27Mar2015 Market Close: U.S. Averages Ended Session With Fractional Gains On Low Volume While WTI Oil Plummets

Fed’s Janet Yellen Pitches Cautious Tack on Rate Increases

Federal Reserve Chairwoman Janet Yellen laid out a case for a “gradualist approach” to interest-rate increases in the years ahead, spelling out in greater detail than she has before the risks of moving too aggressively to tighten U.S. credit.

Lender says will make ‘significant’ new bid for RadioShack

WILMINGTON, Del (Reuters) – A lender to bankrupt RadioShack Corp told a U.S. judge on Friday it was prepared to present a new offer that was a “significant improvement” over a rival proposal that was selected as a winning bidder at an auction this week.

Intel in talks to buy Altera: WSJ

(Reuters) – Chipmaker Intel Corp is in talks to buy Altera Corp , the Wall Street Journal said, citing people familiar with the matter.

Fed rate hike may be warranted later this year: Yellen

SAN FRANCISCO (Reuters) – The U.S. Federal Reserve is giving “serious consideration” to beginning to reduce its accommodative monetary policy and a rate hike may be warranted later this year, although a downturn in core inflation or wage growth could force it to hold off, the central bank’s chief said on Friday.

Oil dives 5 percent as worries about Iran talks trump Yemen

NEW YORK (Reuters) – Oil tumbled 5 percent on Friday, erasing the previous session’s gains, as Yemen’s conflict looked less likely to disrupt Middle East crude shipments and investors turned their focus to talks for a potential Iran nuclear deal that could put more supply on the market.

How Wall Street Helps Tech Workers Cash In

Financial firms are creating a murky, ad hoc market where the red-hot stocks of closely held technology companies trade largely out of sight of regulators, other investors and the companies themselves.

Janet Yellen To Discuss “The New Normal For Monetary Policy”

In a few minutes, Janet Yellen will address a lunch session in her native SF Fed (the same place which earlier this week finally figured out what debt is) during a conference whose topic is The New Normal for Monetary Policy (the typo from “Paranormal” is easy to make).

The full formal agenda is shown below.

The informal agenda will be Yellen’s explanation of how she plans on achieving the yield curve which we predicted back in 2010 is just a matter of time.

And while it is unlikely Yellen will say much if anything actionable, the speech taking place 15 minutes before market close on a Friday has many wondering: why now, and how will the algos react to the headlines from her speech, if not so much in the Emini where lately it has been all Citadel and the Bank of Japan, then more in the EURUSD and USDJPY.

Google to pay CFO Porat more than $70 million

(This March 26th story has been corrected to remove ‘in the next two years’ from headline and first paragraph)

Saudi Arabia Then & Now (In 1 Cartoon)

“Unintended Consequences”?

Source: Townhall

BlackBerry Reports $28 Million Profit in 4th Quarter

The smartphone maker is in the midst of a major restructuring, limiting production of phones to avoid the financial drains of the past.

Muted Day of Trading Might End Market’s Losing Streak

Oil prices were lower, a day after a sharp increase related to worries about supply amid conflict in the Middle East.

Central Banks Are Paralyzed At The Zero Bound

Submitted by Alasdair Macleod via GoldMoney.com,

Though the Fed would deny it, it is clear from the minutes of the last Federal Open Market Committee (FOMC) meeting that a rise in interest rates has been put off indefinitely.

The subsequent rally in the price of gold and the sudden fall in the dollar tend to confirm this conclusion.

The Fed Funds Rate, which is the interest rate the Fed targets to set all other rates, has now been less than 0.25% for six and a quarter years, gradually declining from roughly 0.15% to about 0.10% today. It was set at a target range of between zero and 0.25% in December 2008.

According to the Policy Normalisation Principles and Plans issued last September, the FOMC will raise its target range for the Fed Funds Rate “primarily by adjusting the interest rate it pays on excess reserve balances” when the Fed normalises interest rates, “using reverse repurchase agreements to take money out of circulation to the degree necessary”. The Fed also intends to reduce its holdings of securities and contract its balance sheet in the longer run.

