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16Jun2015 Market Close: Grexit, European Bonds And Mounting Investor Concerns May Reverse U.S. Markets Before Friday

Written by Gary

The averages finished today's session after moving up nicely from the morning lows placing the DOW up triple digits. Oil and the U.S. dollar were relatively stable on low volatility which is expected to change over the next two sessions.

Greek debt talks are still on-going and investors are awaiting the outcome of the two-day Federal Reserve policy meeting which concludes tomorrow.

Todays S&P 500 Chart

Short-term reading of the tea leaves indicates either a large gap up tomorrow or several sessions of 'moderate' market advances which will be followed by another small correction. The fear among investors is that this expected small 'correction' could be exacerbated by a Greek default or some other dastardly financial event.

Watch Bitcoin in the event of the Greeks are looking to hide their monies.

The Market in Perspective

Here are the headlines moving the markets.

Stocks Up, Bonds Up, VIX Up, Dollar Up, & Oil Up; Time's Up, Fed's Up

Despite the strength of the bullishness in stocks today, US equities have told us that they "self-identify as bears"...

Yeah that just happened...

The March FOMC saw the same "buy everything" idiocy... that did not end well for stocks...

As liquidity disappeared and traders focused on tomorrow's Fed, sparking a total meltup in stocks (NOT driven by Greece - the comments were actually bad, NOT driven by US housing data - we were already well on our way by them, and NOT driven by any great rotation)...

On the day, Trannies remained red as the rest all grouped together...again seeming to stall after EU Close...

Cash indices managed to get ...

Wall Street rises on merger action despite Greek worries

(Reuters) - U.S. stocks rose on Tuesday following back-to-back daily declines, with merger activity more than offsetting market concerns as Greece struggled to avoid a default.

The Audacity Of Hope Meets The Veracity Of Data

Hope may be an investing strategy in the short-term, but it is not a driver of economic growth...

no matter how many times Yellen or Lavorgna or Cramer tell you it is.

h/t @Not_Jim_Cramer

Charts: Bloomberg

Greek PM tears into lenders, euro zone prepares for 'Grexit'

ATHENS/BERLIN (Reuters) - Prime Minister Alexis Tsipras lashed out at Greece's creditors on Tuesday, accusing them of trying to "humiliate" Greeks, as he defied a drumbeat of warnings that Europe is preparing for his country to leave the euro.

"Horrified" Syriza Hardliners Back "Immediate" Greek Bank Nationalization, Euro Exit

In "Democracy Under Fire: Troika Looks To Force Greek Political â€'Reshuffle'", we took an in-depth look at the true motivation behind the hardline stance adopted by Greece's creditors. In short, we've argued that the troika is determined to send a strong message to EMU member countries that threatening to expose the idea of euro indissolubility as fiction is not a viable bargaining strategy when it comes to extracting austerity concessions from Brussels. This became even more important after regional and municipal elections in Spain which betrayed growing resentment for the troika and strong support for Podemos, a progressive political movement that is, in many ways, ideologically aligned with Syriza. Here's what we said last month:

It is becoming increasingly clear that the Syriza show will ultimately have to be canceled in Greece (or at least recast) if the country intends to find a long-term solution that allows for stable relations with European creditors although it may be time for Greeks to ask themselves if binding their fate to Europe is in their best interests given that some EU officials seem to be perfectly fine with inflicting untold economic pain upon everyday Greeks if it means usurping the â€'radical leftists.'

Less than a week later, Syriza hardliners called for a default to the IMF and a return to the drachma. The motion was defeated by just 20 votes, prompting us to conte ...

Venezuela chides Procter & Gamble over sanitary pad prices

CARACAS (Reuters) - Venezuela's socialist government has criticized U.S.-based Procter & Gamble for charging "criminal" prices for sanitary towels selling for a fifth of the monthly minimum wage.

Constellation Brands to invest over $2 billion in Mexico beer plant expansion

MEXICO CITY (Reuters) - Alcoholic beverage maker Constellation Brands Inc said on Tuesday it is in the process of investing more than $2 billion in its Mexican operation.

Nestle cuts 15 percent of its Africa workforce: FT

(Reuters) - Swiss food and drinks company Nestle SA is cutting 15 percent of its workforce in 21 African countries because it says it overestimated the rise of the middle class, the Financial Times reported.

Forget The 3:30pm Ramp, Stock Gains Are All About The Night Shift

Just 2 years after we first noted it, the mainstream media has become fascinated with the performance of stocks in the last 30 minutes of the US cash session - the 330 Ramp! But, as with anything that becomes widely known (apart from "never start a land war in Asia" and "stocks are always cheap"), the exuberant last 30 minute ramp has been superseded by another... Welcome to The 2am Europe Open Ramp.

As Nanex's Eric Scott Hunsader notes, a stunning 22% of all S&P 500 futures gains have occurred between 2am ET and 3am ET.

22% of eMini gains since the start of the bull market occurred between 2am and 3am Eastern time! $ES_F

â€" Eric Scott Hunsader (@nanexllc) June 16, 2015

But wait, it gets better, because going even further back reveals that in the past decade 49%, or half of all stock gains, have taken place in just that one late hour, right before Europe opens for trading!

49% of eMini gains since 2005 occurred between 2 and 3am ET!

