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29Jul2015 Market Update: Markets Climb Higher In Afternoon Trading Ahead Of Fed FMOC Minutes, Oil Melting Up And U.S. Dollar Seesawing Upwards

Written by Gary

Markets opened flat, seesawed sideways then pushed upwards so the DOW was up triple digits. WTI oil climbed back up into the mid 49's ahead of the Fed's FMOC announcement.


Here is the current market situation from CNN Money

North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 3.11% while Mexico's IPC is up 0.63% and U.S.'s S&P 500 is up 0.49%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 62%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 20%
Investors Intelligence sets the breath Above 50 bullish 42.5%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -25.26
StockChart.com NYSE % of stocks above 200 DMA Index ($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.

38.37%

StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 48.57%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 51.00%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 22.91
StockChart.com Consumer Discretionary ETF (XLY) As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy 77.36
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,861

What Is Moving the Markets

Here are the headlines moving the markets.

Bits Blog: Yahoo Offers New Mobile Chat Service Featuring Silent Video

Last year, Yahoo all but gave up on updating its Messenger mobile apps. Now, the company is introducing a new, decidedly quirky messaging app with a surprising combination of features.

Greek Crisis Pinches Importers in U.S.

American importers of Greek products are stymied by their suppliers' inability to procure materials for export.

Janet Yellen Can't Pop The Biotech Bubble (But The SF Gate Can)

Submitted by Daniel Drew via Dark-Bid.com,

Biotech has a special place in the heart of the gambler investor. In the modern market where the average investor doesn't stand a chance, some of them indulge their hope and turn to lottery tickets. If only they can get the next Gilead or the next Amgen, they will become the next wildly successful "maverick" investor. More lottery tickets seem to be flying around than usual lately, floating alongside the recent biotech bubble. Some have doubted if this is a bubble. Maybe it's different this time. The SF Gate pondered this exact same question 15 years ago, and the market promptly replied.

On February 28, 2000, the SF Gate published an article called "Boom in Biotech Stocks Brings Back Memories of Bubbles Past, Industry observers say it won't burst like it did in '92." The SF Gate quoted "experts" like Steve Burrill, who said, "Prices may come down 10 percent, but not 50 percent." Earlier this month, Burrill was sued for embezzling $17 million. However, back in 2000, he was still an expert biotech investor. He noted, "We are still in the first leg of a biotech rally which we expect will last another decade." Here's what happened after the SF Gate published the article.

Apollo Global Reports Lower Earnings

Apollo Global Management said Wednesday that its second-quarter earnings fell 21% on a sharp decline in deal profits.

Gilead: the Apple of the Biotech World

Gilead faces short-term challenges as its hepatitis C franchise slows. But the stock is a rare example of biotech value.

China Demonstrates "Sea Combat Ability" With Live Fire Drill Video

With China laser focused on propping up its manipulated markets, which over the course of the past month have become the laughing stock of "skeptics" everywhere for exposing just how rigged everything truly is (even as CNBC debates whether it is better to manipulate stocks via central bank QE or, as China is doing it, via direct buying of stocks), it is worth recalling that over the past year China has seen another, just a troublesome situation developing in the form of numerous territorial conflicts in the East and South China Seas primarily due to geopolitical bragging rights and natural resource claims.

As previously reported, China is currently pursuing a rapid program of artificial island construction in the South China Sea, despite being locked in disputes with several countries over its claims to almost the entire area.

And yet, even with Beijing focused on halting the market (and economic) carnage in recent weeks, the politburo found a way to remind its neighbors that China has no intention of allowing its domestic financial volatility derail its territorial expansion. It did so as part of a 10 day maritime training exercise which started last week, which culminating overnight when China's navy carried out a "live firing drill" in the South China Sea to improve its maritime combat ability, state media has reported as tensions flare over the disputed waters.

According to the Guardian, the exercise on Tuesday involved at least 100 naval vessels, dozens of aircraft, missile launch battalions of the Second Artillery Corps and information warfare troops, Xinhua news agency said, citi ...

Merchants File Challenge to Visa, Mastercard Settlement

Lawyers representing roughly 100 merchants formally notified MasterCard and Visa that they believe a $6 billion class-action antitrust settlement should be thrown out due to the discovery that opposing lawyers in the case exchanged confidential information.

