02 Mar 2015 Opening Market Commentary:

Berkshire’s Buffett opposes putting Wilson on GM board

DETROIT (Reuters) – Warren Buffett, Berkshire Hathaway’s billionaire chief executive and one of the largest shareholders in General Motors Co , told CNBC on Monday he disagrees with putting former U.S. auto task force member Harry Wilson on the automaker’s board.

Brent tumbles on Iran, Libya; U.S. crude up on spread play

NEW YORK (Reuters) – Brent crude tumbled more than 3 percent on Monday on speculation of a nuclear deal that could boost Iran’s oil exports, and U.S. crude rose by around 1 percent as traders bet the gap between the two would narrow.

US Will Never Gain Oil Market Crown, EIA Chief Says

Submitted by Andy Tully via OilPrice.com,

No matter how much oil the United States produces over the next few years, it will never become the next Saudi Arabia in the global oil market, according to Fatih Birol, the new executive director of the International Energy Agency (IEA).

What’s especially interesting about this forecast is that it directly contradicts what Birol said only three months ago, and he gave no explanation for his change of mind.

On Feb. 26, Birol told The Telegraph’s Middle East Congress in London that OPEC, particularly the Persian Gulf members, will prevail over all other producers for the foreseeable future, even though the revolution in extracting shale oil has been “excellent news” for American producers.

“The United States will never be a major oil exporter. Their import needs are getting less but the US is not becoming Saudi Arabia,” Birol told the conference. “Their production growth is good to diversify the market but it will not solve the world’s oil problems.”

Certainly, Birol acknowledged, 2014 crude production by countries that are not among OPEC’s 12 members was greater than it had been in three decades, helping create an oversupply of oil that caused prices to erode and robbed OPEC producers of some of their market share.

But at least for the next 10 years, the cartel’s two top producers, Saudi Arabia and Iraq, will be the countries best equipped to meet the world’s demand for energy, …

U.S. Consumer Spending Fell in January

U.S. consumer spending fell for a second straight month in January as households continued to cut back on purchases, opting to save much of the massive windfall from cheaper gasoline.

U.S. consumer spending falls, inflation pressures muted

WASHINGTON (Reuters) – U.S. consumer spending fell for a second straight month in January as households continued to cut back on purchases, opting to save much of the massive windfall from cheaper gasoline.Â

This Is What The Entire World Frontrunning The ECB Looks Like

The market has had nearly two months in which to frontrun the preannounced ECB QE, and as DB summarizes “record European equity inflows this year ($30bn) have been driven by both domestic and foreign investors.”

And this is what record central bank frontrunning – with Draghi not yet even lifting a finger to buy bonds (which as we reported last week may not even be there) looks like:

Leading to the following valuation disconnect, which doesn’t need any comment.

And this time, with every central bank now throwing everything it has at the problem as direct CB interventions in 2015 are set to surpass all records (yes, including Lehman) it really is different.

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Spain says a third Greek bailout under discussion

MADRID/ATHENS (Reuters) – Euro zone countries are discussing a third bailout for Greece worth 30 billion to 50 billion euros, Spain’s economy minister said on Monday, as Athens sought to quell fears it might run out of money before the end of March.

Former HP chairman to testify in venture firm sexism trial

SAN FRANCISCO (Reuters) – Onetime highflying tech executive Ray Lane is expected to testify Monday in a discrimination and retaliation trial involving his former employer, Kleiner Perkins Caufield & Byers, the investment firm that has backed companies from Google Inc to Amazon.com Inc .

How To Reach Nasdaq 5000 In The New Paranormal

In November we exposed the market’s ability to levitate magically when exchanges – most notably CBOE – break. Today we get another glimpse of the new paranormal. While the official CBOE site is not exposing it, numerous traders noted that CBOE options data was not being disseminated from around the open to shortly after 1030ET this morning. That ‘coincidentally’ occurred as NASDAQ ramped almopst unabated to 5000 (as VIX was clubbed from 13.9 to 13.1)…

Reports from traders about lack of options data being disseminated to their trading platforms coincided perfectly with the ramp in Nasdaq and plunge in VIX…

CBOE seems unwilling to admit that the issues started earlier…

Welcome to the new paranormal.

White Collar Watch: Hedge Fund Suit Accusing U.S. of Misconduct Faces High Bar

A lawsuit filed by Level Global’s founder accusing the government of violating his rights must overcome significant protection given to prosecutors.

U.S. manufacturing growth slows to 13-month low: ISM

NEW YORK (Reuters) – The pace of U.S. manufacturing growth fell in February to its slowest in 13 months, according to an industry report released on Monday.

HP to buy Wi-Fi gear maker Aruba Networks for $2.7 billion

(Reuters) – Hewlett-Packard Co said it would buy Wi-Fi network gear maker Aruba Networks Inc for about $2.7 billion, the biggest deal for the world’s No. 2 PC maker since its botched acquisition of Britain’s Autonomy Plc in 2011.

Ex-Chief of BP Named Chairman of Russian Billionaire’s Oil and Gas Group

The investment company of Mikhail Fridman said it had appointed John Browne to build the global oil and gas production company L1 Energy.

