23Mar2015 Market Update: Markets Elevated, Trading Sideways On Falling Volume

Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.24%, while the Bovespa is leading the IPC lower. They are down 0.54% and 0.11% respectively.

In What Is Now A Daily Tradition, The Market Breaks

A post-open pump and dump can only mean one thing…

And so…

Source: BATS

DuPont investors to vote on Trian demands on May 13

(Reuters) – DuPont , embroiled in a proxy war with activist investor Trian Fund Management LP for board seats, said it would hold its annual shareholder meeting on May 13.

Schlumberger sees 10-15 percent drop in industry E&P spending in 2015

(Reuters) – Schlumberger Ltd, the world’s No.1 oilfield services provider, said it expects the oil and gas industry’s spending internationally on exploration and production to drop by 10-15 percent in 2015.

February 2015 Existing Home Sales Improved “Modestly” and Remains In a Long Term Improvement Trend

Written by Steven Hansen

The headlines for existing home sales say that sales “increased modestly”. Our analysis of the unadjusted data shows the unadjusted three month rolling averages for sales accelerated, remains in positive territory – and has been in a long term improvement trend even though being in contraction most of 2014.

Deutsche’s Three “What If” Scenarios: What Happens After The Grexit

As reproted previously, the biggest event of the day will be the meeting between Greek PM Tsipras and Germany’s Merkel, which – with Greece having only days of access to liquidity left (and a negative solvency position already as confirmed by Tsipras’ letter to Merkel saying it will be unable to repay its near-term debts) – means the fate of Greece will be decided over next day, one way or another.

So while we await today’s 6:00 PM GMT press conference, here is a “what if” analysis created by Deutsche Bank laying out three scenarios on the short and long-term consequences of a Grexit.

Here is Deutsche Bank

What if we are wrong? Grexit scenarios

We believe that ultimately, even at the cost of capital controls, Grexit will be avoided. But what if we are wrong? With the risk of Grexit, in our view the highest since the crisis began in late 2009 and European patience wearing thin, we engage in some “what if” analysis on the short and long-term consequences of Grexit under three scenarios.

Back in January we have looked at (i) channels of contagion, (ii) peripherals’ vulnerabilities and (ii) ex-post tools to contain contagion11. There we highlighted that in a Grexit scenario, direct channels are not the main source of concern. Indeed, the private sector direct exposure to Greece has been scaled down dr …

Buffett tells foreign investors good profits to be made in U.S

WASHINGTON (Reuters) – Berkshire Hathaway Inc Chief Executive Officer and Chairman Warren Buffett said on Monday the U.S. economy and investment climate are a tailwind for his companies’ success and encouraged foreign investors to jump in too.

Stocks up as dollar adds to losses, oil gains

NEW YORK (Reuters) – U.S. stocks edged higher on Monday following strong gains in major indexes the previous week, as investors assessed gyrations in the dollar and crude prices and their impact on equities.

ChemChina to buy into Italian tire maker Pirelli in $7.7 billion deal

MILAN (Reuters) – China National Chemical Corp (ChemChina) is to buy into Pirelli, the world’s fifth-largest tire maker, in a 7.1 billion-euro ($7.7 billion) deal that will put the 143-year-old Italian company in Chinese hands.

Existing Home Sales Miss (Again); Weather & “Unsuitably High Price Levels” Blamed

Following January’s disastrous dive in Existing Home Sales (which must be weather, right? Nope!) to a SAAR 4.82 million homes, February (with its even worse weather) saw a 4th month of missed expectations with a 4.88mm print against 4.90 mm expectations. As always, weather was blamed – which is odd given that the only drop in sales that occurred happened in The Northeast which accounts for just 12% of total transactions. Perhaps more worrisome is NAR’s Larry Yun noting “unsuitable price levels” as a reason for weak sales due to low inventories (despite inventories rising 1.6% in February?!). May be it’s time to blame The Fed… for not creating more rich people to buy more houses…

Another month, another miss…

As Home Prices remain higher YoY….