As Greek Bonds & Stocks Crash, Here's Who Keeps Catching The Falling Knife

Greek 10Y yields are breaking back above 13%, bonds ar trading at 50 cents on the dollar, Greek stocks are near multi-decade lows, and Greek bank bonds have collapsed amid the ever-more-likely Grexit (or at least redenomination amid capital controls). But, there are some very smart chaps who must know something Tsipras, Merkel, and the rest of the world does not... because they are spending "Other People's Money" to buy the dip in Greek stocks and bonds. From Allianz and PIMCO (the world's lagest Greek bondholder ex-ECB) to Putnam and Wilbur Ross, it seems more than a few American investors will be impacted should Greece really implode.

Wilbur Ross (and his friends) are BTFDing...

The contrarian American billionaire Wilbur L. Ross Jr. made a bundle betting on the Irish banking system when it was down and out, and a similar wager on Cyprus now looks promising. But Greece may prove to be the toughest test yet of his knack for cashing in on eurozone crisis spots.

Mr. Ross, who built his career investing in distressed assets, is the ringleader of a group of investors who last year pumped 1.3 billion euros, or about $1.47 billion, into Eurobank Ergasias, the third-largest bank in Greece.

"A default and a removal from the euro would provoke even worse austerity than anything being proposed by the institutions," Mr. Ross said in an interview.

On paper, Mr. Ross and the other investors have already lost hundreds of millions of euros. Eurobank shares have fallen by more than half since April 2014, when Mr. Ross and a gr ...

United Airlines to end service at NYC's JFK airport after losses

NEW YORK (Reuters) - United Airlines said on Tuesday it plans to end service in October at New York's John F. Kennedy International Airport, where it failed to profit over seven years because it offered few connections to other cities, and add flights at its Newark, New Jersey, hub.

What Is The Outlook For The Federal Budget In The Next 40 Years?

by Congressional Budget Office

The economy's gradual recovery from the recession, the waning budgetary effects of policies enacted in response to the weak economy, and other changes to tax and spending laws will cause the deficit to shrink in 2015 to its smallest percentage of GDP since 2007, CBO projects - 2.7 percent, a much smaller percentage than the recent peak of nearly 10 percent in 2009. Throughout the next decade, however, an aging population, rising health care costs per person, and an increasing number of recipients of exchange subsidies and Medicaid benefits attributable to the Affordable Care Act would push up spending for some of the largest federal programs if current laws governing those programs remained unchanged.

Fund Managers Pile Into Cash Amid Volatility

Fund managers hold more cash now than they have at any other time during the past six months amid a surge in volatility across global financial markets.

According To Bank of America, This Is "The Biggest Risk To Global Equities"

On Monday evening we brought you "Bank Of America Begins 66-Day Countdown Until The 'Ghost Of 1937'" Returns," in which we discussed why, if history is any guide, a rate hike cycle will be a disaster for equities. As a refresher, here's the narrative:

Put simply, central bank's provision of liquidity for financial markets has been unprecedented. The extent of Wall Street addiction to liquidity is about to be revealed and the potential for unintended consequences is clearly high.

Which is not to say that attempts to "renormalize" rates are unheard of: previously both Israel and the RBNZ tried it and failed, with markets promptly forcing them to reverse tightening.

More notably, it was the ECB itself which in April of 2011 tried to halt Chinese inflation exports in their tracks, and pulled off one rate hike... before the wheels came off and Europe promptly entered a double dip recession.

But no episode is more notable than what happened in the US in 1937, smack in the middle of the Great Depression. This is the only time in US history which is analogous to what the Fed will attempt to do later this year, and not only because short rates collapsed to zero between 1929-36 but because the Fed's balance sheet jumped from 5% to 20% of GDP to offset the Great Depression. Just like now. And then, briefly, the economy started to improve superficially, just like now, and as a result the Fed tightened in a series of three steps between Aug'36 & May'37, doubling reserve requirements from $3bn to $6bn, causing 3-month rates to jump from 0.1% in Dec'36 to 0.7% in April'37. As Bank of Americ ...

Brazil Retail Sales Drop Most On Record, Goldman Warns Will Get Worse

Just a few months ago, we warned Brazil's economy was on the verge of collapse as the fiscal situation was deteriorating rapidly. It appears, judging by the most recent data from the oil-rich nation, that we were right. Broad retail sales have now declined for five consecutive months with the seasonally adjusted broad retail sales index now at the same level as early 2012. Core retail sales declined 3.5% YoY during April (weakest print since Aug 2003) and broad retail sales declined by an even larger 8.5% YoY (lowest on record), and as Goldman warns, the outlook for private consumption and retail sales in the near term remains very weak.

Via Goldman Sachs,


The core retail sales measure (excluding autos and building materials) missed market consensus (+0.7% mom sa) by surprisingly contracting 0.4% (mom sa) in April. In addition, the March figure was revised slightly down from -0.9% mom sa to -1.0% mom sa. Similarly, broad retail sales contracted 0.3% mom sa in April, and the March figure was revised down from -1.6% mom sa to -1.8% mom sa.

Broad retail sales have now declined for five consecutive months at an average monthly rate of 1.6% mom sa per month. The seasonally adjusted broad retail sales index is now at the same level as early 2012.

In annual terms, core retail sales declined 3.5% yoy during April (weakest print since Aug 2003 ...

Toyota expands Takata U.S. air bag recalls by 1.37 million vehicles

DETROIT (Reuters) - Toyota Motor Corp will recall almost 1.37 million more vehicles in the United States due to potentially deadly front passenger-side air bags made by Japan's Takata Corp , Toyota said on Tuesday.

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