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13May2015 Market Update: Averages Have Lost Morning Gains Leaving The Large Caps In The Red, But Trading Sideways

Written by Gary

Wall Street pared early gains in choppy trading as tepid economic data and a renewed selloff in the bond market more than offset a flurry of corporate deals on Wednesday. Oil's rally looks increasingly disconnected from fundamentals of supply and demand as the U.S dollar has fallen into the support once again.

Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.08%, while the Bovespa is leading the IPC lower. They are down 0.84% and 0.33% respectively.

German Bund yields have spiked back quickly to the highs of the day (from under 60bps to 70bps). This has sparked selling across most asset classes with US and European stocks waning quickly. Trannies are in trouble have tumbled post-open and are now -1.7% from payrolls.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 63%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 50%
Investors Intelligence sets the breath Above 50 bullish 57.2% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -27.76 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 58.49% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 62.08% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 63.40% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 22.78 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 75.80 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,118

What Is Moving the Markets

Here are the headlines moving the markets.

Exclusive: Wal-Mart improves lobbying disclosure after shareholder push

CHICAGO (Reuters) - Wal-Mart Stores said it will start disclosing directly to investors what it spends on lobbying on a state-by-state basis, responding to shareholder pressure to improve transparency on how the retailing giant seeks to influence public policy.

Wall Street pares early gains on weak data, bond market swings

(Reuters) - Wall Street pared early gains in choppy trading as tepid economic data and a renewed selloff in the bond market more than offset a flurry of corporate deals on Wednesday.

China Lashes Out At US: "Refrain From Provocative Action"

Yesterday, in a stunning admission that already frigid relations between China and the US (because according to the lying White House it is Russia that is "isolated", even as Putin was sitting next to China's president on May 9) are getting worse, if not outright hostile, by the day we learned that US Defense Secretary Ash Carter has asked his staff to look at military options to rebuke Chinese ambitions in the South China Sea area around the Spratly Islands, which has recently become a topic of contention between China and most of its neighbors, especially the Philippines and Vietnam.

And while apparently the US does not have its hands full already with orchestrating (and profiting from) two proxy regional wars, one in Ukraine and one in the Middle East, and feels compelled (by shareholders of US "defense" companies) to prove to the world it has long since lost its globocop status when China roundly ignores American threats, China wasted no time to do just that and overnight Beijing strongly condemned a proposed U.S. military plan to send aircraft and Navy ships near disputed South China Sea islands to contest Chinese territorial claims over the area.

DuPont wins board proxy fight against activist investor Peltz

WILMINGTON, Del. (Reuters) - DuPont said on Wednesday it had fended off a board challenge from activist investor Nelson Peltz, after shareholders backed all 12 directors nominated by the U.S. chemical conglomerate's management.

Markdowns on delayed merchandise to hurt Macy's profit

(Reuters) - Macy's Inc forecast a lower second-quarter profit as it marks down merchandise received late due to a strike at West Coast ports and foreign tourists spend less as the dollar stays strong.

Eurozone's Hard Path to Growth

The path of the eurozone economy is never straightforward, and the first-quarter outcome is no exception.

Air Gets Thin in Luxury Condo Market

It's getting crowded at the top of Manhattan's apartment market. Builders are plowing ahead with scores of condominiums priced above $20 million in skinny glass towers throughout Manhattan, sparking fears of a supply glut.

Eurozone Economy Improves, but Finland and Greece Lag

The gross domestic product of the 19 nations that form the euro currency bloc grew 0.4 percent in the period, but the two countries slid into recession.

IEA: Battle for Oil Market Share Just Beginning

A global battle for market share between OPEC and non-OPEC producers that has fed into the biggest slump in the price of oil since the financial crisis is just getting started.

Japan's three top carmakers to expand Takata air bag recalls by millions

TOKYO (Reuters) - Japan's three biggest carmakers are expanding a huge global recall triggered by potentially fatal air bags made by Takata Corp , saying on Wednesday they will take back millions of vehicles worldwide for investigation.

Euro zone economy picks up pace but Germany lags

BRUSSELS (Reuters) - A slowdown in Germany weighed on the euro zone in the first quarter, but the bloc's economy still grew at its fastest in almost two years as cheap food and fuel boosted spending and a central bank stimulus program kicked in.

