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02Apr2015 Market Update: Markets In The Green, Oil Falling As Iran Talks Drag On

Written by Gary

Markets did in fact open lower, but quickly rose into the green and have traded sideways just below the morning highs. Gold, U.S. Dollar and the oils have all trended lower as focus returned to talks for a nuclear pact with Tehran one that could put millions of additional Iranian crude barrels onto a market already brimming with supply.

Here is the current market situation from CNN Money

North and South American markets are mixed today. The Bovespa is up 1.14% while the S&P 500 gains 0.35%. The IPC is even.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 51
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 36
Investors Intelligence sets the breath Above 50 bullish 58.0% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. +0.26 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 57.69% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 63.19% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 70.00% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 19.02 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 75.54 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,957

What Is Moving the Markets

Here are the headlines moving the markets.

Exclusive: Greece tells creditors it will run out of cash on April 9

(Reuters) - Greece has told its creditors it will run out of money on April 9, making an appeal for more loans before reforms on which new disbursements hinge are agreed and implemented, but the request was rejected, euro zone officials said.

Oil down as Iran talks back in focus; weak dollar pares loss

NEW YORK (Reuters) - Oil prices fell on Thursday as focus returned to talks for a nuclear pact between Tehran and global powers that could put millions of additional Iranian crude barrels onto a market already brimming with supply.

U.S. jobless data boosts labor market picture; trade deficit narrows

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labor market continues to expand at a solid clip even as economic growth has stalled.

Bits Blog: Via, a Ride-Sharing App, Raises $27 Million for Car-Pooling

The aim of Via is to expand its service far beyond the confines of Manhattan.

Wall Street gains ahead of holiday; data lifts payroll hopes

(Reuters) - U.S. stocks rose on Thursday as a reading on the labor market came in better than expected in a positive sign for payrolls data on Friday.

February 2015 Manufacturing Mixed. Rolling Averages Remain in Contraction.

Written by Steven Hansen

US Census says manufacturing new orders improved. Our analysis agrees - and even the headline year-over-year growth declined from last month. The data has been soft for a half a year. Consider that this data is noisy - and the rolling averages (which include transport) remain in contraction territory. Unfilled orders are shrinking (year-over-year). Transport was soft this month.

Chart Of The Day: Is The US Already In A Recession?

A month ago, when looking at the latest Factory Orders numbers, we noticed something very disturbing: the annual rate of increase, or rather decrease, in factory orders dropped to -2.3%. The last two time this happened was in 2008, just after the failure of Lehman, and in 2001, just as the US was again entering a recession. In fact, if there is one reliable, false-negative proof indicator of key recessionary inflection points in the US economy, it is the annual change in Factory Orders.

Unfortunately for the econo-bulls, and the Fed's rate-hike prospects, moments ago the latest Factory Orders number came out, and it was not good.

Amusingly, on the surface it was actually a beat, rising by 0.2%, relative to the -0.4% expected. However, if one actually looks at the underlying number, February was still a miss, because the January print was revised substantially lower, from $470Bn to $467.5Bn, which means the 0.2% increase was really a 0.4% decline relative to the pre-revised number.

What worse, however, is when one looks at the Factory Orders series on an annual basis. It is here that the sequential fudges become irrelevant, and here where it becomes obvious that, all else equal, the US is already in a recession.

And the long-term chart, courtesy of the St. Louis Fed

U.S. factory orders rise, offer glimmer of hope for manufacturing

WASHINGTON,(Reuters) - New orders for U.S. factory goods unexpectedly rose in February after six straight months of declines, offering a ray of hope for a sector that has been battered by a strong dollar and weaker global demand.

Rail Week Ending 28 March 2015: Month Ends with Contraction Year-over-Year

Econintersect: Week 12 of 2015 shows same week total rail traffic (from same week one year ago) again declined according to the Association of American Railroads (AAR) traffic data. Intermodal traffic, which accounts for half of movements, is now strongly growing year-over-year - but weekly railcar counts remain in contraction. Rail traffic is surprisingly weak.

Greece Faces D-Day On April 9, Will Default Within 30 Days Of Missed Payment, BofAML Says

As "difficult" negotiations between Greece and its creditors drag on, Athens is perilously close to running completely out of cash, and with the banking sector becoming ever more reliant on incremental increases in the ELA ceiling, it may be time to start considering what happens if the cash-strapped Syriza government can't "borrow" enough public sector funds or otherwise find the money to meet its obligations over the next several months. As a reminder, here's what the country is up against in the near-term:

If you believe the government (and why wouldn't you?), Greece will make a scheduled payment to the IMF on April 9 and should have enough cash to carry it through the month. That said, BofAML thinks it's time to consider the "negative scenarios" that would play out in the event Athens finally comes up short.

Via BofAML:

If Greece misses the payment to the IMF on 9-Apr, this would not necessarily trigger an immediate default. Greece may have an implicit grace period of one month. 1 The sequence of events would be as follows: 1) IMF Staff immediately sends a cable urging the member to make the payment promptly; this communication is followed up through the office of the concerned Executive Director. The member is not p ...

Ford China joint venture acquires factory in $1.1 billion deal

BEIJING (Reuters) - Ford Motor Co's joint venture with Chongqing Changan Automobile Co Ltd will takeover and upgrade a factory in northeast China in a 6.6 billion yuan ($1.1 billion) deal, a company spokeswoman said.

McDonald's raising average worker wage to about $10 an hour

LOS ANGELES (Reuters) - McDonald's Corp plans to raise the average pay of about 90,000 U.S. workers to around $10 an hour, but the increase will not benefit workers at the vast majority of the restaurants, because they are operated by franchisees, who make their own wage decisions.

Ask Nicely: Bernanke Says Global Imbalances Bedevil the World Economy. Discuss.

