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20Apr2015 Market Close: No Surprises Today, Nothing To See, Move Along. Markets Close Up, DOW Up Triple Digits

Written by Gary

Markets gap up, trade sideways and close. All on minuscule volume and has investors wondering what is ahead. We have not had a heavy down session like we had on Friday without the markets continuing to fall for anther 3 or 4 sessions. Yet, today we had a session that not only recovered Friday's losses but closed higher.

By 4 pm the major averages closed above 1.0% in gains no significant closing volume to speak of. The DOW closed up triple digits while the afternoon trading was sideways in a very narrow zone that may suggest that tomorrow will be down, ahem, maybe up.

We have discovered there are 2 types of market investors that you might find interesting - read on.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Just Another Manic Panic-Buying Monday In Stocks

After all the event risk headlines from Friday sparked significant volume (below the 100DMA), thanks to a Chinese RRR cut, "everything is awesome" again...

All hail the Central Bank Put... but note that stocks just could not break above Friday's cliff...

Cash indices today were led by Trannies - which now love higher oil costs...

And only Trannies are green from Thursday's close...

While US equities loved the RRR cut, Chinese [day] traders (seen here)...

Stunned Greeks React To Initial Capital Controls And The "Decree To Confiscate Reserves", And They Are Not Happy

Earlier today, following weeks of speculation, Greece finally launched the first shot across the bow of capital controls, when it decreed that due to an "extremely urgent and unforeseen need" (ironically the need was quite foreseen since about 2010, but that is a different story), it would be "obliged" to transfer - as in confiscate - "idle cash reserves" located across the country's local governments (i.e., various cities and municipalities) to the Greek central bank.

Several hours later the decree which was posted in the government gazette has finally percolated among the population, and the response to what even ordinary Greeks realize is now the endgame, is less than exuberant.

Bloomberg reports, that "as Greece struggles to find cash to stay afloat, local authorities say they oppose a government decision to use their reserves for short-term financing."

"The government's decision to seize our reserves not only raises legal and constitutional issues, but also a moral one," said George Papanikolaou, mayor of Glyfada, the third-largest municipality in the metropolitan region of Attica after Athens and Piraeus. "We have a responsibility to serve our citizens," Papanikolaou said by phone on Monday. Glyfada has about 16 million euros in cash reserves, he said.

George is unhappy because as recently as tomorrow, he will find there is precisely zero euros in his public bank account, as all the money has now been forcibly sequestered by the government in order to repay future Troika, pardon, IMF obligations.

Sadly for G ...

U.S. and Japan narrow gaps substantially in trade talks: USTR Froman

TOKYO (Reuters) - The United States and Japan have made significant progress in trade talks over recent days, adding momentum to multilateral efforts toward a free-trade pact, U.S. Trade Representative Michael Froman said early on Tuesday.

Stop The Presses: Nobel-Prize Winning Economist Slams QE

Whether it is due to pervasive groupthink, a chronic lack of vision, the perpetuation of failed ideas, or just because the alternative casts grave doubts about the value of their very existence, conventional economists and their media lackeys have almost without exception been supportive of the Fed's "recovery" efforts, be it ZIRP or QE. After all, neoclassical economics demands it, and if the Fed is wrong about its response to the second great depression, then the value of every single economist likewise goes out the window.

Still, in the relentless rising tide of ever louder voices against central planning by the world's monetary authorities, and its destructive consequences, mostly originated by people who engage in actual work as opposed to tenured academics who live in ivory towers where they conduct (failed) thought experiments,it was only a matter of time before at least one prominent economist took the other side of the argument that according to the likes of Paul Krugman has only failed (so far) because not enough of it has been tried (leave it to an economist to completely fail to anticipate the collateral collapse resulting from relentless central bank debt monetization which Zero Hedge forecast as long ago as 2012).

That time has come, and over the weekend, none other than Nobel-prize winning economist Robert Merton (of expanded Black-Scholes fame) with Arun Muralidhar as co-author, released an Op-Ed in Pensions and Investments magazine titled "Monetary policy: It's all relative", in which they slammed not only the current monetary policy response to economic ills (as observed through the prism of pension math and the adverse impact of low rates), but question if inste ...

Europe Is Expected to Charge Gazprom in Antitrust Case

Gazprom is accused of abusing its dominance in natural gas markets, and countries like Lithuania and the United States have been pushing for a crackdown.

