<![CDATA[Hedgehogs.net: '' related content]]> http://www.hedgehogs.net/tag/foreign+minister?view=rss http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11465993/thousands-protest-in-argentina-demanding-answers-in-prosecutor-alberto-nismans-death Thu, 19 Feb 2015 11:44:55 +0000 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11465993/thousands-protest-in-argentina-demanding-answers-in-prosecutor-alberto-nismans-death <![CDATA[Thousands Protest In Argentina Demanding Answers In Prosecutor Alberto Nisman's Death]]>
Protesters waved Argentine flags and carried white signs with black letters that read "Justice!" and "Truth!" Many also carried umbrellas to repel a burst of summer rain.

Blanca Perez, 81, said she believed Nisman had been murdered and the government needed to account.

"If we don't have justice, we won't have liberty," she said. "The government has lost control of the situation."

Organized by several prosecutors, protesters planned to walk from Congress to the iconic Plaza de Mayo in downtown Buenos Aires. While police declined to provide estimates, the 10-block stretch, plus many surrounding streets, burst with people, suggesting it was one of the biggest of several marches since Nisman's body was discovered Jan. 18.

Prosecutors take part in the 'Marcha del silencio' (March of Silence) called by Argentine prosecutors in memory of their late colleague Alberto Nisman in Buenos Aires on Feb. 18, 2015. (JUAN MABROMATA/AFP/Getty Images)

The 51-year-old prosecutor was found in a pool of blood the day before he was to detail to Congress his explosive accusations that President Cristina Fernandez and top administration officials orchestrated a secret deal with Iran to shield Iranian officials allegedly responsible for the 1994 bombing that killed 85 people at a Jewish community center in Argentina's capital.

Fernandez has denied the allegations, but her administration has struggled to confront a growing political crisis.

The president initially suggested Nisman had killed himself, then did an about-face a few days later, saying she suspected he had been slain. Authorities now say they are investigating the possibility of suicide or homicide.

Like many Argentines, lawyer Marcelo Lopez rejected the idea that Nisman killed himself.

"I'm worried about the future of my country," he said, holding a sign that read, "They can't 'suicide' us all."

In the lead up to the march, the main opposition parties said they planned to participate, making it a hotly contested political issue and adding to intensifying rhetoric from the government.

Fernandez has suggested Nisman was killed by rogue counterintelligence agents and have cast suspicions on Antonio "Jaime" Stiuso, who reportedly oversaw a vast wire-tapping operation before being removed by Fernandez in December.

Stiuso, who had worked with Nisman on his investigation, provided testimony on Wednesday, according to a statement from the office of Viviana Fein, the lead investigator in Nisman's death. No other details were provided.

Prosecutors take part in the 'Marcha del silencio' (March of Silence) called by Argentine prosecutors in memory of their late colleague Alberto Nisman in Buenos Aires on Feb. 18, 2015. (JUAN MABROMATA/AFP/Getty Images)

Fernandez and other top administration officials also have suggested that the United States and Israel have meddled with Argentina, but have not provided details.

In a speech at nuclear power plant earlier Wednesday, Fernandez referred to letters that Foreign Minister Hector Timerman said he sent Tuesday to his counterparts in the United States and Israel. Timerman said the two countries should not get involved in Argentina's affairs, but did not provide specifics.

"Some people wanted to play dumb and look the other way," Fernandez said of the accusations. "I urge all compatriots to read every paragraph of those letters."

Fernandez, known for populist, fiery speeches, did not elaborate. But she did cast the apparent friction as a battle of economic interests and attempts by other countries to keep Argentina down.

"In reality, they prefer an Argentina without a nuclear plan, an Argentina that does not develop scientifically, an Argentina with low salaries and cheap labor," she said.

