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08Apr2015 Market Close: FMOC Minutes Causes Volility, Oil Trend Lower, US Dollar Trends Higher

Written by Gary

The Fed's FMOC minutes didn't provide enough 'good stuff' for the bears or bulls as the averages reacted very negatively at first, then the bulls took over, but the excitement dissipated and the trading resumed right where it was before the FMOC announcement.

By 4 pm the averages were in the green trading on moderate volume, but sea-sawing sideways right up to the closing bell. The oils continued to trend lower and the U.S. Dollar is trending higher, bot not a healthy sign for the equities markets.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Stocks Gyrate Wildly Following Two Consecutive Stop Hunts, Close With A Whimper Despite More Fed Dovishness

If there is one word to describe today's market, as well as the market of the past week, past month, and perhaps all of 2015, it is "stop hunts." Well, technically it's two words.

The first stop hunt took place, as is now a daily routine, right after the US market open, when the entire Dow Jones increasingly, looking like the infamous, illiquid and massively overvalued (until such time as it was halted) CYNK stock, ramped, then tumbled the moment reality was glimpsed courtesy of the abysmal EIA crude report which sent crude crashing on its biggest one day drop in two months, also sending stocks into the red...

... only to be followed by another stop hunt, this time with the dump first then the ramp after the FOMC minutes were released.

Even the traditional last minute ramp was feeble by normal Fed standard, and barely managed to push the S&P or the DJIA solidly into the green. The only outlier were transports which were buoyed by the plunge in oil to close at the day's high.

Commodities were broadly low ...

15 Years Of Stimulus - Nothing To Show

Submitted by David Stockman via Contra Corner blog,

At this point 15 years ought to count for something. After all, we have now used up one-seventh of this century. So you can't say its too early to tell what's going on or to identify the underlying trends.

Indeed, during that span we have encompassed several business cycles, two financial crises/meltdowns and nearly a non-stop blitz of "extraordinary" policy interventions. To wit, a $700 billion TARP, an $800 billion fiscal stimulus, upwards of $4.0 trillion of money printing and 165 months out of 180 months in which interests rates were being cut or held at rock bottom levels.

You'd think with all that help from Washington that American capitalism would be booming with prosperity. No it's not. On the measures which count when it comes to sustainable growth and real wealth creation, the trends are slipping backwards—- not leaping higher.

So here's the tally after another "Jobs Friday". The number of breadwinner jobs in the US economy is still 2 million below where it was when Bill Clinton still had his hands on matters in the Oval Office. Since then we have had two Presidents boasting about how many millions of jobs the have created and three Fed chairman taking bows for deftly guiding the US economy toward the nirvana of "full employment".

Say what?

Oil dives 6 pct from 2015 high as stocks swell, Saudis pump

NEW YORK (Reuters) - Oil prices dived 6 percent on Wednesday after closing at their highest this year, as a mammoth rise in U.S. crude stockpiles and news of record Saudi oil production scuttled talk of a sustained recovery.

"Odious Debt" Has Finally Arrived: Greece To Write Off "Illegal" Debt

It was back in June 2011 when we first hinted that the time of Odious Debt is rapidly approaching.

As a reminder, this is what Odious Debt is: In international law, odious debt is a legal theory which holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are thus considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.

Today, nearly four years later, Odious Debt is now a reality in Greece, where Zoi Konstantopoulou, the head of the Greek parliament and a SYRIZA member, released two videos which have promptly gone viral, designed to promote the investigative parliamentary committee to look into the circumstances surrounding the signing of the country's two bailout agreements that led Greece to implement its austerity measures.

The short video spots, shown below, end with the message "Check it, Erase it" referring to the country's 320 billion-euro debt.

That this concept emerges now is perhaps confusing: it was just a few days ago when the Greek FinMin promised to the IMF that Greece would honor all of its debt commitments. Should Greece decide that some (or all) of its debt was illegal and unenforceable, this will clearly not happen. Then again, this is the same political party that made pre-election promises whose execution would require about €30 billion according to German calculation, so the relen ...

Fed officials say June rate hike still in play, hinges on data

NEW YORK (Reuters) - The Federal Reserve could still hike interest rates in June despite weak recent U.S. data and investor skepticism, two influential officials with the central bank said on Wednesday, putting the spotlight squarely on the economy's performance in the next two months.

Wall St rises in volatile trading after Fed minutes

NEW YORK (Reuters) - U.S. stocks rose on Wednesday, but trading was volatile following the release of minutes from the U.S. Federal Reserve that indicated the central bank remained on track for a rate hike this year.

Euro Corporate Bond Market Is "Tenacious Bubble," UBS Says

Towards the end of last month, we discussed a Barclays note which suggested that QE in Europe is driving investors into corporate credit as yields on euro govies tumble under the weight of the ECB's perpetual bid. Here's what this dynamic looks like in four simple charts:

The problem with this, as we've outlined exhaustively, is that the combination of shrinking dealer inventories and heavy investor demand has the very real potential to spell trouble should everyone who has been moving into corporate credit to find yield in the face of what has been a 5-year-long episode of Central Banks Gone Wild suddenly decide, for whatever reason (e.g. an Austrian Black Swan, a Varoufakis fumble, or an "accident" near the Bab el-Mandeb), that they want out. Put simply: the secondary market isn't very liquid these days.

Here's the latest take on the subject from UBS:

* * *

EU: A tenacious bubble

We believe the European corporate bond bubble is firmly entrenched. On the one hand, we believe a return to a global systemic financial crisis with the potential to trigger a wave of corporate defaults seems rather unlikely given the deleveraging and recapitalisation efforts accomplished by banks over the last few years. On the other hand, we think a return to sustainable growth and higher inflation that could see investors move out of fixed income assets into capital appreciative equities remains elusive. While European equities have seen large inflows ...

