16Mar2015 Market Close: DOW Closed Up. WTI And Brent Oil Trending Up. U.S. Dollar Weakens Slightly Against Euro.

Dismal-Data Drives Stock Buying-Frenzy; Hindenburg Omen Re-Appears

The machines were hard at work today….

For the first time in 2 months, the mysterious Hindenburg Omen has re-appeared (and, as is clear below, has been ‘useful’ since QE3 ended). Reputation aside, the ‘omen’ is merely an indication of the mass confusion under the surface of stocks with advancers and decliners and new highs and new lows not playing along with the market’s surgefest. The last few times we had an ‘omen’, markets tumbled only to be saved by Central-Banker-Speak…

From Friday’s late-day buying panic effort to get The Dow green year-to-date, we have extended gains amid weaker and weaker global data…

Today was not a short-squeeze-driven move…

As Equity prices decoupled from oil at that time also…

Meet The Relentless, Mystery Buyer Of Chinese Stocks Even As China’s Economy Grinds To A Crawl

The bad news for China is getting worse with every passing day. First it was purely in the financial realm, with both record capital outflows and a crashing housing market leaving the local government-backstopped banks exposed, forcing the PBOC to cut rates not once but twice in 2015, even as sliding wages in China’s 4 largest cities confirm the deflationary wave has moved out of the financial arena and has entered the economy proper, something we subsequently confirmed when we showed the latest updated batch of key Chinese charts.

Earlier today we got yet another confirmation of just how truly bad things are for the world’s largest (depending on how one counts GDP) economy, when Shanghai Daily reported that fiscal revenue growth slowed in the first two months this year as reduced economic growth dampened tax income and other sources of government revenue.

Fiscal revenue rose 3.2 percent to 2.57 trillion yuan (US$411 million) in the first two months, down from 11.1 percent in the same period a year ago and 2014’s 8.6 percent rise, the Ministry of Finance said on its website yesterday.

Worse, while overall revenue posted a modest increase, personal income tax dropped 7.1% year on year to 164.6 billion yuan. No, not Greece: China.

Adding insult to injury was revenue from tariffs which also declined 5.3 percent after oil, iron ore and …

U.S. airline passengers forecast to grow 50 percent by 2035: report

(Reuters) – The number of travelers flying on U.S. airlines is expected to grow by about 50 percent in the next two decades, according to a report by the U.S. Federal Aviation Administration.

Bits Blog: Silicon Valley Investor Warns of Bubble at SXSW

Bill Gurley, a partner at Benchmark, has been warning of an impending Silicon Valley bubble-burst for quite some time, and he did so again at South by Southwest.

ICE Futures Broke Law “Thousands” Of Times In 20 Months, CFTC Fines Exchange 0.75% Of 2015 Revenues

From October 2012 to May 2014, the CFTC found that ICE Futures exchange submitted reports and data containing errors and omissions on every reporting day, with cumulative inaccuracies totaling in the thousands. The CFTC stated unequivocally that, those “who fail to meet their reporting obligations will be held accountable,” and required ICE to pay a $3 million civil monetary penalty. With expectations of over $4 billion in revenues for FY 2015, the $3 million fine represents just 0.75% of the exchange’s income… that will teach them!!!

Full CFTC Statement:
CFTC Orders ICE Futures U.S., Inc. to Pay a $3 Million Civil Monetary Penalty for Recurring Data Reporting Violations

The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against ICE Futures U.S., Inc. (ICE), a designated contract market (DCM), for submitting inaccurate and incomplete reports and data to the CFTC over at least a 20-month period, from at least October 2012 through at least May 2014.

According to the CFTC Order, on every reporting day during the period above, ICE submitted reports and data containing errors and omissions, with cumulative inaccuracies totaling in the thousands. The Order further finds that CFTC staff repeatedly notified ICE of the problems with its reports and data and requested that ICE take action to correct the mistakes, but that ICE continued to submit inaccurate reports and data. The Order requires ICE to pay a $3 million civil monetary penalty and to comply with undertakings aimed at …

SolarCity, a Vocal Critic of the Utility Industry, Joins It

SolarCity will design and operate small, independent power networks called microgrids for cities, remote communities, campuses and military bases.

