Written by Gary
A new closing high was set for the SP500 and the DOW closed up triple digits, all on low volume which belies any validity of today’s rising markets. No new highs have been set, just what appears to be testing of the resistance and HFT algo computer manipulation tactics.
According to many analysis this market is about to start a correction to the downside within four weeks. Some say hold onto your seats, others claim we are simply overdue for a ‘minor’ correction before we can climb higher. What do you think?
Todays S&P 500 Chart
The U.S. dollar still has more room for growth left, according to one strategist. TheStreet’s Scott Gamm speaks with Brian Rehlig, co-head of global fixed income strategy at Wells Fargo Investment Institute, to discuss how the dollar’s falling value affects the Federal Reserve’s plans to hike short-term interest rates, which have remained close to zero since December 2008.
While Rehlig believes a rate liftoff during the central bank’s June and July meetings are off the table, he’ll be keeping a close eye on subsequent meetings, including September, as the Fed analyzes incoming economic data during that time. When the Fed does lift rates higher, it will be the first increase the fed funds rate has seen since 2006.
The Market in Perspective
|Here are the headlines moving the markets.|
The S&P 500 closed at a record as U.S. stocks advanced after European equities regained ground and bond markets stabilized.
The US Dollar Index continues to suffer setbacks on softer US economic data and technical selling. The Index is now well over 600 points off recent highs and dropping. Many traders saw the decline coming, but even they are surprised at the speed and size of the drop. Does this mean that the drop was excessive and the greenback is bound to bounce back? That remains to be seen.
Turning to the chart, we see the June Dollar Index completing a double-top formation, suggesting an end to the uptrend that had lasted 9 months. The next support level for the Dollar Index could come in just below the 0.9000 level. Prices may be able to gain some upward traction if the June contract can manage a close above the 0.9650 level. The RSI remains in oversold levels, which could be somewhat supportive in the near-term.
SAO PAULO (Reuters) – Brazilian investigators believe 6.19 billion reais ($2.1 bln) in bribes were moved in a corruption scheme involving state-run oil firm Petroleo Brasileiro SA , prosecutor Deltan Dallagnol said on Thursday.
Aberdeen, Scotland, is in a double bind. Not only has the price of oil plummeted, but supplies in the North Sea are running out.
Via Dana Lyons Tumblr,
The current consternation among global equity markets is centered around the recent considerable rise in bond yields globally. There seem to be equal numbers of folks who believe this development to be a legitimate threat and those who believe it’s just another distraction. Which camp are we in? As always, we prefer to take a quantitative, historical view of the matter (though, ultimately, we will let prices tell us whether or not to worry). We have looked at the spike in yields from a couple angles already in this blog, including concurrent short-term lows in the Russell 2000 and Treasury bonds (may be a short-term concern for stocks) and a negative divergence in corporate bonds versus equities (may be an intermediate-term concern). Today, we take another look at the issue within the context of the swift reversal in 10-Year Treasury Yields (TNX) recently and the effect this type of move has had on stocks in the past.
First of all, there are countless ways of defining the current interest rate “spike”, from the subjective to the quantifiable. Even in the quant category, there are endless ways of looking at the move. In order to stay objective, one has to draw the line somewhere in the definition of the spike. In this case, we kept it pretty straightforward, focusing on the extreme reversal of fortunes in the bond market. Specifically, we looked at prior occurrences when rates demonstrated the precise behavior as this recent move, going from a 52-week low to a 5-month high within a 4 month period.
(Reuters) – Shares of Avon Products Inc soared as much as 20 percent after an apparently non-existent firm based in a remote archipelago in the Indian Ocean said it had offered to buy the cosmetics company for almost three times its market value.
(Reuters) – Avago Technologies Ltd, looking to acquire a fellow chipmaker, has reached out to potential targets including Xilinx Inc, Renesas Electronics Corp and Maxim Integrated Products Inc, according to people familiar with the matter.
NEW YORK (Reuters) – Oil futures pulled back on Thursday as ample global supply weighed on prices while Brent’s front-month June contract headed to expiration.
Avon hasn’t received a bid from PTG Capital and is treating the purported proposal as a hoax.
The market isn’t prepared for a September rate increase, and the Federal Reserve will have a hard time changing that.
The California Public Employees’ Retirement System is placing a portion of its U.S. timber holdings up for sale in the latest sign of a larger strategic re-evaluation inside the nation’s largest pension fund, according to people familiar with the matter.
