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 March 10, 2010, 4:00 pm EST — … The Standard & Poor’s 500 index closed up 5.16 to 1145.61, as benchmark crude for April delivery rose 60 cents to settle at $82.09 on the New York Mercantile Exchange. The Energy Information Administration said crude inventories grew last week by 1.4 million barrels to 343 million barrels. Analysts expected a build of 2.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. The lower build raised hopes that demand might be picking up, although there’s still a lot of oil on hand. “There was nothing inherent in the report to justify buying up to $83 per barrel,” said oil analyst and trader Stephen Schork. He cautioned against focusing on one week of data which “doesn’t mask the fact that we have seen enormous builds and smaller draws in the weeks prior to this.” Meanwhile OPEC said world oil demand should grow by 900,000 barrels per day this year, an upward revision from last month’s forecast. OPEC said its forecast depends on a sustained global economic rebound, particularly in the U.S. While oil prices have risen about 17 percent since early last month, crude demand in the U.S., the world’s largest consumer of oil, has remained sluggish. “We really have to look overseas for growth,” said Andrew Lipow, president of Lipow Oil Associates. “Oil demand is increasing in the usual suspects like China and India, but it’s also increasing throughout the Arabian Gulf and in Africa.” This means higher gasoline prices for U.S. consumers, he added. Retail gasoline prices climbed again on Wednesday. The nationwide average rose 0.9 cents to $2.768 per gallon, according to AAA, Wright Express and Oil Price Information Service. Prices have risen 11.6 cents in the last month and are now 82.7 cents higher than levels of a year ago. … The dollar edged down slightly against the euro in afternoon trading. A weaker dollar makes crude cheaper for investors holding foreign currencies. …
 — Underreported: Unemployment rose in 30 states in January, the Labor Department said today, evidence that jobs remain scarce in most regions of the country. The data is slightly better than December, when 43 states reported higher unemployment rates, but worse than November, when rates fell in most states. Still, five states reported record-high joblessness in January: California, at 12.5 percent; South Carolina, 12.6 percent; Florida, 11.9 percent; North Carolina, 11.1 percent; and Georgia, 10.4 percent. Michigan’s unemployment rate is still the nation’s highest, at 14.3 percent, followed by Nevada, with 13 percent and Rhode Island at 12.7 percent. South Carolina and California round out the top five. There were limited signs of job creation. Thirty-one states added jobs in January, up from only 11 in the previous month. But the job gains weren’t enough, in many cases, to lower the unemployment rate. For example, California reported the largest job gains, of 32,500, though its unemployment rate also rose. Illinois, New York, Washington state and Minnesota reported the next highest totals of new jobs. However, when drilling down into the numbers, the gains were bogus or government generated due to the census polling. The lowest unemployment rates are still found in upper Plains states, with North Dakota’s jobless rate of 4.2 percent the lowest in the nation. Nebraska and South Dakota had the next lowest rates, at 4.6 percent and 4.8 percent, respectively. In January, the national unemployment rate fell to 9.7 percent from 10 percent the previous month. Last week, the Labor Department said the national rate was unchanged in February at 9.7 percent, while the pundits claimed that the slight improvement is only the beginning. Dartline is still questioning the data: How are new jobs going to be created when the only plus gains in the last 10-years were small businesses and the real estate construction sector? Meanwhile, state unemployment data for February won’t be released until later this month. Should be an interesting read.
