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15Jun2015 Market Close: Short Term Tea Leave Reading Indicating Market Reversal Tomorrow, Bad New Is That It Isn't Going To Be Long Term

Written by Gary

Several closing indexes are showing spinning top candles indicating a reversal could be slated for tomorrows session. Today's session closed in the red with the DOW down triple digits, but otherwise the averages traded sideways and somewhat higher after the morning lower opening.

Todays S&P 500 Chart

The U.S. dollar has fallen from a high 95 to a support at 95 throughout today's session, bullish for the averages and WTI oil has risen fractionally remaining at the $60 dollar resistance.

By now it has become abundantly clear that the biggest hurdle in the Greek negotiations is the topic of pensions, and specifically whether they should be cut, as the Troika demands, or boosted, as a Greece top court recently did when it reversed a 2012 ruling to cut pensions.

Greece and its creditors hardened their stances today after the collapse of talks aimed at preventing a default and possible euro exit, prompting Germany's EU commissioner to say the time had come to prepare for a "state of emergency". The reason U.S. averages haven't crashed any further is because no one believes a 'Grexit' just won't happen - be prepared.

The Market in Perspective

Here are the headlines moving the markets.

Judge rules for ex-AIG CEO Greenberg over 2008 bailout, but no damages

WASHINGTON/NEW YORK (Reuters) - A U.S. judge on Monday awarded no damages to American International Group Inc shareholders led by former CEO Maurice "Hank" Greenberg in their lawsuit against the U.S. government, despite finding that the U.S. Federal Reserve exceeded its authority in the insurer's 2008 bailout.

Greece, creditors dig in after debt talks founder

ATHENS/BERLIN (Reuters) - Greece and its creditors hardened their stances on Monday after the collapse of talks aimed at preventing a default and possible euro exit, prompting Germany's EU commissioner to say the time had come to prepare for a "state of emergency".

Don't Believe The Hype On U.S. Shale Growth

Submitted by Robert Rapier via OilPrice.com,

The OPEC Free Fall

There is a popular narrative going around that I want to address in today's article. Last November, after several months of plummeting crude oil prices, the Organization of the Petroleum Exporting Countries (OPEC) met to discuss the oil production quotas for each country in the months ahead. Many expected OPEC to cut production in order to shore up crude prices that had been falling since summer. This was the strategy favored by OPEC's poorer members, as many require oil prices at $100/barrel (bbl) in order to balance government budgets.

Instead, OPEC announced that they would continue pumping at the same rate. They chose to defend market share against the surge of supply from U.S. shale producers, and in doing so the fall in the price of crude oil accelerated. A look at the U.S. rig count shows the swift impact to U.S. shale drillers in the aftermath of that meeting:

USRigCountDrop

Rig counts went into free-fall after it became clear that OPEC was not interested in propping up the price of oil for the benefit of rapidly expanding shale oil producers. While that approach hurt OPEC's income in the short term, it also immediately impacted rig counts in the shale oil fields. But — and here is the narrative — shale oil producers continue to make gains in production even as rig counts have been slashed because they are becoming more and more efficient

Dissecting the Narrative

There is some truth to the narrative. Yes, oil production has continued to grow even th ...

China Mocks G7 As "Gathering Of Debtors", Warns "Confrontation Will Be A Disaster For Europe"

Vladimir Putin didn't get an invite to the Angela Merkel-hosted G7 Summit in Bavaria last week, which means the Russian President not only missed out on two days at the scenic Castle Elmau, but also on lederhosen shopping with US President Barack Obama who, judging from eyewitness accounts and a variety of amusing photo ops, channeled his inner Clark Griswold upon touching down in the Bavarian town of Krun. The G7 isn't pleased with Russia's â€'behavior' in Eastern Europe and so, Moscow has been expelled from the cool kids club until such a time as the Kremlin agrees to uphold Western democratic values.

(Obama in Krun)

But the G7 is an equal opportunity exclusionist which means it's not just former superpowers that aren't welcome, but rising superpowers as well, which means you won't be seeing Xi Jinping at the table either.

But "Big Uncle Xi" (as he is affectionately known in China) likely isn't losing any sleep because in the eyes of Beijing, the G7 â€" much like the IMF and the ADB â€" is a relic of a global economic and political order that is well on its way to obsolescence if it isn't there already.

(Xi Jinping; illustration: The New Yorker)

The Global Times (which, it should be noted, is owned by the ruling Communist Party's official newspaper, the People's Daily) has more on why the G7 is largely irrelevant in the modern world.

CVS Health to buy Target's pharmacy business for $1.9 billion

(Reuters) - Drugstore operator CVS Health Corp will buy Target Corp's pharmacies and clinics in a $1.9 billion deal that should help it bargain with drug makers for lower prices, while freeing Target from a costly business where it struggled to make a profit.

In Dramatic Decision Judge Finds Fed Bailout Of AIG Was "Illegal", Government "Violated Federal Reserve Act"

Earlier today, former AIG head Hank Greenberg's long-running legal battle of the US government came to a dramatic end when in a 75-page ruling, U.S. Court of Claims Judge Thomas Wheeler found that Greenberg was indeed correct in claiming the government overstepped its legal boundaries in its "unduly harsh treatment of AIG in comparison to other institutions" which was "misguided and had no legitimate purpose."