A U.S. Embassy spokesman declined to comment, instead referring to a State Department statement from Tuesday saying the United States had offered assistance in the Nisman investigation. A spokeswoman at the Israeli Embassy also declined to comment.]]>
http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11465947/foreign-minister-uses-emojis-to-answer-online-questions Thu, 19 Feb 2015 10:28:09 +0000 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11465947/foreign-minister-uses-emojis-to-answer-online-questions <![CDATA[Foreign minister uses emojis to answer online questions]]> <

http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11465088/greek-negotiations-and-philosophical-questions Thu, 19 Feb 2015 06:12:54 +0000 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11465088/greek-negotiations-and-philosophical-questions <![CDATA[Greek Negotiations and Philosophical Questions]]>
The three questions I ask at the bottom of this post are based on statements made by a global foreign exchange strategy chief at UniCredit bank and two negotiation demands by Greek Prime Minister Alexis Tsipras.

I highlighted in red and italics the source of my questions. Stop at the questions and think about your answers before reading further. 

 Greece Rift Wider Than Expected

An 11th hour meeting between Greece and creditors takes place on Monday. But a larger than expected Gap Still Yawns Between the Parties.
Weekend talks uncovered a bigger-than-expected gap between the two sides, setting up a difficult stand-off between Yanis Varoufakis, the Greek finance minister, and his eurozone counterparts when they meet on Monday night.

Wolfgang Schäuble, Germany’s finance minister, is determined that Athens should stick to its rescue programme as a condition of further financial assistance. Dogged resistance to such demands from Alexis Tsipras, Greece’s prime minister, has seen his poll standing soar at home, with thousands taking to the streets on Sunday in a support rally.

Panagiotis Lafazanis, leader of Syriza’s far-left faction, adopted a less-emollient tone, saying he would not allow his party’s economic plans to be “chopped up, subdivided or split into good and bad”.

“If our so-called partners insist on an extension of the current programme in one form or another — the sinful memorandum — there won’t be an agreement,” he said on Sunday.

Germany wants Greece to stay in the eurozone, but not at any price. “If we go deeper into the [debt] discount debate, there will be no more reforms in Europe,” said a senior German official. “There will be joyful celebrations in the Elysée and probably in Rome, too, if we go down this path.”

Ahead of Monday’s meeting, Vasileios Gkionakis, global foreign exchange strategy chief at UniCredit bank, wrote to clients: “I think it is fair to say that . . . the irresistible force will be meeting the immovable object.”

Germany and other creditors have agreed that the three organisations supervising the bailout programme — the International Monetary Fund, European Commission and European Central Bank — will no longer be called “the troika”, in a nod to Greek demands. But Berlin insists the same bodies will continue as Greece’s watchdog, even if renamed “the institutions”.

Berlin is also open to easing Greece’s fiscal straitjacket. Athens wants a reduction in the proposed fiscal surplus from 4.5 per cent to around 1.5 per cent. In Berlin’s view, around 3 per cent might be possible.
"Dignity Not Negotiable"

Reuters reports Greece, Confident Sticks to No-Austerity Pledge
Prime Minister Alexis Tsipras told Germany's Stern magazine that Athens needed time to implement its reforms and shake off the mismanagement of the past.

"I expect difficult negotiations; nevertheless I am full of confidence," he said. "I promise you: Greece will then, in six months' time, be a completely different country."

"The irresistible force will be meeting the immovable object," Vasileios Gkionakis, head of global FX strategy at UniCredit, wrote in a note.

Greek government spokesman Gabriel Sakellaridis showed no sign that Greece was backing off on its core demand.

"The Greek government is determined to stick to its commitment towards the public ... and not continue a program that has the characteristics of the previous bailout agreement," he told Greece's Skai television.

He later said: "The Greek people have made it clear that their dignity is non-negotiable. We are continuing the negotiations with the popular mandate in our hearts and in our minds."

Some of the problems facing the Eurogroup are semantic. The Greeks, for example, will not countenance anything that smacks of an "extension" to the old bailout, preferring something new called a "bridge" agreement.

Wave of Anger

This is political. Tsipras rode into power on a wave of anti-austerity and anti-bailout anger last month and would have a hard time explaining a row-back so soon. Thousands of Greeks massed outside parliament in Athens on Sunday to back his strategy.

But even a cosmetic change of labels could have practical consequences. An "extension" may not require many national ratifications unless it involves additional financial commitments from euro zone governments.