P&G mulls sale, IPO of some beauty products in one deal: Bloomberg

(Reuters) – Procter & Gamble Co is exploring a sale or initial public offering of some of its beauty brands in a single deal, Bloomberg reported, citing people with knowledge of the matter.

Crude Plunge Sends Energy Stocks Soaring

The new “paranormal”…

Makes perfect sense…

Now where have we seen this before?

Charts:Bloomberg

Valeant Fends Off Rival Bid for Drug Maker Salix

Faced with the prospect of letting another deal slip through its fingers, the drug maker increased its bid, and Endo International withdrew.

Room for Debate: Deciding an Institution’s Future

Should Congress save the Export-Import Bank, or let it expire?

Putin Warns “We Were Ready” To Use Nukes To Secure Crimea

Having re-emerged from his hibernation, Vladimir Putin is wasting no time getting back to business. Having paced 40,000 troops on “snap-readiness,” AP reports that a documentary which aired last night shows Putin explaining that Russia was ready to bring its nuclear weapons into a state of alert during last year’s tensions over the Crimean Peninsula and the overthrow of Ukraine’s president, and admitted well-armed forces in unmarked uniforms who took control of Ukrainian military facilities in Crimea were Russian soldiers. In the documentary, which marks a year since the referendum, Putin says of the nuclear preparedness, “We were ready to do this … (Crimea) is our historical territory. Russian people live there. They were in danger. We cannot abandon them.”

As AP reports,

Russia was ready to bring its nuclear weapons into a state of alert during last year’s tensions over the Crimean Peninsula and the overthrow of Ukraine’s president, President Vladimir Putin said in remarks aired on Sunday.

Putin also expanded on a previous admission that the well-armed forces in unmarked uniforms who took control of Ukrainian military facilities in Crimea were Russian soldiers.

Putin’s comments, in a documentary being shown on state TV, highlight the extent to which alarm spread in Russia in the weeks following Ukrainian President Viktor Yanukovych’s ouste …

Bob Shiller Asks “How Scary Is The Bond Market?” (Spoiler Alert: Not Very)

Authored by Robert Shiller, originally posted at Project Syndicate,

The prices of long-term government bonds have been running very high in recent years (that is, their yields have been very low). In the United States, the 30-year Treasury bond yield reached a record low (since the Federal Reserve series began in 1972) of 2.25% on January 30. The yield on the United Kingdom’s 30-year government bond fell to 2.04% on the same day. The Japanese 20-year government bond yielded just 0.87% on January 20.

All of these yields have since moved slightly higher, but they remain exceptionally low. It seems puzzling – and unsustainable – that people would tie up their money for 20 or 30 years to earn little or nothing more than these central banks’ 2% target rate for annual inflation. So, with the bond market appearing ripe for a dramatic correction, many are wondering whether a crash could drag down markets for other long-term assets, such as housing and equities.

It is a question that I am repeatedly asked at seminars and conferences. After all, participants in the housing and equity markets set prices with a view to prices in the bond market, so contagion from one long-term market to another seems like a real possibility.

I have been thinking about the bond market for a long time. In fact, the long-term bond market was the subject of my 1972 PhD dissertation and my first-ever academic publication the following year, co-authored with my academic adviser, Franco Modigliani. Our work with data for the years 1952-1971 showed that the long-term bond market back then was pretty easy to describe. Long-term interest rates on any given date could be explained quite well as a certain weighted average of the last 18 quarters of infla …

The 5 Most Crowded Trades on Wall Street: Part 1

By EconMatters

Herd Mentality

Here are 5 of the most crowded trades in financial markets, where a lot of group think has led to large fund flows on one side of the trade. This has been a very common phenomenon the last couple of years in financial markets, partly due to participating in the same investment conferences, limited trading opportunities, lack of imagination, investors seeking security with the crowd, Fe …

Fund Managers Use Machines, “Smart” Beta To Dupe Dumb Retail Investors

Active fund managers have figured out a way to combat the rather inconvenient fact that beating a passively managed index fund over time turns out to be exceptionally difficult, especially net of fees: build an algorithm that replicates your investment strategy, press “go”, then tell investors you’re indexing. This is called “smart beta” in the industry and, like any sophisticated-sounding strategy, it’s luring retail investors and bringing in billions. Here’s Bloomberg:

Few people have profited more from the so-called smart-beta craze than Tom Dorsey. A new exchange-traded fund that he runs using a century-old charting methods took in $1.2 billion last year. Then, in January, he sold his 22-person investment firm, Dorsey, Wright & Associates, to Nasdaq OMX Group for $225 million.

