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04Jun2015 Market Close: Bearish Outlook Hasn't Changed, Tomorrow Could Be A Very Volatile Trading Session

Written by Gary

The expected downturn, led by losses in materials and energy shares, fizzled out early afternoon, but the averages didn't improve either as oil, U.S dollar and gold rests on weak supports, anything could happen. The one banner being waved the most by analysts is the Bear flag. Our short-term indicator is running 45% bearish for the second day and that doesn't look good for the bulls tomorrow.

Todays S&P 500 Chart

Greece delayed a key debt payment to the International Monetary Fund due on Friday and the benchmark price of copper in the U.S. tumbled to a six-week low today, reflecting heightened investors concerns about economic growth.

The Market in Perspective

Here are the headlines moving the markets.

Volatility Explodes: China, Bunds Crash Then Smash; Dow, S&P500 Tumble Below Key Support Levels

When Draghi warned traders yesterday that "markets must get used to periods of higher volatility" boy was he not kidding.

The day's absurd vol started first in China, where as noted previously, things first when bump after news a major brokerage was cutting margin for ChiNext stocks, forcing a plunge in both the SHCOMP and the Shenzhen of some 6%, however to prevent the collapse from carrying over and shattering the bubble sentiment ,"someone" stepped in after the break and Chinese stocks went linearly up as if nothing had happened to the tune of another 6%: a 12% round-trip in one day!

However, those who hoped this would be the end of volatility hadn't seen anything yet.

Enter Europe, where moments after the market open, German Bunds ignored China's manic close, and focused instead on the panic selling, leading to an aggressive continuation of the previous day's Bund selloff, with 10Y German paper briefly touching 0.99% before quickly finding buyers ahead of what seemed like an inevitable stop flush. As a reminder, this was trading 0.07% bps less than two months ago.

The move led to a just an aggressive selling in the Dax, which briefly plunged at the open, only to promptly recover nearly 2% in losses before closing just modestly lower.

The question: was the German bond market leading the Euro or vice versa? The EURUSD had j ...

Greece delays IMF payment, PM to brief angry parliament

ATHENS/BRUSSELS (Reuters) - Greece delayed a key debt payment to the International Monetary Fund due on Friday as Prime Minister Alexis Tsipras, facing fury among his leftist supporters, demanded changes to tough terms from international creditors for aid to stave off bankruptcy.

Wall St. falls ahead of payrolls report

NEW YORK (Reuters) - U.S. stocks fell on Thursday, hit by nervousness ahead of Friday's jobs report and lingering uncertainty over a Greece aid deal with creditors.

Exclusive: SEC investigates allegations of misspending by Dow Chemical CEO

NEW YORK (Reuters) - The U.S. Securities and Exchange Commission is investigating allegations that Andrew Liveris, chairman and chief executive officer of industrial giant Dow Chemical Co , misused company funds for personal benefit, according to people familiar with the matter.

3 Things: Autos, Old People, Buybacks

Submitted by Lance Roberts via STA Wealth Management,

Auto Sales

The media was especially excited this past week when auto sales were announced to have topped 17 million cars. This was the highest level in 10 years and a sure sign of real economic strength.

Let's look at the data.

I am setting aside for the moment that cars are being financed in progressively worse manners as subprime credit, lease terms and length of contracts continue to soar. While cars are indeed being sold, it is requiring further stretches of credit risk to accomplish that feat. Of course, we saw similar gimmicks used to seduce buyers during the last two peaks in sales as well.

It was reported that 17.7 million automobiles were sold during the month of May. That is a pretty astounding number until you realize that is an annualized number. In reality, only 1.48 million were actually sold, but still a large number. History suggests that the reported number is likely overly estimated.

To smooth out any "seasonal adjustment" bias, I have taken the non-seasonally adjusted sales and smoothed it with a 12-month average. I then overlaid the reported "seasonal adjusted" sales and calculated the differential between the two numbers.