March 10, 2010, 7:00 am EST —   … The Standard & Poor’s 500 index futures up 1.20 to 1141.70, as exports in China were up 45.7 percent over a year earlier, beating analyst forecasts of 35 to 40 percent growth. Imports surged 44.7 percent, the agency said, reflecting growing demand in China as it emerges from the global crisis. China’s global trade surplus was $7.6 billion in February and the combined January-February surplus was $21.8 billion. Its trade surplus with the United States in the January-February period shrank by 27 percent to $20.9 billion. The gap with the 27-nation European Union, China’s biggest trading partner, widened by 34 percent to $22.3 billion. China’s combined trade surpluses with its major export markets were larger than its global surplus because it also ran substantial deficits with Australia, Brazil, Taiwan and other suppliers of iron ore, industrial components and other materials needed by its booming export manufacturers. The commerce minister, Chen Deming, cautioned Saturday that despite stronger recent trade, it will be two to three years before China’s exports return to pre-crisis levels. … Meanwhile, A market surge that began a year ago appears to have run out of steam recently. Traders are no longer looking for just anecdotal evidence that a recession is easing like they were last year. Now they want to see signs of sustained economic growth. With little economic data released since last week’s better-than-expected jobs report, investors haven’t made any big moves. However, a report due out Wednesday is expected to show business inventories rose 0.2 percent in January. … In Europe, the FTSE 100 index of leading British shares was down 1.23 point to 5,601.07 while Germany’s DAX rose 8.72 points, or 0.2 percent, to 5,894.61. The CAC-40 in France was 5.78 points, or 0.2 percent, higher at 3,915.79. … Of interest — Britain Prime Minister Gordon Brown confirmed that the annual budget statement will be on March 24, meaning that it’s even more likely that the British general election will be on May 6 — election campaigns usually last a month or so in Britain. … The pound traded 0.8 percent lower at $1.4875, following the news that the recovery in Britain’s industrial sector ground to a halt in January — official figures showed that industrial production fell by 0.4 percent during the month, with manufacturing output down by an even greater 0.9 percent. Though the industrial sector only accounts for around 18 percent of the British economy, the figures reinforced fears that the British economy may contract again in the first quarter of the year following grim trade data on Tuesday. The pound has been undermined in recent weeks by growing concerns about the upcoming general election following the closing of the gap between the opposition Conservative Party and the governing Labour Party in a raft of opinion polls. Investors are worried that an unclear election outcome where no one party gets an overall majority may stymie attempts to get borrowing down. On Tuesday, Fitch Ratings said Britain’s triple A rating was merited but it did warn that more needs to be done by the next government to get a handle on Britain’s budget deficit, which is poised to be around 12 percent of the country’s gross domestic product this year — not far off from Greece’s levels. The euro was 0.1 percent lower at $1.3585 while the dollar rose 0.5 percent to 90.36 yen. …
— Maintain resistance for the S&P 500 index at 1150.41 and support at 1102.80. Critical next two days as the index will determine near term direction whether resistance holds or not. Meanwhile, trade the market cautiously with a neutral bias.
March 9, 2010, 4:00 pm EST — Closing Thoughts … The Standard & Poor’s 500 index closed up 1.93 to 1140.43, as momentum from big banks that were damaged by the credit crisis and the recession are pointing to show major profits going forward.Even with “tricky accounting” look for almost zero interest rates to peculate to the bottom line. ADD HOPE TO THE EQUATION: The most likely smoke: job growth. Traders need to see a Labor Department report that says employers are creating more jobs than they’re cutting. Besides jobs, investors need to see more strength in the housing market. Traders have been tolerant of recent declines in home sales, but if those numbers don’t pick up, the market is likely to become uneasy. … First-quarter earnings reports that will be issued next month will show continued sales growth. Companies’ results for the last three months of 2009 were better than expected and the trend will continue. The BIG SPIN: Look for two months of back-to-back gains in job growth and for the unemployment rate to fall below 9 percent to feel more comfortable about the pace of recovery. Unemployment stands at 9.7 percent. Don’t bet the farm on the HIGH FREQUENCY NOICE, but play the action such sounds create.…
Underreported: The Energy Department on Tuesday said it still expects pump prices to climb past $3 per gallon as more motorists hit the road in the spring and summer driving seasons. In its monthly short-term energy outlook report, the Energy Information Administration said that for the full year it sees a national average price of $2.84 per gallon, up from $2.35 per gallon in 2009. Oil prices should average above $80 per barrel this spring, rising to an average of about $82 per barrel by the end of the year and to $85 per barrel by the end of 2011, the report said. A more optimistic view of global economic growth prompted the EIA to boost its 2010 forecast for oil consumption growth to 1.5 million barrels per day from last month’s prediction of 1.2 million barrels per day. EIA predicted that most of the economic growth should come from the Asia-Pacific region and the Middle East. EIA’s outlook for residential electricity prices stayed about the same from last month, at an annual average of 11.5 cents per kilowatthour for this year, rising to 11.6 cents per kilowatthour in 2011. BAD NEWS — it would gave Helicopter Bernanke an excuse to raise interest rates to maintain the appearance of containing inflation.
