Written by Gary
Preliminary agreement has been reached in the Iran nuclear talks and the markets reaction was – nothing. Oil did rise fractionally from its morning lows and the U.S. Dollar continued to trade sideways off its high from yesterday..
By 4 pm the averages were posting green numbers on low volume in another quiet session after two days of declines following encouraging data on the labor market, which raised investors’ hopes for Friday’s key payrolls report.
Todays S&P 500 Chart
WTI oil is at 49.48 falling from morning highs of 50.25 (Chart Here), Brent has fallen to 55.23 from its high of 56.21 (Chart Here), and the U.S. Dollar is still loosing ground now at 97.79, up from its low at 97.57 (Chart Here).
Our medium term indicators are leaning towards Hold portfolio of non-performers and the session market direction meter (for day traders) is 6 % bullish down from 37 % bullish at the opening bell. 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 -2.96. It is expect to move lower over the next few sessions before turning back up.
Having some cash on hand now is not a bad strategy as negative market changes are happening everyday. Many investors are starting to take in some profits from ‘high-fliers’ as a precaution and to build a better cash base for the ‘dips’.
As of now, I do see some leading indicators that are warning of a ‘long-term’ reversal within six months. I believe one is most likely to occur later in 2015, but any market fluctuations we see now are more of a internal market rectification than a bear market. If you are not worried, then at least be cautious. A good rule is that one cannot be prepared for a situation if you do not anticipate the possibility of that situation materializing.
Steven Hansen, writes in his article, Watching The Economy Slow
“Forward indicators are now suggesting the economy will be slowing . . . The problem is that there can be little exactness because of weather and labor issues occurring simultaneously . . . I am concerned because rail traffic is very weak.
What I am currently watching is rail counts which look ugly. Rail is a real-time reflection of economic activity. But carloads (chemicals, coal, oil, motor vehicles, grain, farm products, etc.) are struggling. Even removing coal and grains from the analysis shows a CONTRACTION.
I believe the clues are too abundant to poo-poo that the USA has entered an economic soft spot. Many long view economic sectors we watch remain in positive territory, so there is no evidence that the USA is headed towards a recessionary cycle. But one always worries that economies are ripe for an economic shock when there is economic softness.”
The Market in Perspective
| Here are the headlines moving the markets. xxxxxxxxxxx | |
 | IBM uncovers new, sophisticated bank transfer cyber scam SEATTLE (Reuters) – IBM has uncovered a sophisticated fraud scheme run by a well- funded Eastern European gang of cyber criminals that uses a combination of phishing, malware and phone calls that the technology company says has netted more than $1 million from large and medium-sized U.S. companies. |
| Exclusive: IBM hired advisers to deal with restless investors – sources NEW YORK/BOSTON (Reuters) – Some top shareholders of IBM, disappointed by 11 straight quarters of falling revenues, are seeking help from activist investors to shake up the company, but have been turned down by both Bill Ackman’s Pershing Square and Jeffrey Ubben’s ValueAct, according to people with knowledge of the matter. |
| The Tragedy Of America’s Farmer, Revealed In A Craiglist “For Sale” PostNot so long ago, US farmland – whose prices were until recently rising exponentially – was considered by many to be the next asset bubble. Then, almost overnight, the fairytale ended, and as reported in February, US farmland saw its first price drop since 1986.
But nobody has had it as bad as the US farmer, whose visions of fame and fortune have sadly gone up in a cloud of methanol smoke. Perhaps nothing captures the lives of quiet modern gothic desperation led by America’s farmer than the following Craigslist posting about a Disk Ripper for sale.