Auto-Sales-Over-Under-060415

As shown, the reports tend to substantially OVER est ...

Wal-Mart resists investor pressure on independent chairman

BENTONVILLE, Arkansas/BOSTON (Reuters) - Even as Wal-Mart Stores Inc showed unusual openness to outsiders' complaints by taking steps including raising wages, it has been trying to slam the door on a shareholder proposal that could weaken the founding Walton family's power over its board.

IMF warns Fed should delay rate hike until 2016

WASHINGTON (Reuters) - The U.S. Federal Reserve should delay a rate hike until the first half of 2016 until there are signs of a pickup in wages and inflation, the International Monetary Fund said in its annual assessment of the economy on Thursday.

Dish, T-Mobile US talk merger, wireless spectrum a key factor

(Reuters) - Just four months ago, T-Mobile US Inc Chief Executive John Legere warned consumers that results of a U.S. airwaves auction "should scare the hell out of you" because winning bids by Dish Network Corp and bigger phone companies threatened competition.

Weak U.S. productivity, rising labor costs stir inflation concern

WASHINGTON (Reuters) - U.S. nonfarm productivity fell more sharply than initially thought in the first quarter, leading to a jump in labor-related production costs, a trend that could ignite inflation if sustained.

SEC sues over alleged hoax Avon buyout bid

NEW YORK (Reuters) - The top U.S. securities regulator on Thursday accused a Bulgarian man of being an architect behind hoaxes that fraudulently drove up share prices of Avon Products Inc and two other companies through bogus takeover bids.

Copper Falls to Six-Week Low

The benchmark price of copper in the U.S. tumbled to a six-week low on Thursday, reflecting heightened concerns about economic growth.

The "Better Than Cash Alliance" Has An Orwellian Plan

Submitted by Seth Mason

The "Better Than Cash Alliance" Has An Orwellian Plan

In the fall of 1910, under the pretense of a duck hunting trip, a group of powerful bankers, political figures, and businessmen met at Jekyll Island, GA to plan the creation of a central bank for the United States. The "game" that this elite group of "hunters" brought back to their ivory towers of Lower Manhattan and Capitol Hill was the blueprint for one of the most destructive financial institutions in modern history, the Federal Reserve.

One-hundred years later, another group of powerful bankers, political figures, and businessmen have converged to promote a cashless society, an economic system that would compel every man, woman, and child to utilize proprietary, government-monitored electronic systems to make purchases of any kind. This group, which calls itself the Better Than Cash Alliance, is as dangerous as the group of "outdoor enthusiasts" that met at Jekyll Island that fateful early-20th Century November.

And, just like the Jekyll Island group sold their grand plans based on a lie (they claimed that the Fed would guarantee liquidity in times of financial panics), the Better Than Cash Alliance is selling the idea of a cashless society based on the farce that eliminating cash would stimulate entrepreneurship among the poor. In reality, the elimination of cash would reduce a great many opportunities for entrepreneurship for people of few means. Gone would be the informal businesses the working poor often operate: roadside produce stands, street performances, handicraft tables, and day labor. Contrary to the assertions of the BTCA, a cash-free society would limit entrepreneurship to those with the means to incorporate a business, afford the proprietary system required to a ...

The Danes Are Revolting: Tax Administration Set On Fire

In Fredensborg, Denmark, ten official cars from the Tax Administration Office were set on fire and destroyed overnight in a protest. As ExstraBladet reports, police received notification Wednesday night at 3:09 a.m. that the Tax Administration offices on Kratvej were on fire. So far, there are no suspects. But, as Martin Armstrong notes, the police will undoubtedly hunt for someone retaliating against the Tax Man.

As Martin Armstrong further points out, this is not the first time the world has seen this...

On February 18, 2010, a man in a dispute with the IRS for seizing his home flew his plane in a suicide mission directly into the IRS building in Austin, Texas.