Was Kyle Bass Wrong About Japan?

By Chris at www.CapitalistExploits.at

Have you ever read John Steinbeck's Of Mice and Men? It's part of the high school curriculum in many western countries. The story is of two lonely and alienated farm labourers in the depression. One, George, who is sharp and quick, and the other, Lennie, who is physically huge and strong but possesses the mind of a child.

Early on in the book the reader gets this sense of impending doom, yet Steinbeck draws the reader in. You find yourself wanting to find out what terrible fate awaits. It's an uncomfortable feeling as you begin to see this chain of events forming and you find yourself wanting to scream out warnings to the characters. As the story unfolds this sense of doom and the despair that goes with it is heightened as the inevitability and consequences of actions taken plays itself out. You realise early on that poor Lennie, the simpleton, is going to get into trouble, possibly horrible trouble, and as a reader there is not a damn thing you can do about it.

When I think about the Bank of Japan, I think about Lennie. Possibly well intentioned but totally out of depth with little idea of the immense problems ahead which will ultimately cause untold hardship.

Japan, as we know, have unimaginably huge debt. All ¥ 1,259,476,310,706,736 of it. In fact, this figure is already outdated since the debt is rising every second so let's simply agree it's large. So large that if it was human it would make Pavarotti look positively anorexic.

Barclays Scraps Dividend Target

Barclays Executive Chairman John McFarlane asked shareholders to be patient on dividends as he took a fresh stab at reshaping the beleaguered British bank.

Wall St. Is Higher, Bolstered by Strong Earnings Reports

Twitter shares sank 14 percent after the social media company reported sluggish customer growth.

Greece's Tsipras, hounded by left, vows 'thus far and no further'

ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras, struggling to contain a revolt in his left-wing Syriza party, said on Wednesday that his government would not implement reform measures beyond those agreed with lenders at a euro zone summit this month.

Higher incentives, strong dollar weigh on MasterCard's revenue

(Reuters) - MasterCard Inc , the operator of the world's second largest payment network, reported lower-than-expected quarterly revenue as it offered more rebates and incentives to win deals.

Weak home purchase contracts hint at pause in sales activity

WASHINGTON (Reuters) - Contracts to buy previously owned U.S. houses unexpectedly fell in June after five straight months of increase, suggesting some cooling in home resales activity after recent hefty gains.

Wall St. higher ahead of Fed meeting

(Reuters) - Wall Street was higher on Wednesday as investors assessed earning ahead of a statement from the U.S. Federal Reserve that could give clues regarding the timing of a rate hike.

Thomson Reuters profit beats, finance unit shows growth

(Reuters) - Thomson Reuters Corp on Wednesday reported higher-than-expected quarterly profit as the company's biggest division that serves banks and financial institutions showed underlying revenue growth for the first time since 2011.

Banks Squirm As Congress Moves To Cut The 6% Dividend Paid To Them By The Fed

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

On December 23 of this year, the Federal Reserve will be 99 years old. And throughout that 99 years, regardless of boom, bust, recession or Great Depression, the biggest Wall Street banks have been enjoying a 6 percent, risk-free return on the capital they hold at the Fed in the form of dividends.

Have you looked at your checking or money market bank statement lately from JPMorgan Chase or Citibank? How about the statement showing the interest you're earning on your mortgage escrow account with the big banks? While the country suffers through the lingering effects of the Great Recession caused by the biggest Wall Street banks, the public typically receives less than 1 percent on their deposits at the big banks, while the government has legislated a permanent, risk-free 6 percent guarantee to the Wall Street banks for their capital on deposit at the Fed. Now that's an entitlement program that needs to die!

This corporate welfare program gets even better: if the shares of stock were acquired prior to March 28, 1942, the 6 percent risk-free dividend is tax exempt and the bank doesn't have to pay corporate taxes on it.

- From the excellent 2012 Wall Street on Parade article:

Q&A: Disabling Video Autoplay on Twitter

Twitter has introduced video clips that automatically play in the timeline, but you can turn the feature off.

Tsipras Seeks to Avert Party Split as Greece's Creditors Arrive for Talks

As dissenters pushed for a congress of his Syriza party, the premier said that sealing an agreement on a bailout was the current priority.

