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14Aug2015 Market Close: Averages Close Higher, Oil Again Testing 6-1/2 Year Lows, U.S. Dollar Gaining Traction Trending Higher And China's Stock Market Still Looks Very Shaky

Written by Gary

U.S. Markets melted up nicely by the closing bell, but on low volume and worried investors. Oil Prices that had climbed off the 6-1/2 year lows earlier today was heading back down into the high 41's by the end of today's session and is expected test the mid 41's shortly.

Today's closing remains in a downtrend closing below the 50 DMA and below the median Bollinger line, both bearish signs the bears will have to over come. The short tern indicators just tilt slightly over the bearish line, so there is hope for the bulls.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

U.S. crude edges up from six-and-a-half-year low, expiring Brent dips

NEW YORK (Reuters) - U.S. crude oil edged higher after falling to a fresh 6-1/2-year low on Friday, posting a seventh weekly loss amid concerns over global oversupply, while Brent futures slipped as the front-month September contract approached expiration.

China Stock Futures Signal Deeper Pessimism

As global financial markets try to gauge the impact of a weaker yuan, China's stock-index futures are signaling that investors are more pessimistic than current Shanghai share prices suggest.

European Commission confirms euro zone deal to lend Greece up to 86 billion euros

BRUSSELS (Reuters) - International creditors have agreed to lend Greece up to 86 billion euros over three years, the European Commission confirmed on Friday following six hours of talks in Brussels.

The Economissed Track Record: In January 75% Of Experts Said The Fed Would Have Hiked By Now

If PhD economists were serious about getting things right, they would have a tough job. That goes double for PhD economists charged with making policy decisions based on their conclusions.

That's because economics (like sociology and political science and astrology) isn't a real science. It's a pseudo-science. And as is the case with other pseudo-sciences, it's flat out impossible to discover laws and immutable truths, no matter what anyone told you in your undergrad economics course.

Of course PhD economists aren't really serious about getting things right, which means that in reality, their jobs are remarkably easy. Here's the job description: make predictions that are almost never right and then make up any reason you want to explain away the fact that you were wrong. These explanations run the gamut from intentional obfuscation via opaque statistical tinkering ("residual seasonality") to comically absurd attempts to turn common sense into an excuse for poor outcomes ("snow in the winter").

And while economists by the very nature of their jobs are already predisposed to getting it wrong almost all the time, that tendency is amplified when economists try to predict what other economists are going to do. We might call this "stupidity squared", and it's readily observable in its natural habitat when economists attempt to predict when the Fed will raise rates.

When "forecasters" are surveyed on the timing of a Fed hike (or cut) what you get is one group of economists trying to guess at what another group of economists mistakenly thinks about the direction of the economy, and as you can see from the graph shown below, this is definitely not a case where two wrongs make a right.

America (In 1 Cartoon)

You have to believe to receive...

Source: Townhall.com

J.C. Penney loss narrows as Sephora stores help attract shoppers

(Reuters) - J.C. Penney Co Inc reported a smaller-than-expected quarterly loss, helped by demand for home goods and high-end Sephora beauty products, indicating that the department store operator's turnaround efforts were starting to pay off.

Wall St. edges higher after upbeat data, retailer gains

(Reuters) - U.S. stocks inched higher on Friday afternoon after upbeat economic data and gains in retailer shares, though a decline in energy shares limited the move up.

China Says Plunge Protection Team Will Prop Up Stocks "For Years To Come" If It Has To

Perhaps it's a case of something getting lost in translation (so to speak), but Chinese authorities have a remarkable propensity for saying absurd things in a very straightforward way as though there were nothing at all odd or amusing about them.

For example, here's what the CSRC said on Friday about the future for China Securities Finance (aka the plunge protection team):

"For a number of years to come, the China Securities Finance Corp. will not exit (the market)."

For anyone who hasn't followed the story, Beijing transformed CSF into a trillion-yuan state-controlled margin lender after a harrowing unwind in the half dozen or so backdoor leverage channels that helped inflate Chinese equities earlier this year caused stocks to plunge 30% in the space of just three weeks.

CSF has since become something of an international joke, as the vehicle, along with an absurd effort to halt trading in nearly three quarters of the country's stocks, came to symbolize the epitome of market manipulation - and that's saying something in a world where everyone is used to rigged markets.

And because Beijing wanted to get the most manipulative bang for their plunge protection buck (err… yuan) the PBoC went on to count loans made to CSF by banks towards total loan growth in July. In other words, China acted as is if forced lending to a state-run stock buying e ...

Exclusive: GE expected to win EU approval for $14 billion Alstom deal - sources

BRUSSELS (Reuters) - General Electric is expected to secure EU approval for its proposed 12.4-billion-euro ($13.8 billion) bid for French peer Alstom's power business, its largest ever deal, two people familiar with the matter said on Friday.

Hedge funds added Apple shares in second quarter, filings show

BOSTON (Reuters) - Top U.S. hedge funds added to their positions in Apple Inc during the second quarter, even as shares of the iPhone maker were flat during the period.

Obamanomics - Union Pacific Cuts 100s Of Jobs On Coal Shipments Collapse

There will be more Americans tonight newly questioning President Obama's Clean Power Plan, as NBCNews reports, Union Pacific will cut hundreds of management jobs as the amount of coal shipped by railroads continues to plunge.

Coal carloads down YoY 25 weeks in a row...

As NBCNews reports,

The Omaha company reported late last month that coal volume dropped 26 percent in its most recent quarter and said it believed that demand for coal would remain weak for the rest of the year.

Union Pacific spokesman Aaron Hunt said Thursday that the cutbacks were job eliminations, not just temporary layoffs. He wouldn't confirm a specific number or say where the cuts would fall in the coming months.

The company says severance packages will be available for some who will lose their jobs.

* * *

As we noted yeste ...

Welcome To The Revenue Recession

Via ConvergEx's Nick Colas,

The "Revenue Recession" is alive and well, at least when it comes to the 30 companies of the Dow Jones Industrial Average.

Every month we look at what brokerage analysts have in their financial models in terms of expected sales growth for the Dow constituents. This year hasn't been pretty, with Q1 down an average of 0.8% from last year and Q2 to be down 3.5% (WMT and HD still need to report to finish out the quarter). The hits keep coming in Q3, down an expected 4.0% (1.4% less energy) and Q4 down 1.8% (flat less energy).

The good news is that if markets discount 2 quarters ahead, we should be through the rough patch because Q1 2015 analyst numbers call for 1.9% sales growth, with or without the energy names of the Dow. The bad news is that analysts tend to be too optimistic: back in Q3 last year they thought Q2 2015 would be +2%, and that didn't work out too well.

Overall, the lack of revenue growth combined with full equity valuations (unless you think +17x is cheap) is all you need to know about the current market churn. And why it will likely continue.

The most successful guy I've ever worked for - and he has the billions to prove it - had the simplest mantra: "Don't make things harder than they have to be". In the spirit of that sentiment, consider a simple question: which Dow stocks have done the best and worst this year, and why? Here's ...

Are Automakers About To Hit The Panic Button?

There is a major problem brewing the US Auto industry... and therefore the US economy.

Automakers just unleashed a massive production surge to keep the dream alive...

With inventories at record highs (having risen for 61 straight months)...

Which would be fine if sales were keeping up - but they are not...

And now the subprime auto loan market is set to collapse...

And here's why stock markets should care...

To sum up...

The only way automakers are making sales is by ...

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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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