*FEB. MEDIAN HOME PRICE RISES 7.5% FROM YEAR AGO TO $202,600

Northeast sales fells 6.5% MoM, The West rose 5.7% MoM with the The Midwest flat and South up 1.9% MoM.

NAR’s Larry Yun explains…

“Severe below-freezing winter weather likely had an impact on sales as more moderate activity was observed in the Northeast and Midwest compared to other regions of the country.”

Wall St. Is Mixed, With Focus on Greece

Leaders of Greece and a major creditor, Germany, were meeting in Europe to discuss reforms.

Biotech Behemoth Gilead In Trouble After Flagship Drug Related Death

Gilead is, by far, the largest income producer in the Nasdaq Biotech Index and today’s warning from the Biotech behemoth which has dragged the stock down 2.8% this morning, is weighing heavily on the exponentially-expanding index. As Bloomberg reports, GILD said nine patients taking its hepatitis C drugs Harvoni or Sovaldi along with the heart treatment amiodarone developed abnormally slow heartbeats and one died of cardiac arrest. Now, of course, it’s “just” 9 patients… so analysts will spin the diversification. The Nasdaq Biotech Index now trades with a P/E of 50x, with over 80% of the entire sector’s earnings concentrated in just 5 companies… and the biggest of all just warned on the drugs that make up half its revenues!

Gilead is ‘it’…

So, as Bloomberg reports, when two of its drugs which account for half its revenues face a warning of death… perhaps it’s time to reflect on the exponentiality of this lottery ticket index…

Carlyle CEO says strong U.S. dollar won’t deter long term investors

WASHINGTON (Reuters) – The strong U.S. dollar may temporarily deter some companies from investing in the United States, but the country will continue to attract foreign investment, the Carlyle Group co-chief executive David Rubenstein said on Monday.

Merrill Lynch fined $2.5 million in Massachusetts

BOSTON (Reuters) – Massachusetts’ top securities regulator on Monday said that he has fined Bank of America’s Merrill Lynch unit $2.5 million for failing to stick to its own compliance rules.

Illiquid Corporate Bond Market Will End In “Very Unpleasant Fashion”

Yesterday, we pointed out that the industry is getting increasingly nervous about the possibility that a lack of liquidity in bond markets may indeed be the catalyst for the next collapse. Thanks to new regulations ostensibly designed to, among other things, bolster capital cushions and keep the market safe from the perceived perils of prop trading, banks are more reluctant to facilitate trading. This comes at the absolute worst possible time. Borrowing costs are so low that the Fed is basically daring companies not to take advantage, so while issuance is high, secondary market liquidity is non-existent meaning, effectively, that the door to the theatre is getting smaller and smaller and if someone yells “fire,” getting out is going to prove decisively difficult.

Here’s more from the BIS:

On the structural side, regulators have taken steps to strengthen the financial system. These include requiring key market-making institutions to strengthen their balance sheets and their funding models. Such structural improvements protect the financial system by making it less likely that banks will suffer liquidity crises or that such crises will spread contagiously from one institution to another (see below). However, many market participants expect that this will come at the expense of raising market-makers’ costs, which could reinforce the liquidity bifurcation described above – although that is likely to happen to different degrees across asset classes and jurisdictions…

Importantly, these trends are taking place just as demand for and dependence on market liquidity are on the rise. The new-issue bond market is ex …

Itineraries: Companies Adapt to Uber and Lyft Rides on the Expense Report

A growing number of business travelers are choosing ride-hailing services over taxis and car services, and employers are racing to catch up.

Another “Worst Since Lehman” Moment: 70% Of The “Developed” World Has Inflation Less Than 0.5%

Things are going from bad to worse not only for the “Chinese growth is stable at 7%” but the “US is decoupling from the rest of the world” false narratives. But while we have been pounding the table on both for years, only last week did the Fed finally admit US growth was slowing down rapidly (and will slow down much more once the 0.3% Atlanta Fed GDP forecast becomes mainstream), but it is China that will be the wild card.

