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02Sep2015 Market Update: Oil Reserves Up, Prices Fall Along With Markets, But Remaining Above 1%

Written by Gary

WTI oil reserves up 4.7% and prices drop below 44, currently in the 44's. Markets followed suit and dropped fractionally, but have risen to where the OW is up over one percent. Volume is moderate and falling.

Here is the current market situation from CNN Money

North and South American markets are mixed today. The S&P 500 is up 0.92% while the IPC gains 0.20%. The Bovespa is off 1.78%.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 60%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 15%
Investors Intelligence sets the breath Above 50 bullish 27.5% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -20.31 NYSE % of stocks above 200 DMA Index ($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.

17.16% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 33.98% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 29.40% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 21.65 Consumer Discretionary ETF (XLY) As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy 73.95 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 9,918

What Is Moving the Markets

Here are the headlines moving the markets.

China Scrambles To Enforce Capital Controls As Capital Flight Threatens The Economy (Which Is Great News For Bitcoin)

Officially, China has maintained quasi capital controls for years: on paper no individual is allowed to move more than $50,000 out of the country in any given year while Chinese companies can exchange yuan for foreign currencies only for approved purposes.

Unofficially, China's capital controls had been skirted for years, leading to massive capital outflow from the nation over the past decade, leading to such aberrations as massive luxury housing bubbles in places such as Vancouver, London, New York and San Francisco.

Just last March, we explained the schematic of how easy it is to avoid Chinese limitations on outflows, using nothing more than a UnionPay credit card and a trip to Macau. Here are some of the highlights:

China's underground money is flowing across the border into the gambling hub of Macau, a former Portuguese colony that like Hong Kong is an autonomous region of China. And the conduit for the cash is the Chinese government-supported payment card network, China UnionPay.

In a warren of gritty streets around Macau's ritzy casino resorts, hundreds of neon-lit jewellery, watch and pawn shops are doing a brisk business giving mainland Chinese customers cash by allowing them to use UnionPay cards to make fake purchases - a way of evading China's strict currency-export controls.

On a recent day at the Choi Seng Jewellery and Watches company, a middle-aged woman strode to the counter past dusty shelves of watches. She handed the clerk her UnionPay card and received HK$300,000 ($50,000) in cash. She signed a credit card receipt describing the transaction as a "general sale", stuffed the cash into her handbag and strolled over to the Ponte 16 casino next door.


Tech stock lead Wall St. higher as China fears ebb

(Reuters) - U.S. stocks were higher in late morning trading on Wednesday, rebounding from steep losses a day earlier, after China intervened to support its financial markets and help stem a global equities selloff.

Bill Gross: Fed tightening now could create self-inflicted instability

NEW YORK (Reuters) - Bond guru Bill Gross, who has long called for the Federal Reserve to raise interest rates, said on Wednesday that U.S. central bankers may have missed their window of opportunity to hike rates earlier this year and doing so now could create "self-inflicted" instability.

U.S. private payrolls rise steadily; productivity revised up

WASHINGTON (Reuters) - U.S. private employers maintained a solid pace of hiring in August despite recent global financial market turmoil, suggesting that labor market momentum likely remains strong enough for the Federal Reserve to consider an interest rate hike this year.

VW's CEO Winterkorn set to stay on for three more years

HAMBURG/STUTTGART (Reuters) - The executive committee of Volkswagen's supervisory board has proposed extending Martin Winterkorn's contract as chief executive until the end of 2018, the company said on Tuesday, opening the door to the appointment of a new chairman.

The US Economy Is Not Awesome And It's Not Decoupled

Submitted by David Stockman via Contra Corner blog,

When the bubble vision stock peddlers get desperate, they talk decoupling. So by the end of yesterday's bloodbath you would have thought China was on another planet, and that "commodities" were some trinket-like collectibles gathered by people who don't wear long pants, drink coca cola or jabber on their cell phones.

On these fine shores, of course, its all awesome from sea to shinning sea. So don't be troubled. Buy the dip.

Never mind that we are in month 74 of this so-called recovery and that after year upon year of promised "escape velocity" the reliable signs of said event are still few and far between. But the "recovery" narrative stays alive because there is always some stray factoids of seasonally maladjusted, yet-to-be-revised "incoming data" that can excite the MSM headline writers and bubble vision talking heads.

Today the data on construction spending and housing took their turn in the awesome circle. Thank heavens that the headline writing software used by the financial press doesn't yet read graphical data. Otherwise they might have reported that private residential construction soared in July—-well, all the way back to January 2002 levels!

And those are the nominal dollars that the Fed has done its level best to depreciate in the 13 years since then. In fact, on an inflation-adjusted basis the housing construction spend is still at 1992 levels.

Oil falls on large U.S. crude stocks

LONDON (Reuters) - Oil prices fell on Wednesday after U.S. government data showed a big rise in crude oil stocks, adding to concerns about global oversupply and sluggish economic growth in China.

Navistar may face SEC lawsuit, posts 12th consecutive loss

CHICAGO (Reuters) - Truck and engine maker Navistar International Corp on Wednesday reported its 12th consecutive quarterly loss and said it could face regulatory enforcement action for its disclosure practices, sending its shares down nearly 7 percent.