Bits Blog: F.C.C. Fines AT&T $25 Million for Privacy Breach

Customer service employees at AT&T call centers sold customers' personal information to third parties over a six-month period ending last April.

Fed looked past weakness to press ahead on rate hike plan

WASHINGTON (Reuters) - U.S. Federal Reserve officials acknowledged risks from overseas and a weak start to the year at their March meeting but remained confident enough in the strength of the recovery to continue laying the groundwork for an interest rate hike later this year, according to minutes from the meeting released on Wednesday.

Pawn to cushion payday lenders from regulatory blow

(Reuters) - Payday lenders that have substantial pawn operations are better positioned to absorb the blow from proposed U.S. regulations aimed at cracking down on an industry that has been criticized for saddling borrowers with debt they cannot repay.

Fed Minutes: Officials Divided on June Rate Increase

Federal Reserve officials were divided at their last policy meeting on whether they would be ready by June to begin raising short-term interest rates.

Holcim, Lafarge set to name Olsen as CEO of combined company: source

ZURICH (Reuters) - Cement maker Holcim has backed Eric Olsen as chief executive following the Swiss firm's planned merger with French peer Lafarge , a source familiar with the matter told Reuters on Wednesday.
< ...

FOMC Minutes Expose World Weary, Un-Patient, Dow-Data-Dependent Fed

Following the surprise dovish FOMC dot-downgrade to counter hawkish 'patience removal', and this morning's admission by Dudley that The Fed is Dow-Data-Dependent; expectations for the FOMC Minutes offering any insights were low...

*FED OFFICIALS FAVORING LIFTOFF LATER IN 2015 CITED DOLLAR, OIL, CHINA, GREECE

*FED OFFICIALS WERE SPLIT ON JUNE RATE RISE, FOMC MINUTES SHOW

*MOST OFFICIALS SAW RISKS TO OUTLOOK, JOB MKT NEARLY BALANCED

So "worried" about the world, "downside" risk to growth but reasons to be cheerful, unpatient and data-dependent liftoff... something for everyone.

Pre-FOMC Minutes: S&P 2079, 10Y 1.89%, EURUSD 1.0815, Gold $1206


*A FEW FED OFFICIALS SAID USD MAY RISE MORE ON POLICIES OVERSEAS

*FED OFFICIALS REPEATED THAT CHINA, GREECE WERE POTENTIAL RISKS

*A FEW FED OFFICIALS SAID USD MAY RISE MORE ON POLICIES OVERSEAS

*MINUTES SHOW ALMOST ALL FED OFFICIALS NOTED RISKS FROM OVERSEAS

*SEVERAL FED OFFICIALS EXPECTED A FAIRLY GRADUAL TIGHTENING PACE

*SEVERAL FED OFFICIALS SAW DOLLAR AS A DRAG ON EXPORTS, GROWTH

*SEVERAL FED OFFICIALS JUDGED A JUNE LIFTOFF WOULD BE WARRANTED

*FED MINUTES SHOW OTHER OFFICIALS FAVORED LIFTOFF LATER IN 2015

Fed Policy Makers Seem Cool to Rate Increase in June

Minutes of last month's policy meeting, and recent comments by Federal Reserve officials, reflect concern that job and inflation goals are unmet.

Shell's BG purchase could be catalyst needed for U.S. shale deals

HOUSTON (Reuters) - Royal Dutch Shell Plc's $70 billion agreement to buy BG Group Plc may be just the signal that other dealmakers need to make their own energy takeover bets, particularly in the U.S. shale sector.

Fiat Chrysler to invest $540 million in new engines for Alfa Romeo

MILAN (Reuters) - Fiat Chrysler Automobiles will invest more than 500 million euros ($540 million) to produce two new engines for its Alfa Romeo cars as part of a planned relaunch of the brand, the car group said on Wednesday.

'Stay tuned' for more Swiss bank deals over tax evasion: U.S. official

NEW YORK (Reuters) - More Swiss banks that helped wealthy Americans evade taxes will soon strike agreements with the Department of Justice to avoid prosecution, an official overseeing the U.S. government program told Reuters.
...

Guest Post: Russia's Central Bank Governor Is Way Smarter Than Ours

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

It wouldn't be a first, but it would certainly be a - bigger - shock. That is to say, the Bank of England hijacked the head of Canada's central bank some time ago, but, while unexpected enough, that would pale in comparison to the US hiring the present Governor of the Russian central bank, Elvira Sakhipzadovna Nabiullina. It would still seem to be a mighty fine idea, though.

Not that I think it will happen, not to worry if you think Yellen is just what it takes at the Fed. But Nabiullina is both razor sharp and fiercely independent. Yellen is obviously neither; she's a cog in a machine that huffs and puffs and pumps and dumps to make sure her overlords in the blissful world of US finance make ever more profit no matter how bad things get in American society.

There's no need to be particularly sharp in order to play that role, and she was picked exactly because she's NOT independent. Or let's just say she's a good listener.

Nabiullina is a whole different story. Not that I have much confidence in western readers understanding that this is so, let alone why. Not after the 24/7 highly public media campaigns and sanctions and oil price wars and Ukraine war talk and chest thumping directed at Putin and Russia, and after everything else that we don't even know that plays out behind the veils.

Enjoy your conspiracies while you can, I'd say. Because despite more than a year of intense efforts to make Russia look like the empire of unspoken evil, financial markets, yes, the same ones Yellen manipulates at her lords' bidding, have now made the Russian ruble and the ...

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