His battle against the Tax Man made him a hero to many.

Market Slides Back as Deadline for Greece Nears

Stocks swung lower as an impasse between Greece and its creditors dragged on. The drop put major indexes on track for a weekly loss.

This Is What Capital Controls Will Look Like In Greece

Yanis Varoufakis says he got the shakedown from EU creditors during his first few days in office.

The Greek FinMin told Parapolitika Radio that during his first week on the job, creditors threatened Syriza with capital controls if they could not come to a swift compromise with the institutions.

Via Bloomberg:

Varoufakis says he was threatened during his first week as Greek Finance Minister that Greece would have to impose capital controls on its banks if it doesn't sign a deal with creditors, Greek Finance Minister Yanis Varoufakis says in Parapolitika Radio interview.

Varoufakis said couldn't name the official that threatened him.

While the idea of capital controls may have been invoked in early February merely as a means of extorting the new Greek government, acute deposit flight is now a reality. Indeed, it appears that even in the event a deal with creditors is sealed, some form of capital controls will be necessary as the agreement works its way through the Greek parliament (a process which may be riddled with political uncertainty).

Barclays has more on what capital controls will look like in Greece:

Although progress towards an agreement has been achieved in recent days, the longer unsuccessful negotiations drag on, the more this risk increases. Greek banks continue to bleed deposits and replace them with ELA. We believe that a programm ...

Ukraine 'Mobilizes' Right Sector Neo-Nazis Amid Renewed Fighting; NATO Points Finger, Russia Responds

Following yesterday's "large-scale" rebel offensive, as Ukraine's military reported it, and hot on the heels of Poroshenko's threat of imminent martial law (including the right to detain or force relocate foreign nationals at will) and Soros' exposure as the 'lethal-weapon-demanding' puppet-master, Tass reports Ukraine's nationalists affiliated with the extremist organization calling itself the Right Sector (outlawed in Russia) have been urged to cut short their vacations and all commanders, ordered to begin full mobilization. NATO has asked both sides to back down, focused on Russia's responsibility as Poroshenko says there are now more than 9,000 Russian troops on Ukraine soil (though YouTube proof remains absent).

As Tass reports, Poroshenko appears to be falling back on his neo-nazi 'non-terrorist' supporters to fight the pro-Russian 'terrorists'...

Ukraine's nationalists affiliated with the extremist organization calling itself the Right Sector (outlawed in Russia) have been urged to cut short their vacations and all commanders, ordered to begin full mobilization, Right Sector spokesman Andr ...

Goebbelnomics

Originally posted on Bawerk.net. You may also follow us on Twitter

As the Keynesian revolution was merged with the models of Robert Lucas, it eventually morphed into something called neoclassical economic thought. The general gist was that economic agents can be tricked into changing their behaviour through surprises in monetary policy, which yes, has somewhat miraculously become the mainstay of central bank economists.

As Jeffery Snider of Alhambra Investment Partners succinctly puts it, the academic transition led to the "economics of money shifting to economics of psychology". In old Keynesian thinking, recession came as a result of "animal spirits" changing, which roughly translated into modern day parlance, equates to â€'irrational exuberance', albeit with an â€'apathetic' twist.

Confused? Don't be. If collective exuberance and apathy is the sole cause of the business cycle, then it logically follows that human emotions need to be manipulated accordingly. Only by doing so can policymakers smooth out the ups and downs in economic activity. And what better way to do that then to change the money supplied to the general public. If we, as society, have more money then we will surely feel better and apathy can be turned into exuberance. If psychology was not a "soft" science self-conscious economists would view them self as therapists for the collective.

While this sounds eerily like 1984, it's unfortunately much closer to the truth than most of you think. Why else spend time and resources conducting consumer and business confidence surveys to guide monetary and fiscal policy? Why else blatantly lie when asked about the status of the economy? Only if people feelbetter will they spend money and revive economic activity.

Prior to the c ...

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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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