Oil Triple Whammy: Inventory Build, Iran Nuke Deal Has Votes, & China Gives Venezuela $5 Billion Loan

Following last night's epic inventory build., according to API, DOE has reported a 4.7mm barrel build but US crude production pluinged 1.4% (lowest since March). However, ths oil complexc has been hit by two other 'issues' this morning as Obama captures the votes he needs to confirm the Iran nuclear deal (guaranteeing more oil supply) and China encumbers more Venezuelan oil ($5bn loan) allowing them to keep pumping at below-cost levels. The reaction for now is notable selling pressure...

Inventory Builds most in 5 months...

The Obama administration will be jubilant this morning as it appears they have captured enough votes to confirm the Iran-nuclear deal...


As MarketWatch reports,

Sen. Barbara Mikulski, a Maryland Democrat, said Wednesday she supports the nuclear deal with Iran, giving the agreement enough votes to be upheld in the Senate. She becomes the 34th Democrat to back the deal, the magic number to sustain a veto.

Of course, that confirms the Iran oil supply is coming.

And then there is last night's China-Venezuela "cash-for-oil" loan...

President Ni ...

July 2015 Manufacturing Is a Disaster

Written by Steven Hansen

US Census says manufacturing new orders improved. Our analysis says new orders crashed. Unadjusted unfilled orders' growth is now in CONTRACTION year-over-year. No matter how you cut the data, it is bad. The headline analysis is extremely misleading this month.

Just When You Thought It Couldn't Get Worse For Brazil...

Brazil's economy is incredible.

Just when you're sure - and we mean sure - that it can't possibly get any worse, or at least not materially worse in the very short-term, something else happens to further underscore the deep, dark economic malaise plaguing one of the world's most important emerging markets.

So after last Friday's GDP print which confirmed that the country slid into recession during Q2 - a quarter in which Brazilians suffered through the worst inflation-growth outcome in at least a decade - and after July's budget data which confirmed that the country's fiscal situation is, as Citi put it, "a bloody terror film," we got a look at industrial production today and boy, oh boy was it bad. So bad in fact, that it missed even the lowest analyst expectations.

Here are some key excerpts from Goldman's breakdown:

Sharp Decline in Industrial Production in July

IP contracted by a much larger than expected -1.5% mom sa (-8.9% yoy) in July (vs. the -0.1% mom sa market consensus). Furthermore, the June print was revised down to -0.9% mom sa from the original -0.3% mom sa. During the last nine months industrial production declined at an average monthly rate of -0.9% mom sa. Of the 24 main industrial segments, 14 recorded a contraction of output in July.

IP declined 8.9% yoy in July, with the largest decline recorded in capital goods -27.8%. ...

US Recession Looms As Factory Orders Plunge 9th Month In A Row

US Manufacturers saw new orders rise at a modest 0.4% in July (missing expectations of a 0.9%). However, year-over-year Factory Orders crashed 14.7% (thanks in large part to last year's Boeing order dropping out of the cycle). But even ex-Transports, New orders tumbled 0.6% in July and plunged 6.9% YoY. This is the 9th month in a row of YoY drops and is without doubt signalling an imminent US recession.

The breakdown as summarized by MNI: "The value of new factory orders rose 0.4% in July, below the 0.7% increase expected in an MNI survey due to a sharp 1.3% drop in nondurables orders, data released by the Commerce Department Wednesday morning showed."

Total factory orders excluding transportation were down 0.6% in July on the decline in nondurable goods orders that more than offset a 0.4% increase for durables orders outside of transportation. The nontransportation durables reading was a downward revision from the 0.6% gain in the advance estimate.

Once again, it's all about autos (subprime loans), and war: Transportation orders themselves were revised sharply higher to a 5.5% jump in July from the originally reported 4.7% rise; motor vehicles orders are now reported up 4.0%, while nondefense aircraft orders are reported down 6.1% and defense aircraft orders fell 13.1%. Orders for ships and boats were up 19.5%."

Headline Factory orders collapse.

and even adjusting out Boeing's huge order, it is a bloodbath.

Autos lift U.S. factory goods orders in July

WASHINGTON (Reuters) - New orders for U.S. factory goods rose for a second straight month in July on strong demand for automobiles, which could help to keep manufacturing supported as it deals with a strong dollar and softening global demand.

Italy Is "Willing To Temporarily Suspend Schengen" In Response To Refugee Crisis

Europe's refugee crisis just took a dramatic turn for the worse, and strikes at the very hear of Europe's Shengen customs union which has allowed borderless travel within Europe for decades. As Bloomberg reports, the Italian Province of Bolzano in Northern Italy said in a statement that it agreed with the Italian government on request by German Federal State of Bavaria by "communicating a willingness to restore border controls at Brenner and temporarily suspend the Schengen agreement."

Bloomberg adds that Bavaria's request was made to all neighboring regions, and includes aid for temporary logistical support in hosting refugees, and that it will "welcome for a few days, as a temporary measure to enable Bavaria to regroup and meet emergency contingent, a number of refugees estimated to be between 300 and 400."

Here is the official statement from the Bolzano province, google translated:

Refugees, Bavaria asks temporary aid to South Tyrol

In the South Tyrol, Italy intervenes in support of Germany in receiving temporary refugees: Bavaria asked logistical support to the Province of Bolzano in these hours of emergency and President Kompatscher had green light from the Italian government for hosting for a few days a contingent of migrants to Germany.

Bavaria record wave record arrivals of refugees in the last hours, mainly via the Balkan route, which is creating an unmanageable situation: working to find new structures and cope immediately with the exponential growth in the number of migrants. Before this sudden emergency the Bavarian Minister Emilia Müller has contacted the provincial councilor Martha Stocker, at the forefront in addres ...

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