Written by Gary
U.S. stocks turned higher today, reversing their morning declines, when bond markets and the U.S. dollar sold off sharply. Greece’s debt standoff continued as oil prices rose to the highest level of the year and expectations of a fifth straight weekly decline in U.S. crude supplies. Lower highs and lower lows has been the markets trend for the last 7 sessions alarming some savoy investors and analysts of an imminent downturn.
Todays S&P 500 Chart
The euro vaulted toward its biggest one-day gain against the dollar in more than two months, as signs of movement in creditors’ standoff with Greece triggered another round of volatility in currency markets.
Wall Street was little changed as investors fretted over Greece’s shaky finances.
Global growth is languishing, corporate revenues too, but CEOs are trying to show they can grow their companies the quick and easy way. Cheap debt is sloshing through the system while yield-hungry investors offer their first-born to earn 5%. And this cheap debt along with vertigo-inducing stock valuations have created the largest M&A boom the US has ever seen, with May setting an all-time record.
The Market in Perspective
| Here are the headlines moving the markets. | |
 | Blood On The Street In The Big Boys’ Markets: Bonds & Dollar “Blatter”-edWe suspect more than a few professional traders can find some analagous context with this clip after today’s turmoil… (forward to 1:30 if it does not automatically jump) Quite a day… 0400ET Early drop on hotter-than-expected EU inflation 0500ET Ramp on Greek deal rumors once again 0815ET Airline Bomb Threats send stocks lower 0830ET BTFDers ignore those headlines – stocks jump 0915ET Dijsselbloem dismisses deal – stocks drop 0945ET S&P touches 50DMA and bounces 1000ET Terrible Factory Orders data – stocks surge 1130ET Rip to new highs as algos latched on to Crude’s spike – run stops 1200ET VIX monkey-hammered lower surges stocks 1400ET Stocks start to rollover on no news 1430ET NYMEX Closes, oil-stock link fades and stocks drop into red 1445ET RTRS headline bullshit on EU agreement on terms for Greece 1500ET Great Auto Sales data bumped stocks briefly but faded * * * While stocks traded like an EKG today, the big story is in FX and Bond markets where turmoil was an understatement… The USDollar was crushed today… down a stunning 1.8% as EUR spiked over 2% ahead of tomorrow’s ECB conference
This is the 2nd biggest down day for the Dollar since March 2009… |
| Chief Says I.R.S. Struggles to Stay Ahead of Online Attackers The head of the Internal Revenue Service said the agency was hamstrung in protecting taxpayer identities by software so antiquated that its makers are no longer updating it. |
| Greece’s creditors draft deal to unlock aid, Athens resists BRUSSELS/ATHENS (Reuters) – Greece’s creditors drafted the broad lines of an agreement on Tuesday to put to the leftist government in Athens in a bid to conclude four months of acrimonious negotiations and release aid before the cash-strapped country runs out of money. |
| Goldman executives take victory lap in debate over business model NEW YORK (Reuters) – Senior Goldman Sachs Group Inc executives took a victory lap on Tuesday, telling an investor conference that the bank’s recent results show they have been right all along about its trading-heavy business model. |
| U.S. stocks slip; utilities fall as bond yields jump (Reuters) – U.S. stocks dipped late Tuesday afternoon as a jump in bond yields weighed on utilities, but gains in energy shares and optimism that Greece may be close to a deal with its creditors limited losses. |
| Bits Blog: Pinterest Brings E-Commerce to Social Bookmarking With a Buy Button Pinterest, the online scrapbooking site, enters the ecommerce realm with a “Buyable Pins” button that enables people to purchase items through its site. |
| Greece Breaks America’s Heart, Will Sign MOU With Russia For Gas PipelineGreece has received what The New York Times recently described as “dueling sales pitches” on two proposed natural gas pipelines. One proposal comes from Russia, where the Kremlin is keen to use the tumultuous negotiations between Athens and creditors to advance Moscow’s energy and geopolitical interests. Moscow hopes to essentially buy Athens’ participation in the Turkish Stream pipeline which, as a reminder, will allow Russia to bypass Bulgaria by piping gas through Turkey, then through Greece, Serbia, and Hungary straight to the Austrian central hub.
(Greece’s options) Some have suggested over the past several months that Athens may be able to secure an advance on its potential profits from the pipeline, thus giving Greece some much needed breathing room in what have a series of suffocating negotiations with the troika. This would suit Vladimir Putin just fine as it would allow him to solve the South Stream ‘problem’ while securing a Greco-Russo economic and energy alliance just as Europe debates how to proceed with regard to the conflict in Ukraine. For its part, Europe has responded by filing antitrust charges against Gazprom. The US proposal involves The Southern Gas Corridor, a project aimed at “improving the diversity of the EU’s energy supply” — in other words, it’s an … |
| 5 Investing Myths DebunkedSubmitted by Lance Roberts via STA Wealth Management, 1) The Market Has Generated 10% Annual Returns One of the biggest myths perpetrated by Wall Street on investors is showing individuals the following chart and telling them over the “long-term” the stock market has generated a 10% annualized total return.