Disk Ripper for sale – $8900
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| What De-Leveraging? ECB QE To Drive $600 Billion in New IssuanceOn Wednesday we highlighted the fact that US corporations issued a record amount of debt in Q1 with high grade supply coming in at $348 billion while issuance for the month of March tied a 2008 record at $143 billion. Explaining this debt bonanza, we noted that “struggling oil producers tapped HY markets to stay afloat, companies scrambled to max out the stock-buyback-via-balance-sheet re-leveraging play before a certain “diminutive” superwoman in the Eccles Building decides to do the unthinkable and actually hike rates, and then there was M&A.” We also discussed how successive rounds of QE in the US served to boost HY issuance by some 50% above the historical average:
Now UBS is out calling for a similar dynamic in Europe as the ECB’s €1 trillion plus in asset purchases should drive demand for corporate credit as yields on sovereign debt and SSAs are driven relentlessly lower. The bank is now forecasting €600 billion in supply for 2015, up a fifth from last year with €300 billion in HY. Via UBS:
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| Oil Glut Is a Boon to Shippers, as Buyers Stock Up at Low Prices Although petroleum prices are down worldwide, the business of sending supertankers across the seas has never been brisker — or more global. |
| Iran “Nuclear Deal” Fact SheetIn case anyone is curious what today’s theater is all about. Because it’s not a “deal”, it’s a “Parameters for a Joint Comprehensive Plan of Action” And in case the above is not enough, here is a “splainer.” |
| Wall St. Edges Higher Ahead of Jobs Data Markets were generally tepid ahead of Friday’s jobs report, which often sets the tone for a week or two after release. |
| 3 Things: Economic Warning Signs, More Than Just WeatherSubmitted by Lance Roberts via STA Wealth Management, ISM Follows Trend In January of this year, I discussed the many warning signs that the economy was tracking much weaker than headlines suggested. However, the ISM sentiment survey’s were surging higher in contrast to weaker production numbers elsewhere. I noted then:
As expected, ISM numbers have declined rather sharply as economic realities have begun to weigh on “sentiment.” |
| Wall St. climbs after two-day decline; jobless data boosts NEW YORK (Reuters) – U.S. stocks edged higher on Thursday after two days of declines following encouraging data on the labor market, which raised investors’ hopes for Friday’s key payrolls report. |
| Obama Makes Statement On Iran “Deal” – Live WebcastUpdate: here is the statement by Obama, not to be confused with the statement Netanyahu is about to make and which may be measured in the kilotons. In the same style as we have grown used to around the world, a major negotiation has ended with all sides claiming victory and no sides offering any actual solutions. Iran proclaims the talks have made “significant progress,” yet Western diplomats are saying progress is “limited,” only to be confused even more by Iran’s Foreign Minister stating that “but still we have not agreed on the reviewed solutions.” So in summing it all up, a press conference will be held shortly to explain that ‘they agree on the outline of a plan which will pave the way for an agreement but aren’t sure how much of the plan or hypothetical agreement they want to share’. New normal geopolitics… no deal is the new deal.
Nuclear talks between the Iranian delegation and foreign ministers of the P5+1 group might bear fruit on Thursday, RT reports, if the sides manage to agree certain solutions.
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| Dear Texas, Welcome To The RecessionEarlier today, when looking at the latest Factory Order data we saw that based on historical patterns if only in US manufacturing (if not in the recent seasonally-adjusted “hiring” of waiters and bartenders) the US is already in a recession. Ironically, this came out on the day in which the BLS presenting some more amusing “data” suggesting that only 268K workers filed initial claims in the past week, one of the lowest numbers of the second great depression. Which is great for political propaganda purposes, however, for an accurate perspective we decided to look at a provider of job data that is actually representative of what happens in the real world not some goalseeked Arima-X-12 spreadsheet. Here is what Challenger Gray found when looking at the latest monthly data:
True, if we exclude all the negative data, all we are left with is good dat … |
| Investment banking fees fall 8 percent in weakest first quarter since 2012 (Reuters) – Global investment banking fees fell 8 percent to $20 billion in the first quarter, the poorest start to the year since 2012, hurt by weak deal activity in Europe, Asia Pacific and Japan. |
| Rig Count Drops For 17th Week With Smallest Decline Of 2015Crude prices are undecided how to react to this week’s 20 rig decline in total rig count to 1028. This is the 17th weekly decline in a row (down over 46% from the highs) but the pace of declines is dropping rapidly as it appears the ‘efficiency’ has been wrung out for now.
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| U.S. jobless data boosts labor market picture; trade deficit narrows WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labor market continues to expand at a solid clip even as economic growth has stalled. |
| Exclusive: Greece tells creditors it will run out of cash on April 9 (Reuters) – Greece has told its creditors it will run out of money on April 9, making an appeal for more loans before reforms on which new disbursements hinge are agreed and implemented, but the request was rejected, euro zone officials said. |
| More Unofficial Capital Controls In The US: PFIC RulesSubmitted by Nick Giamburino of International Man More Unofficial Capital Controls In The US: PFIC Rules It ranks at the very top of potential tax nightmares, especially if you invest internationally. This nightmare could become a reality if you happen to invest in what the IRS deems a Passive Foreign Investment Company (PFIC), which are taxed at exorbitant rates and have highly complex reporting rules. Most foreign mutual funds are PFICs, as are certain foreign stocks. It’s not illegal to invest in a PFIC, but practically speaking, the costs of doing it are so incredibly onerous that it’s prohibitively expensive in the vast majority of cases. PFIC rules amount to unofficial restrictions on investing in certain foreign assets and are yet another indicator of the disturbing trend of creeping capital controls in the US. Capital controls are used by many countries and come in all sorts of shapes, sizes, and labels. The purpose, however, is always the same: to restrict and control the free flow of money into and out of a country so that the politicians have more wealth at their disposal to plunder. What Is a PFIC Investment? As always, it’s important to first define our terms. As far as the IRS is concerned, passive income includes income from interest, dividends, annuities, and certain rents and royalties. If a foreign corporation or investment vehicle meets either of the two conditions below, it will be deemed to be a PFIC. 1) If passive income a … |
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