Maybe the question we should ask is how we can make developing countries unafraid to borrow from us again and to buy more of our products.

U.S. Jobless Data Boosts Labor Market Picture; Trade Deficit Narrows

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labor market continues to expand at a solid clip even as economic growth has stalled.

The U.S. Economy Slows To Stall Speed

Submitted by Charles Hugh Smith from Of Two Minds

The U.S. Economy Slows To Stall Speed

This long-term weakening of the economy is the direct result of financialization and the Federal Reserve's policy of propping up impaired debt with more debt and constantly bringing demand forward with zero interest rates.

The U.S. economy is slowing to stall speed--the point when gravity overcomes the lift provided by central bank free money. This deceleration is evident in a number of indicators such as gross domestic product (GDP), which is now at 0% according to the Federal Reserve Bank of Atlanta's GDPNow model.

New orders for consumer goods has fallen off a cliff, eerily repeating the freefall of the Great Recession in 2008:

Longtime correspondent B.C. shared two more insightful charts of the economy's deceleration to stall speed. Rather than depict one or two indicators, B.C.'s charts are relational, meaning that data is added together or displayed as ratios.

The first chart shows per capita corporate profits + disposable personal income + government receipts and real final sales. As B.C. notes on the chart: "From the point when the growth rate decelerated below the 'stall speed' of 1% , the average 4- and 6-quarter growth rates for real final sales per capita thereafter were -0.36% and -0.1% respectively, i.e. recession."

I added two notes to the chart: growt ...

Fed's Yellen says research needed to understand inequality issue

WASHINGTON (Reuters) - More research is needed to understand what policies allow people to move up the economic ladder and what holds them back, Federal Reserve Chair Janet Yellen said on Thursday, returning to a controversial topic for the U.S. central bank.

28 March 2015 Initial Unemployment Claims Rolling Averages Improves Significantly - Historical Data Revised

Blue Line 4 Week Average

The market was expecting the weekly initial unemployment claims at 275,000 to 295,000 (consensus 285,000) vs the 268,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 300,250 (reported last week as 297,000) to 285,500. The rolling averages have been equal to or under 300,000 for most of the last 6 months. Note that this week's release reflects the annual revision to the weekly unemployment claims seasonal adjustment factors. The seasonal adjustment factors used for the UI Weekly Claims data from 2010 forward, along with the resulting seasonally adjusted values for initial claims and continuing claims, have been revised.

China Becomes Global Lender Of Last Resort With Bailout Of World's Most Indebted Oil Company

Over the course of last month we variously described the Asian Infrastructure Investment Bank as an attempt by Beijing to deal a decisive blow to the post-World War II global economic order by undermining US-dominated multinational institutions, as an attempt to usher in a new era characterized by yuan hegemony, and as an effort to cement China's regional influence via the implicit establishment of a sino-Monroe Doctrine.

With that in mind, we find it somewhat ironic that the China Development Bank (which isn't the same as the AIIB but which we think might offer some clues as the how the new venture will be run under Beijing's control), is set to provide $3.5 billion in financing to Brazil's deeply indebted Petrobras. The new funding comes 6 years after a $10 billion oil export deal between the company and China and just days after Brazil signed up as a founding member of the AIIB.

More, via WSJ:

Brazil's state-run Petroleo Brasileiro SA said on Wednesday it signed a $3.5 billion financing deal with the China Development Bank, highlighting the oil giant's deteriorating financial condition in the wake of a vast corruption scandal as well as China's growing ties to Latin America.

Petrobras didn't provide any details of the deal, which is part of a cooperation agreement to be implemented this year and in 2016. But the transaction deepens the Brazilian government's relationship with its largest trading partner and fellow BRIC country.

The Asian giant has provided similar assistance to countries like Ecuador, Venezuela and Argentina, helping those countries deal with fall ...

US Imports Collapse Most Since Lehman

Anyone scratching their head how it is possible that in an environment of a soaring dollar the US trade balance just tumbled, and printed its smallest monthly deficit since 2009, here is the answer: in January, US imports (with the delta entirely in the goods, not services, column) plunged from $232 billion to $222 billion, a whopping $10.2 billion or 4.4% drop, and the biggest monthly decline in US imports since the peak of the financial crisis in the aftermath of the Lehman collapse.

The irony: since exports also dropped but did not plunge quite as rapidly, this disturbing number will actually be a boost to US Q1 GDP, which as reported recently, is now tracking at 0.0% with the Atlanta Fed.

And now time for a question: with US and Chinese imports both plunging, just who is Europe "exporting" all of those surplus goods and services to?

Initial Claims Slide Again; Trade Deficit Lowest Since 2009 Despite Soaring Dollar On Imports Plunge

The volatility in initial claims continues: after last week's drop to 282K pulled the heavily-watched number back under 300K, this week we have seen even less layoffs, with the DOL reporting that only 268K claims for unemployment benefits were filed in the past week, well below the 286K expected. The 4-week moving average was 285,500, a decrease of 14,750 from the previous week's revised average. The previous week's average was revised up by 3,250 from 297,000 to 300,250.

It is not surprising that the state with the biggest jump in initial claims was in Texas which accordinng to the DOL was the only state that had a 2K+ increase in claims: to be expected for the state most exposed to the Oil recession.

And while it is no secret that US labor data leave much to be desired it was today's trade data that will shock many, after the BEA reported that in February, the US trade deficit collapsed to just $35.4 billion, a 17% plunge compared to the $42.7 billion January revision, and far below the $41.2 billion expected. The $7.3 billion drop in the deficit was the largest since the $8.3 billion drop posted in June of 2013. And even more notable: the total February deficit was the lowest since October 2009!

How did this happen? The answer: coordinated contraction but while exports dropped by $3 billion in February to $ ...

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