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04Aug2015 Market Close: Markets Close Fractionally Lower, Gold Closes Above 1090, Oil Stabilizes Just Above Five Year Low And Investors Mixed On Market Outcome

Written by Gary

Averages have sea-sawed downward on moderate volume as investors are mixed regarding Chinese, EU and U.S. markets continued viability to move upward. Oil remained steady just above its five year low and the U.S. dollar stopped short of a major resistance after climbing rapidly at 1 pm.

Some analysts claim that comments from Fed's Dennis Lockhart said the 'economy is ripe for a rise in short-term interest rates' weakened the markets, but more likely from a real fear of a possible meltdown of the Chinese stock market.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

US stocks move mostly lower as traders assess earnings; Allstate slumps on weak results

NEW YORK (AP) — U.S. stocks moved between small gains and losses on Tuesday as investors assessed company earnings reports and deal news. KEEPING SCORE: The Standard & Poor's 500 index dropped four points, or 0.2 percent, to 2,094 as of 3:25 p.m. Eastern time. The Dow Jones industrial average dropped 43 points, or 0.3 percent, to 17,554.

The Nasdaq composite fell five points, or 0.1 percent, to 5,109. ALLSTATE SLUMP: Allstate was the biggest decliner in the S&P 500. The insurer dropped $7.09, or 10.2 percent, to $62.29 after reporting earnings that fell significantly short of analysts' expectations. The company said its earnings dropped because of more frequent and more severe auto accidents.

LOSING MOMENTUM: Apple slumped $3.13, or 2.6 percent, to $115.33, dropping for a fifth straight

Gold finish above $1,090, but stumbles on rate fears

Gold prices finished higher in Tuesday trade but encountered late pressure from the U.S. dollar, which rallied after remarks from a Federal Reserve official pointed to a September interest-rate hike.

Atlanta Fed President Dennis Lockhart said it would take "a significant deterioration in the economic picture" to persuade him to vote against raising key interest rates, which have remained at ultralow levels for about a decade. Lockhart made his remarks Tuesday afternoon in an interview with The Wall Street Journal.

Lockhart becomes the second Fed official in as many days to endorse a September rate hike after St. Louis Fed President James Bullard told The Wall Street Journal on Monday that he was in favor of a move at the Sept. 16-17 meeting.

Read More >>

Oil futures bounce off 4-month low to end higher

West Texas Intermediate oil for September delivery CLU5, +1.20% on Nymex rose 57 cents, or 1.3%, to close at $45.74 a barrel on Tuesday. Oil recovered some of the ground lost in a Monday rout that sent the U.S. benchmark to its lowest close in more than four months.

Oil stabilized as Chinese equities rebounded and traders prepared for weekly data on U.S. crude inventories from the American Petroleum Institute later Tuesday and more closely watched figures from the Energy Information Administration on Wednesday morning.

A survey of analysts by oil-information firm Platts produced a consensus forecast for a 1.6 million barrel decline in U.S. commercial crude stocks.

Read the full story: Oil ends higher as traders dare to catch 'falling knife'

Lockhart Says Fed 'Close' to Being Ready for Rate Rise

Federal Reserve Bank of Atlanta President Dennis Lockhart said the economy is ready for the first increase in short-term rates in more than nine years and it would take a significant deterioration in the data to convince him not to move in September.

Some Clear Thinking About The Price Of Gold

Submitted by Simon Black via Sovereign Man blog,

On April 2, 2001, the price of gold closed the market trading session at $255.30.

And that was the lowest price that gold has seen ever since.

In US dollar terms, gold closed the 2001 calendar year higher than it did in 2000. Then it did the same thing again in 2002. And again in 2003.

In fact, after reaching its low in April 2001, gold closed higher for twelve consecutive years- something that had never happened before in ANY financial market with ANY asset.

Then came a correction; the price started falling, and gold is now on track for 2015 to be its third down year in a row.

What's incredible is that, despite its history of gains, and 5,000 years of tradition behind it, gold is rapidly becoming one of the most widely despised assets.

But before we pronounce it dead and write the final gold eulogy, however, let's consider the following:

1) Nothing goes up (or down) in a straight line. After 12 straight years of unprecedented gains with any asset class, it's not unusual to have a meaningful correction.

(Just imagine how severe the correction in stocks will be. . .)

And like all frantic booms which go way past sustainable levels, corrections also overshoot fair value.

This correction in the gold market could easily last for several more years, with prices potentially well below $1,000.

But then we could just as easily see another massive surge all the way past $2,000 and beyond.

That's the nature of these markets- to be extremely fickle (and highly manipulated).

Even over a period of a few years, the market can show about as much matu ...

Japan's Real Wages Just Plunged The Most In Six Years

When it comes to Japanese wage data, that weakest link of Abenomics simply because real wages haven't grown in 24 consecutive months - and without wage growth no economy can ever possibly groq - there is little to add to what we said previously: all the data is not only fabricated, but manipulated to comply with policy. Recall our post from April in which we exposed just how Japan's Monthly Labor Survey adjusted all historical data so that the "rising" wages into Japan's election were subsequently revealed to be a lie and in fact Japan never had a single month of rising base wages in 2014!

Since then the Japanese department of data fabrication has gone "full Chinese" and last month, the wage data was presented as the long overdue "smashing success" for Abenomics, as it was the first month in two years when real wages posted a meager 0.1% increase.

Unfortunately, just a few weeks later that 0.1% increase was promptly adjusted down to an unchanged 0.0%, thereby confirming not only that Abenomics remains a failure but that no Japanese wage data is even modestly credibly.

And then, last night, we got the latest data for the month of July which was an absolute disaster.

The ministry of health and labor . . .