Any new bailout program, on the other hand, might require several national parliamentary ratifications and could also bring Germany's Constitutional Court into play.
Crunch Time and Domestic Rallies

Bloomberg reports Greece Faces Crunch Talks After Show of Domestic Support
Finance Minister Yanis Varoufakis leads a Greek government delegation back to Brussels Monday buoyed by a demonstration of support in front of Parliament in central Athens the previous evening that police put at more than 20,000 people. His goal is to secure a bridge accord that allows Greece the time and financial space to negotiate a post-bailout era.

“The stakes are high, but I doubt tonight is much more than theatrics,” Daniel Gros, director of the Centre for European Policy Studies in Brussels, said in an e-mail. “The real showdown will come much later.”

While fellow euro-area countries will “of course” discuss Greece’s debt levels, “it is out of the question to cancel the debt, we can discuss its maturity,” French Foreign Minister Laurent Fabius, told Europe 1 radio Sunday.

While Tsipras’s Syriza-led government has no natural political allies around the table on Monday, his support at home remains solid. Sixty-one percent of 1,015 Greek people polled by Kapa Research for To Vima newspaper this weekend said they approved of the government’s approach.
Philosophical Questions 

  1. Does "Troika" by any other name stink as bad?
  2. Is there any meaningful difference between "bridge" and "extension"?
  3. What happens when "the irresistible force meets the immovable object"?

Think carefully especially about question number three before reading further. There is a correct answer to question number three that will likely surprise some.

Philosophical Answers

  1. Beauty is in the nose of the beholder. But logically, the answer is yes. 
  2. No. 
  3. The question is ridiculous. In fact, it's impossible. By definition if there is such a thing as an "irresistible force" then by definition, there cannot be an "immovable object". Likewise, if there exists an "immovable object" then by definition there cannot be a an "irresistible force". 
The "irresistible force vs. immovable object" analogy by Vasileios Gkionakis, head of global FX strategy at UniCredit, is logically ridiculous.


Vasileios Gkionakis pinged me with this email...
I do not take your comment as “being ridiculous” personally but here is the point: alluding to something that is indeed impossible to exist is a way to show that the only way we can get a deal is if there is a step back in either side…otherwise no deal!

I am somewhat disappointed on the attention that was attracted on this specific phrase in a piece which I think discusses a number of important points such as the balancing act between economic stimulus and tidying up Greece’s public finances, privatisation, productivity and tax evasion.
My reply

Thanks Vasileios, that's a point understood, in advance, actually. I did not mean anything personal. It's just that few understand the illogical nature of that often-repeated saying. Had you said "between a rock and a hard place" I would have been in agreement.

Actually, I believe we are pretty much in agreement from a practical as opposed to a philosophically logical perspective. 

Mike "Mish" Shedlock
http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11463475/more-than-400000-rally-in-buenos-aires-over-nisman-death Thu, 19 Feb 2015 02:50:37 +0000 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11463475/more-than-400000-rally-in-buenos-aires-over-nisman-death <![CDATA[More than 400,000 rally in Buenos Aires over Nisman death]]> Argentine prosecutors stand on a stage (R) at the end of the


http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11463262/ukraines-military-is-stronger-than-believed-heres-what-it-needs-to-win Thu, 19 Feb 2015 02:23:16 +0000 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11463262/ukraines-military-is-stronger-than-believed-heres-what-it-needs-to-win <![CDATA[Ukraineâs military is stronger than believed. Hereâs what it needs to win.]]>

By Alan Chin


http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11462571/still-a-rangebound-market Thu, 19 Feb 2015 00:30:05 +0000 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11462571/still-a-rangebound-market <![CDATA[Still a range-bound market]]> Trend Model signal summary
Trend Model signal: Risk-off
Trading model: Bearish

The Trend Model is an asset allocation model which applies trend following principles based on the inputs of global stock and commodity price. In essence, it seeks to answer the question, "Is the trend in the global economy expansion (bullish) or contraction (bearish)?"

My inner trader uses the trading model component of the Trend Model seeks to answer the question, "Is the trend getting better (bullish) or worse (bearish)?" The history of actual (not backtested) signals of the trading model are shown by the arrows in the chart below. In addition, I have a trading account which uses the signals of the Trend Model. The last report card of that account can be found here.

Update schedule: I generally update Trend Model readings on my blog on weekends and tweet any changes during the week at @humblestudent.

