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03Jun2015 Market Close: Beige Book Report Guesses All Is Well, But Will Be Revised Down Next Month, But Look For Bear Scat In Next Several Sessions

Written by Gary

The averages roller-coasted all session long today, most of it on low volume. There are numerous conflicting indicators ultimately pointing to investors lack of conviction of a continuing bull market. Oil fell through its support, rose and stabilized lower. The U.S. Dollar plummeted to its support and remains in limbo while short term indicators swing solidly in the Bear Zone.

Todays S&P 500 Chart

The Fed's Beige Book reported that the U.S. economic activity expanded from early April to late May and growth was expected to continue at a "modest" to "moderate" pace, but like all manipulated government reports, it will be downgraded next month because of severe winter weather.

In the Beige Book report this afternoon, the Federal Reserve said it expects economic growth to continue at a modest to moderate pace against the backdrop of declining oil and gas investment.

The central bank noted the dollar's strength weighed on export sales and capital investments. For many of its 12 districts, continued oil-price weakness pressured energy-dependent industries, but resulting low gas prices proved to be a tailwind for consumer spending in Cleveland and San Francisco. Meanwhile, three districts noted continued negative effects from the West Coast port strike.

The Market in Perspective

Here are the headlines moving the markets.

Oil up over 1 percent after U.S. inventory drop

LONDON (Reuters) - Crude oil prices rose more than 1 percent on Friday after U.S. inventories fell for a fourth straight week, although prices were set for a weekly drop on a stronger dollar.

Futures down as Greece weighs; GDP data awaited

(Reuters) - U.S. stock index futures were lower on Friday amid worries about Greece's ability to strike a deal with its euro zone partners by Sunday and ahead of U.S. gross domestic product (GDP) data.

U.S. dealmaking at record year-to-date high

LONDON (Reuters) - Dealmaking in the United States has made its strongest start to a year since Reuters records began in 1980, climbing 52 percent year on year to $746.9 billion in the Jan. 1 to May 28 period.

Euronext Breaks: All Derivative, Currency Future Trading Halted

Usually the market breaks don't take place until after the selling begins. Today, someone in Europe got triggerhappy, and as a result moments ago the Euronext broke. Or perhaps this is just another drill for the "big one".

The details:

SERVICES IMPACTED: Market Data, Trading

MARKET: Euronext Derivatives Markets

PRODUCT: Commodity Futures, Commodity Options, Currency Futures, Currency Options, Individual Equity Options Brussels, BEL20 Futures, PSI Futures, BEL20 Options, Index Dividend Futures, Single Stock Dividend Futures, Belgian Single Stock Futures

CATEGORY: Data issue

Due to a market data issue, trading has been halted on the BO,BF,FF,FO,MF,YF,YO,RF,ZF,ZO,SF exchanges until further notice.

As a consequence, all orders other than GTC's were removed from these products.

We are working to resolve this issue and we will provide an update as soon as possible regarding the expected pre-opening time and resumption of trading.

For your information, before any trading resumption, there will be a pre-opening phase of at least 15 minutes.

Trading on all Cash instruments is taking place as normal.

China's Nauseating Volatility Continues, US Futures Flat Ahead Of Disastrous GDP Report

The most prominent market event overnight was once again the action in China's penny-index, which after tumbling at the open and briefly entering a 10% correction from the highs hit just two days ago, promptly saw the BTFDers rush in, whether retail, institutional or central bankers, and after rebounding strongly from the -3% lows, the SHCOMP closed practically unchanged following a 2% jump to complete yet another 5% intraday swing on absolutely no news, but merely concerns what the PBOC is doing with liquidity, reverse repos, margin debt, etc. Needless to say, this is one of the world's largest stock markets, not the Pink Sheets.

