Midday averages are trading near the unchanged line after a solid opening in the green this morning. The SO500 recorded a new historic high (2125.92) remained there for the first hour, dipping down, sea-sawing and finally trending down to the flat line.
By noon the market trend was down, albeit slowly with the DOW still in the green for now.
Here is the current market situation from CNN Money
North and South American markets are mixed. The IPC is higher by 0.27%, while the Bovespa is leading the S&P 500 lower. They are down 1.08% and 0.16% respectively.
Oil has remained trading sideways just below resistance of 58, U.S. Dollar is trending down in the high 96's and gold has squeaked above 1200 but below resistance. All of this meaning any breakouts are still a possibility - in either direction, be VERY careful.
$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.
One month ago, Goldman warned that the biggest risk for the market was the stock buybacks hiatus due to earnings season, which in turn resulted in what was almost a modest market selloff, before someone stepped in to buy: we say someone"" because we know for a fact it wasn't retail or institutional flow, which has been pulling out of the market at the fastest pace in years...
So, yes "someone" - call it BOJ taking advantage of the CME's "Central Bank Incentive Program" to buy E-minis, or call it Citadel spoofing the ES higher with the explicit blessing of the NY Fed's Chicago office, it doesn't matter. Point is stocks are higher even as actual flows are reversing.
However, while preserving the farce of the S&P's relentless rise no matter the earnings recession, the 1% GDP or the negative funds flow, has been entirely a central bank mandate in the past month (one which will soon inlude the PBOC), the good news for the BOJs and the NYFeds of the world is that the stock buyback hiatus is almost over, and starting this week the bulk of companies can come right back and proceed to repurchase their stocks at all time highs.
And what a come back it will be. According to Goldman, the pace of buybacks is now absolutely off the charts, with nearly $1 trillion in buy ...
Following meetings with Sec. of State John Kerry, Defense Sec. Ashton Carter, Japanese officials, it appears, have been shown the endgame now that the Keynesian farce is over... As AFP reports, Japan's military to take on more assertive role, according to Japanese officials as Japan and US bolster their alliance for the first time in 18 years. Noting the alliance "serves as the cornerstone of peace in AsiaPac," and that the Senkakus will fall under protection of this new treaty, we suspect the Chinese will have more than a few things to say about this.
As AP reports,
The United States and Japan are boosting their defence relationship to allow a greater Japanese role in global military operations with an eye on potential threats from China and North Korea.
Before Japan's prime minister visits Washington this week, the two countries' foreign and defence ministers on Monday signed off on revisions to the U.S.-Japan defence guidelines. They are the first changes to the treaty allies' joint strategy in 18 years. Any changes are subject to security legislation pending in Japan's parliament.
The revisions boost Japan's role in missile defence, mine sweeping and ship inspections amid growing Chinese assertiveness. The new arrangements also allow Japan to dispatch its armed forces beyond the region for logistical backup of U.S. military's global operations, in distant areas including the Middle East.
* * *
*U.S., JAPAN GUIDELINES ALLOW GREATER CONTRIBUTIONS TO SECURITY
*JAPAN, U.S. BOLSTER ALLIANCE FOR FIRST TIME IN 18 YEARS
TOKYO (Reuters) - U.S.-based Applied Materials Inc on Monday scrapped its $10 billion planned takeover of chip-making gear rival Tokyo Electron Ltd after the deal, a rare foreign bid for a Japanese firm, fell foul of U.S. anti-trust regulators.
Will they default or will they not? Are they out of cash or can they scrape together another half billion by tapping some heretofore untouched pocket of the public purse? Did they just institute capital controls? Because that's what it looks like. What was Varoufakis thinking? Is an advance from Gazprom on the way?
These are just of few of the many questions which seem to get asked and re-asked on an almost daily basis as the crisis in Greece plays out like a slow motion car crash that no one can take their eyes off of even though everyone (the market, the creditors, Athens â€¦ everyone) is exhausted, exasperated ("Gratigue" maybe?), and ready for some manner of resolution. Unfortunately, as Citi noted last week, the most scenario will be a kind of euro purgatory characterized by capital controls, defaults, and prolonged pain and suffering for the populace. This state of affairs is known as "Grimbo," and as Reuters notes, no one involved in the ordeal wants history to remember them as the villain. Here's more:
The game of chicken between Greece and its international creditors is turning into a vicious blame game as Athens lurches closer to bankruptcy with no cash-for-reform agreement in sight.
Europe's political leaders and central bankers and Greek politicians agree on only one thing: if Greece goes down, they don't want their fingerprints on the murder weapon!
Greece's leftist government has already identified its culprit of choice - Germany, Europe's main paymaster, accused of hav ...
Amid too close scrutiny in the equity markets, it appears the "spoofing" machines have turned their attention to the Soybean complex. As Nanex's Eric Hunsader exposes, a series of 200-lot sell-order-spoofs has sparked a pump-and-dump roundtrip in Soybean futures today. Oat futures have been monkey-hammered down almost 10% today and ripped back higher.
Oats Futures continue to get clubbed (in odd ways according to traders) strongly suggesting more spoofing...
BENGALURU (Reuters) - There is a 40 percent chance Greece will leave the euro zone, according to a Reuters poll of money market traders in which just over half said the country could stay in the bloc even if it defaults on its debt payments.
Despite all of Dick Fisher's promises, The Dallas Fed Manufacturing Outlook had collapsed in the last 4 months (and is down for 6 months in a row - the longest losing streak in history) and April did not disappoint. Against expectations of -12, Dallas Fed printed -16 (the 5th large miss in a row). Silver-lining enthusiasts will note this is a slight rise from 2-year lows at -17.4 in March but remains close to 6-year lows. Of the 15 sub-cmponents only wages and employment were positive (sure why not) as capacity utilization and new order growth rates slowing further. Prices Paid are at their most negative since Lehman.
Prices Paid and "Hope" Collapsed...
It appears low oil prices are not a net positive to the Texas economy after all.
Dollar weakness continues (after weak US Services PMI) which has sent stocks to new record highs but it is the China-QE-driven commodity complex (along with Aussie and Canadian Dollar) that is in outright vertical panic mode...
And the move is on very heavy volume...
Gold is nearing $1200 once again, Silver now well above $16, Copper surgiung over $275, and WTI Crude testing $58 (2015 highs)
And commodity currencies likewise are soaring...
When considering catalysts, perhaps it is worth noting the relative buying began in the Asia session as China QE hints were dropped... it appears people remember that the thing China buys a lot of after it generates inflation is gold and if indeed China QE is pushing stocks higher then gold (and other hard assets) is up next.
After 3 months of somewhat surprising strength (given the background of disastrous hard data), US Services PMI dropped in April by the most since December, missing expectations by the most on record. Against serial extrapolators' expectations of a rise to 58.9, PMI fell to 57.8 with cost inflation jumping to a six-month high and the biggest rise in the jobs index suggests to Markit that "the FOMC to consider starting the process of normalising monetary policy sooner rather than later at its meeting later this week.."
A miss - but under the covers Market is excited...
As Markit concludes,
Greater optimism regarding future business activity, alongside sustained growth of incoming new work in April, contributed to robust job hiring across the service economy. The latest increase in payroll numbers was the steepest since June 2014.
"The improvement in second quarter economic growth, rising price pressures and strong job creation signalled by the PMI surveys adds to pressure on the FOMC to consider starting the process of normalising monetary policy sooner rather than later at its meeting later this week."
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