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06May2015 Market Update: Yellen's Bank Remarks Send Markets Lower, Oil Up, U.S. Dollar Lower

Written by Gary

Apparently investors did not like Ms. Yellen's remarks regarding the Fed is ready to take further steps to curb bank risk as the averages moved sharply lower after being modestly in the green after opening.

WTI oil at new interim highs while the U.S. Dollar descends into support levels.

Here is the current market situation from CNN Money

North and South American markets are mixed. The Bovespa is higher by 0.59%, while the IPC is leading the S&P 500 lower. They are down 0.37% and 0.33% respectively.

There Have Been Some Big, Mysterious Moves in Markets Lately

The trend is no longer your friend! It has been a busy period in markets across the globe, with trends (and trades) breaking down everywhere.

The U.S. dollar has been weakening. Euro-area sovereign debt has been selling off, causing yields to rise. Asian stocks, which have been in a bull market for years, have been feeling the pressure, with the Shanghai Composite Index closing lower in the last couple of sessions.

There doesn't seem to be any single driver that would explain all of these moves, though plenty of analysts are pointing to the unwinding of consensus positions such as trades built around the expectation of continued deflation and quantitative easing in Europe. Others have highlighted more technical factors and illiquid markets that have amplified the moves.

Whatever the reason, the recent seismic activity in these markets has, no doubt, been painful for some big investors.


Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 66%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 52
Investors Intelligence sets the breath Above 50 bullish 58.7% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -47.65 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 57.64% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 63.62% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 66.80% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 22.05 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 75.24 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,025

What Is Moving the Markets

Here are the headlines moving the markets.

'Flash Crash' Overhaul Is Snarled in Red Tape

Five years after the market meltdown, efforts to prevent a repeat drag far behind schedule.

U.S. Stocks Decline

U.S. stocks slipped on Wednesday, though energy stocks pulled ahead as oil prices climbed to five-month highs.

Swiss Stock Market Collapses Instantaneously On 5th Anniversary Of Flash-Crash

It's deja vu all over again...who are 'they' going to blame for this one?

The "event" halted the entire Swiss Market for 3 minutes. And this was followed by an outage in Stoxx exchange data delivery this morning.

Source: @NanexLLC

Greece makes IMF payment but hopes of quick deal dashed

ATHENS/FRANKFURT (Reuters) - Greece made a small interest payment to the International Monetary Fund on Wednesday but European lenders dashed hopes for a cash-for-reforms deal before a more crucial, bigger installment Athens must pay next week.

Greece Floats Surcharge On Withdrawals As ECB Considers Cuts To Liquidity Lifeline

As we first reported on Monday and as we outlined in more detail on Tuesday, the IMF and Greece's EU creditors are now at odds over what constitutes an acceptable set of reforms. Although disagreements between the IMF and the rest of the Troika over Greece are not unprecedented, Syriza era negotiations have been largely characterized by the fractious relationship between Athens and its creditors, with Greek FinMin Yanis Varoufakis personifying the tension. With Varoufakis now sidelined, talks looked set to move forward but have now stalled amid what some officials have described as intractable differences between the "red lines" adopted by the IMF and the supposedly more lenient terms favored by the EU. This is further complicated by reports that the IMF is pushing for the EU to write-off a portion of its Greek debt. In the end, it's no longer clear who's the â€'good cop' and who's the â€'bad cop.'

Today's news flow out of Greece starts with what look like more â€'soft' capital controls as Athens is considering the imposition of a surcharge on withdrawals and transfers and is also mulling a â€'ceiling' on the latter.

Via DailyMail:

Greece has revealed it is to introduce a surcharge for all cashpoint withdrawals and financial transactions in a desperate attempt to prevent ...

Growth in Private Payrolls Moderates; Productivity Falls

U.S. nonfarm productivity fell in the first quarter as harsh winter weather weighed on output, pushing labor-related production costs to rise at their quickest pace in a year.

No deal with Greece on Monday, but mood positive: Dijsselbloem

PARIS (Reuters) - Many issues remain unsolved between Greece and its lenders and agreement at next Monday's Eurogroup meeting of euro zone finance ministers is now not possible, Eurogroup chair Jeroen Dijsselbloem said.

U.S. private payrolls growth moderates; productivity falls

WASHINGTON (Reuters) - U.S. private employers in April added the fewest number of workers in more than a year, which could heighten worries about the economy's potential to rebound strongly from a first-quarter slump.

On Flash Crash Anniversary Scapegoat Sarao Says "I Did Nothing Wrong Apart From Being Good At My Job"

To those who lived through the harrowing market plunge in which it seemed that the Fed has finally lost control, the May 6 2010 flash crash feels like yesterday, and to nobody more so than to the person who mysteriously emerged two weeks ago, just days ahead of the 5 years statue of limitations expired, to blame it all on one person as the CFTC's scapegoat: Navinder Sarao.