Just to put thing in perspective again:

Elsewhere, European equities opened firmly in the red after Greece stated yet again they are expecting a deal to be agreed on Sunday ahead of their IMF payment due on June 5th, thereby seeing markets using the excuse of month-end to take risk of the table ahead of this key risk event, with Greek banks among the worst performers. Over the last few minutes the selling ceased and Europe has rebounded on a bout of buying, which has pushed both the EUR lower and US equity futures into the green.

And just to complete the confusion, it also sent the yield on the German 5Y bond negative once agagin for the first time since April, as NIRP is back once again. Whether this was a consequence of month-end demand or uncertainty surrounding Greece is unclear, but should the entire German curve go subzero again, expect the ECB to instill another panic selling episode as the more negative German yields go, the less purchasing capacity the ECB has in an already collateral constrained market.

High spirits battle: Asia tycoons vie for cognac maker Louis Royer

HONG KONG/BANGKOK (Reuters) - Thai billionaire Charoen Sirivadhanabhakdi is considering buying cognac maker Louis Royer, people familiar with the matter said, potentially locking horns with a Philippine tycoon for the French firm amid a forecast rebound in Asian demand for luxury spirits.

U.S. economy likely shrank in first quarter, but fundamentals strong

WASHINGTON (Reuters) - The U.S. economy likely contracted in the first quarter as it buckled under the weight of unusually heavy snowfalls and a resurgent dollar, but activity since has rebounded modestly.

Wipeout in European Bonds Tests Investors' Resolve

A strong start to the year for many of Europe's biggest bond funds was all but wiped out by an abrupt selloff in the region's bond market, testing the mettle of investors who rely on the asset class for its steady returns.

Japan's Skymark submits bankruptcy plan despite creditor opposition

TOKYO (Reuters) - Japan's failed budget carrier Skymark Airlines Inc submitted a restructuring plan for court approval on Friday despite opposition from the two main creditors owed about two-thirds of its roughly 300 billion yen ($2.4 billion) debt.

Dollar, Chinese shares steady as Europe wobbles

LONDON (Reuters) - The dollar inched higher on Friday, putting it on track for a monthly rise in May, while Chinese shares steadied after a plunge a day earlier that stoked concerns about the financial health of the world's second largest economy.

Unrepentant Lehman ex-CEO Fuld says firm 'was not bankrupt'

NEW YORK (Reuters) - Six years, seven months and 13 days after Lehman Brothers Holdings Inc filed for bankruptcy, its former chief executive, Richard Fuld Jr., is still insisting it did not go broke.

Greek Austerity And Economic Religion

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

There are many things going on in the Greece vs Institutions+Germany negotiations, and many more on the fringe of the talks, with opinions being vented left and right, not least of all in the media, often driven more by a particular agenda than by facts or know-how.

What most fail to acknowledge is to what extent the position of the creditor institutions is powered by economic religion, and that is a shame, because it makes it very difficult for the average reader and viewer to understand what happens, and why.

Greek FinMin Yanis Varoufakis has often complained that he can't get the finance ministers and others to discuss economics. As our mutual friend Steve Keen put it:

Steve Keen said the finance minister was frustrated with the progress of Greece's talks with the euro zone, adding Varoufakis had compared the talks to dealing with "divorce lawyers". Keen said the finance ministers of Europe refused to discuss certain euro policies, according to Varoufakis. [..] When asked what [Varoufakis and he] mainly discuss at the moment, Keen said, "Mainly his frustration, the fact that the one thing that he can't discuss with the finance ministers of Europe is economics.."

"He goes inside, he is expected to be discussing what the economic impact of the policies of the euro are and how to get a better set of policies, living within the confines of the euro and the entire European Union system, and he said th ...

Intel nears $15 billion deal to buy Altera: NY Post

(Reuters) - Intel Corp is close to a deal to buy smaller chip maker Altera Corp for about $15 billion, the New York Post reported.

NYSE Looks to Ease Late-Day Pileup

The New York Stock Exchange is preparing a new plan to make it easier to buy or sell the shares of thousands of listed companies, an effort to counter the slow midday trading and uneven liquidity plaguing U.S. stock markets.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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