Wall Street rallies on China stimulus ahead of tech earnings

(Reuters) - Wall Street rose on Monday, reversing much of the previous session's sharp decline, as China's steps to stimulate its slowing economy and cautious optimism about U.S. earnings lured investors into technology stocks.

U.S. court hears Chevron's fraud claims in $9.5 billion Ecuador dispute

(Reuters) - Chevron Corp urged a U.S. appeals court on Monday to uphold a ruling finding that an American lawyer used corrupt means to secure a $9.5 billion pollution judgment in Ecuador.A lawyer for Chevron told the 2nd U.S. Circuit Court of Appeals in New York that Steven Donziger, a U.S. lawyer who represented a group of Ecuadorians that sued the oil giant, pursued a case "shot through with fraud."

Morgan Stanley posts highest profit since financial crisis

(Reuters) - Wall Street investment bank Morgan Stanley reported its most profitable quarter since the financial crisis on Monday, boosted by higher revenue from trading bonds and equities.

China's Day Trading Hordes Unmasked

There's been no shortage of coverage both here and elsewhere of China's world-beating, margin debt-fueled, self-feeding equity mania. The inexorable rally has Shanghai trading up more than 100% over the course of the last 18 months and now, with new regulations paving the way for the southbound flow wherein mainland investors unsatisfied with the "value" proposition offered on the Shanghai exchange can search for "bargains" in Hong Kong-listed shares, the bubble has spilled over onto the Hang Seng causing shares of HKEx to go "interstellar."

Although we know that 3.2 million stock trading accounts were opened in just the first two weeks of April alone (on top of 4 million in March), and although Bloomberg recently gave us a window into the world of the Chinese day trader, we were still left wondering: who are all of these newly minted "investors" whose ranks are now so large that their trades literally broke the software that tracks volume on the Shanghai Exchange today?

We did some digging and we now have our answer:

The Fed Didn't End the 2008 Crisis… It Actually Let It Spread

The 2008 Crisis was caused by too much debt/ leverage, particularly in the form of illiquid derivatives (mortgage backed securities get the most attention, but the derivatives market was well over $800 trillion at the time of the crisis).

To combat the financial crisis, the Fed did three things:

1) Cut rates to zero.

2) Abandon accounting standards.

3) Engage in Quantitative Easing/ QE.

None of these policies represented "solutions" to the crisis. In fact, you couldn't even accurately argue that they represented "containment." What the Fed did was permit the very cancerous securities that nearly imploded the Wall Street banks to spread beyond from the private sector onto the public's balance sheet.

You cannot cure cancer by letting it spread from one area of the body to the next. You cannot solve a termite problem by letting the termites move somewhere else in a house. So how could one argue that you could solve a financial crisis by letting the problems spread elsewhere in the financial system?

Consider mere leverage levels. Going into the 2008 crisis, the investment banks sported leverage levels in the 30-40s. Lehman was leveraged at 31 to 1. Morgan Stanley was leveraged at 30 to 1. Merrill Lynch peaked out in the low 40s.

Today, the Fed's has $57.6 billion in capital and $4. 4 TRILLION in assets. That represents a leverage level of 75 to 1.

The Fed will argue that this leverage does not matter because it can print money to increase its leverage levels. This is technically true, but doesn't alter the fact that the Fed has backed itself into a corner by buying up over $3.5 trillion worth of stuff... which the Fed has no idea how to exit.

Indeed, we know that Ja ...

Chinese Property Developer Kaisa Defaults on Debt

The Kaisa Group, which has been struggling with regulation and executive resignations, said it missed two interest payments worth $52 million.

Tax Receipts Flash Economic Warning Sign

Submitted by Lance Roberts via STA Wealth Management,

With "tax day" now firmly behind us, it is expected that 2015 will show a record level of tax collections. This is a good thing, right? Maybe not.

Over the weekend, an economist friend of mine sent me an interesting piece of analysis discussing the record level of tax receipts as a percentage of the economy. This is something that I have written about in the past.

While the current push higher in tax collections partially due to economic growth, it is primarily due to higher tax rates brought on by the "2011 Budget Control Act." That bill imposed automatic tax increases and spending cuts beginning in 2013. It is worth noting that then chairman of the Federal Reserve, Ben Bernanke, launched "QE 3" specifically to offset the potential risks of the "fiscal cliff" imposed by the "debt ceiling deal."

