05Jun2015 Market Update: Averages Remain Mixed And Trending Down Over Investors Continued Market Concerns Over A Overdue Big Correction

Here is the current market situation from CNN Money

North and South American markets are mixed. The IPC is higher by 0.10%, while the Bovespa is leading the S&P 500 lower. They are down 0.76% and 0.14% respectively.

OPEC agrees to keep pumping as oil glut fears persist

VIENNA (Reuters) – Oil group OPEC agreed to stick by its policy of unconstrained output for another six months on Friday, setting aside warnings of a second lurch lower in prices as some members such as Iran look to ramp up exports.

Chinese Hacking of U.S. Data May Extend to Insurance Companies

The same attackers who breached the records of millions of government workers appear to be behind similar thefts at Anthem and Premera Blue Cross, cybersecurity experts say.

U.S. Stocks Fluctuate

U.S. stocks fluctuated and bond prices pared their losses, after the May jobs report showed a pickup in hiring last month but also heightened concerns that the Fed will raise borrowing costs this fall.

“The Job Numbers Literally Do Not Add Up”

By Jeff Snider of Alhambra Investment Partners

Payroll Stats Become Even More Implausible

Since Q1 GDP was revised lower by almost 1% that meant estimates of productivity were going to be even more out of alignment than they were at the first release. Of course, in a less massaged environment productivity might have preserved some sense if there was less rigidity from the BLS on the employment side. In other words, when “output” estimates were reduced (and they were, by more than GDP) it would make sense that everything would be revised downward in a more cohesive process. Instead, output was reduced significantly, by 1.4%, while total hours worked was marked down by all of 0.1%.

As a result, productivity is revised from a nonsensical -1.9% to an even more skeptical -3.1%.

If this was just a one-quarter problem, then it would be easy to dismiss as random variation or expected variance in all these statistics trying to tie together across real economy lags and such. But that is not the case, as productivity, and by extension the estimates for how “expensive” marginal labor is and thus the primary reason businesses hire and fire in the first place, has been seriously “off” for some time. With these latest estimates and revisions, productivity is now -0.7% over the last 5 quarters dating …

Wall St mixed after jobs growth signals Sept rate hike

(Reuters) – U.S. stocks were mixed in choppy trading on Friday after data showed that U.S. job growth rose sharply in May and wages picked up, signs of momentum in the economy that revived expectations of an interest rate hike in September.

Barclays settles lawsuit over Lehman brokerage purchase

NEW YORK (Reuters) – Barclays Plc on Friday said it has resolved litigation with the trustee for Lehman Brothers Holdings Inc’s brokerage unit, which arose out of the bank’s hurried purchase of much of that unit at the height of the 2008 global financial crisis.

Greece’s Governing Party Adds to Pressure From Country’s Creditors

Members of Syriza and government officials amplified their dissent over a new bailout plan hours before the prime minister was to address Parliament.

The Parched West: California Farmers Dig Deeper for Water, Sipping Their Neighbors Dry

Those who can afford to are drilling deeper, hoping to tap new aquifers, but those new wells threaten to arouse long-dormant water disputes in the state.

Greece postpones IMF payment; snap elections possible

ATHENS (Reuters) – Greece delayed repayment of an IMF loan on Friday and a deputy minister said Athens might call snap elections to break an impasse with lenders that threatens to push the country into bankruptcy and out of the euro.

Walton family cements influence at Wal-Mart with new chairman

FAYETTEVILLE, Arkansas (Reuters) – Wal-Mart Stores Inc named Vice Chairman Greg Penner as its new chairman on Friday, replacing his father-in-law Rob Walton and cementing the founding family’s influence over the retailer’s board.

The Incredibly Bearish Bull Market

Submitted by Lance Roberts via STA Wealth Management,

In our daily lives, we use oxymorons on a regular basis. Combinations of words such as “exact estimate,” “pretty ugly,” and “butt head” are pretty funny when you think about them. Other combinations of words, such “business ethics,” have become oxymorons given that major U.S. banks have effectively become criminal enterprises by being allowed to rig forex and LIBOR markets. Those criminal actions, which would have resulted in jail time for anyone else, resulted only in a small fine and a promise not to commit MORE criminal acts for 36 months. That should be sufficient time for the banks to plan their next major caper.

I digress. There is another emerging oxymoron: the “bearish bull market” in stocks.

Currently, there are things occurring that are very troublesome, and in more normal times, would likely already have investors heading for cover. However, in today’s liquidity fueled, Central Bank supported environment, that has yet to be the case. The reason was best described recently by Dr. Robert Shiller:

“I call this the ‘new normal’ boom it’s a funny boom in asset prices because it’s driven not by the usual exuberance but by an anxiety.”