March 9, 2010, 7:00 am EST — The Standard & Poor’s 500 index futures down 4.80 to 1132.20, as Britain’s FTSE 100 index was down 0.4 percent at 5,584.32, Germany’s DAX down 0.3 percent to 5,856.79 and France’s CAC-40 down. 0.3 percent to 3,892.31. In Asia, markets were cautious ahead of key reports on the region’s two biggest economies, China and Japan, that are due Wednesday. The strength of Chinese trade data could give investors a better sense of when and how Beijing will wean the country off its economy-boosting measures. A report on Japanese machinery orders, a key gauge of company spending, could provide more insight into the state of global trade and the world’s second-largest economy. Tokyo’s Nikkei 225 stock average fell 18.27 points, or 0.2 percent, 10,567.65. Hong Kong’s Hang Seng added 0.1 percent to 21,207.55 and South Korea’s main benchmark edged up 0.1 percent to 1,660.83. Shanghai’s market climbed 0.5 percent, while markets in Australia, Taiwan and Singapore rose as well. India’s market was down. … Meanwhile, Greek Prime Minister George Papandreou was due to meet President Barack Obama later Tuesday to discuss stricter regulations on hedge funds and currency traders that Athens believes aggravated their crisis. Pledges of support for Greece from France and Germany over the weekend lacked concrete details, and investors will keep an eye on the country’s financial markets — particularly the rate at which is can raise money on capital markets — for signs that confidence in being restored. Greece last week raised euro5 billion ($6.83 billion) in a 10-year bond sale, but the 6.25 percent rate it paid is still considered too high. The country would like to borrow at more moderate rates. To avoid future fiscal crises, France and Germany have floated the idea of creating a European monetary fund which would have the authority to enforce budget cuts and offer funds to countries facing debt trouble. Such a fund, however, would not be of help to Greece now as it would take months to agree. … Oil prices slipped to near $81 a barrel, losing momentum after a 4-week run-up fueled by growing investor optimism about global economic growth. Benchmark crude for April delivery was down 84 cents to $81.03 a barrel after adding 37 cents overnight. The dollar was lower at 89.76 yen from 90.28 yen and the euro weakened to $1.3590 from $1.3631.
— Maintain resistance for the S&P 500 index at 1150.41 and support at 1102.80. International markets suggest a step back and allow the events to unfold. Since markets are driven by the carry trade, low volume and lack of new money, US stocks require a major catalysis to keep moving higher. However, enough noise is available to not anticipate a sharp drop in values. Manipulation is alive and well — got with the trends and stay focused as what is really happening.
March 8, 2010, 4:00 pm EST — Closing Thoughts … The Standard & Poor’s 500 index closed down 0.20 to 1138.50, while no economic reports and very low volume created nothing to write about, except the one year anniversary that the market jumped 69.96 percent from its 12-year closing low on March 9, 2009. Gains in U.S. stocks should slow because equity mutual funds are burning through cash at the fastest rate in 18 years, leaving them with the smallest reserves since 2007. Cash dropped to 3.6 percent of assets from 5.7 percent in January 2009, leaving managers with $172 billion in the quickest decrease since 1991, Dartline data indicates. However, near zero interest rate guaranteed more smoke and mirror, as the carry trade remains the only game in town, and creating near 75 percent oft he volume. … The Chicago Board Options Exchange Volatility Index, or VIX, rose for the first time in nine days with a 1.7 percent climb to 17.72, still below its average of 20.30 from its two-decade history. …
Underreported: The International Monetary Fund will support a separate bail-out fund for European countries, depending on the nature of the agreement that is struck in Brussels. The IMF would not comment on Monday on the possible creation of a European Monetary Fund on the grounds that no specific proposal had yet been presented by the European Commission and member states. But IMF officials said that an EMF with powers to rescue bankrupt eurozone governments would not necessarily compete with the Washington-based global body and that there were situations in which the IMF might back the formation of such a regional arrangement. In particular, they pointed to the IMF’s support for the Chiang Mai initiative, a currency swap arrangement conceived in the wake of the Asian financial crisis that in effect serves as a potential bail-out fund for 10 members of the Association of Southeast Asian Nations (Asean). “I don’t think the purpose of the EMF is to compete with the IMF,” said Carlo Bastasin, a visiting fellow at the Peterson Institute for International Economics in Washington. “It reflects the necessity to find a mechanism that can deal with problems on a European level and not in terms of global governance,” he said. The IMF has been absent from the frontlines of the debate surrounding Greece’s debt crisis, with European governments taking the lead in the response. However, Greece has made it clear that it could always turn to the IMF as a last resort if it could not strike a satisfactory deal with other European countries. As reported by Dartline last week, the IMF said Greece’s plan to rebalance its public finance amounted to a “very strong fiscal package” and it stood ready to provide any technical assistance needed for its implementation. George Papaconstantinou, Greek finance minister, was yesterday scheduled to hold informal meetings with IMF officials in Washington, but the IMF said his visit was merely a “courtesy call”. George Papandreou, Greek prime minister, is in the US and was expected to meet a range of senior US officials, including Barack Obama, president, but not the IMF. Referring to a possible EMF, Mr Papandreou said: “What we are talking about now is creating an ad hoc instrument which will help the Greek economy if in need and we want to borrow.” Dominique Strauss-Kahn, IMF managing director, said in November last year that regional reserve pools could play an important role in the strengthening global financial insurance measures, adding that “the Chiang Mai initiative provides an important complement to IMF financing”.
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