The good news is that those tax increases and automatic spending cuts led to a massive shrinkage of the deficit which has declined from a record of $1.35 Trillion in 2010 to just $559 billion as of the end of 2014.

Taxes-Deficit-042015

While it is certainly good news that the budget deficit is shrinking from a "fiscal" perspective, the economic ramifications are not so great.

The reason: "The economy is not growing strongly enough to offset t ...

US Navy Sends Aircraft Carrier, Warships To Intercept Iranian Weapons Shipments In Yemeni Waters

Update: Because the report from AP does not play well with "Everyday Americans", US CentCom is denying:


*U.S. DENIES REPORT SHIP SENT TO INTERCEPT IRAN VESSEL

*U.S. SAYS SHIP SENT TO KEEP SHIPPING LANES IN REGION OPEN

The 'proxy' war is escalating very rapidly. As AP reports, Navy officials confirm that the aircraft carrier USS Theodore Roosevelt is headed to Yemeni waters to intercept an Iranian weapons shipments. Just as we warned 10 days ago, the probability of a major escalation over the latest proxy Middle Eastern civil war escalated substantially when Iran parked two warships off the Yemeni coast.

As AP details,

U.S. Navy officials say the aircraft carrier USS Theodore Roosevelt is steaming toward the waters off Yemen and will join other American ships prepared to intercept any Iranian vessels carrying weapons to the Houthi (HOO'-thee) rebels fighting in Yemen.

The U.S. Navy has been beefing up its presence in the Gulf of Aden and the southern Arabian Sea amid reports that a convoy of Iranian ships may be headed toward Yemen to arm the Houthis.

The Houthis are battling government-backed fighters in an effort to take control of the country.

There are about nine U.S. ships in the region, including cruisers and destroyers carrying teams that can boa ...

Petrofac of Britain Takes Another Write-Down on Gas Project

The engineering and production company blamed weather and labor problems for a $194 million write-down on a plant in the Shetland Islands.

Business group sees thousands of U.S. jobs from Pacific trade deal

WASHINGTON (Reuters) - The 12-nation Pacific trade pact would create nearly a quarter of a million U.S. jobs due to increased foreign investment in the United States, a business group estimated on Monday, in the first look at the deal's employment impact.

Monsanto Furious At World Health Organization For Claiming Weedkiller Causes Cancer

Following Monsanto lobbyist comments recently that he's "not stupid" enough to drink the weedkiller that he also proclaimed was safe enough that "you can drink a whole quart of it and it won't hurt you;" Reuters reports that the maker of the world's most widely used herbicide, Roundup, wants an international health organization to retract a report linking the chief ingredient in the weedkiller to cancer. The company said on Tuesday that a report, issued on Friday by the WHO, was biased: "The WHO has something to explain." However, as one scientist noted, "there are a number of independent, published manuscripts that clearly indicate that glyphosate...can promote cancer and tumor growth."

As Reuters reports,

Monsanto, maker of the world's most widely used herbicide, Roundup, wants an international health organization to retract a report linking the chief ingredient in Roundup to cancer.

The company said on Tuesday that the report, issued on Friday by the World Health Organization's International Agency for Research on Cancer (IARC), was biased and contradicts regulatory findings that the ingredient, glyphosate, is safe when used as labeled.

A working group of the IARC, based in Lyon, France, said after reviewing scientific literature it was ...

Fed Study Finds Fed Insolvency "Would Not Create Serious Problems"

Submitted by Simon Black via Sovereign Man blog,

In October 1925, English mathematician Karl Pearson began publishing a multipart series of groundbreaking articles in the Annals of Human Eugenics.

The series was entitled, "The Problem of Alien Immigration into Great Britain, Illustrated by an Examination of Russian and Polish Jewish Children," and it went on for hundreds of pages over several years.

Pearson's article focused on "whether the intelligence of the alien Jewish children is closely correlated with their defective physique. . ." and concluded, among many other things, that "Jewish girls have less intelligence than Gentile girls. . ."

Unbelievable.

Pearson was considered a well-respected scientist. Yet his entire career is full of such work analyzing the various races and making 'scientific' claims about their deficiencies to the point that he openly advocated for "war with inferior races."

He wasn't alone. Some of the leading scientists in the world from the 18th through the early 20th century dedicated their careers to such nonsense.

Dr. Samuel Morton's book Crania Americana, for example, is a nearly 500-page phrenology tome which makes all sorts of bizarre assertions of various races based on the measurements of their skulls.

