Written by Gary
The averages have moved sideways trading in a very narrow band on moderate volume. WTI oil fell down to the 46’s piercing what we thought was the support, evidently not, as the equities didn’t follow, in fact, moved fractionally higher.
The German Vs. Greek spat goes on as Greek PM Tsipras tries to assure the EU partners that they will keep their word. Intel has cut their revenue forecast as desktop demand weakens as Wall Street bounces back in broad rally as bank shares gain. Cold weather is once again blamed for poor U.S. Retails sales, poor job market numbers and despite the continuing commentary that all is well in America, economic growth expectations for Q1 just collapsed to a new cycle low of 2.4%. Tell me again, why are the markets still going up?
By 4 pm the averages closed higher after two session of negative proportions, GS announces new faster HFT algo using ‘ethical trades’ no longer executing thousands of other blatantly unethical dealings I guess; such is progress.
Todays S&P 500 Chart
It appears equity investors are not going to be concerned until WTI oil reaches the mid 44’s. The media has convinced investors that oil isn’t going to go much lower than it is totally forgetting about the dire lack of storage facilities that will be filled in several months (weeks), plus the needs of the Saudi’s to drive oil even lower to ‘hurt’ the Russians and Iranians. Some say oil will fall as low as 20 dollars a barrel and the Saudi’s would like to see it fall to $10 which isn’t very likely.
But, there are presidents for lower prices, much lower in fact. Recently as December 2008, WTI was at $30.28 setting a support of some weight indicating we could see that price before dropping any further. Then in January, 2002, WTI was as low as 19.72, so $20 a barrel is possible, but in December, 1998 oil was selling as low as $11.28 which should scare the pants off of some foreign oil producers should it ever get that low. WTI has been even lower, but I believe it is unrealistic to see oil in the 10’s, but then I never expected to see this bull run move so high either.
Our medium term indicators are leaning towards Hold portfolio of non-performers and the session market direction meter (for day traders) is 42 % Bearish. We remain mostly conservatively bullish, but with a bearish slant. I am very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals that will only please the day traders. The SP500 MACD has turned down, but remains below zero at -0.13.
The Market in Perspective
|Here are the headlines moving the markets.|
Remember when during the inflation panic of 2011 we reportted that “Wage Inflation is Rampant In China As More Provinces Plan Minimum Salary Hikes.” and wrote:
Well, kiss all that goodbye. From Shanghai Daily:
With Greece on the edge of being kicked out of the Eurozone , either voluntarily or otherwise, with an anti-austerity party on the verge of taking over the reins of power in Spain, with Beppe Grillo waiting in the corridors for his chance to pounce in Italy and with Marine le Pen and her nationalist party on the verge of becoming the biggest shocker of Europe over the coming years, here, according to Daniel Hannan, is what killed democracy in Europe. Europe itself.
Here are the punchlines, which are all based documented fact:
PARIS/ATHENS (Reuters) – Prime Minister Alexis Tsipras tried to reassure euro zone partners on Thursday that Greece would stick to an extended bailout agreement with its international creditors even as a war of words rumbled on between Athens and Berlin.
(Reuters) – Intel Corp slashed nearly $1 billion from its first-quarter revenue forecast as small businesses put off upgrading their personal computers, sending the chipmaker’s shares down more than 5 percent.
Documents filed Wednesday accuse the Facebook chief executive of reneging on a promise to introduce a would-be neighbor to powerful Silicon Valley friends.
The air quality testing follows a news report that the retailer sold laminate flooring from China that violated safety limits.
Submitted by Lance Roberts of STA Wealth Management,
In a recent Reuter’s article, Dr. Richard Fisher of the Dallas Federal Reserve stated:
This is not actually the case as I will discuss in all three parts of today’s “3 Things.”
A Strong Dollar Is Not Good For Exports
In today’s globally interconnected world exports have become a critical component of both corporate profitability and economic growth. Increases in the labor market are a by-product of stronger economic growth and corporate profitability.
The chart below shows the US Dollar as compared to the annual percentage change in exports on a quarterly basis. I have inverted the scale of exports to more clearly show the correlation between a rising dollar and weaker exports.
Importantly, a strongly rising dollar has also been witnessed just prior to the onset of an economic recession.
Companies tend NOT to aggress …
… it’s government.
NEW YORK (Reuters) – A federal judge on Thursday said Citigroup Inc cannot process interest payments by Argentina on some bonds issued under that country’s law, a defeat for the cash-strapped nation as it tries to reenter international debt markets.
NEW YORK (Reuters) – U.S. stocks rose in a broad rally on Thursday, bouncing back from two straight days of losses, helped by a weaker dollar and a rally in banking shares.
Want to be a millionaire? That’s easy. All you need to do is find a failing company whose shares trade with some semblance of liquidity, offer to loan said company money, then make sure the fine print on the deal allows you to convert the note into equity at a guaranteed discount to where the stock trades.
You literally can’t lose unless of course you can’t find any buyers, but if the five or so people you hired to scout prospects did their job and chose companies whose shares actually trade, that shouldn’t be a problem.