Still a range bound market (for now)
In last week's commentary, I outlined my bear scenario (see A correction is brewing) and the fundamental case for stock market weakness remains largely unchanged.

Forward EPS estimates remain on the weak side and the Greek situation is still unresolved.. I did quality my comments with the following:
On the other hand, the stock market has been in volatile and range-bound for the last few weeks and we have to allow for the possibility that, instead of declining right away, it rallies and resumes the choppy pattern. The chart below shows that the SPX has seen its recent declines arrested at the 150 day moving average and the index closed just slightly below that level on Friday. In addition, the 5-day RSI, which is a useful short-term swing trading indicator, is showing a slight positive divergence so the rally scenario remains a possibility.

The current environment has been very friendly to swing traders but highly frustrating for trend followers. The up-and-down market choppiness that last no more than a week have been profitable for the former and unprofitable for the latter group. Judging by the market action on Friday when the SPX failed to punch through a resistance level that defines the current trading range, it appears that the same choppy pattern is likely to continue, as per my tweet Friday:

More uncertainty in Europe
One of the concerns that I cited last week was the continuing levels of uncertainty in Europe. While I continue to believe that the Greek situation will eventually be resolved in a benign manner (see Making sense of the latest Greek drama and The (European) parents fight and the kids hear everything), we are only in Act II of a three act play and there is much more drama to come.

Consider the latest developments in the week that just past:
  • Angela Merkel expects the negotiations to drag on for months.
  • The ECB has cut off acceptance of Greek bonds in an effort to turn up the heat on Athens, though funding for Greek banks through ELA remains available.
  • The new Greek government is digging in its heels, as Reuters reports that new PM Tsipras is expected to address parliament and say that "Greece wants no more bailout money, plans to renegotiate its debt deal and wants a 'bridge agreement' to tide the country over until a new pact is sealed".
  • The Russia-Ukraine conflict is heating up again and Europeans are getting worried about war with Russia (via The Guardian, emphasis added):
In Brussels and other European capitals, the fear of Vladimir Putin is becoming palpable. The mood has changed in a matter of weeks from one of handwringing impotence over Ukraine to one of foreboding.

The anxiety is encapsulated in the sudden rush to Moscow by Angela Merkel and François Hollande. To senior figures closely involved in the diplomacy and policymaking over Ukraine, the Franco-German peace bid is less a hopeful sign of a breakthrough than an act of despair.

“There’s nothing new in their plan, just an attempt to stop a massacre,” said one senior official.

Carl Bildt, the former Swedish foreign minister, said a war between Russia and the west was now quite conceivable. A senior diplomat in Brussels, echoing the broad EU view, said arming the Ukrainians would mean war with Russia, a war that Putin would win.
The situation in Europe remains highly uncertain with both Greece and Russia and anything can happen. I would expect Europe to be a source of event-driven volatility in the near future.

Forward EPS getting "less bad"
In the US, forward EPS continue to deteriorate, though the degree of deterioration is starting to stabilize. That is to say, things are getting "less bad". The following chart from John Butters of Factset shows that forward 12 month EPS has been deteriorating for the past few weeks and past periods of deterioration has seen either corrections or bear markets. In fact, the current episode of forward EPS weakness is the worse seen in the last 10 years, other than the bear market that began in 2007. The good news is that the weakness is starting to stabilize (annotations in red are mine).

The latest Earnings Season results in the latest week continues to be disappointing. While the EPS beat rate of 78% is above average and the revenue beat rate of 59% is average, company guidance remains negative. For Q1 2015, 52 companies have issued negative guidance compared to 10 with positive guidance. Last week, the guidance score was 37-9. This means that, in the past week, 15 companies had negative guidance compared to 1 with positive guidance.

Just as worrying is the YoY EPS growth rate. Factset reports that the Q1 2015 YoY EPS growth rate is -3.1%, compared to -1.6% last week, and the Q2 2015 growth rate is -0.4%, compared to +0.9% last week. The sales growth rate fared a bit better as the Q1 2015 YoY sales growth rate came in at -2.3% (vs. -2.4% last week) and Q2 2015 YoY sales growth rate at -2.6% (vs. -2.4% last week).