If normalisation is the result of economic recovery we will be familiar with the playbook. Demand for money in the economy picks up, and instead of pyramiding bank credit on reserves held at the Fed, the Fed feeds back the excess reserves to the banks by selling government securities into the markets. The bear market in government bonds should be manageable because of underlying pension and insurance company demand coupled with a diminish …

Housing Contribution To US GDP Lowest In Post-War Era

In “Underwater Homeowners Here To Stay” we highlighted a report from Zillow which showed that negative equity has now become a permanent fixture of the US housing market. The report also showed that the percentage of homeowners who are underwater was flat from Q314 to Q414, breaking a string of 10 consecutive quarters of declines.

We also recently noted that a completely ridiculous new home sales print that defied all logic notwithstanding, housing data, including starts and existing home sales, has come in below expectations. On a side note, home price appreciation has outpaced wage growth at a rate of 13:1, to which we would add:

Of course, the biggest determinant of home price appreciation over the past 2 years has nothing to do with US consumers, or household formation, as confirmed by the collapse in first-time homebuyers or the unprecedented depression in new mortgage origination, and everything to do with what we first suggested is one of the main drivers of the US housing bubble – foreigners parking their illegally procured cash in the US and evading taxes, now that US housing, with the NAR’s anti-money laundering exemption blessing, is the new normal’s Swiss Bank Account. That and flipping homes from one “all-cash” buyer to another “all-cash” buyer in hopes of a quick capital appreciation and the constant presence of the proverbial dumb money.

As 3G digests Kraft deal, rivals will focus on organic firms

NEW YORK (Reuters) – The macaroni and ketchup merger of Kraft Foods Group and H.J. Heinz Co may prove a boon to the far smaller natural and organic food companies that have seized market share as consumers shift away from processed foods, bankers and portfolio managers said.

Yemen “Gulf Intervention” Premium Erased, WTI Tumbles Back Below $49

Well that was a quick geopolitical event. On the heels of what was set to be Crude’s best week since July 2013, Stratfor clarifying little risk of disruption to crude supplies, Goldman confirming neglible impact from Yemen and more to Iran, and reports from Saudi Arabia that “this [Yemen] operation will not go on for long, I think it will be days,” WTI crude has tumbled back to the $48 handle and erased all the “gulf intervention” premium – refocusing on domestic storage concerns.

As Reuters reports,

The Arab military campaign against Yemen’s Houthi militia is likely to last days rather than weeks, Yemeni Foreign Minister Riyadh Yaseen told Saudi-owned al-Arabiya television on Friday.

In answer to a question about whether he thought the Saudi-led operation, which began on Thursday, would last days or weeks or more, Yaseen replied: “I expect that this operation will not go on for long, I think it will be days.”

Median Household Income Up Slightly in February 2015

from Sentier Research

According to new data derived from the monthly Current Population Survey (CPS), median annual household income in February 2015 was $54,510, not significantly different than the January 2015 median of $54,450. (The apparent month-to-month increase of $60 was not statistically significant.

Fed weighs insurers’ proposal for new capital rules

WASHINGTON (Reuters) – The U.S. Federal Reserve is considering a proposal from life insurers that could delay the implementation of a costly nationwide capital framework for the $1 trillion industry, according to records of a recent meeting between the two sides seen by Reuters and people familiar with the matter.

Police Gas Student Protesters In Quebec

Earlier this week we reported that the Blockupy movement — supporters of which set fire to the streets of Frankfurt earlier this month in an anti-austerity protest timed to coincide with the grand opening of the ECB’s new headquarters — had apparently spread across the Atlantic to the streets of Montreal where students describing themselves as “an association of young communists and anti-capitalists” got tear gassed, sound bombed, and shot with rubber bullets after they failed to provide police with an itinerary as to what they planned to vandalize and when.

Just days later and aggrieved Canadian students are at it again, this time in Quebec City where hundreds gathered to protest austerity measures like shorter library hours. Here’s more from RT News:

Students in Quebec City were sprayed with tear gas by Canadian police after holding an ‘illegal’ gathering to protest the provincial budget. A brief scuffle broke out before law enforcement officers began randomly gassing the demonstrators.

Hundreds of students, some traveling from as far as Montreal, had gathered in front of the National Assembly to protest the Quebec government’s budget, which had been table on Thursday.

The demonstrators wanted to hold a protest in front of the National Assembly to show their disgust at cuts to services such as healthcare on campus …

Wall Street flat with Yellen on tap; biotechs climb

NEW YORK (Reuters) – U.S. stocks were flat on Friday, with the S&P 500 on track for its worst week since late January, ahead of a speech by Federal Reserve Chair Janet Yellen that could create a volatile close on Wall Street.