Q2 GDP Forecast Cut To 0.7% By Atlanta Fed

Zero Hedge first brought attention to the Atlanta Fed over two months ago, when the first massive divergence between bullish consensus and objective reality appeared. Since then it has been nothing but a downhill race for reality, with consensus scrambling to catch up. Moments ago, the Atlanta Fed just cut its Q2 GDP forecast once more, this time to 0.7% from 0.8%. This is on the back of a Q1 GDP which as of this moments is around -1.0%.

From the Atlanta Fed:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 0.7 percent on May 13, down slightly from 0.8 percent on May 5. The nowcast for second-quarter real consumer spending growth ticked down 0.1 percentage point to 2.6 percent following this morning's retail sales report from the U.S. Census Bureau.

This means that the consensus will once again have to scramble and consult the Oracle Stone in their catch down to the Atlanta Fed.

It also means that the first half US GDP print will be negative and all else equal, would suggest a technical recession. It also means that for 2015 full year GDP to print at a "growing" 2.5%,

The US Is In Recession According To These 7 Charts

The evidence continues to mount...

"Most since Lehman" has become the new meme for macro-economic data in the US as day after day brings another lacklustre superlative to be dismissed with some excuse by the cognoscenti of sell-side economists...

Of course, that is aside from anything related to aggregate jobs that is spewed by the government's official ministries of truth... (do not look at this chart)

* * *

So here are seven charts that scream "recession" is here...

Retail Sales are weak - extremely weak. Retail Sales have not dropped this much YoY outside of a recession...

And if Retail Sales are weak, then Wholesalers are seeing sales plunge at a pace not seen outside of recession...

Payroll Friday (aka Bubblevision's Live Action Romper Room)

Submitted by David Stockman via Contra Corner blog,

Payroll Friday puts you in mind of a live action Romper Room. The bubblevision children get big-eyed month after month—even as they hear the same old fairy tale from the BLS. And make no mistake, the headline jobs number is tantamount to fiction, even as it parades as science.

For all practical purposes, the monthly establishment survey number, which was 223,000 for April, is the ultimate emission of the momo game. The BLS essentially projects a trend line of gains in the various cells which make up the establishment payroll slate and then modifies them in each month's report by the deltas in the rag-tag survey results taken by the Census Bureau, as well as its own concoction of statistical flim-flam for seasonality, birth-death and myriad other technical tinkerings.

But what the headline number is not, is the result of a valid sample of US businesses, scientifically extrapolated to the entire economy such as that represented by the Gallup report on employment. As a result, once a trend line of business cycle recovery gets built into the BLS projection, the monthly number will always come up +/- 200k, save for an occasional monthly aberration or two. The headline is thus the product of an a priori model, not a current empirical measurement.

Every so often, of course, the economy hits a downdraft and the momentum factor goes into reverse. When that happens, massive downward revisions are made to recent monthly results, while current monthly totals show deep job losses. And then this bonfire of recession period job losses is revised sharply lower yet again in the annual benchmark adjustments.

Market Open Ramp Ends With A Whimper As Bund Yields Suddenly Spike

Having tested down to Payrolls levels once again, German Bund yields have spiked back quickly to the highs of the day (from under 60bps to 70bps). This has sparked selling across most asset classes with US and European stocks waning quickly. Trannies are in trouble have tumbled post-open and are now -1.7% from payrolls.

Bunds are crashing again...

With 4Y back into positive yield territory...

Sending DAX dumping...

With US Trannies the worst...

Charts: Bloomberg

Vertex Could Give Investors Vertigo

Vertex shares are soaring ahead of Orkambi's likely approval, but high drug prices and valuations pose risks to investors.

Crude Pumps & Dumps After Inventory Draw Slows & Production Rises

Following API's data lastnight, DOE reported a 2.19 million barrel draw (more than expected) this week, crude oil prices immediately extended gains. However, that ramp quickly faded once it set in that the draw was actually notably lower than last week's. For some context, this leaves the total inventory still a near record 30% above average for this time of year. Prices were also not helped as total crude production rose modestly WoW.

2nd weekly draw in a row but it's slowing...

Some context...

And production rose WoW...

Oil prices spiked then dumped on priduction news...

Charts: bloomberg

Many Investors Still Bullish on Treasury Bonds

Many money managers believe that the recent selloff isn't sustainable, pointing to two key differences with the events of 2013's "taper tantrum": tempered economic expectations and more-balanced positioning by investors.

Retail sales unchanged; import prices weak in April

WASHINGTON (Reuters) - U.S. retail sales were flat in April as households cut back on purchases of automobiles and other big-ticket items, indicating the economy was struggling to rebound strongly after barely growing in the first quarter.

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