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31Mar2015 Market Update: Markets Remain Down Oil Trend Fractionally Higher, Iran Still On Minds Of Investors

Written by Gary

Markets made a feeble attempt earlier to rise above the morning lows only to start trending down again. Oil has trended upwards fractionally and the U.S. Dollar is trending sideways just off its morning high.

By 12:30 pm the afternoon equities are trading on low volume and most likely will trade somewhat lower by the end of the session as investors are concerned about the Iran deal.

Here is the current market situation from CNN Money

North and South American markets are mixed. The Bovespa is higher by 0.07%, while the IPC is leading the S&P 500 lower. They are down 0.49% and 0.44% respectively.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 56%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 40
Investors Intelligence sets the breath Above 50 bullish 58.1% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. +11.56 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 57.76% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 62.59% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 71.40% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 19.39 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 75.73 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,937

What Is Moving the Markets

Here are the headlines moving the markets.

Greece fails to reach initial deal on reforms with lenders

ATHENS (Reuters) - Greece failed to reach an initial deal with the European Union and the IMF to unlock aid after the creditors dismissed a package of reforms from Athens as ideas rather than a concrete plan, officials said on Tuesday.

Wall Street sees lower stock market gains due to rate worries

NEW YORK (Reuters) - U.S. stocks are forecast to post more modest gains this year than in 2014 as rising interest rates and a firmer dollar partly offset strong economic growth, a Reuters poll found.

Wall St. Is Lower a Day After a Big Jump

As the end of the quarter approached, traders were especially active in closing out positions.

Government Corruption Has Become Rampant

Government corruption has become rampant:

Senior SEC employees spent up to 8 hours a day surfing porn sites instead of cracking down on financial crimes

Nuclear Regulatory Commission workers watch porn instead of cracking down on unsafe conditions at nuclear plants

NSA spies pass around homemade sexual videos and pictures they've collected from spying on the American people

NSA employees have also been caught using their mass surveillance powers to spy on love interests, such as girlfriends, obsessions or former wives ... and to

U.S. consumer confidence soars; house prices rising

NEW YORK (Reuters) - U.S. consumer confidence rebounded strongly in March amid optimism over the labor market, a hopeful sign that a recent sharp slowdown in economic activity will be temporary.

The Iran "Talks" - Just Another US vs Russia (And China) Power Game

In what has been the world's longest negotiation (we are only modestly joking: the Iran P5+1 nuclear "talks" started in 2013 and have yet to achieve anything) one whose "rolling deadline" has been breached time and time again, it appears that with today's latest deadline just hours away, the most likely outcome is another deadline extension even though, as Reuters puts it, "Iran and six world powers ramped up the pace on Tuesday in negotiations over a preliminary deal on Tehran's nuclear program, while officials cautioned that any agreement would likely be fragile and incomplete."

The negotiations, which we have largely ignored covering as the past has abundantly shown that nothing ever actually gets done except for a lot of talking, posturing, gesticulating and pizza-ordering, have seen the United States, Britain, France, Germany, Russia and China trying to break an impasse in the talks, which are aimed at stopping Iran from gaining the capacity to develop a nuclear bomb in exchange for easing international sanctions that are crippling its economy.

As a reminder, it is the "threat" of an amicable resolution and a resumption in Iran oil exports that has been presented as the cause for oil's most recent weakness.

According to the conventional narrative "disagreements on enrichment research and the pace of lifting sanctions threatened to scupper a deal that could end a 12-year standoff between Iran and the West over Tehran's nuclear ambitions and reduce the risk of another Middle East war."

"The two sticking points are the duration and the lifting of sanctions," an Iranian official said. "The two sides are arguing about the content of the text. Generally progress has been made."

They said the main sticking points remain the removal of U.N. sanctions and Iranian demands for the right to unfet ...

Wall Street dips after rally; indexes set for quarterly gain

NEW YORK (Reuters) - U.S. stocks fell on Tuesday in a modest retreat from the previous session's sharp rally, but major indexes remained on track for a positive first quarter and the S&P 500 was set for its ninth straight quarterly rise.

