Russell 2000 Loses Critical Support As MoMo Massacre Accelerates

Momentum, or high-growth hope, stocks are making fresh lows of the February Tarullo Top as this morning’s mysterious buying panic sparked by housing data has relapsed into aggressive selling pressure. The Pharma frenzy is fading fast also. The Russell 2000 has broken below its 200DMA once again – a critical support level – and Nasdaq and Trannies are making new lows from Friday. All US equity indices are now in the red for April.

Biotechs not getting a bounce from the Pharma frenzy as momos just keep tumbling from Tarullo’s top…

 

As the day’s chaos evolves once again…

 

Leaving all US equity indices under water for April and Russell below its 200DMA once again

 

As AUDJPY takes over charge of S&P futures from USDJPY…




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Kill One Man to Save Five? Answers Depend on What Language This Moral Dilemma Is Posed In

It’s a timeworn and some might
say tired rhetorical dilemma: Would you sacrifice one person’s
life to save five?
But a new study published in the
journal PLOS One provides a fresh
twist on this morality test
. It seems people’s answers may
depend on whether the question is posed in a native or a foreign
language, with people making “substantially more utilitarian”
decisions in the foreign language. 

“People often believe that moral judgments about ‘right’ and
‘wrong’ are the result of deep, thoughtful principles and should
therefore be consistent and unaffected by irrelevant aspects of a
moral dilemma,” note the researchers, led by Albert Costa of
Spain’s University Pompeu Fabra.

Not so! Study participants—a mix of Americans, Koreans, French,
and Israelis—were asked to imagine a situation where pushing a
heavy man off a footbridge in front of a moving train could save
five people about to get hit. The moral dilemma was posed to them
in either their native language or a foreign language that they
were proficient in but did not grow up speaking at home. Across all
groups, more participants selected the utilitarian choice—to save
five people by killing one—when using a foreign language than a
native tongue.

Overall, only 18 percent of participants decided to push the man
to his death when using their native tongue, compared to 44 percent
when using a foreign language. 

In a second experiment, participants were given another version
of the same dillemma—but this time, pulling a switch could
divert the train from hitting five people to only hitting one, no
pushing required. This time, participants preferred to divert the
train in nearly equal numbers using native and foreign
languages. 

The researchers speculate that this has to do with the more
emotional nature of the first scenario. “Most likely, a foreign
language reduces emotional reactivity, promoting cost-benefit
considerations, leading to an increase in utilitarian judgments,”
they write. “This discovery has important consequences for our
globalized world as many individuals make moral judgments in both
native and foreign languages.”

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The Federal Government’s Obamacare Exchange Is Still Far From Complete, and It’s Way Behind Deadline

After last October’s disastrous
launch of HealthCare.gov, the federal health insurance exchange
portal created under Obamacare, the Obama administration decided
that some change, and perhaps even hope, was in order. In January,
the administration fired the original exchange tech contractor, CGI
Federal, and brought on a new firm, Accenture.

Normally, the federal contracting process is slow and arduous.
But the administration needed to make the transition with a minimum
of fuss. Partly that was to ensure continuity of service. But
partly it was because the exchange project was still lagging far
behind schedule. The back-end components that communicate with and
make payments to health insurers—the “financial management
platform”—were originally supposed to be finished before the site
went live in October. But pre-launch delays kicked the work down
the road. In November, during a congressional hearing on the
botched exchange launch, a federal tech official revealed that
between 30 and 40 percent of the system had not been completed. The
expected completion date was revised and pushed back to January.
But when January came along, and the administration decided to
change contractors, the work still wasn’t done. There was still no
financial management platform in place to manage the law’s complex
network of subsidies and risk mitigation payments to insurers.

In a
document
justifying the rapid award of the new contract with
Accenture, the administration warned that before long, this could
be a huge problem. “Failure to deliver” the payment
functionality “by mid-March 2014 will result in financial harm to
the Government. If this functionality is not complete by March
2014, the Government could make erroneous payments to providers and
insurers.” Without a finished system, “the entire healthcare reform
program is jeopardized.” Missing the mid-March deadline would
“significantly increase” a variety of risks for the program, and
could “potentially [put] the entire health insurance industry at
risk.”

As an astute reader, you may notice that it is now the end of
April. The mid-March deadline is long gone, and long blown. These
crucial back end systems remain incomplete.

And,
according to a report
in Politico, the administration
has no timeline in place for when they will be finished. Nor will
anyone in the know say how much work has been done.
Politico reports that federal health officials “refused to
provide an update on just how much of the back end remains
incomplete, the current issues they face and their latest
timetable.” Not exactly confidence inspiring, eh? 