And while the rest of the world, or at least 1% of it, is enjoying the ongoing "wealth effect" propping up the increasingly more rickety "markets" built on the backs of $22 trillion in central bank assets, or more than the GDP of the US and Japan combined, earlier today Nav was fighting if not for his life then certainly his freedom when he told a London court he had done nothing wrong, the Flash Crash was not his fault, and was just good at his job.

"I've not done anything wrong apart from being good at my job. How is this allowed to go on, man?" Sarao said at Westminster Magistrates' Court.

How is it allowed to go on? Simple: as we showed two weeks ago, you threatened to expose the "mass manipulation of High Frequency Nerds", and since Virtu was about to report its first public quarter since going public, someone had to deflect attention from the true culrpits of the flash crash.

In other words, you were the scapegoat: a patsy who "traded from his parents' modest home in west London."

Worse, this mastermind behind the biggest, if briefest, wipeout in market value in history, is unable to procure the 5 million pounds he needs to post bail. As

California Adopts "Unprecedented" Restrictions On Water Use As Drought Worsens

Early last month we warned that California's drought was approaching historic proportions and that if climatologists were to be believed, the country may see a repeat of The Dirty Thirties as experts cite "Dust Bowl" conditions. Governor Jerry Brown has called for statewide water restrictions aimed at reducing consumption by 25%.

Now, the conservation calls are getting much louder as the state's water regulators have approved "unprecedented" measures aimed at curtailing the crisis.

Via AP:

California water regulators adopted sweeping, unprecedented restrictions Tuesday on how people, governments and businesses can use water amid the state's ongoing drought, hoping to push reluctant residents to deeper conservation.

The State Water Resources Control Board approved rules that force cities to limit watering on public property, encourage homeowners to let their lawns die and impose mandatory water-savings targets for the hundreds of local agencies and cities that supply water to California customers.

Gov. Jerry Brown sought the more stringent regulations, arguing that voluntary conservation efforts have so far not yielded the water savings needed amid a four-year drought. He ordered water agencies to cut urban water use by 25 percent from levels in 2013, the year before he declared a drought emergency…

Despite the dire warnings, it's also still not clear that Californians have gr ...

1Q2015 (Initial): Productivity Again Contracts, Costs Up. However, Year-over-Year Growth Is Moderate.

Written by Steven Hansen

A simple summary of the headlines for this release is that the growth of labor costs continues to increase significantly from the previous quarter, whilst the rate of growth of productivity declined. If one looks at the year-over-year data - it is showing a steady growth of both productivity and labor costs.

Read more ...

There Will Be No 25-Year Depression

Submitted by Bill Bonner via,

Good and Bad News

Today, we have bad news and good news. The good news is that there will be no 25-year recession. Nor will there be a depression that will last the rest of our lifetimes.

The bad news: It will be much worse than that. On Monday, the Dow rose another 43 points. Gold seems to be working its way back to the $1,200 level, where it feels most comfortable.

"A long depression" has been much discussed in the financial press. Several economists are predicting many years of sluggish or negative growth. It is the obvious consequence of several overlapping trends and existing conditions.

Brooklyn Daily Eagle Front Page

Newspaper from October 24 1929, a.k.a. "Black Thursday" - at this point, the panic had just begun with the market losing 11% in one day. On the next two trading days (Friday and Saturday - at the time, the market was open on Saturdays) the market rebounded slightly, then came "Black Monday" and "Black Tuesday", which erased all doubt about the seriousness of the situation

Old People Are Dead Wood

First, people are getting older. Especially in Europe and Japan, but also in China, Russia and the US. As we've described many times, as people get older, they change. They stop producing and begin consuming.

They are no longer the dynamic innovators and eager early adopters of their youth; they become the old dogs who won't learn new tricks.

Nor are they the green and growing timber of a healthy ec ...

Qatar, France, Fighter Jets and Migrants

Follow ZeroHedge in Real-Time on FinancialJuice

The only thing that is of any interest when you say the word Qatar is the fact that the French have just struck a $7 billion deal for the sale of 24 Dassault Rafale fighter jets. Whatever it is that President François Hollande of France is doing he's doing it right. Well, if we are honest according to common opinion amongst his own ilk he's not doing a lot else right these days. Their unemployment is still rising as we speak. In fact it even hit 10.4% in the last quarter of 2014, reaching the highest levels for 16 years (records only going back to 1998). The number of people that are underemployed stands at 6.5%. The French do not favor President Hollande well at the moment. But, he must be doing something right. Only in April was it that Dassault sealed a contract selling 36 Rafale jets to India and in February there was another one for Egypt with an extra 24 being notched up.