The chart below shows how top-down and bottom-up EPS estimates have evolved over time. Bottom-up FY 2015 EPS estimates are still falling, but the decline is starting to stabilize, though the bottom-up FY 2016 EPS estimates are still deteriorating at a rapid clip. Since forward 12 month EPS depend predominantly on 2015 estimates as we are still early in the calendar year, which is different from the fiscal year, the decline in 2016 estimates will have only a minor effect on forward 12 month estimates. In other words, things are still getting bad, only less bad.

In addition, the current episode is not just restricted to large cap stocks, which have a higher weighting in multi-national companies, which were hurt by USD strength, and energy stocks. Analysis from Ed Yardeni shows that the midcap SP 400, which broke out to new all-time highs last week and got a lot of technicians excited, are also seeing forward EPS fall.

Similarly, Yardeni`s analysis also shows that small cap stocks are also seeing falling forward EPS, though the degree of EPS weakness in small and mid cap have not been as strong as large caps.

How does the stock market advance?
I've said it before in these pages. In order for the stock market to advance, either the E in the PE ratio has to rise, which it isn't doing right now, or the PE ratio has to expand. Valuation levels are already elevated and the Fed is about to enter a tightening cycle this year. How do stock prices rise with these headwinds?

Indeed, the latest data from the WSJ shows the SPX to be trading at 20x trailing EPS, which is not exactly cheap.

In addition, the Leuthold Group warned that median PE and cash flow ratios are now higher than they were at the market peaks in 2000 and 2007:

With regards to the Fed's interest rate policy, the robustness of the January Jobs Report underscored the point that a rate hike in June is still on the table - and that's potentially negative for equities. Jon Hilsenrath interpreted the report this way:
The strong January employment report keeps open the possibility the Federal Reserve could start raising short-term interest rates in June.

The report included whopping increases in payroll employment in recent months. Revisions showed employers added 423,000 jobs in November, the largest monthly private-sector increase since September 1997, and 329,000 in December, as well as 257,000 in January.

Importantly, the report also shows average hourly earnings of private sector workers rose 2.2% in January from a year earlier, a modest gain but better than the 1.7% increase in December. This supports the thesis that an improving job market is underpinning wages, though not yet pushing them up much.
So far, the market has been discounting a rate hike in late 2015. Should the Fed signal a that liftoff is likely to be in June, it will be a shock and market expectations will have to adjust rapidly. We will get better clue on Fed thinking when Janet Yellen testifies before Congress February 24-25.

Other bearish signals
A number of other bearish signals have surfaced that are worrying. First, the latest data from Barrons shows corporate insiders turning heavily to the sell side. While this data series is noisy and highly volatile, it does raise another yellow flag for the bull camp. The volatility of the readings have likely been exacerbated by Earnings Season as insiders have a window around earnings announcements when they are precluded from trading. With 323 of the SP 500 companies having reported, those regulatory constraints are starting to abate.
In addition, Mark Hulbert pointed out that the Dow Theory, which is the granddaddy of all trend following models, is now on a sell signal. First, the Dow Theory sell signal criteria is set out as follows:
Hurdle 1: Both the Dow Jones Industrial Average and the Dow Jones Transportation Average must undergo a “significant” correction from new highs.
Hurdle 2: In their subsequent “significant” rally attempt following that correction, either one or both must fail to rise above their pre-correction highs.
Hurdle 3: Both averages must then drop below their respective correction lows.

Hulbert writes that two of the three Dow Theory newsletter writers have flashed a sell signal:
In the opinion of two of the three Dow theorists monitored by the Hulbert Financial Digest, the first of these three hurdles was satisfied by the market’s decline from its late-December highs to mid-January lows — which took 4.1% off the Dow Industrials and 6.1% off the Dow Transports. Those two Dow theorists are Jack Schannep, editor of TheDowTheory.Com, and Richard Moroney of Dow Theory Forecasts.