$100 Trillion Global Bond Bubble Poses "Systemic Risk" To Financial System

$100 Trillion Global Bond Bubble Poses "Systemic Risk" To Financial System

Global bond bubble poses systemic risk to financial system

FT warns that a June rate hike could put fixed-income funds under severe pressure

Fed's Bullard warns of "dire consequences" of developing asset price bubbles

UK fund managers worried about "inflated value of bonds"

Regulators talk tough but have wavered since 2011

Mutual fund markets have "ballooned" since 2008

"Gates" or capital controls that limit investor withdrawals in troubled times are likely

by Mark O'Byrne

The Financial Times warned today about the growing global â€'bond bubble' and potential severe problems in the bond markets and â€'systemic risk' which may come to a head in June if the Federal Reserve raises interest rates.


In an article entitled "Time to find out hard way if asset management is systemic risk", it quotes James Bullard from the Fed warning of "dire consequences" due to developing asset price bubbles if the Fed does not raise rates soon.

It refers to fact that "80 per cent of fund managers surveyed by CFA UK, a financial standards body, signalled worries ab ...

Greece Looks to Russia as Deal With Europe Stumbles

A meeting next week between Greece's prime minister and Russia's president raises questions as European leaders said a reform plan had fallen short.

TBTFs Have $551 Trillion in Rate-Based Derivatives on Their Balance Sheets

The biggest question for investors today is that whether or not rates will rise in 2015.

The Fed may raise rates a token amount this year, but the move will be largely symbolic. With over $100 trillion in bonds and over $555 TRILLION in interest rate derivatives trading based on interest rates, the Fed will not be normalizing rates at any point in the future.

Indeed, former Fed Chairman Ben Bernanke admitted this in private during a closed-door luncheon with several hedge funds last year. Bernanke's exact words were that rates would not normalize anytime during his "lifetime."

So the Fed may raise rates from 0.25% to say 0.3% or possibly even 0.5%. But we won't be entering a hawkish period for the Fed by any means.

The reason is very simple... any normalization of rates would implode the bond market.

The fact is that much of the globe, particularly the developed west, is up to its eyeballs in debt. Mind, you, this is based solely on official public debt numbers. If you include unfunded liabilities, then the US, most of Europe, Japan, and even China are sporting Debt to GDP ratios well over 300%.

In the US, a 1% increase in interest rates means over $100 billion more in interest rate payments. The US is already running a deficit (meaning that it spends more than it takes in via taxes) and has been for most of the last 20 years.

Of course, the deficit could become larger to service the increase in interest payments, but with the US already having to resort to issuing NEW debt to cover OLD debt that is coming due, this is a slippery slope. The US issued over $1 trillion in new debt in an 8-week period for precisely this purpose.

The reality is ...

Reuters Poll: Market uncertainty tempers forecasts for equities' gains this year

(Reuters) - Uncertainty surrounding the timing of the U.S. Federal Reserve's interest rate hike has tempered analysts' forecasts for stock market gains this year, Reuters polls showed on Tuesday.

All S&P Sector ETFs, VIX ETFs Halted


The Market Breaks will continue until the S&P 500 is green...

Dead Markets Walking... Pisani: "Sometimes, this just happens folks!"

VIX ETF Explodes...

Ultra VIX...

Germanwings disaster will not affect image of budget air travel: easyJet

AMSTERDAM (Reuters) - The disaster at budget airline Germanwings which killed 150 people will not harm the image of low-cost air travel in Europe, easyJet chief executive Carolyn McCall said on Tuesday.

"Biggest Jump In General Collateral On Record" Leaves Experts Stumped

While there has been no move in its close cousin, the Fed Funds rate, which actually declined sharply into quarter-end from yesterday's 0.12% print to just 0.03% following a pattern observed in recent quarters when the FF plunges at quarter end just to rebound to its 0.12%-0.13% range...

... it is what is going on in the far more important (in a world in which Fed Funds is irrelevant courtesy of $2.6 trillion in Fed reserves sloshing around) General Collateral rate that has bond market experts such as Stone McCarthy stumped. To wit:

The overnight general collateral rate jumped to 0.38% this morning. The GC rate has seen sharp moves at quarter end in the past, although today's jump is the largest we have on record. We do not have a definitive explanation for today's movement, but if any of our readers have an explanation, please let us know.

