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03Mar2016 Market Close: Markets Closed Up For Third Session In A Row, Crude Can't Penetrate Resistance, Oil Ministers Being Called 'Lairs' Trying To Push Oil Prices Higher

Written by Gary

Major US averages all moved into the green at the close (finally) except the $NDX (-02%). Gold shot up to 1270 and now retracing down into the low 1260's, the US dollar stabilized in the mid 97's after falling from session highs ( 98.12) and WTI crude experienced some high volatility, but settled quietly in the high $34's. Short-term indicators bullish.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall St. closes higher, energy and banks lead

NEW YORK (Reuters) - Wall Street moved higher on Thursday, with the S&P 500 at its highest in two months, adding momentum to a recent recovery as energy companies and banks made gains.

U.S. tech companies unite behind Apple ahead of iPhone encryption ruling

(Reuters) - Alphabet Inc's Google, Facebook Inc , Microsoft Corp and several other Internet and technology companies will file a joint legal brief on Thursday asking a judge to support Apple Inc in its encryption battle with the U.S. government, sources familiar with the companies' plans said.

Yahoo exploring sale of $1 billion-$3 billion in 'non-core assets': CFO

SAN FRANCISCO (Reuters) - Yahoo Inc is exploring the sale of $1 billion to $3 billion of patents, property and other "non-core assets," its chief financial officer said on Thursday.

GE gets anti-trust approval to sell appliance unit to Haier

(Reuters) - General Electric Co said its proposed deal to sell its appliance business to China's Haier Group for $5.4 billion had received approval from U.S. anti-trust authorities.

U.S. data flow suggests economy regaining steam

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits unexpectedly rose last week, but the underlying trend continued to point to a strengthening labor market.

Valeant reiterates key executive resigned, was not asked to go

(Reuters) - Valeant Pharmaceuticals International Inc , responding to investors' queries, said on Thursday that Executive Vice President Deb Jorn had not been asked to leave, reiterating that she had resigned for personal reasons.

Business activity worldwide at weakest in three years in February

LONDON (Reuters) - Global business activity expanded at its weakest rate in over three years in February despite firms cutting prices for the first time since September, business surveys showed on Thursday.

Fed's Kaplan calls for patience on raising U.S. interest rates

AUSTIN, Texas (Reuters) - Dallas Federal Reserve President Robert Kaplan called on Thursday for the U.S. central bank to be patient when it comes to raising interest rates, citing the effect of tighter financial conditions on U.S. economic growth.

Oil Market Commentary 3 3 2016 (Video)

By EconMatters

Sparks flew in the middle of the day, but when all was said and done we finished relatively flat for the day in the oil market. The week closes out Friday with the Employment Report.

Don't Believe The Bounce? Here Is How To Make 60% If The February Selloff Returns

One recurring question posed to finanial pundits in the financial media over the past two weeks has been "is this rally real" with the bullishness of the response usually directly proportional to how many assets any given pundit is trying to offload.

While we don't know if the rally is "real", and how much longer this unprecedented short squeeze can last, courtesy of a BofA note titled "Where to look for hedges if looking to fade the bounce in risk assets" we now have a breakdown of the cheapest hedges available for those who are eager to fade the rally and to prepare for the next leg lower in risk assets.

But before we lay out the summary of cheapest hedges, it is worth noting that as BofA's Jason Galazidis observes, in the last month FX vol (average of EURUSD, GBPUSD and USDJPY vols) have exhibited a sharp rise owing to a multitude of factors such as the highly anticipated ECB meeting in Mar-16, a build-up of uncertainty leading to the UK's EU referendum in Jun-16, and (likely) BoJ policy fatigue. Consequently, FX vol has joined the ranks of equity and commodity vols, all of which currently stand well above their long term median levels. This, to BofA, evokes a landscape of broader and more protracted uncertainty that markets have not witnessed since 2011-12.

As a result, we know that FX hedges are now expensive. So what isn't?

According to Galazidis, proxy hedging the S&P500 with Russell (small/mid cap US equities) puts remains attractive - in fact, even more so than in mid-Jan, when we last highlighted their value in "Here Are The Cheapest Hedges For A Systemic Collapse."

And here is the punchline for those who believe that the current bounce is temporary and a repeat of the February selloff is just a matter of time, and the best way to hedge, or profit fro ...

This Is What Is Propping Up Oil

Short positions in oil exchange-traded funds surged to stunningly extreme record levels (up 300% in a month) in Janaury as crude oil plummeted. Since January 20th, however, things have changed rapidly as a massive short-squeeze began...

(axes adjusted to show relative scale of short position)

Now, as UBS notes,

Yesterday oil ended in the green despite a very large reported crude inventory build, a reflection of how biased to the downside sentiment and positioning already is. Today, crude started in the red and has been mixed from there but moving higher. And both days, the stocks have led with energy the best performing subsector in the S&P. Now, there is no doubt that the performance today is TOTALLY short-squeeze led. Though it also shows how negative sentiment and positioning still is.

And this is what is directly propping up the price oil...

The chart above shows the oil futures-equivalent-holdings of the all the Oil ETFs out there (quoted in 1000s of lots).

Thanks to the massive short-squeeze, Oil ETFs are currently net long 272k lots of oil, which is equal to 56% of the front month open-interest in futures, putting an unnatural floor on the market.

The Return of the Inflation Trade

The inflation trade is back on Wall Street, thanks to a recent upturn in U.S. economic data and warming investor sentiment. Demand for Treasury inflation-protected securities has perked up after recent data showed growing inflation pressures.

February Jobs Report: Is It Millennials' Time to Shine?

Millennials appear to be faring better on the employment front, a trend that bears watching in Friday's jobs report.

Yahoo and ESPN to compete in esports coverage

Yahoo launches hub dedicated to esports to take advantage of booming growth potential.

Summary of Economic Releases this Week

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Earnings Summary for Today

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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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