Month: April 2016

WTI's 'mysterious' spike into the NYMEX close extended after hours (almost as if someone knew something). Inventories drewdown 4.6mm barrels according to API (drastically less than the expected 2.85mm build). This is the biggest weekly draw since Jan 1. Cushing was expected to see a build of 100k (after 2 weeks of draws) but saw a considerably larger one at +620k. Distillates inventories built as Gasoline drewdown very modestly.

API

• Crude -4.3mm
• Cushing +620k
• Gasoline -116k
• Distillates +2.7mm

Ending the 7 straight weekly build streak…

 

And the reaction…

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1UU1Sc6 Tyler Durden

Submitted by Thad Beversdorf via FirstRebuttal.com,

I keep hearing that the past 6 or 7 years in equities is just part of an even longer term secular bull market.  And it strikes me very curious that investors continue to pay these fee based money managers and chief market strategists who continue to sell this theory.  

Let me show you a chart…

…and then provide a very brief parable for you to consider.

A man moves out to the woods and his family only eats what he catches from the lake.  So on his first morning in the woods he awakens early, grabs his gear and goes fishing.  After anxiously waiting most of the day he gets a fish on but then loses it before it is safely in the boat.  He reels the line in and sees the hook broke.  So he paddles to the marina and buys a new hook from the man who sold him the first one and then he heads back out.  It is now getting late but he decides to give it one more cast and to his excitement he gets a fish on and this time gets the fish in the boat.  He paddles home to show his family the supper he caught.

 

Now does he have one or two fish to show his family?  That’s right, while he caught two fish, the first was lost, and so he has only one to feed his family.  But for the guy at the marina selling poor quality hooks, he actually did profit, not from the fish but from keeping the man fishing.  So perhaps it’s all about perspective.  That is, are you feeding your family from actual investment gains or from scalping fees around other people’s investing?

Let’s remember the point of investment is to gain purchasing power through wealth appreciation.

So first, let’s not focus on nominal value as the above chart indicates 100% of the S&P 500 ‘gains’ since 2000 have come by way of inflation.  This means the market has created exactly $0 of additional purchasing power for investors over the past 15 years.  That’s right, none, zilch, nada.  Want to explain that one away Zandi?? 

 

Second, let’s be honest, now I know finance is certainly not the place for honesty but let’s try.  Suggesting that achieving the same market gains two separate times after having lost them the first time is somehow two separate bull markets is total nonsense unless you are profiting from the ride rather than the final destination.  

Happy trading!

via Zero Hedge http://ift.tt/1WaqCMm Tyler Durden

2015’s positive return for The S&P 500 was rescued at the last second…

Because nothing says “efficient markets” like a last second VIX panic-selling to jam S&P up 3 points into the close… and save the green close for the year…

 

Close up it all started exactly one minute before the cash close…

 

Keeping the green alive!

via Zero Hedge http://ift.tt/1UGKxD8 Tyler Durden

Better than expected PMIs prompted a rip and dip early on as good news ended up as bad news today… as opposed to bad news being bad news yesterday (and good news being good news on Friday)… and just like that all the jobs gains are gone…

 

And despite some ramp efforts, this…

 

Not only is the 2015 analog holding up – in an ominous way…

 

But the 2001 analog is looking especially ugly…

h/t @NautilusCap

As Deutsche's systemic risk analog sends the loudest warning…

 

Since Friday's exuberant ramp close, things have not gone according to The Fed's plan…

 

and Obama's address today scaring the merger arb crowd did not help..

 

Since payrolls, bonds are leading, gold and stocks are unch and oil is monkey-hammered…

 

Crude ramped dramatically at the NYMEX close, which along with a USDJPY ramp sent stocks soaring – and most importantly lifted S&P back into the green post-Payrolls… and then stocks dumped…

 

Treasury yields dropped on the day and flattened…4th day of 2s30s flattening in a row…

 

Commodity currency carnage offset JPY strength to leave the USD Index unch-is on the day…

 

And despite the relatively unch day, gold and silver rallied and crude was just bloody idiotic…

 

Crude close up…

 

Charts: Bloomberg

Bonus Chart: Fed Balance Sheet continues to be point of pivot suggesting 1965 FV…

via Zero Hedge http://ift.tt/23ewK8s Tyler Durden

“peddling virtual fiction…”

 

 

Source: Investors.com

via Zero Hedge http://ift.tt/25JsDmN Tyler Durden

Preface: One of the reasons that voters like Sanders and Trump is because they oppose fake "free trade" deals, which help a handful of fatcats … but have almost nothing to do with "free trade", and which hurt the American worker.

Barack Obama pushed the trade deal with Panama which allowed the tax evasion revealed by the "Panama Papers" to flourish.  Huffington Post reported in 2011:

Obama is also urging Congress to approve a trade agreement that would cement a key tax avoidance tactic deployed by some of the richest Americans.

 

***

 

Obama urged Congress approve three trade deals, including one with Panama that would permit Americans to easily stash assets in the Central American country, a notorious tax haven for the wealthy and American corporations.

 

***

Panama does have some of the most stringent bank secrecy laws in the world, making it extremely easy and inexpensive for U.S. citizens to set up offshore corporations and bank accounts. Establishing the corporation and bank account costs less than $2,000, and any money that Americans stash in these entities is not taxed. Bank secrecy laws and extremely lax corporate registration standards make it very difficult for the Internal Revenue Service to track transactions transferring funds to these Panamanian destinations from the United States. Small surprise, then, that Panama is home to nearly 400,000 offshore corporations, more than any other nation except Hong Kong.