Wall St. advances as Nasdaq touches 5,000 mark

NEW YORK (Reuters) – U.S. stocks advanced on Monday to push the Nasdaq above the 5,000 mark for the first time in fifteen years, as a round of mixed data pointed to a slowly accelerating economy.

Wall St. Rises Amid Merger News

A pair of mergers in the tech sector were hailed by investors, and economic data reflected strong job gains during January.

Can Greece “Just Print Drachmas”? Goldman Answers

A few days ago, in advance of the new Greek parliament throwing in the towel in its negotiations with the Eurogroup and conceding to virtually all demands, we showed what, in a worst case scenario, the new Greek currency would look like using data from a previous News247 report. Some of the proposed samples are shown below.

But how realistic is a Greek monetary conversion out of Euros and into a “Nea Drachma”?

For the answer we go to …

Bill Gross: “Central Banks Have Gone Too Far In Their Misguided Efforts To Support Economic Growth”

The usual stuff in Bill Gross’ latest monthly letter which could have been picked form the pages of Zero Hedge circa late 2009/early 2010, now that virtually all the “conspiracy theories” we first presented years ahead of everyone have not only been validated, but accepted as New Paranormal canon.

The excerpted highlights:

None dare call it a “currency war” because that would be counter to G-10/G-20 policy statements that stress cooperation as opposed to “every country for itself”, but an undeclared currency war is what the world is experiencing. Close to the same thing happened in the 1930’s, a period remarkably similar to what many countries’ policies resemble today.

… the U.S. tailwind from competitive devaluation has since stalled — in fact the tailwind has now turned into a headwind. While it was once the only breed in the show, it now competes against better coiffured currencies with their own QE’s and promises to hold interest rates for lower and longer than does the U.S. Japan has a quantitative easing program 2 to 3 times greater than our own in comparative GDP terms and the ECB of course is about to embark on its own grand journey into the vast unknown of bond buying, yield lowering, and presumably further Euro currency devaluation.

The universe of negative yielding notes and bonds in Euroland now total almost $2 trillion. Not even “thin gruel” is being offered to our modern day Oliver Twist investors. You have to pay to come to the dinner table and then sit there staring at an empty plate.

A more serious concern however, might be that low interest rates globally destroy financial business models that are critical to the functioning of modern day economies. Pension funds and insurance companies are perhaps the most important e …

Philadelphia Fed Picks Patrick Harker, University of Delaware President, to Lead It

Mr. Harker, an engineer by training who has spent most of his career as an academic, has served on the Philadelphia Fed’s board for three years.

Nasdaq Hits 5000 for First Time Since Dot-Com Era

The Nasdaq Composite climbed briefly above the 5000-point level for the first time in almost 15 years on Monday, marking a milestone in the revival of an index that once was synonymous with dot-com excess.

The Three Acronyms That Best Describe This Era: TINA, TANSTAAFL And FUGAZI

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

TINA and the complacent belief in free lunches strip the resiliency from a system and leave it vulnerable to collapse.

It’s tough to select three acronyms that best capture the current perfection of central planning, central banking and centralized propaganda. FUBAR (f**ked up beyond all repair) is tough to beat, and for those with a taste for absurdist humor, ROTFLMAO is equally appropriate–especially when “official” economic data is issued by various Ministries of Truth. After long deliberation, I’m going with TINA, TANSTAAFL and FUGAZI as best defining our era: there is no alternative, there ain’t no such thing as a free lunch, and f**ked up, got ambushed, zipped in (to a body bag). Let’s start with TINA, there is no alternative, because this drives the other two. TINA is the favored phrase of those benefiting from the current arrangement; if they can sell everyone on the idea that this is the only possible arrangement, the tax-donkeys and debt-serfs (i.e. the bottom 90%) will passively accept their lot in life and those at the top of the heap will have a free pass to most of the wealth and power. But TINA also expresses a systemic rigidity that suppresses the variability and volatility needed to maintain real stability and not just a phony extend-and-pretend pseudo-stability. As Nassim Taleb has shown in his work on fragility and anti-fragility (as described in his book

Fed Ushers in New Era of Uncertainty on Rates

Investors are obsessing over when the Federal Reserve will start raising short-term rates. Drawing less scrutiny is where rates will end up in the long run and how they’ll get there. But it’s time to start paying attention.

Carlyle, Warburg to Challenge Ratings Agencies

Officials with private-equity firms Carlyle Group LP and Warburg Pincus LLC say they hope to create a credible challenge to the three largest U.S. ratings agencies with their purchase this week of Canadian rater DBRS Ltd.

Near Fed majority backs June liftoff Yellen hasn’t yet endorsed

WASHINGTON (Reuters) – Janet Yellen’s premium on consensus may lead to a Federal Reserve decision the chair hasn’t yet endorsed, as a near majority aligns in favor of a possible June interest rate hike.

What would the Dow look like if it included Apple?

NEW YORK (Reuters) – It may be by far the most valuable American company but Apple Inc still can’t get into at least one exclusive club — the 30-member Dow Jones Industrial Average.