The statement is not entirely false. Since 1900, stock market appreciation plus dividends have provided investors with an AVERAGE return of 10% per year. Historically, 4%, or 40% of the total return, came from dividends alone. The other 60% came from capital appreciation that averaged 6% and equated to the long-term growth rate of the economy. However, there are several fallacies with the notion that the markets long-term will compound 10% annually. 1) The market does not return 10% every year. There are many years where market returns have been sharply higher and significantly lower. 2) The analysis does not include the real world effects of inflation, taxes, fees and other expenses that subtract from total returns over the long-term. 3) You … |
| Last Two Times This Happened, Stocks CrashedWolf Richter www.wolfstreet.com www.amazon.com/author/wolfrichter Global growth is languishing, corporate revenues too, but CEOs are trying to show they can grow their companies the quick and easy way. Cheap debt is sloshing through the system while yield-hungry investors offer their first-born to earn 5%. And this cheap debt along with vertigo-inducing stock valuations have created the largest M&A boom the US has ever seen, with May setting an all-time record. There may be a sense of desperation among CEOs as the Fed’s cacophony evokes interest rate increases, the first since July 2006. So companies are issuing all kinds of cheap debt while they still can. Bond issuance has totaled over $100 billion per month in the US for the past four months, the longest such streak ever, according to Bank of America Merrill Lynch. And that record issuance doesn’t account for the booming “reverse Yankee issuance,” where US corporations take advantage of the negative-yield absurdity Draghi has concocted in Europe and issue euro-denominated bonds into European markets. “Issuers should realize that the window to lock in low long-term yields for any purpose is closing,” Hans Mikkelsen, a senior strategist at BofA, wrote in a note, according to the Financial Times. And so in May, M&A deals hit an all-time record of $243 billio … |
| Petrobras Pays Up: The High Price Of Issuing A 100 Year BondThe scandal-surrounded, junk-rated, state-managed Brazilian oil producer Petrobras managed to successfully issue a $2.5 billion notional 100-year bond yesterday. Mainstream media is cock-a-hoop over the fact that the ‘market’ seemed to soak this bond up so easily and at a yield of 8.45% (which was 20-30bps below guidance) amid an order book apparently up to asround $10 billion. However, for those with some math skills, the truth is that it cost Petrobras around $380 million more than market-implied levels to successfully launch the bond (and so it should). Petrobras is not the first to issue a Century-bond (as the following chart from Bond Vigilantes shows back in 2010)
But this was the largest recent issuance.
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| Wal-Mart to raise wages for 100,000 U.S. workers in some departments (Reuters) – Wal-Mart Stores Inc said it would raise minimum wages for over 100,000 U.S. employees including some department managers and deli workers, its second wage hike this year. |
| IMF economists say some countries can ‘just live with’ high debt WASHINGTON (Reuters) – Some countries with high public debt levels might be able to “just live with it,” because cutting back carries its own risks, three IMF officials said in a paper that disputes decades of dogma about the benefits of austerity. |
| Itau, Bradesco, Santander Bid on HSBC’s Brazil UnitItau Unibanco Holding SA, Banco Bradesco SA and Banco Santander Brasil SA have bid to buy the Brazilian unit of HSBC Holdings PLC, according to four people close to the talks. |
| Greece Challenges Creditors With New Proposal to Break Debt Impasse Athens unveiled a plan to unlock financial aid, as creditors like the European Commission and I.M.F. were working on their own proposal. |
| DealBook: Reflections on Stress and Long Hours on Wall Street Wall Street has always thrived, in part, on its eat-or-be-eaten culture. Would curbing its competitive nature cut into its success? |
| A 10% Correction Now Or A 20% (Or More) Bear Market Later OnVia ConvergEx’s Nichaolas Colas,
One of the greatest – if largely forgotten – stories from ancient Greece is a text called the “Anabasis”. Written by soldier and writer Xenophon around 400 BC, it tells of 10,000 Greek mercenaries stuck deep inside the Persian Empire and very far from home. Their sponsor, Cyrus the Younger, had managed to get himself killed and with no local sponsorship the 10,000 have to retreat all the way from what is now Baghdad to the Black Sea, some thousand-plus miles to the north. On the way th … |
| Fed’s Brainard: global troubles weighing on U.S., may delay rate hike WASHINGTON (Reuters) – It may be impossible for the Federal Reserve to raise interest rates until the rest of the world economy improves, Fed board member Lael Brainard said on Tuesday, in the most direct acknowledgement yet of how weak global markets could handcuff the U.S. central bank. |
| Fed Mouthpiece Jon Hilsenrath Furious “Stingy” US Consumers Refuse To Buy The “Recovery” PropagandaNo commentary necessary on this piece originally posted on the Wall Street Journal by Jon Hilsenrath (the same ad hoc, trial ballooning Fed mouthpiece whose work as it relates to the Federal Reserve has to be precleared by the Federal Reserve itself as we first reported five years ago). And no, to our best knowledge, this is not the WSJ transforming into the Onion. from HILSENRATH’S TAKE: A LETTER TO STINGY AMERICAN CONSUMERS
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