This is what the largest "on record" jump in GC looks like.

So while SMRA may be stumped, Bloomberg has some ideas, and suggests that the Treasury GC repo trading around 50bps/35bps at quarter-end is due to regulations forcing largest banks to hold more collateral on their balance sheets. Further, mortgage repo traded as high as 70bps, according to TD Securities.

Bloomberg quotes Citi strategist Andrew Hollenhorst who said that higher repo rates indicate "the marginal cost of ...

Consumer Prices in Eurozone Decline Again, but So Does Unemployment

Two reports did not alter the view that Europe is experiencing a miniboom, lifted by low oil prices, the weak euro and aggressive stimulus from the European Central Bank.

Consumer Confidence Surges Higher As 'Hope' Trumps Reality

Following February's drop from 'recovery' cycle highs (which has now been erased by previous revisions! why are confidence measures seasonally-adjusted anyway?), despite surging gas prices, terrible economic data, and dismal weather, March consumer confidence explodes higher. Printing 101.3, massively beating expectations of 96.4, this is just shy of the cycle highs in January. Of course, it's all hope... the present situation index actually dropped notably from 112.1 to 109.1 as future expectations surged from 90.0 to 96.0, but fewer people plan to buy homes or major applicances in the next 6 months.


As Hope trumps reality once again...

Charts: Bloomberg

March 2015 Conference Board Consumer Confidence Improves, Above Expectations

Written by Doug Short and Steven Hansen

The Conference Board Consumer Confidence Index improved moderately after its decrease last month. The market expected this index to come in at 93.0 to 98.2 (consensus 95.5) versus the 101.3 reported.

March 2015 Chicago Purchasing Managers Barometer Remains in Contraction

Econintersect: The Chicago Business Barometer remains in contraction in March - although "improving" marginally. The authors of this index remain surprised.

Read more ...

Chicago PMI Fails To Bounce Back, Hovers Near 6-Year Lows

Despite the hockey-stick-like expectations of all the clever economists, Chicago PMI failed to bounce back from its total carnage in February. Printing 46.3 against expectations of 51.4, the index remains at near six-year lows. Must be the weather... oh apart from the massive surge in Midwest pending home sales...? This is the biggest 5-month plunge since Lehman.

Not what the Keynesian mean-reverters were hoping for...

With the biggest 5-month plunge since Lehman...

Under the covers, slight improvement...

Forecast range 45 - 55 from 42 economists surveyed

Prices Paid fell compared to last month

New Orders rose compared to last month

Employment rose compared to last month

Inventory rose compared to last month

Supplier Deliveries fell compared to last month

Production rose compared to last month

Order Backlogs rose compared to last month

Business activity has been positive for 10 months over the past year.

Number of Components Rising: 5

Charts: Bloomberg

How The Fed Has Failed The Nation (In One Chart)

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

There is only one way to end the financial tyranny of the Federal Reserve - abolish it, and put an end to the predatory pathologies of its policies.

The Federal Reserve has failed not just the nation and the U.S. economy, but more importantly, the American people that it supposedly serves. It has also failed the world, by showing other central banks that they can reward private banks and top .01% with absolute impunity. The supposed goal of the Fed's zero-interest rate policy (ZIRP) and quantitative easing (QE) was to make borrowing easier for both corporations and consumers, the idea being companies would borrow to invest in new productive capacity and consumers would buy the new goods and services being produced with cheap credit. The secondary publicly stated goal was to spark a rally in stocks, bonds and real estate that would spark a wealth effect: as households saw their net worth rise, they would feel wealthier and thus more likely to buy goods and services they didn't need on credit. The real reason for ZIRP and QE was to rebuild the balance sheets and profits of banks on the backs of savers who have earned near-zero thanks to the Fed's manipulation of markets. But setting aside the obvious success of the Fed's real goals--enriching the banks and the super-wealthy who have access to near-zero interest credit--let's see what corporations did with the Fed's nearly-free money. Did they invest in new productive capacity? No, they bought back their own s ...

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