That set the Dow Theory clock running on the remaining of those hurdles. The second was met in the market’s rally that began from those mid-January lows, since neither index was able to surpass its late-December highs. And the final hurdle was cleared last week, with the Dow Industrials on Jan. 28 closing below their mid-January lows, and the Transports doing so two days later at Friday’s close.
I would also like to address the issue of the upside breakout of the mid-cap SP 400 to all time highs. I know that some technicians have gotten very excited about this event, like JC Parets who wrote about the impending breakout and its possible consequence:
This is a name we want to own above all of this resistance. Above the December highs and there is nothing but blue skies. Our target based on this potential breakout would be up near 285 based on the 161.8% Fibonacci extension of the September/October decline. This represents about 6% of upside from current levels. I think we get a breakout soon and we want to be all over it.
Josh Brown had a very good post analyzing the mid-cap breakout. Mid-cap strength was mainly driven by the lower weight in energy, which have tanked, and overweight in better performing sectors like financials. I would also add that the mid and small cap stocks are less sensitive to USD strength, which have hurt large cap multi-nationals the most. In light of the analysis from Ed Yardeni which I outlined above and the negatives posed by the Dow Theory sell signal, my conclusion is that while small and mid-cap are likely to outperform large caps, the upside breakout should not be taken as a bullish signal for all stocks.

Rally last week due to oil and USD reversals
A week ago, the SPX rested at its 150 day moving average support level as stock prices were weighed down by the bearish factors that I cited. In the five days that followed, the 150 dma proved to be a decisive support as the SPX rallied back to the top of its trading range for 2015.

I attribute the market rally to a reversal in oil and USD. Much of the bearish concerns over falling earnings estimates were from either weakening oil prices and the strong USD, which became a significant headwind for large cap multi-nationals in the SP 500. Last week, oil rallied and the US Dollar, which is inversely correlated to oil and other commodities, pulled back.

Was that the bottom for oil (and a USD top)? In that case, the partial stabilization seen in forward EPS may reverse and start rising, which would spark further strength in US equity prices. Urban Carmel, writing at The Fat Pitch, studied past bottoms in crude oil and concluded that oil is not likely to rally very much further from current levels, at least in the short-term:
Let's look at other drops in oil over the past 30 years. Below is a monthly chart of crude oil (WTIC). The yellow bars are the size and duration as the current fall in oil since June 2014. Three other instances look similar in that the drop was swift and without a pause (marked with stars: 1986, 1990 and 2008). Two others took twice to four times as long to unfold (1997 and 2000).

Here is his most likely scenario for an oil price bottom:
Oil is not likely to "v-bottom": it will likely retest the low at least once if not twice or more. These retests could be higher or lower than the first low. They'll likely be spread over the next 2 to 4 months.

The point of these failed rallies and bottom retests is to work off the downward momentum in price. This is true of oil as well as any other traded good. That is why the slope of the 50-dma begins to flatten and the MACD shows a divergence near the low.

The first rallies will likely fail near the 50-dma. We are using a crayon, not a pencil, to mark these.

If past is prologue, there will be swings back and forth at the bottom, a change from the seven consecutive month fall in price so far. This will be a positive sign.

Drawing from the examples above, we have illustrated what might take place next in oil. Price will emphatically not bottom exactly like this. But if the current rally is the start of a bottoming process, this will be a general approximation of what to expect: (1) the 50-dma flattens (blue line); (2) multiple bottoms spread a few months apart (circles); (3) at least one failed test near the 50-dma (arrows); and (4) a positive divergence in the MACD (bottom panel).

If this analysis is correct, then oil strength (and USD weakness) is likely to either peter out soon or may have stalled out already. Currently, the 50 dma for oil is $55 and falling very fast - and that is likely to be a short-term ceiling for crude. Once oil starts to turn downwards, the equity bears will seize control of the stock market tape once more, as the bullish influence of higher oil prices and USD weakness on EPS estimates diminish.

Independent of the above analysis, Marc Chandler provided some color on the technical picture on oil:
The two-week advance in oil prices seems largely technical in nature. Production in the US, and globally remains strong, even if the rig count in the US continues to fall. Global output is thought to be moving toward two mln barrel a day in excess of demand. Inventories continue to rise. The technical indicators we use warn of some more upside risk in the days ahead. Basis, the March crude oil contract, the five day moving average has crossed above the 20-day average for the first time since last September. A move above $53.60 likely signals a move beyond the $54.25 high and toward what we expect to be a peak $56-$57.00.
Here are his observations on the USD, which is inversely correlated to oil and other commodities:
The US dollar's consolidative phase appears to have ended with the January employment report. Employment growth accelerated, and average hourly earnings rebounded. There was a 10-11 bp increase in both short- and long-term interest rates.