In other words, it is not exuberance about the strength of the economy, job security and global stability that is providing investors the confidence to plunge into markets. It is the “anxiety” of missing out on further gains. This anxiety ha …

Futures Storm Into The Green, On Verge Of Regaining 2100

When the “better than expected” jobs data came in, equity futures (alongside crude, precious metals, and bunds) promptly tumbled on fears the Fed rate hike, which many had expected would take place in September was pushed forward to July, or even the current month. However, starting with the market open, the E-mini has seen a relentless bid higher, and as of moments ago, it finally ticked into the green, covering nearly 17 points from the lows in less than an hour.

Why? We don’t know, but we are eagerly looking forward to a blog post by Ben Bernanke, Citadel’s most famous futures trader, explaining it all.

Of course, with the market having “liquidity” issues and with Virtu’s algos doing all the can to constantly trigger any and all trailing or otherwise ES stops, we wouldn’t be surprised if 5 minutes from now, all the gains are gone and the ES is back at the day lows.

Stocks Are Moving Into Dangerous Territory

It’s possible that the big move we’ve been waiting for is finally here.

We’ve just broken below the lower trendline that has been in place since November 2014.

The significance of this cannot be overstated because the S&P 500 has just completed a massive bearish rising wedge pattern that started at the bottom in 2009. As you can see in the weekly log-scale chart below, we’ve just taken out the lower trendline that has guided the bull market since 2009.

This would suggest that the bull market in stocks is ending. It’s quite possible that a significant top, and possibly THE top is in for stocks.

This would coincide with the proprietary “sell” signal that we received from our long-term trend model last month. As we stated to our subscribers at that time…

This is the same signal that triggered the top for the Tech Bubble and the Housing Bubble. The only other time it triggered was during the Debt Ceiling crisis in 2011. But even at that time stocks still collapsed 20%.

I continue to be concerned that we are at risk of something worse than a 10% correction. A mere 10% correction would only take us to the October 2014 lows.

This would be just a healthy correction… but given the “behind the scenes” signals I’ve been getting from the financial syst …

Fed seen raising rates in October as job market firms

(Reuters) – After an unexpected surge in U.S. job gains in May, traders are now betting the Federal Reserve will start raising interest rates as soon as October, and will make a second increase early next year.

Sturdy U.S. jobs report boosts chances of Fed rate hike

WASHINGTON (Reuters) – U.S. job growth accelerated sharply in May and wages picked up, signs of momentum in the economy that bolster prospects for an interest rate hike in September.

An Important Economic Indicator Money Velocity Crashes Far Worse than During the Great Depression

We noted 3 years ago that the velocity of money – an important economic indicator – is lower than during the Great Depression.

Things have gotten even worse since since then …

By way of background, the velocity of money is the rate at which people spend money.

In other words, it’s the speed at which a dollar moves from one person to the next through the economy.

The Federal Reserve Bank of St. Louis explains:

The velocity of money can be calculated as the ratio of nominal gross domestic product (GDP) to the money supply … which can be used to gauge the economy’s strength or people’s willingness to spend money. When there are more transactions being made throughout the economy, velocity increases, and the economy is likely to expand. The opposite is also true: Money velocity decreases when fewer transactions are being made; therefore the economy is likely to shrink.

The St. Louis Fed labels the velocity of money as “Gross Domestic Product/St. Louis Adjusted Monetary Base” … and provides the following data on the velocity of money between the start of the Great Depression and today:

Where The May Jobs Were: Teachers, Waiters, Retail, And Temp Help

One of the defining features of jobs “recovery” and the main reason why wage growth has been so far below the Fed’s expectations for years it has prevented wage inflation from appearing despite years of QE, is that the quality of jobs added month after month has disappointing. May was no difference.

Yes, the headline print of 280K job additions was great, but a quick look at how the BLS got there shows that nothing has changed because four of the five main job additions were, as usual for the lowest paid jobs.

Here is the breakdown:

Education and Health (i.e., teachers): +74,000

Leisure and Hospitality (i.e., waiters): +57,000

Retail Trade (i.e., minimum wage store clerks): +31,400

Temp Help: +20,100

In fact, these lowest quality jobs accounted for two-thirds of all jobs gains in May.

As for the well paid jobs: Mining and logging (energy workers): down 18,000, Information: down: 3,000, Financial services: up 13,000, and Construction workers: up 17,000 which is not bad, however it is down more than half from April’s +35,000.

Incidentally, by consistently adding the lowest quality jobs, not only is the conundrum of America’s missing wage growth resolved, but so is the quandary of why US labor productivity has gone nowhere in the past 5 years.

Wealth Matters: Skimping on the Splurges, Even as a Millionaire

Recent research shows that single-digit millionaires, at least, are generally far more mindful about how they save, spend and invest their money.