What is it exactly that President Hollande of France is doing in bed with Egypt, India and now Qatar? Those French have a way with it.

· President François Holland ...

US Productivity Suffers First Consecutive Quarterly Plunge Since 1993

Well this cannot be good. US output per hour (for the non-farm businesses) - or non-Farm productivity - plunged 1.9% in Q1. This follows a 2.1% slump in Q4 2014 and is the first consecutive quarterly plunge since 1993. This was driven by a 0.2% decline in output as hours worked increased 1.7% with manufacturing productivity suffering a 1.1% drop in Q1 (driven by a 1.2% decline in output).

Must be geat news...

working more... making less.

Charts: bloomberg

April 2015 ADP Job Growth at 169,000 - Slower Growth Trend Continues

Written by Steven Hansen

ADP reported non-farm private jobs growth at 169,000. Although disappointing and below forecasts - the year-over-year rates of growth is statistically the same as last month (which was revised downward). The rolling averages of year-over-year jobs growth rate for the last 10 months remain around 2.4%.

Read more ...

E.U. Commission Opens Antitrust Inquiry Into E-Commerce Sector

Officials said the investigation would address whether large players like American tech giants were impeding competition for European consumers.

MasterCard doubles card numbers in Middle East, Africa

DUBAI (Reuters) - MasterCard Inc has doubled the number of its cards to about 100 million in the Middle East and Africa in the past three years, where it has begun setting up partnerships with governments to provide access to its payments system.

ADP Employment Tumbles To 15 Month Lows As Manufacturing Jobs Plunge

Following March's dismal drop in the ADP Employment report (the biggest miss in 4 years) and missing for 3 straight months, April printed a very weak 169k (against notably lowere expectations of a 200k rise). Even worse, February and March was revised even lower. This is lower than the lowest economist estimate.

Large companies were particularly weak which is to be expected considering the unprecedented M&A and buyback spree which is entirely at the expense of workers (and wages) while smaller businesses adding the bulk of the meager jobs print. All job gains were in the Services segment with Manufacturing losing 10,000 jobs in April and the goods-producing sector losing 1,000.

The esteemed Mark Zandi blames this on "the fallout from the collapse of oil prices and the surging value of the dollar."

Must be the oil port strike again. Or perhaps it rained in the spring?

The details:

From the report:

Payrolls for businesses with 49 or fewer employees increased by 94,000 jobs in April, down from 105,000 in March. Employment among companies with 50-499 employees increased by 70,000 jobs, up from 64,000 the previous month. Employment gains at large companies â€" those with 500 or more employees â€" decreased slightly from March, adding 5,000 jobs in April, down from 6,000. Companies with 5 ...

J.P. Morgan's Barista-Turned-Banker Sees Good Things Brewing

Ivette Agosto's years of serving coffee to J.P. Morgan bankers got the Starbucks worker noticedâ€"and hired.

Chesapeake Energy has loss, sees more output

(Reuters) - Chesapeake Energy Corp on Wednesday raised its oil and gas production forecast for the year even as the second largest U.S. producer of natural gas reported a quarterly loss related to lower commodity prices.

For HFTs It's All About FX: Trading Currencies Is Now Virtu's Biggest Source Of Revenue

One month ago, when looking at Virtu's S-1 just before the HFT company went public, we broke down the company's revenues and found something fascinating. This is what we said:

Which asset class was responsible for Virtu's trading perfection for yet another year. It wasn't stocks because adding across the firm's America, EMEA and APAX equity product lines, Virtu revenues actually declined, from $201 million in 2013 to $195 million in 2014. It also wasn't commodities, where revenue dropped by almost $2 million in 2014 to $93.1 million.

So what was it?

The answer, by a wide margin, was FX or as Virtu defines it "Global Currencies."

The punchline: "since the data is as of December 31, and extrapolating these growth rates, it is virtually assured that as of this moment, the primary source of revenue for Virtu is no longer equities but FX!"

Today, Virtu released its first public financials since going public, and our speculation has been proven correct: FX is now the largest revenue generator for VIRT, amounting to 28.4% of revenues in the quarter ended March 31, at $42.2 million, well above the $29.1 million generated from trading America Equities and the $34.7 million from global commodities.

In fact, as the chart below shows, on an LTM basis, FX is now not only the biggest revenue item for the world's dominant HFT firm at $131.1 million, but is also the fastest growing source of profit, rising 103% on a year over year basis!

GlaxoSmithKline Bets on Consumer Health Spending

Consumers from New York to New Delhi are digging deeper in their pockets for over-the-counter remedies and health products, a trend GlaxoSmithKline is banking on to help shape the next chapter in its evolution.

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