The increase in the implied rates of the Fed funds and Eurodollar futures strip indicate that sentiment has swung back toward where we have steadfastly been, and that is to favor a mid-year Fed hike. We feel more confident that the Federal Reserve will modify its forward guidance at next month's meeting to dilute the idea that the first rate hike is at least two meetings away, which is how Yellen helped investors understand what the FOMC statement meant by "patience".
Putting these together, the most likely near term scenario is the oil rally starts to stall out soon and USD strength continues. Removed of the tailwinds that equities experienced last week, the most likely stock market implication is near-term weakness. The SPX failed at resistance near the 2015 highs on Friday and it is likely to work itself lower back down to the lower band at the 1980-1990 level. Should that happen, I would then re-evaluate the technical conditions of the market as they stand before making a further directional call. Despite my bearish tilt, this is still a range-bound market until it demonstrates otherwise.

In the meantime, my inner investor remains cautious, while my inner trader remains short equities.

Disclosure: Long SPXU, SQQQ

http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11462483/libyan-foreign-minister-calls-for-international-assistance-in-troops-arming Thu, 19 Feb 2015 00:10:26 +0000 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11462483/libyan-foreign-minister-calls-for-international-assistance-in-troops-arming <![CDATA[Libyan Foreign Minister Calls for International Assistance in Troops Arming]]>

http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11461042/uss-kerry-meets-iran-minister-in-munich-on-nuclear-talks Sat, 07 Feb 2015 04:18:37 +0000 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11461042/uss-kerry-meets-iran-minister-in-munich-on-nuclear-talks <![CDATA[U.S.'s Kerry meets Iran minister in Munich on nuclear talks]]>

http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11461033/uss-kerry-meets-iran-minister-in-munich-on-nuclear-talks Sat, 07 Feb 2015 04:18:29 +0000 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11461033/uss-kerry-meets-iran-minister-in-munich-on-nuclear-talks <![CDATA[U.S.'s Kerry meets Iran minister in Munich on nuclear talks]]>

http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11460440/jordanian-pilots-death-adds-to-worries-about-us-fight-against-isis Wed, 04 Feb 2015 02:21:25 +0000 http://www.hedgehogs.net/pg/newsfeeds/hhwebadmin/item/11460440/jordanian-pilots-death-adds-to-worries-about-us-fight-against-isis <![CDATA[Jordanian Pilot's Death Adds To Worries About U.S. Fight Against ISIS]]> video posted online indicated that the militant group had killed a Jordanian pilot taking part in that fight.

The video appeared to depict the pilot, Lt. Muath al-Kaseasbeh, being burned alive by Islamic State militants. Al-Kaseasbah was taken captive on Dec. 24, 2014, after his jet went down during a bombing mission over Syria. His country is one of the U.S.'s high-profile Arab partners in the international military campaign against the Islamic State.

Washington was quick to respond to the news, with President Barack Obama proclaiming that it would only strengthen the coalition's determination to combat the Islamic State, also known as ISIS or ISIL. But in a troubling signal for the coalition, Jordan watchers have suggested in recent days that the pilot's case was exacerbating internal divisions within the country about the Arab nation's participation in the anti-ISIS campaign.

“It is Jordan’s right to defend itself against Islamic State, but not to start wars or fight on others’ behalf,” Abdullah Salah, an activist from the southern city of Maan, told The Wall Street Journal. “This is not our decision to take part in these wars."

Ali Dalaen, a former lawmaker from the pilot's hometown, told Reuters that Jordanians were likely to blame the pilot's loss on the government more than on the Islamic State.

And a former Jordanian minister told the Middle East news site al-Monitor that the controversy over al-Kaseasbeh -- including questions about whether Jordan was doing enough to help him and whether he should have been flying over Syria in the first place -- was the biggest challenge to Jordan's King Abdullah in a decade.