That, apparently, is how one Joshua Sason has managed to make a fortune in penny stocks and while it’s not technically illegal, it most assuredly raises eyebrows. Here’s more, via Bloomberg:
Having thought long and hard (since 2009) about the benefits of becoming a member of the European Union, Iceland has decided to withdraw its application…
*ICELAND SAYS WON’T RESTART ACCESSION TALKS WITH EU
The 2013-elected (euroskeptic) coalition government had scrapped talks, so this is not entirely surprising, as it sought more trade accords.
Foreign Minister Gunnar Bragi Sveinsson formally withdrew bid for European Union membership in a letter presented to Latvia’s Foreign Minister Edgars Rinkevics, according to an e-mailed statement from the Foreign Ministry in Reykjavik.
As Sputnik News reports,
* * *
The investment was led by Rakuten, the Japanese e-commerce giant, and it valued the start-up at $2.5 billion.
NEW YORK (Reuters) – Global oil prices fell on Thursday, with traders pricing the market lower before the expiry of the front-month contract in benchmark Brent, and after estimates showing another big supply build at the delivery point for U.S. crude.
WASHINGTON (Reuters) – U.S. retail sales unexpectedly fell in February as harsh weather kept consumers from auto showrooms and shopping malls, tempering the outlook for first-quarter growth and a June interest rate increase by the Federal Reserve.
Prime Minister Alexis Tsipras says the Organization for Economic Cooperation and Development will help Greece create jobs and cut bureaucracy.
The Richest Have Never Been Richer: US Household Assets Rise To Record $97 Trillion (As The Poor Get Poorer)
In the quarter ended September 30, 2014, household net worth did something it hasn’t done since 2011: it declined, as a result of the dip in the stock market which pushed financial assets lower by $200 billion. Well, since then ECB announced and then launched Qâ‚¬, not to mention the expanded BOJ QE in November, and predictably financial assets rose.
Which means that in the fourth quarter, US household net worth jumped by $1.5 trillion to $82.9 trillion, driven by a rise in total assets to $97.1 trillion, even as the long awaited increase in “good debt”, that of mortgage debt, remains elusive and Mortgage debt hasn’t budged from $9.4 trillion in 8 quarters! This, even as the total US housing market is said to have kept rising, which can only mean one thing (a thing we have explained many times in the past): the bulk of home purchases in the US take place “all cash” with zero incremental leverage (whether because the potential buyers don’t want to incur the debt, or don’t quality).
Ironically, even as household liabilities remained flat for the second year in a row, real estate assets rose from $23.2 trillion to $23.5 trillion as America’s ultra-luxury segment (which is now the New Paranormal’s “secret Swiss account”) continues to drive housing higher while every other segment is contracting.
But the biggest jump in Q4 assets was once again in financial assets, driven by a $492 billion increase in Corporate Equities as well as $323 billion added from Pension Funds. And as usual, financial assets remained at precisely 70% of total assets (a curious ceiling which we will discuss shortly).
In short: almost $100 trillion in household assets, with the vast bulk of these belonging to America’s “1%”.
Despite the continuing commentary that all is well in America, economic growth expectations for Q1 just collapsed to a new cycle low. From just 4 months ago, growth expectations have been cut 20% to 2.4%… but that is still four times The Atlanta Fed’s dismal 0.6% forecast…
The Atlanta Fed forecasts Q1 growth of just 0.6%…
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2015 was 0.6 percent on March 12, down from 1.2 percent on March 6. The nowcast for first-quarter real consumption growth fell from 2.9 percent to 2.2 percent following this morning’s retail sales release from the U.S. Census Bureau.
Front-month crude oil futures just plunged to new 6-week lows and a $46 handle. The April-May (J-K) spread has soared… no immediate catalyst for this move so we suspect it is Oil ETF and futures-roll-driven flow.
WTI hit 6-week lows…
And contango is soaring…
Fact… Or Fiction…
Source: The Onion
Having previously hinted that they might ‘dip’ into public pensions funds for some short-term cash to payback The IMF, and then confirming that the plan is to repo that cash from pension cash reserves (raising concerns about how they will unwind the repo – i.e. pay it back); the Greek government finally signed the bill today that enables them to plunder the Greek people’s pension funds (for their own good).The massive irony of this bill is the bill enables greek deposits to be fully invested in Greek sovereign bonds… which Tsipras and Varoufakis both admitted today is “unsustainable” and “will never be repaid.”
*GREEK GOVT SUBMITS BILL, ALLOWING USE OF PENSION FUND RESERVES
As Bloomberg reports,
The agency said it would decide on what was acceptable on a case-by-case basis, taking on a more prominent role in the high-speed Internet arena.
Many drivers say the systems are unfair, but communities say they make money and reduce accidents.
Back in January, when European stocks were only starting their unprecedented QE ramp, we presented the “Driver Behind The European Stock Surge” in which we showed that ever since Mario Draghi’s “whatever it takes” speech in July 2012, European equity prices were up 50% (even higher now) even as corporate earnings had actually declined by 7%.
It is a take on the chart above that has sent Albert Edwards over the edge once again, and in his latest letter he presents another way of visualizing the data above, with the help of what he dubs the “WOW!” chart.
Edwards begins with the standard, and well-deserved, rant against central bankers who now merely need – and create – ever greater bubbles in hopes of preserving a system, which can no longer function away from a “bubble” state.
The settlement covers the bank’s role in enabling a huge accounting scheme and other illicit transactions, state and federal authorities announced.
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