Overnight Bank of America finally acknowledged just this “wildcard” and not only cut its outlook on Chinese stocks to “neutral”, but had this to say:

Our recurrent theme is that most of the world is “old, indebted and unequal”. In our view this is a recipe for debt deflation and weak nominal earnings/economic growth. Proactive central banks figure this out early and fight the inevitable slowdown by implementing QE and weaker currencies. They grab the other guy’s pizza slice. Their asset markets soar. As Figure 5 shows, 70% of the world’s developed markets have inflation below 0.5% — almost as high as the depths of the 2008 financial crisis. So the USD8.6tn in central bank balance sheet expansion (from the Fed, ECB, BOE, BoJ, and PBoC, which amounts to 130% growth over Dec-07 to now) has been unable to get inflation going. Remember: most of the planet is Old, Indebted and Unequal — a recipe for slow nominal growth. That failure to ignite inflation is unlikely to stop central banks from trying QE/QE variants. Asset prices should be well supported by their (fruitless) endeavor wherever it is undertaken, like Japan and Europe currently. Emerging markets are not much better — as Figure 6 shows, about 70% have deflation in their PPIs. According to McKinsey, overall debt has increased by USD57tn in mid-2014 from USD142tn in 2007. Ch …

February 2015 CFNAI Super Index Shows USA Economy Slowing

Written by Steven Hansen

The economy was growing slower last month based on the Chicago Fed National Activity Index (CFNAI) 3 month moving (3MA) average – and is now growing below the historical trend rate of growth.

US Economic Activity Worst Since 2011 Amid Major Downward Revisions, Chicago Fed Signals

January’s “optimistic” +0.13 print for CFNAI was revised drastically lower to -0.10 and now February prints -0.11 against an expectation of +0.10 for the 3rd miss in a row – the worst run since Q3 2011. The Chicago Fed National Activity Indicator (which has gained in prominence in recent months) indicates a 3rd month of “below trend growth,” for the first time since June 2011.

Charts: Bloomberg

Saudi Production Comments Send WTI Sliding To $45 Handle

Following Friday’s manic quad-witching melt-up in oil (and everything else), the exuberance (surprise surprise) is fading as fundamental reality is slapped back onto the face of the energy complex by Saudi Arabia. As Reuters reports, Saudi oil minister Ali al Naimi also said the kingdom was now pumping a record high 10 million barrels per day (bpd), and would only cut if non-OPEC countries cut production. The ‘supply’ weakness in crude has been tempered somewhat by a tumbling USD (EUR surging) for now (and also by news from Sinopec of major capex cuts).

As Reuters reports,

Saudi Arabia has stood firm on output, saying it would only consider cutting it if other producers outside OPEC also joined.

Saudi oil minister Ali al Naimi also said the kingdom was now pumping around 10 million barrels per day (bpd), which could indicate an increase of 350,000 bpd over its February production.

Analysts at Barclays forecast on Monday that if OPEC production held near current levels of near 30 million bpd, the market surplus would expand from 900,000 bpd to 1.3 million bpd.

“In the past 15 years, the global economy was defined by rising commodity prices, zero interest rate polic …

Frontrunning: March 23

Saudis keep on pumping, oil prices keep on slumping (Reuters)

Tenet Healthcare Nearing Deal to Buy United Surgical Partners (WSJ)

Dizzying Pre-IPO Tech Values Spurred by Rush of Hedge-Fund Money (BBG)

Russia threatens to aim nuclear missiles at Denmark ships if it joins NATO shield (Reuters)

Torrent of Cash Exits Eurozone (WSJ)

Draghi Cheerleads for Euro-Area Economy as Greek Risk Looms (BBG)

Fortescue Mines for More Financing Options (WSJ)

Topix Charts Evoke Calm Before ’13 Rout as Momentum Gains (BBG)

How Adidas Aims to Get Its Cool Back (WSJ)

Biogen shortens name, expands ambitions in Alzheimer’s, ALS (