Dorsey calls himself a money manager, Bloomberg Markets will report in its April issue, but his methods are more robot designer. He says so himself, proudly. If Dorsey and his team got abducted from their Richmond, Virginia, office by aliens, their algorithms could keep picking investments for the firm’s new money magnet, the First Trust Dorsey Wright Focus 5 ETF, forever.

“Once a quarter, we press a button,” Dorsey says. The Focus 5 algorithm then generates a list of investments, and First Trust Portfolios, his partner company, executes them. Otherwise, they don’t meddle with the robot. “We just need someone to press the button.”

It’s index investing with key twists, all of them rules-based, with no active management required. Most smart-beta funds track …

GE’s Immelt touts value of conglomerate’s scale to investors

(Reuters) – General Electric Co Chief Executive Officer Jeff Immelt is sticking by his company’s model for housing diverse businesses under one roof at a time when other U.S. conglomerates are looking at hiving off units to please investors.

Irish Finance Minister Dumps Stocks – Buys Gold

– Ireland’s Minister of Finance shifted personal wealth out of stocks and into gold
– Minister invested in SPDR Gold Shares ETF, Portuguese government bonds and other ETFs

– Maintained holdings in bank and agricultural commodities ETFs
– Gold ETF not a safe haven asset – much unappreciated counterparty risk

The Minister for Finance in Ireland, Michael Noonan, sold his shares in funds that track European and US stocks and diversified his portfolio including allocating some of his personal wealth into a gold exchange traded fund (ETF) in 2014.

Italian Bad Debt Hits Record $197 Billion As Bank Lending Contracts For Unprecedented 33 Consecutive Months

Repeat after us: the biggest threat facing Europe’s banking system is not a Grexit, is not the Austrian “bad bank” black swan (although it is pretty bad), it is the trillions in non-performing loans on the balance sheets of European banks, which Europe has no idea how to and which continue to multiply in the process threatening to impair depositors with bail-ins (see Cyprus). It is also why, after years of debate, the ECB finally agreed to flood European banks with what it hopes will be over a1 trillion in excess reserves a la the US (of course, if Zero Hedge, and now JPM, is correct, the ECB will break the bond market long before it achieves its goal) in order to mitigate the relentless cash demands of a constantly rising NPLs.

And unfortunately for the third largest issuer of sovereign bonds in the world, Italy – the country all eyes will focus on once Greece and/or Spain exit the Eurozone – when it comes to NPLs things are going from bad to worse because as Reuters reported earlier, citing ABI, gross bad loans at Italian lenders continued to rise, totaling 185.5 billion euros ($196.5 billion) in January from 183.7 billion euros a month earlier.

As the chart below shows, Italy now has over 10% of its GDP in the form of bad debt.

Wall Street bounces, led by utilities, as dollar drop eases earnings worry

(Reuters) – U.S. stocks rose on Monday, with utilities leading a rebound on the S&P after three weeks of losses, as a decline in the U.S. dollar against the euro eased some worries over how a robust greenback might erode the earnings of multinationals.

A Wall Street Prosecutor to Join WilmerHale

WilmerHale said on Monday that it had hired Anjan Sahni, a senior federal prosecutor in the United States attorney’s office in Manhattan.

Caught On Tape: State Department’s Psaki Smirks About US Policy Supporting Coups

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

In case you weren’t aware, Venezuelan authorities recently accused the U.S. of attempts to overthrow its government. In a press conference, U.S. State Department spokeswoman, Jen Psaki, vehemently denied such claims and then went ahead and spouted talking points so ridiculous, only a complete ignoramus could believe them. She said:

As a matter of long-standing policy, the United States does not support political transitions by non-constitutional means.

Interesting, because it seems to me that the primary role of U.S. foreign policy throughout my lifetime has been specifically to initiate political transitions by non-constitutional means.

The line was simply too much to bear for some members of the press. One guy in particular, incredulously asked her to elaborate on her definition of “long-standing” in light of the historical reality that the U.S. government has been constantly involving itself in coups all over the world, particularly in Latin America.