Echoing other commentators, al-Kaseasbah's father said Saturday that the Islamic State fight "is not our war." Discontent with the Jordanian role in the coalition is reportedly growing, especially in the south of the country, the region from which al-Kaseasbeh and many other members of the military originate.

Abdullah has sought to make his nation central to U.S. military policy in the Middle East, in a departure from the more cautious policy of his father. The late King Hussein is thought to have declined to participate in the U.S.-led operation against Iraqi dictator Saddam Hussein in 1991 because of anti-war sentiment at home.

Some Jordanians see the pilot's plight as an indication that their country is suffering as a result of its partnership with the U.S. in the anti-ISIS coalition. Analysts have even suggested that the Islamic State's tactics are deliberately designed to undermine Abdullah by turning popular opinion in Jordan against the military campaign.

Jordan is one of the poorer countries in the U.S.-led coalition. It does not have the vast oil and gas wealth of partners like Saudi Arabia and Qatar, and its economy has suffered following a massive influx of refugees from the civil war in neighboring Syria. The kingdom has received significant U.S. support at times when it appeared that Jordan could help promote Middle East stability, notably around the time of the invasion of Iraq and then, more recently, as the CIA began training moderate Syrian rebels in Jordan.

Still, the U.S. knows it must tread carefully in the country. The CIA training was covert and never publicly endorsed by the king. And unlike other U.S. partners in the Muslim world, Jordan has refused to host training camps for the broader Pentagon-run training of Syrian rebels that is set to begin in the spring. In addition, Jordan is one of the largest sources of foreign fighters aligned with the Islamic State and other radical groups in Syria.

The discomfort in some Jordanian quarters about participation in the anti-ISIS campaign has been visible for some time now. Fahad Nazer, a terrorism analyst at the intelligence consultancy JTG, Inc. and a former political analyst at the Saudi Arabian Embassy in Washington, pointed out that even at the time of the pilot's capture, critics of the anti-ISIS campaign were saying Jordan should have known better than to get involved.

Perhaps ironically, the news of the murder came just as Jordan and the U.S. were seeking to demonstrate the strength of their relationship. On Tuesday, the king was in Washington for one of his frequent trips, along with top officials. In the morning, at the Four Seasons Hotel, Abdullah's foreign minister signed a U.S.-Jordanian Memorandum of Understanding, securing an increase in U.S. assistance to the kingdom from $600 million per year to $1 billion. The funds are meant to help refugees fleeing the Islamic State and to assist Jordan's security forces.

The reports of the pilot's death were met with solemn reactions on Capitol Hill, where Abdullah was scheduled to meet with several lawmakers throughout the day. Despite reports that the king would be cutting his visit short to return to Amman, he was set to meet with several members of the Senate Foreign Relations Committee Tuesday evening.

Lawmakers told The Huffington Post they foresaw greater anti-ISIS action by Jordan.

“I think they’ll do whatever is necessary. They’ve been our best ally there outside of Israel,” said John McCain (R-Ariz.), chairman of the Senate Armed Services Committee. “I think that the Jordanian people of course are very angry, very upset, and Jordan will continue to be our close and cooperative ally. They’ll probably step up their efforts.”

“It’s more than terrible," said Sen. Dianne Feinstein (D-Calif.), ranking member of the Senate Intelligence Committee. "It goes from one unconscionable, inhumane action to the next. And it makes you wonder what these people hope to achieve."

“If anything, it’ll unite a coalition against ISIS," she added. "The brutality is unprecedented.”

Nazer told HuffPost that power brokers in Jordan's partner nations were indicating that they expected the kingdom to bring its citizens together and redouble its efforts against the militants. Prominent Arabs from neighboring powers like Saudi Arabia and Egypt, Nazer said, were signaling on social media that the execution was "the last straw and that it was time to launch an all-out war against ISIS."

Media reports suggested that Jordan's immediate response would be to counter violence with violence and exact a swift revenge. A Jordanian security source told Reuters Tuesday his country would quickly execute the jailed Iraqi bomber, whose release the Islamic State has attempted to negotiate, and other prisoners on death row for terrorism-related charges.

Ali Watkins contributed reporting.]]>