Global shares up at end of down week, oil prices retreat

NEW YORK (Reuters) – Wall Street and European stocks edged ahead on Friday but remained en route to a losing week while U.S. Treasury debt prices jumped on government data indicating U.S. economic growth was slowing.

Stockman: “The Bottom’s Not In”, Why This Market Is Dumber Than A Mule

Submitted by David Stockman via Contra Corner blog,

They were trying to put in a bottom – again! The sell-off earlier this week amounted to the sixth sizeable “dip” since November 20 – so the market’s ingrained reflex was back at work all afternoon, trying to scoop up the “bargains”.

But the roundtrip to the flat-line shown below is not a classic “wall of worry” and its not a “bottom” that’s being put in. This market is dumber than a mule, and the nation’s central bank and its counterparts around the world have made it so.

The plain truth is that six years of torrential money printing and worldwide ZIRP have not happened with impunity. On the one hand, massive, sustained and universal financial repression caused an artificial growth and investment boom in much of the world, especially China and the EM, which has now run out of steam and is visibly and rapidly cooling.

There is probably no better proxy for the global investment boom than the spot price of iron ore because it captures China’s massive infrastructure construction spree and the waves of mining, shipbuilding, steel-making and construction materials spending that it set off all over the world. But this huge tidal wave has now crested, leaving behind the worst of both worlds——co …

Black Swan 2: This Is “The Next Critical Chapter In The Austrian Banking System Story”

When it comes to the sweeping of (trillions of) toxic assets until such time as the ECB starts purchasing not only government bonds but equities, bank loans and really anything else that in a normal world would have some “mark to market” value, Europe had a ready answer: bad banks. A tradition which started with Switzerland and the semi-bailout of UBS during the great financial crisis, “bad banks” have been proposed every time there are a few hundred billion in bad assets that need to be swept away or otherwise removed from the the public eye.

In fact, it was just a few hours ago that Spain’s economy minister praised the usefulness of bad banks, which have certainly seen their fair share of use in Spain over the past 5 years.

GUINDOS: BAD BANKS USEFUL INSTRUMENT TO CLEAN UP BALANCE SHEETS.

Yes, useful. Until you have a massive blow up like in Austria when several years of avoiding reality exploded in everyone’s face when the Bad Bank meant to fix the mess left after the collapse of Hypo Alpe Adria itself became insolvent, after the horrendous state of its balance sheet could no longer be masked, and creditors were shocked to learn they would foot the bail out, or rather bail in costs thanks to massive debt writedowns.

And since there is never just one cockroach when it comes to hiding Europe’s biggest financial problem, namely trillions in non-performing loans, the question always is: which cockroach is next?

For now the answer, thanks to the ECB’s relentless intervention in all capital markets is hiding, but one proposal comes from Daiwa Capital Markets which suggests to take a long hard look at Austria’s Pfandbriefbank Oesterreich AG.

Here is what Daiwa’s Jakub Lichwa thinks: . . .

Bits Blog: Google and Johnson & Johnson Team for Robotic Surgery Projects

Google and Johnson & Johnson announced a partnership to develop new robot-assisted surgery technologies but offered few details.

Be Your Guest? How About I Just Pay and Leave?

For decades, Disney used the word the “guest” instead of “customer.” Today it has sprung from the hospitality business and invaded retail, to some customers’ chagrin.

Syria “Welcomes” Larger Russia Presence

Following Vladimir Putin’s demands for an “immediate cessation of military activities” in Yemen, AFP reports Syrian President Bashar al-Assad’s comment during a recent interview that “with complete confidence that we welcome any widening of the Russian presence in the eastern Mediterranean and on Syrian coasts and ports,” including the port of Tartus. Amid the Western-backed opposition National Coalition’s planned boycott of talks, Assad pointedly remarked, “the negotiating parties must be independent and must reflect what the Syrian people want… people would not accept that their future, their fate, or their rules are decided from outside.”

Syria would welcome an increased Russian military presence at its sea ports, President Bashar al-Assad said in an interview with Russian news channels published Friday. As AFP reports,

“I can say with complete confidence that we welcome any widening of the Russian presence in the eastern Mediterranean and on Syrian coasts and ports,” including the port of Tartus, Assad said.

“For us, the larger this presence in our neighbour …