For the time being, payments are being made based on estimates
from insurers rather than actual tracking—basically, they’re
guesstimating. And they’re going to continue guesstimating for a
while. But eventually, at some point, everyone has to start dealing
with reality.

The Obama administration posted a
document
 earlier this month indicating that insurers will
continue to be paid through an “interim” accounting process—pretty
much a spreadsheet and some informed estimates—until at least
September. When the permanent system eventually goes live, it could
lead to a massive correction that either exposes taxpayers to more
costs or puts pressure on insurance companies to raise
prices
.

The best-case scenario here is that the delay isn’t actually
that big a problem, at least not in the short term, and the
administration’s original warnings were misleading—perhaps
intentionally, or perhaps unwittingly. Either way, it’s not good:
They either knowingly overstated the risk, or they still don’t have
a strong handle on many key technical aspects of the exchange
system. 

But given those early warnings, and the serious trouble the
administration and its tech vendors seem to be having making this
part of the system work, it’s still at least plausible that there
are more serious tech messes coming in the near future. At minimum,
I suspect, even if there are no major disasters, the federal health
exchange system will continue to be rickety and unstable for a
while to come.

And remember—compared to several of the still-malfunctioning
state exchanges, the federal portal is actually on relatively sure
footing. 

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The Fed Knows That QE Has Failed to Create Growth… But Do the Markets?

As we’ve noted previously, the Bank of Japan’s massive QE campaign has revealed:

 

1)   That QE does not generate economic growth

2)   There will be political consequences for its failure

 

Indeed, Japan will spend over 20% of its GDP on this single QE program… and at most bought an uptick in economic data that lasted a few quarters. So much for QE as an engine for economic growth.

 

Now, Central Bankers will never openly admit that they or their policies have failed. Moreover, they do not rush into sudden tightening (more on this in a moment). But one can begin to notice subtle changes in their language and actions that indicate they have noticed what’s happening in Japan. Nowhere is this more clear than at the US’s Federal Reserve or Fed.

 

Indeed, starting in August 2013, various Fed officials began questioning the efficacy of QE.

 

First came the San Francisco Fed with a study revealing that QE generally doesn’t appear to generate economic growth:

 

Asset purchase programs like QE2 appear to have, at best, moderate effects on economic growth and inflation. Research suggests that the key reason these effects are limited is that bond market segmentation is small.

 

Moreover, the magnitude of LSAP effects depends greatly on expectations for interest rate policy, but those effects are weaker and more uncertain than conventional interest rate policy. This suggests that communication about the beginning of federal funds rate increases will have stronger effects than guidance about the end of asset purchases.

 

http://ift.tt/14HG3Uw

 

A few months later, the former Fed official in charge of the Fed’s first round of QE, penned a Wall Street Journal article stating that QE was in fact a Wall Street bailout.

 

I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time…

 

It wasn't long before my old doubts resurfaced. Despite the Fed's rhetoric, my program [QE] wasn't helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn't getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.

 

http://ift.tt/1djUD3Z

 

Around this time, the Fed began to taper QE first by $10 billion in December… and another $10 billion in January. By this point even uber-dove Fed President Bill Dudley (he formerly claimed inflation is low because iPads are getting cheaper) even admitted the following:

 

We don't understand fully how large-scale asset purchase programs work to ease financial market conditions—is it the effect of the purchases on the portfolios of private investors, or alternatively is the major channel one of signaling?

 

http://ift.tt/1g8bdVY

 

At this point, Ben Bernanke handed off the reins for Fed Chairman to Janet Yellen. Yellen has since continued Bernanke’s tapering projects, reducing the monthly QE spend from $65 billion to $55 billion.

 

The failure of the Bank of Japan’s massive QE program and the Fed’s decision to taper are not unrelated. Take a look at the timeline.

 

·      April 2013: Japan announces a “shock and awe” QE program.

·      August 2013: San Francisco Fed economists (where future Chairman of the Fed Janet Yellen is President) write a study showing QE is ineffective at generating economic growth.

·      November 2013: Former Fed officials admit QE was not meant to help Main Street.

·      December 2013: the Fed begins to taper its QE programs by $10 billion

·      January 2014: Bernanke’s last FOMC as Fed Chairman, Fed announces another $10 billion taper

·      March 2014: Janet Yellen takes over at the Fed and announces another $10 billion QE taper.

 

This represents a tectonic shift in the financial markets. It does not mean that Central Banks will never engage in QE again. But it does show that they are increasingly aware that QE is no longer the “be all, end all” for monetary policy.

 

This concludes this article, swing by http://ift.tt/RQfggo for a FREE investment reports Protect Your Portfolio, which outlines how to protect your portfolio from bear market collapses.