But because "the question is not whether this treatment was inequitable or unfair, but whether the government's actions created a legal right of recovery for AIG's shareholders" Wheeler found that Greenberg was not owed any money as AIG would have gone bankrupt without the government's forced intervention. Greenberg was seeking at least $25 billion in damages for shareholders.

The reason for the case is that years after the initial $85 billion bailout which eventually ballooned to $182 billion, AIG - with the government's explicit backstop and thus zero credit risk - managed to repay the government bailout funds and the government with a $22.7 billion profit. Greenberg argued that the pre-bailout equity holders deserved a piece of the pie, very much the same way that Fannie and Freddie stakeholders are also arguing they too deserve a piece of the post-government bailout pie.

However, "in the end, the Achilles' heel of Starr's case is that, if not for the Government's intervention, AIG would have filed for bankruptcy. In a bankruptcy proceeding, AIG's shareholders would most likely have lost 100 percent of their stock value" the judge found, and admitted that the pre-government bailout equity value of financial companies - since all of them were facing bankruptcy without a bailout - was zero. Whether this opens up the door to a class action lawsuit by all those ...

Platinum Prices Hit Six-Year Low

Platinum prices fell to a six-year low on Monday on concerns over growing supplies of the precious metal. Gold and silver fared better, as a breakdown in Greek financial talks pushed investors to buy safe-haven assets.

Saudi Arabia and China Drift Apart on Oil

Saudi Arabia's high oil production reflects a fundamental shift in Chinese oil demand.

Bits Blog: IBM Invests to Help Open-Source Big Data Software â€" and Itself

IBM plans to invest heavily in accelerating the adoption of the open-source big data software, Spark. With the move, IBM is investing as much in its own future as in the open-source project.

U.S. industrial output hurt by weakness in manufacturing, mining

WASHINGTON (Reuters) - U.S. industrial production unexpectedly fell in May as manufacturing and mining activity remained weak, a sign that a strong dollar and spending cuts in the energy sector continued to constrain economic growth.

Eurozone To Impose Capital Controls On Greece If No Deal By Weekend: German Press

Just as we hinted earlier when we reported that the ECB may use the "nuclear option" on Wednesday and yank Greek ELA, here comes German Suddeutsche Zeiting with a report that Eurozone countries have reached a Greek emergency plan (yay)... which calls for the imposition of capital controls on Greece if no deal is concluded by the weekend (oh no).

From SDZ (via Google translate):

The euro partners have agreed in the face of the solidified negotiations with Greece on a contingency plan for Athens. This became known on Monday in Berlin and Brussels. It stipulates that creditors want to give the Greeks initially another chance and wait to see if by the end of the week it is possible to Euro finance ministers to agree with the government in Athens to the corners to meet the current emergency program. The ministers meet Thursday and Friday in Luxembourg.

Elapses this deadline without agreement, to be convened without further delay a special meeting of heads of state and government in Brussels. In an interview for this is Friday night. At the special summit a political solution should be sought again. French President Francois Hollande warned on Monday against the failure of the negotiations. The deadlines were extremely short. "I have often said: caution, we now come in a period that can be turbulent, if no agreement is found," he said during a visit to the air show in Le Bourget near Paris.

Via Bloomberg:

EURO-ZONE COUNTRIES READY CAPITAL COUNTRIES FOR GREECE: PAPER

CAPITAL CONTROLS TO BE READIED FROM COMING WEEKEND: ...

Stocks lower amid Greek debt worries

(Reuters) - U.S. stocks recouped some of their losses in afternoon trading on Monday after a sharp fall on worries about Greece's debt, but the Dow Jones Industrial Average remained in negative territory for the year.

Why Greek Pensions Have Become The Biggest Hurdle In The Bailout Negotiations

By now it has become abundantly clear that the biggest hurdle in the Greek negotiations is the topic of pensions, and specifically whether they should be cut, as the Troika demands, or boosted, as a Greece top court recently did when it reversed a 2012 ruling to cut pensions.

At the heart of this argument is a simple question: is it political, as Greece claims, or simple math, as the IMF and its Troika peers assert.

Earlier today, none other than the Greek PM laid out his "cut demands are political" argument in a short, 134-word statement:

One can only suspect political motives behind the institutions'insistence that new cuts be made to pensions despite five years of pillaging by the memoranda. The Greek government is negotiating with a plan, and has presented nuanced counterproposals.

We will patiently wait for the institutions adhere to realism. Those who perceive our sincere wish for a solution and our attempts to bridge the differences as a sign of weakness, should consider the following:

We are not simply shouldering a history laden with struggles.

We are shouldering the dignity of our people, as well as the hopes of the people of Europe. We cannot ignore this responsibility. This is not a matter of ideological stubbornness. This is about democracy.

We do not have the right to bury European democracy in the place where it was born. ...

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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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