Chinese Trade Rules Put South Korea's Kimchi Industry in a Pickle

South Korea is not permitted to export Kimchi, fermented cabbage, to China, but cheaper Chinese kimchi flows freely into South Korea, competing with the domestic product.

Judge dismisses 'pyramid scheme' lawsuit versus Herbalife, CEO

(Reuters) - A federal judge has dismissed a lawsuit accusing Herbalife Ltd and its chief executive officer of misrepresenting the weight-loss and nutritional products maker's sales practices as legitimate when the company was "at its core" a pyramid scheme.

Global Markets Rise Ahead of Fed

Global stock markets rose Wednesday as investors looked ahead to a policy statement from the Federal Reserve that could offer clues on the path of U.S. interest rates.

Hillary Does It Again: What "Everyday American" Would Pay $600 For This Haircut?

There are plenty of 'everyday Americans' out there with perfectly good haircuts, styled by perfectly good hairdressers, in perfectly good Main Street salons... so why is self-proclaimed populist person-of-the-everyday-American Hillary Clinton getting a $600 haircut at Bergdorf Goodman's Fifth Avenue store in NYC?

As PageSix reports,

Hillary Clinton put part of Bergdorf Goodman on lockdown on Friday to get a $600 haircut at the swanky John Barrett Salon.

Clinton, with a huge entourage in tow, was spotted being ushered through a side entrance of the Fifth Avenue store on Friday.

A source said, "Staff closed off one side of Bergdorf's so Hillary could come in privately to get her hair done. An elevator bank was shut down so she could ride up alone, and then she was styled in a private area of the salon. Other customers didn't get a glimpse. Hillary was later seen with a new feathered hairdo."

Clinton regularly sees salon owner John Barrett, who charges regular mortals $600 for a cut and blow-dry. Hair color can cost an extra $600.

And let's not forget that her husband, Bill Clinton, was famously caught up in a 1993 controversy known as "Hairgate" when he got a $200 haircut on Air Force One as it was idling for an hour at LAX, shutting down two runways and diverting numerous flights.

Read more here... ...

State of the Art: Steep Discounts a Boon for Customers, but a Gamble for Start-Ups

As new tech companies spend huge amounts to lure customers with deals, it's a great time to be a consumer. But can these companies ever turn a profit?

Investors Need to Check Peugeot's Speed

Peugeot has done well in cutting costs and maintaining pricing discipline. But the outlook is getting tougher for the French carmaker.

This Is The Biggest Paradox Facing The Fed Ahead Of Its Rate Hike Decision

Ahead of today's FOMC announcement, which comes without a press conference and has thus been dismissed as a possible start to a Fed hiking cycle, the Fed has a big problem. It's not jobs, which are running at a pace that many suggest is strong enough to sustain at least a 25 bps hike to nearly a decade of ZIRP, assuming of course one completely ignores the "quality" component as virtually all recent job growth has been in the low-paying job category especially waiters and bartenders...

... but inflation, and specifically the bifurcation between core inflation and headline inflation.

Here is the paradox as succinctly summarized by Deutsche Bank, which notes that the current -29% year-over-year drop in the CRB index implies YoY headline CPI inflation falling from 0.1% to -0.9% over the next couple of months, or just in time for the September or December FOMC meetings both proposed as the "lift off" date. This would be the largest year-over-year drop since September 2009 (-1.3%) and one of the lowest prints in modern history.

However core YoY CPI inflation is likely to edge above 2% in the months ahead which complicates matters.

In other words, Fed will have to pound the table on the commodity crunch being a transitory event, just like every other "transitory event" that forced the Fed to postpone hiking rates since 2011. The problem, however, is that unlike "sn ...

Barclays Returns More Mysterious Than Bankable

Barclays was expected to explain how it will hit higher return targets in its latest set of results, but detail is still lacking.

VIX Vanquished To 12 Handle Ahead Of FOMC

Climbing the wall of complacency...

As we noted yesterday...

VIX 12 handle now looking almost certain

— zerohedge (@zerohedge) July 28, 2015

And sure enough, VIX roundtrips The Matterhorn Pattern

As Grexit fears have disappeared...

Charts: Bloomberg

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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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