 

Best Regards

 

Phoenix Capital Research

 

 




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NY Rep. Michael “I’ll Break You In Half” Grimm Indicted On 20 Counts Of Fraud

NY Republican Congressman, and former FBI agent (ironically), Michael Grimm – who became infamous for threatening an NY1 reporter "I'll throw you off the fucking balcony… I'll break you in half" – has been indicted on campaign finance charges as well as mail, wire, and healthcare fraud. Oh and since he seemed such a trustworthy and honest chap after his apology for the prevous threats, he is also being charged with perjury after lying about all the other shit he did… Welcome to American politics… As AP reports, he has pleaded not guilty to the 20-count federal indictment.

 

As CBS Reports,

He’s charged with engaging in schemes to underreport wages for restaurant workers, including some who were in the country illegally. He’s accused of concealing more than $1 million in sales and wages.

 

“As a former FBI agent, Rep. Grimm should understand the motto: fidelity, bravery, and integrity. Yet he broke our credo at nearly every turn,” FBI Assistant Director George Venizelos said in a statement. “In this 20-count indictment, Rep. Grimm lived by a new motto: fraud, perjury, and obstruction.”

 

 

The alleged fraud occurred from 2007 to 2010 when authorities said Grimm was one of the owners and the managing member of an Upper East Side fast food restaurant called Healthalicious and oversaw the day-to-day operations of the restaurant.

 

Prosecutors said during that time, Grimm filed false state and federal tax returns to underreport over a $1 million in sales and wages by concealing gross receipts for cash purchases and paid workers hundreds of thousands of dollars off the books.

 

“Healthalicious was a small business and it sold casual food so many people used cash and it was this cash that Michael Grimm exploited making over a $1 million simply disappear,” Lynch said. “Grimm took the cash from the register, used part of it to pay the workers off the books, never reporting it to the taxing authorities.”

 

When it came to this restaurant, Michael Grimm never met a tax he didn’t lie to evade,” Lynch added.

 

Authorities also say that when he was deposed by an attorney representing former employees in a lawsuit, Grimm lied under oath about his allegedly fraudulent business practices.

 

“Rep. Grimm billed himself as a patriot and an American hero,” Venizelos said. “But Rep. Grimm was anything but an upstanding citizen. He cheated, evaded and then lied.”




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Meanwhile In China, Bayonets At The Ready

It was only a week ago when we reported that the Chinese Police, for the first time in over 60 years of “pacifism”, has resumed arming itself as more than 1,000 street-patrol officers began carrying 9mm revolvers. “Shanghai officers, according to the city police bureau, will increasingly be equipped “to respond to all violence and terror” with a revolver using real and rubber bullets.  It said officers are getting training in the largest cities in Tibet, Xinjiang, Hunan, Sichuan and Yunnan, where Kunming is the capital.”

However, perhaps nowehere is it clearer just how nervous the Chinese authorities are getting about the restless natives than in the following series of photos posted moments ago on Sina, showing security forces in China’s Urumqi province learning how to use… bayonets?

h/t @ChuBailiang




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Donetsk Clashes Break Out In “Scenes Of Absolute Brutality”

It seems the US and EU sanctions escalation hasdone nothing to calm the tensions between Ukrainians and pro-Russian forces in Donetsk. As the following clip suggests… “rocks and missiles are being thrown from both sides – there are injuries and scenes of absolute brutality as both sides clash.”

 

 

 

Minutes before the violence erupted…

 

and then as violence erupted…

And the got serious..




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“Costs” – Russia +2.35%; Nasdaq -0.3%

Spot the nation that just had “major sanctions” handed down to it…

 

 

What is fascinating is the ramp in US equities managed to catch them up to Russia’s post-sanctions outperformance… before they collapsed again… almost as if someone wanted to prove that US was not suffering.




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Ali-ByeBye – Weibo IPO Plunges To Bear Market

Just a few brief days ago, Weibo IPO’d “successfully” at the bottom-end of its range ($17) and exploded higher – “proving” that Candy Crush (or take your pick of recent IPO failures) were all one-offs and that ‘quality’ companies were still in demand. Fast forward 6 days and Weibo just entered a bear-market – down dramatically from its highs over $24 and is nearing its IPO price. There’s no data, no news – just selling, in size. Investors stashing cash away for another pop in Alibaba’s forthcoming IPO perhaps? Not if market conditions continue to look like this…

 




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A. Barton Hinkle: Is It Time to Welcome Our New Robot Overlords?

From targeted online ads to surveillance by
drone, we’re increasingly living in a brave new world of
technology. Should we say goodbye to privacy and welcome our new
robot overlords? A. Barton Hinkle weighs the issues.

View this article.

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