What’s even more amazing than the fact that the “authorities” remain so willing to publicly spout such easily disprovable propaganda, is her reaction once see realizes she’s been caught. She backpedals and squirms, but the most disturbing thing is you can see a subtle smirk come across her face. She knows how ridiculous the statement is and can’t keep it together once she’s c …

U.S. warns banks it may revoke some money-laundering settlements

HOLLYWOOD, Fla. (Reuters) – Some banks that have non-prosecution agreements over failures to police transactions for criminal activity could see those deals withdrawn and be forced to plead guilty, a U.S. Justice Department official said on Monday.

Itineraries: Gulf Airlines’ Expansion Sets Off a Row in the U.S.

Domestic airports, travelers and hotels worry that questioning open skies agreements could turn the clock back to more protectionist policies.

The Fed’s Juicing the Market This Weekaeuro – But What’s Coming Won’t Be Pretty

The markets are roaring higher today based on two items:

1) Today is a Monday… which trading algorithms have been programmed to expect will be an “up day.”

And…

2) It’s options expiration week.

Regarding #1, there is no real reason for stocks to move higher today. The recent data shows that Bloomberg ECO U.S. Surprise Index is collapsing at a pace not seen since 2009 (when everyone thought the world was ending).

Aside from this, the PPI data showed that profit margins fell in a number of industries. And of course, there’s US retail sales falling in February: the third straight down month.

Negative economic surprises, falling profit margins, and collapsing retail do not point to a strong stock market.

Regarding #2, options expiration week is the Fed’s favorite week to provide Wall Street with additional liquidity so the latter can manipulate the market to shred as many options contracts as possible.

This is not conspiracy theory. Consider that technically ALL Fed QE programs ended in late October 2014. And yet, since that time, the Fed has made LARGE increases in its balance sheet (swapping liquidity for assets) on every single options expiration week with only one exception.

Weeks in which the Fed’s balacnce sheet shrunk are red. Weeks in which it expanded are black. And options expiration weeks are highlighted in gray. Note that the largest expansion moves per month occurred in options expiration weeks with the exception of February.

Ex Petrobras manager arrested for Swiss bank transfers

BRASILIA (Reuters) – Police arrested a former Petrobras executive on Monday after prosecutors discovered large transfers from Swiss bank accounts he managed – the latest twist in a corruption probe implicating some of Brazil’s top companies and political parties.

Germany Has Had It With Greece: Schauble Says “Doesn’t Know What To Do With Greece Now”

In his fiercest rhetoric yet, Germany’s angry Finance Minister Wolfgang Schaeuble unloaded at a CDU event today:

SCHAEUBLE SAYS DOESN’T KNOW WHAT TO DO WITH GREECE NOW

SCHAEUBLE SAYS NEW GREEK GOVERNMENT HAS DESTROYED ALL THE TRUST THAT HAD BEEN REBUILT

He went on to explain that “no one I talk to sees how Greek approach can work,” which perhaps explains why Greek 3Y bond yields spiked back above 20% for the first time since the election today.

Some additional headlines:

*SCHAEUBLE SAYS GREEK T-BILL AUCTION DESTROYED CONFIDENCE

*NO FOREIGN INVESTOR WANTED TO BUY GREEK T-BILLS, SCHAEUBLE SAYS

*SCHAEUBLE: NO ONE I TALK TO SEES HOW GREEK APPROACH CAN WORK

And GGB yields are exploding…

As Bloomberg reports,

“Greece was able to sell those treasury bills only in Greece, with no foreign investor ready to invest,” German Finance Minister Wolfgang Schaeuble says in Berlin. “That means that all of the confidence was destroyed again.”

On Greek govt’s efforts to balance curbing austerity and fulfilling obligations for economic reforms: “None of my colleagues, or anyone in the international institutions, can tell me how this is supposed to work”

Schaeuble comments at Christian Democratic Union event …

Holcim calls a halt to Lafarge deal to revisit terms

PARIS/ZURICH (Reuters) – Switzerland’s Holcim called a halt on Monday to its merger with Lafarge, pressing the French company to renegotiate the deal terms and putting their plan to create the world’s biggest cement maker at risk.