Apple and interest rate jitters weigh on Wall Street

(Reuters) - Wall Street extended losses on Tuesday as investors worried about a rise in interest rates while Apple's shares hit their lowest in over six months.

Fed/Treasury Worried High-Frequency-Trading "Hurts Market Function"

Just days after China bans Citadel (and its high frequency trading) from trading Chinese markets, US Treasury and Federal Reserve officials have been forced to admit they "need to consider whether the race for speed, at this already advanced stage, helps or hurts market functioning." As WSJ reports, Fed governor Jerome Powell and Antonio Weiss, a senior counselor to U.S. Treasury Secretary Jacob Lew, said Monday that the government should re-evaluate the structure of U.S. markets in light of recent events. They are growing more concerned about signs that financial markets have grown more volatile with the growth of fast trading. As Weiss concludes, "the constant pursuit to save one more millisecond not only consumes resources potentially better invested elsewhere, but increases the pressure on the plumbing of the system to handle ever-increasing speeds and messaging traffic."

As we previously noted, Citadel gets busted in China (and banned)... after "The firm has recently expanded its quantitative hedge funds there, and its securities trading business traded options this year in a trial program on the China Financial Futures Exchange."

Chinese media reported over the weekend that one of the restricted accounts was co-owned by Citadel and major Chinese brokerage ...

Exclusive: UBS was warned of Puerto Rico loan practices, e-mails show

NEW YORK (Reuters) - A UBS AG branch manager in Puerto Rico warned bank officials that brokers for the firm had urged customers to engage in improper loan practices, more than two years before the bank made a $5.2 million settlement over the matter with the island's financial regulator, according to internal bank correspondence reviewed by Reuters.

US Shale: How Smoke And Mirrors Could Cost Investors Millions

Submitted by Rune Likvern via OilPrice.com,

In this post I present what I found from applying R/P (Reserves divided by [annual] Production) ratios for Light Tight Oil (LTO) for 3 big companies in Bakken/Three Forks/Sanish.

The companies are; Continental Resources, Oasis Petroleum and Whiting Petroleum, which operated 28% of total LTO extraction in the Bakken (ND) in December 2014.

Undertaking oil and gas reserves assessments are just as much an art as a science.

From previous work with LTO from Bakken I kept track of the R/P ratio for wells/portfolios and generally found it was in the range of 3 - 4 after their first year of flow. This suggested that 25 - 35% of the wells' Estimated Ultimate Recovery (EUR) was extracted in their first year of flow.

This made sense as extraction (production) from LTO wells are heavily front end loaded and have steep initial declines.

Examining some big Bakken companies SEC 10-K (SEC; Securities and Exchange Commission) filings for 2014 I noticed that these had R/P ratios for Proven Developed Reserves (PDP) that ranged from 7 - 9.

That did not make sense and R/P ratios give away powerful and very valuable information about likely future extraction trajectories.

About 50% of the companies' total LTO extraction (flow) in Dec 2014 in Bakken (ND) were from wells started in 2014. In other words, the flow was dominated by "young" wells which decline rapidly. Therefore, whatever flow data (monthly, quarterly) that was annualized it should be expected a R/P ratio for total extraction around 4 for 2014.

What I present is how PDP, extraction data and R/P data derived from th ...

Fed's Lockhart Sends Stocks Reeling; Dollar, Bond Yields Soaring

"Priced in?" Atlanta Fed's Lockhart is the un-Bullard as he proclaims that September would be "appropriate time" for rate hikes to begin... Stocks have roundtripped from initial excitement to lows of the day, short-end bonds are ugly as the curve flattens dramatically and the USD index is surging...

As The Wall Street Journal reports,

Federal Reserve Bank of Atlanta President Dennis Lockhart said the economy is ready for the first increase in short-term interest rates in more than nine years and it would take a significant deterioration in the data to convince him not to move in September.

"I think there is a high bar right now to not acting, speaking for myself," Mr. Lockhart said in an exclusive interview with The Wall Street Journal.

Mr. Lockhart is watched closely in financial markets because he tends to be a centrist among Fed officials who moves with the central bank's consensus, unlike those who stake out harder positions for or against changing interest rates. His comments are among the clearest signals yet that Fed officials are seriously considering a rate increase in September.

The only problem - the data does not support this bullshit at all...

So why is The Fed so desparate? It seems the gap between market ...

Greece and lenders strike upbeat tone, deal seen on bailout

ATHENS (Reuters) - Both Greece and its lenders said on Tuesday they were optimistic they could broker a deal within days on a multi-billion euro bailout, striking a surprisingly upbeat tone on a process previously fraught with bitterness.

Soros' CIO to start own hedge fund with $2 billion

NEW YORK (Reuters) - Scott Bessent, who has been overseeing George Soros' $30 billion fortune for the last four years and whom some consider Soros' protege, will leave at the end of 2015 to start his own hedge-fund firm.

ATM fee lawsuits against Visa, Mastercard, banks revived on appeal

NEW YORK (Reuters) - A federal appeals court has revived litigation against Visa Inc , Mastercard Inc and several U.S. banks accusing them of conspiring to inflate the prices of ATM access fees in violation of antitrust law.

Apple denies plan to sell mobile services directly to consumers

FRANKFURT/PARIS (Reuters) - Apple Inc , the world's most profitable mobile phone maker, has denied working on a plan to market communications services directly to consumers and bypass the telecom companies on which it has long relied to sell its products.

Aetna Turns in Better-Than-Expected 2Q, Hikes Forecast Again

Aetna's second-quarter earnings jumped 33 percent and the health insurer raised its 2015 forecast again after receiving a boost from a government business it plans to feed with a roughly $35 billion acquisition.

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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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