WASHINGTON (Reuters) – Make no mistake: the U.S. economy’s dismal first quarter was, in fact, a dismal first quarter, not a statistical fluke in the way U.S. gross domestic product is measured, Federal Reserve staff concluded on Thursday.
Ahead of the Tape: Production is stronger than the headlines suggest
From the Slope of Hope: Having been involved with high-tech since 1979, and having lived in Palo Alto since 1984, I have some acquaintance with the psyche of the Silicon Valley. It has long been a very imitative place, in spite of its frequent self-praise with respect to innovation and “outside the box” thinking (the phrase itself being quite cliche and, itself, very inside-the-box).
I well remember being at Apple during the late 1980s and early 1990s when an entire series of CEOs went in one door and out the other, as Apple fumbled about, trying to find a real “leader” in the post-Jobs and post-Sculley era. John Sculley was never a shining beacon of unfettered genius, but he looked like the Mozart of Managers compared to the bozos that headed Apple (however briefly) during those years. One I remember in particular was a guy named Allan Z. Loren, shown here (I have no idea what the bikes are doing there; it’s the only photo I could find). In case it’s unclear, Loren is the one with the gigantic nose on the left.
God’s formula in creating Allan was simple: (1) take Steve Jobs; (2) remove all the creativity and vision; (3) slap on a vaguely-unatt …
(Reuters) – U.S. stocks rose sharply on Thursday afternoon and the S&P 500 was on track for a record-high close as a weaker dollar offered the possibility of stronger sales for U.S. multinationals.
According to one estimate, more than one in five owners of hybrid and electric vehicles are switching to S.U.V.s instead.
Submitted by Andrew Zatlin via MoneyballEconomics.com,
The San Francisco Bay Area is home to:
~10% of the S&P 500
6 of the top 20 companies by market capitalization
30 of the 65 Information Technology companies on the S&P 500
With Great Wealth Comes Great Property Inflation
94% of homes received multiple offers in March, up from 88% last year (source: Redfin). Compare that to the national averages of 61%, down from 64% last year. 34% of homes go above asking price (source: Redfin).
The median property sales price in the Bay Area is $1M+, up 25% from the peak in 2007 and up 67% since 2012. Not coincidentally, the stock market was flat until 2012 and has since surged 67%.
The stock market has fueled a tech bubble through the mechanism of IPOs and stock options. Things took off in 2012 with Facebook’s IPO. Prior to that there were a few big hits (Skype, Trulia, LinkedIn), but Facebook signaled that the game was on.
2013 had Twitter (and Splunk, Workday, Palo Alto Networks, ServiceNow). CBIN cites estimates showing that of the top 15 tech IPOs in 2013, 40% were Bay Area companies. That trend it hasn’t stopped. There’s been a steady flow of IPOs that have enriched literally tens of thousands. A lot of hot money is chasing the yield offered by those start-ups and IPOs.
And, just like in 2000 …
A supervisor questions a direct report for calling in sick on the day she was asked to make a presentation in the supervisor’s place.
European corporate debt is showing resilience in the face of bond-market trouble.
The move follows approval of a separate bill that would crack down on currency manipulation, an issue clouding prospects for a Pacific trade accord.
LONDON/FRANKFURT (Reuters) – U.S. seeds giant Monsanto is trying to line up buyers for assets worth up to $8 billion to appease competition authorities before making a fresh takeover approach for Swiss Syngenta, possibly within three weeks, industry sources said.
An S.E.C. filing raises questions about the potential for market manipulation.
Submitted by Jeffrey Snider via Alhambra Investment Partners,
If March was supposed to herald at least the beginning of the anticipated yearly rebound, April put that idea to rest. In terms of retail sales, one of the most important and largest segments of “demand”, April’s figures were mostly the worst of the recovery and some of the worst in the entire series – “beating” out February in every category. Even including autos, total retail sales gained just 0.72% in April more than suggesting there really is a major economic problem brewing.
Among the other segments, the figures are getting truly dire (all numbers are year-over-year not-adjusted): retail & food sales ex autos -0.35%; retail trade incl. autos -0.26%; just retail ex food ex autos -1.80%; general merchandise stores -1.52%. While these numbers are severe on their own, this is a contractionary environment that now stretches at least four months and in some cases five. Recessions are not spontaneous events but rather the accumulation of negative pressures and results. There can be no doubt that consumers in the US right at this moment are acting out of recessionary impulses.
The accumulation of the past four months is indistinguishable from results of the past two recessions (apart from the collapse after Lehman):
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