This is what passed as science back then.

And even senior policy makers (including the likes of Winston Churchill) believed in the findings. After all, the 'scientists' said it was true, and they had a bunch of fancy equations, data, and mathematical models to back it all up.

Today, it's revolting to think that anyone could ...

Oil up on drop in U.S. crude stockpiles, Saudi tensions

NEW YORK (Reuters) - Oil prices rose on Monday after a drop in stockpiles at the delivery point for U.S. crude in the second half of last week outweighed pressure from near record high production in Saudi Arabia.

America's Waning Influence: Beijing To Invest $46 Billion In Energy, Infrastructure For US "Ally"

China is looking to succeed where the United States has failed. Beijing â€" which, as a reminder, has claimed it will not use its regional infrastructure development initiatives as a tool of foreign policy â€" is now set to facilitate the construction of nearly $50 billion in power plants, roads, and railways in neighboring Pakistan. The proposal, which will give China access to the Indian Ocean via the Gwadar port on the Arabian Sea, is part of President Xi Jinping's ambitious "Silk Road" Economic Belt, a plan announced last year that aims to connect China with Europe via a series of infrastructure projects. As a reminder, here's a description via Xinhuanet:

The Silk Road Economic Belt focuses on bringing together China, Central Asia, Russia and Europe (the Baltic); linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and the Indian Ocean. The 21st-Century Maritime Silk Road is designed to go from China's coast to Europe through the South China Sea and the Indian Ocean in one route, and from China's coast through the South China Sea to the South Pacific in the other.

China also hopes the partnership with Pakistan will act as a check on the spread of fundamentalism into its Western Xinjiang region which is predominantly muslim.

Additionally, and perhaps most importantly, President Xi's investment in Pakistan will likely include nearly $2 billion in loans for ...

Did Greece Just Launch Capital Controls: "Mandatory Cash Transfer" Decreed Due To "Extremely Urgent Need"

We warned last week that capital controls were inevitable and it apears the first steps have been taken (very quietly):


GREECE ISSUES DECREE: LOCAL GOVTS OBLIGED TO TRANSFER DEPOSIT RESERVES AT CENTRAL BANK

So, following the pension fund raid, the Greek government is now centralizing all Greek cash citing an "extremely urgent and unforeseen need.".

One wonders if this is per Krugman's advice?

As Bloomberg reports:

Govt decree issued today forces local govts, general govt sector entities to transfer cash reserves to the Bank of Greece.

*DECREE ON MANDATORY CASH TRANSFER POSTED IN GOVT GAZETTE

But fear not: you are being "fairly compensated" for this forced capital reallocation:


GREEK CASH RESERVES INTEREST AT BANK OF GREECE 2.5%: OFFICIAL

From Reuters:

Greece issued a ...

Volcker calls for U.S. financial regulation shakeup

WASHINGTON (Reuters) - The U.S. financial regulatory system is outdated and riddled with loopholes, former Federal Reserve Chairman Paul Volcker said on Monday as he offered an overhaul plan to make watchdogs more effective.

America's Looming "Great Surprise"

Submitted by Jame H Kunstler via Kunstler.com,

The unfortunate consequence of not allowing the process of "creative destruction" to occur in banking and Big Business is that the historic forces behind it will seek expression elsewhere in the realm of politics and governance. The desperate antics of central banks to cover up financial failure can't help but provoke political upheaval, including war.

It's a worldwide phenomenon and one result will be the crackup of economic relations — thought by many to be permanent — that we call "globalism." The USA has suffered mightily from globalism, by which a bonanza of cheap "consumer" products made by Asian factory slaves has masked the degeneration of local economic vitality, family life, behavioral norms, and social cohesion. That crackup is already underway in the currency wars aptly named by Jim Rickards, and you can bet that soon enough it will lead to the death of the 12,000-mile supply lines from China to WalMart — eventually to the death of WalMart itself (and everything like it). Another result will be the interruption of oil export supply lines.

The USA as currently engineered (no local economies, universal suburban sprawl, big box commerce, despotic agribiz) won't survive these disruptions and one might also wonder whether our political institutions will survive. The crop of 2016 White House aspirants shows no comprehension for the play of these forces and the field is ripe for epic disruption. The prospect of another Clinton - Bush election contest is a perfect setup for the collapse of the two parties sponsoring them, ushering in a period of wild political turmoil. Just because you don't see it this very moment, doesn&r ...

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