 

***

 

The trade agreement with Panama would effectively bar the U.S. from cracking down on this activity. The U.S. would not be allowed to treat Panamanian financial services transactions differently from transactions in nations that are not tax havens. It would also be unable to pursue some standard anti-money laundering techniques in Panama. Combating tax haven abuse in Panama would be a violation of the trade agreement, exposing the U.S. to fines from international authorities.

 

“It directly undermines Obama’s putative domestic agenda of job creation, cracking down on tax havens and collecting revenue from tax-dodging corporations,” said Lori Wallach, Director of Public Citizen’s Global Trade Watch. “The [free trade agreement] would forbid future use of existing policy tools to combat financial crime.”

Hillary Clinton did as well …

International Business Times reports:

Soon after taking office in 2009, Obama and his secretary of state [Hillary Clinton] — who is currently the Democratic presidential front-runner — began pushing for the passage of stalled free trade agreements (FTAs) with Panama, Colombia and South Korea that opponents said would make it more difficult to crack down on Panama’s very low income tax rate, banking secrecy laws and history of noncooperation with foreign partners.

 

***

 

 

Upon Congress ratifying the pact, Clinton issued a statement lauding the agreement, saying it … "will make it easier for American companies to sell their products." She added: "The Obama administration is constantly working to deepen our economic engagement throughout the world, and these agreements are an example of that commitment."

But Bernie Sanders opposed the tax evasion deal with Panama, and prophetically warned in 2011:

Panama’s entire annual economic output is only $26.7 billion a year, or about two-tenths of 1 percent of the U.S. economy. No one can legitimately make the claim that approving this free trade agreement will significantly increase American jobs. Then, why would we be considering a stand-alone free trade agreement with Panama, tiny little country?

 

Well, it turns out that Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade U.S. taxes by stashing their cash in offshore tax havens. And the Panama free trade agreement will make this bad situation much worse. Each and every year, the wealthiest people in our country and the largest corporations evade about $100 billion in U.S. taxes through abusive and illegal offshore tax havens in Panama and in other countries. So, according to Citizens for Tax Justice—and I quote—"A tax haven … has one of three characteristics: It has no income tax or a very low-rate income tax; it has bank secrecy laws; and it has a history of non-cooperation with other countries on exchanging information about tax matters. Panama has all three of those. … They’re probably the worst."

 

via Zero Hedge http://ift.tt/1SyC5Qc George Washington

While breadth and seasonals are constructive, BofA's Stephen Suttmeier warns complacent put/call, VXV/VIX, and volume distribution are April risk factors.

Since mid-March, accumulation (up volume or buying) has fallen relative to distribution (down volume or selling) as the US equity market has rallied, which is negative divergence and risk factor for April. To suggest that this complacency is beginning to take its toll on price action, the S&P 500 must break nearby support at 2044-2022, which coincides with revised channel support from February, and fall out of its daily overbought condition.

The NYSE McClellan Oscillator remains weak and has a month-long bearish divergence with the S&P 500 moving into early April. This is similar to the divergence moving into early November, and a risk factor for April.

VXV/VIX says investors very complacent about volatility

There is nothing like a 14%+ rally in 34 days, with help from a Dovish Janet Yellen last week, to make investors feel more comfortable about the US equity market. In terms of sentiment, the VXV/VIX ratio is extremely overbought or complacent as investors do not expect an immediate increase in volatility. The VXV/VIX remains in the overbought zone above 1.20 after hitting the highest reading since March 2015. The S&P 500 has generally struggled on these extreme contrarian bearish readings in the VXV/VIX, which is a risk factor as we move into April.

25-day put/call as complacent as early-Nov & late-May 2015

The CBOE 25-day total put/call ratio has dropped back to the lowest or most complacent levels seen since the S&P 500 highs in early-November at 2116 and late-May 2015 at 2135. This is contrarian bearish, with the 25-day put/call at 0.94 vs. 0.94 in early November and 0.92 in late May. This low put/call ratio is an April risk factor.

VIM Distribution is complacent with a bearish divergence

The market also appears complacent based on low distribution (selling or down volume) readings in our Volume Intensity Model (VIM). VIM Distribution hit a low on March 15 and shows a bearish divergence with the S&P 500 moving into April. A similar divergence developed moving into the early-November peak in the S&P 500. This is a risk factor for April.

via Zero Hedge http://ift.tt/1SNUgnL Tyler Durden

Less than a month ago when we looked at the performance of the most-shorted stocks, we confirmed that at least from a price action standpoint the short squeeze that had started in early February on the back of the 50% move higher in oil, had become the biggest short squeeze on record.

 

Today, courtesy of JPM’s Prime Brokerage, we can not only confirm that the move higher from the February lows was the biggest squeeze ever, but share a unique glimpse inside its mechanics, where something surprising emerges.

The chart below shows the cumulative daily market value change of shorting and covering activities in the PB portfolio across ETFs and Equities YTD 2016 (as of Mar. 31, 2016). The data includes all strategies.

There is something very surprising about the chart below: what it shows is that whereas hedge funds have been actively shorting single name stocks, when it was time to cover, the single names remained shorted but it was ETFs where the covering/buying activity took place.

 

Potentially, this huge ETF covering spree (during which no actual short equities are covered) is a function of pre-existing short ETF positions, used as short pair-trade hedges to maintain a “market neutral” position with single name longs; then during turbulent market inversions, it is the ETFs that are covered first and foremost, while existing shorts remain outstanding, something which would dramtically change the interpretation of such conventional metrics as NYSE short interest.

What are the implications of this asymmetric long/short exposure, where hedge funds short single name stocks and cover ETFs, is not fully clear at this moment but it appears to be an odd development of market technicals and may explain why whenever there is a “Buy The Dip” rally, the cross-asset correlation tends to be far higher on the way up, than on the way down.

via Zero Hedge http://ift.tt/1UTQwVJ Tyler Durden