Mission Accomplished: Nasdaq 5000

Nothing to see here, move along…. (over/under on – number of times you will hear “it’s different this time” today – 20/30)

When it absolutely has to be there… Algos… Was it ever in doubt?

It is different this time… 5048 closing high next, then 5132 record intraday high

Well it is a little different…

Just bear in mind inflation…

BTF – near-ATH.

Charts: Bloomberg

Housing Bubble Redux: Subprime Auto Market Begins To Crack

As noted last week, the aggregate amount of loans for new and used cars will in short order eclipse the $1 trillion mark, joining total student debt in full-on bubble mode. Better still, early delinquencies on auto loans are now sitting back at their 2008 highs (both for all borrowers and for subprime borrowers, with 9% of the latter now missing a payment within the first 8 months of origination). Despite this, and despite the fact that nearly a third of all auto loans in 2013 were made to subprime borrowers (the same amount we saw in 2006 at the very height of reckless underwriting standards), Experian says everything is fine.

Meanwhile, Wells Fargo recently noted that although lending standards had indeed gotten back to “normal” (and as a reminder, “normal” now means how things were in 2006) it’s beginning to look like some households “might be overleveraged.” Simultaneously, lenders are again showing a propensity towards origination for the purpose of selling loans rather than holding them; that is, originating loans and then happily passing them on to the Wall Street securitization machine, which explains why despite a collapse in the issuance of ABS backed by home equity loans since the crisis, total ABS issuance in the U.S. hit its highest level since 2008 last year.

These are things that Wells should know something about as they made some $30 billion in auto loans last year and indeed it now appears the bank may be getting concerned about the market it’s helped to build. As the NY Times reports:

Wells Fargo, one of the largest subprime car lenders, is pulling back from [subprime auto lending], a move that is being felt throughout the broader auto industry…

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Meet The Philly Fed’s New President (No, He Didn’t Work At Goldman)

With Philly Fed’s 10th president, Charles Plosser retiring effective March 1, 2015, algos were wondering if he would be replaced with another former Goldman partner, or if his seat would be filled with yet another academic. The answer, as the Philly Fed reported moments ago, is the latter.

Meet the new president of the Philly Fed: Patrick T. Harker, 56, currently president of the University of Delaware, former dean of the Wharton School at UPenn, and a member of the Philadelphia Fed’s board of directors.

His career academic background: Harker has a Ph.D. in civil and urban engineering, a master’s degree in economics, and an M.S.E. and B.S.E. in civil engineering from the University of Pennsylvania. Wait, so no econ PhD? There may be some hope yet…

It remains to be seen if Harker is a faux-hawk like his predecessor or a full-blown dove, even if it doesn’t really matter in a world in which central banks will monetize more debt than issued.

From the Philly Fed:

The board of directors of the Federal Reserve Bank of Philadelphia today announced that Patrick T. Harker, 56, currently president of the University of Delaware and a member of the Philadelphia Fed’s board of directors, has been named the 11th president and chief executive officer of the Philadelphia Fed, effective July 1, 2015. The appointment was jointly approved by eligible directors of the Philadelphia Fed’s board of directors, all nonbankers by law, and the Board of Governors of the Federal Reserve System in Washington, D.C.

As president of the Philadelphia Fed, Harker will participate on the Federal Open Market Committee in the formulation of U.S. monetary …

Lehman Moment For Austrian “Bad Bank” Means Worse Coming

Not “contained.” Just six short months ago, the 2Y bonds of Austria’s bank bank – HETA Asset Resolution AG – were trading well above par as the world and his mom reached for yield (~6%) in all the wrong places. Today, following the “spectacular development” over the weekend that the bank will be wound down due to the discovery of an $8.5bn “hole” in its balance sheet, the 2Y HETA bonds are trading below 50c on the dollar (at a yield of 54%). This is indeed Austria’s “Lehman” moment as for the first time in the new European ‘bail-in’ era, senior debt is getting a massive haircut.

As we noted yesterday, the punchline, is that while the world was waiting for Greece to announce capital controls, or a bail-in over the past week, it was none other than one of the Europe’s most pristeen credits (one which until recently was rated AAA/Aaa) that informed creditors a bail-in is imminent: “The finance ministry noted that creditors can be forced to contribute to the costs of winding down Heta – or “bailed in” – under new European legislation that Austria adopted this year so that taxpayers do not have to shoulder the entire burden.”

Bloomberg confirms that the ministry announced that under new EU rules means creditors can be forced to share losses…

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Construction Spending Growth Poor in January 2015. Private Sector Construction Is Showing Almost No Growth

Written by Steven Hansen

The headlines say construction spending declined this month – the data is volatile and backward revisions distort the picture. However, the rate of growth looking at the unadjusted rolling averages shows a persistent decline in the rate of growth for the last 12 months. Noteworthy is a continued softness in private sector construction which is now much weaker than the public sector..

Read more …

Here is the European Market Open from CNN Money

European markets finished mixed as of the most recent closing prices. The DAX gained 0.08%, while the CAC 40 led the FTSE 100 lower. They fell 0.69% and 0.09% respectively.