the short term.

The rally looks constructive so far. Chart-wise there is plenty of upside, evidenced by the RSI reading in the 50ish area (upper pane) and a rising MACD (lowest pane).


Gold has been hovering between the $1,280 â€" $1,320 area for almost two years now. The long-term consolidation pattern is a constructive development, as it will function as a solid foundation for a new rally.

However, all of this does not give any additional insight into the strength of the new rally that started last week. What indicator provides reliable information to that end?

The Indicator

Our empirical evidence shows that the weekly Commitment of Traders (COT) ...

BlackBerry Reports $28 Million Profit in 4th Quarter

The smartphone maker is in the midst of a major restructuring, limiting production of phones to avoid the costly financial of the past.

Will Greece Call A Referendum On Euro Membership?

The rumor mill was alive Friday morning with reports that the resignation of Greek FinMin Yanis Varoufakis was imminent. Unsurprisingly, the Greek government is out calling the reports "unfounded":

Via Bloomberg

Speculation a long way from reality: Sakellaridis

Although we don't know exactly what that means, what we do know is that Bundesbank chief Jens Weidmann isn't buying what the Greek government is selling, isn't enthusiastic about perpetuating the charade by allowing for more room under the ELA cap, and suggested that a "disorderly insolvency" may be a foregone conclusion. Here's more (again, via Bloomberg):

Weidmann 'doesn't buy' argument Greek debt insurmountable.

Bundesbank President Jens Weidmann says he's against expanding emergency liquidity for Greece, Focus magazine reported, citing an intv.

"When a member country of a currency union decides not to meet its obligations and stops payment to creditors, then a disorderly insolvency can't be avoided"

New Greek government has "squandered a lot of trust"

There's "not much time left" to reach solution on Greece

"Greek interest burden relative to economic performance in the current year is lower than Italy, Portugal or Ireland"

Meanwhile, the Germans note that they have no idea what Syriza is likely to come up with:

Former American Apparel CEO Charney seeking $40 million in damages

(Reuters) - The founder and former chief executive of American Apparel Inc , Dov Charney, plans to file a lawsuit claiming $40 million in damages for breaches of his employment contract, and more lawsuits are planned, his attorney said on Friday.

U.S. economic growth slows in fourth quarter; corporate profits fall

WASHINGTON (Reuters) - U.S. economic growth cooled in the fourth quarter as previously reported and after-tax corporate profits recorded their biggest drop since early 2011, as a strong dollar dented the earnings of multinational corporations.

Central banks call for lower capital requirements on top-quality pooled debt

LONDON (Reuters) - Bonds based on high-quality loans should benefit from lower capital requirements to kick-start the market in Europe, the Bank of England and European Central Bank (ECB) said on Friday.

It's Official: Americans Spent All Their "Gas Savings" On Obamacare

Last quarter, when we showed what was "The Reason For The "Surge" In Q3 GDP", some were shocked to learn that in the quarter in which US GDP posted a 5% surge, it was none other than Obamacare - a mandatory tax according to the Supreme Court which has the benefit of flowing through the US income statement - which contributed the bulk of this upside.

We are happy, and we use the term loosely, that history has just repeated itself, and now that the final number is available, what we wrote a month ago in "Here Is What Americans Spent Their "Gas Savings" On" has just been confirmed, and as the chart below shows, in the final revision of Q4 GDP, while virtually every other category of household spending was largely unchanged or revised lower, it was Healthcare, of which Obamacare was the biggest contributor on the margin, which saw an unprecedented surge in total spending, from $1.858 trillion to $1.871.9 trillion just between the second and final GDP revisions: a bump of $13.9 billion, without which Q3 GDP woul ...

Dow Chemical to Merge Unit With Olin

In a $5 billion deal, Dow shareholders will own 50.5 percent of the rival chemical company.

Third Estimate 4Q2014 GDP Unchanged at 2.2%. Corporate Profits Down.

Written by Doug Short and Steven Hansen

The third estimate of fourth quarter 2014 Real Gross Domestic Product (GDP) was unchanged at positive 2.2%. Private inventories decline was offset by higher personal consumption and slightly better trade data.

"Serious Depressive Episode" May Have Driven Germanwings Pilot To "Criminal, Mad, Suicidal" Action, Prosecutors Allege

Andreas Lubitz, the 28-year-old co-pilot who murder-suicided a plane full of 150 people into the Alps, had been judged to have suffered a "serious depressive episode" around the time he suspended his training in 2009, according to internal documents cited by Germany's Bild. As Reuters reports, Lubitz had broken off his training in 2009 and reportedly spent a year in psychiatric treatment but as the Lufthansa CEO noted, "After he was cleared again, he resumed training. He passed all the subsequent tests and checks with flying colors. His flying abilities were flawless." French Prime Minister Manuel Valls urged patience during the investigation but stated, "everything points to a criminal, mad, suicidal action that we cannot comprehend."

As The Wall Street Journal reports, the Germanwings co-pilot who appeared to intentionally crash an airliner into a French mountainside this week, killing himself and 149 passengers and crew, received a note from a doctor excusing him from work but apparently tore it up, a German prosecutor said Friday.

The prosecutor said evidence collected in a search of And ...

In among the robots, veteran Toyota staffer says manual labor is key to success

TOYOTA CITY, Japan (Reuters) - In a corner of Toyota's oldest factory, the Japanese carmaker's longest-serving employee preaches the benefits of craftsmanship, saying manual labor is the key to success in a highly automated automotive industry.

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