“The market is better at predicting the news than the news in predicting the market” — Gerald Loeb.

1. China’s Imports Mark Need for More Stimulus — China’s exports fell for a third month in May, while imports slumped the most in three months, underscoring a sluggish domestic environment in need of more stimulus. Annual exports fell 2.5% while imports plunged 17.6%, data from the General Administration of Customs showed on Monday. Many analysts have already penciled in sub-7% growth for the second quarter, raising the risk that the government will not meet its full-year growth target of around 7%.
2. Google (GOOG) Electronic Payment Android Pay Update — according to the WSJ, Google ‘s mobile phone payment service, Android Pay, will not garner any transaction fees from credit card companies, possibly putting pressure on Apple (NASDAQ:AAPL) to drop or lower its charges for Apple Pay. Dominant payment networks, Visa (NYSE:V) and MasterCard (NYSE:MA), recently standardized their “tokenization” card-security service and made it free, preventing payment services, such as Google (GOOG, GOOGL), from charging fees to issuers.
3. Chinese rally Sign of Excess — Mainland speculators have borrowed a record $348B to bet on further gains, price-to-earnings ratios have climbed to the highest levels in five years, while Chinese exchanges have created $6.5T in just 12 months of trading. The economy, meanwhile, is mired in its weakest expansion since 1990.
4. China Stocks Will Have to Wait to Join the MSCI Index — MarketWatch, global stock-index compiler MSCI maker says issues remain before it can include mainland China-listed A-shares. MSCI offered a list of some issues it would discuss with the regulators, including the allocation of investing quotas for large investors, capital mobility and details over beneficial ownership.
5. May Retail Sales Surged Point to Revived U.S. Growth — MarketWatch, Sales at U.S. retailers rose sharply in May and increased for the third straight month, suggesting that warmer weather induced consumers to spending more in the spring after a winter lull. Consumers splurged on big-ticket items in May, when sales of new cars and trucks hit a postrecession high. Sales at auto dealers rose 2%.
6. Greece Deal in Peril — IMF creditors walked out of talks late last week citing “Greece decisions not negotiations” are needed. Greece’s is scrambling , as time runs out for the country to fend off a looming default.
7. Bearish Sentiment Overtake The Bulls – courtesy of BIG, bullish sentiment fell from 27.34% down to 20.04%. This is the lowest weekly reading for bullish sentiment in more than two years (April 2013). At its current level, bullish sentiment is now just slightly more than a point above its lowest levels since the start of 2009 (18.92%).

The week ahead — Economic data from Econoday.com:

“The four most expensive words in the English language, “This time it’s different”” – Sir John Templeton.

1. The Reserve Bank of India Cut Interest Rates — the Reserve Bank of India cut interest rates for the third time this year, lowering its key repo rate by 25 bps to 7.25%, in a move that appears at odds with recent data showing the country’s economy has become one of the fastest-growing in the world. Data on Friday showed India’s output expansion accelerated to 7.5% last quarter, outpacing China in terms of growth.
2. HP sets November 1 spinoff date, partners with Arista — Hewlett-Packard (NYSE:HPQ) co-chief executive Meg Whitman said the separation of HP and Hewlett-Packard Enterprise would be effective November 1. Last October, HP announced it would split into two listed companies, separating its printer unit from its hardware and services operations. HP has also announced a partnership with fast-growing data center switch vendor Arista (NYSE:ANET).
3. Global Bond Yields Fly Higher — bond yields across global markets continued their sell-off into last week as a six-week-long bond rout rumbled on. ECB President Mario Draghi said asset prices tend to be more volatile in a low interest rate environment and policymakers were prepared to look through the sharp rise in yields. With the ECB seeing no reason to adjust its stance on monetary policy, German 10-year Bund yields rose to fresh 2015 highs today at 0.95% (up from near zero in mid-April). U.S. 10-year yield +3 bps to 2.4%.
4. Greece Delays $339 mil Debt Payment — Greece formally requested a deferral of June 5 ‘s payment due to the IMF after insisting it would make the payment. All parties in the negotiations continued to express optimism, but leftist members of the ruling Greek party were indignant at concessions.
5. Bullish Sentiment Increases Slightly — courtesy of BIG, bullish sentiment increased from 27.0% up to 27.34%. This represents the 13th straight week where bullish sentiment has come in below its bull market average of 38.5%. That is the longest streak of below average bullish sentiment since August 2012 when bullish sentiment was below average for 20 consecutive weeks.

The week ahead — Economic data from Econoday.com:

There will not be any re-cap for the week of May 29 2015. We are away for some needed R&R.

The staffs at EGS.

“We want to perceive ourselves as winners, but successful traders are always focusing on their losses” – Peter Borish”

1. ECB Pledges to Boost Bond Buying — ECB Executive Board member Benoit Coeure declared that the central bank would increase purchases under its QE program (from €60B in May and June) before an expected period of low liquidity in the summer.
2. Apple Shelved Plans to Launch a TV Set — WSJ, Apple (NASDAQ:AAPL) “quietly shelved plans” to launch a TV set more than a year ago, sources told WSJ. Apple reportedly planned to make a 4K (Ultra HD) set, and considered including sensor-equipped cameras for making video calls. But it ultimately decided the TV’s features wouldn’t be “compelling enough” to enter a highly competitive market.
3. A June Rate Hike is ‘unlikely,’ Fed Minutes Suggest — according to the summary of the Fed discussions on April 29-30, only a “few” Fed officials thought that the economy would show enough strength to justify a Chances of a rate hike in June. “Most Fed policy members, however, thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, although they generally did not rule out this possibility,” the minutes show.
4. Five Banks Agree to Plead Guilty to Currency Rigging — JP Morgan (JPM), CitiGroup (C), Barclay (BCS), and Royal Bank of Scotland (RBS) agreed to plead guilty to felony antitrust violations for conspiring to manipulate the price of dollars and euros from 2007 to 2013. UBS (UBS) agreed to plead guilty to rigging the Libor rate.
5. Greece Says That It Will Default On June 5th, And Moody’s Warns Of A ‘Deposit Freeze’ — the Greek government says that their lenders agree to give them more money by June 5th, or Greece will default on a 300 million euro loan payment to the IMF. Talks between Prime Minister Alexis Tsipras, President Francois Hollande and Chancellor Angela Merkel broke up without agreements. “open issues” such as pensions, sales-tax rates and targets for a primary budget surplus remained.

The week ahead — Economic data from Econoday.com:

“The stock market is a no-called-strike game. You don’t have to swing at everything — you can wait for your pitch” — Buffett

1. Greece Makes Latest IMF Loan Repayment — Greece completed a 750-million-euro ($836.7 million) loan repayment to the International Monetary Fund last week. The Bank of Greece official said the money was paid from an emergency account held by the central bank after two meetings last week between Governor Yannis Stournaras, Deputy Prime Minister Giannis Dragasakis and Deputy Foreign Minister Euclid Tsakalotos, who manages Greece’s talks with international creditors over its bailout. Euro group chief cited “important progress” but said that “more time” is needed.
2. China Surprised Market with Rate Cut — the China ‘s Central Bank trimmed interest rates for the 3rd time in 6-months amid signs of slower growth. Rate sensitive sectors like autos and housing rallied.
3. Retail Sales Flat in April — Sales at U.S. retailers were flat in April after spike in March. Sales minus autos, which accounts for one-fifth of all retail purchases, rose a scant 0.1%. That’s well below the 0.4% Wall Street forecast. And sales minus both autos and gasoline edged up 0.2%.
4. Eurozone GDP Picks Up, Boosted By (Germany, France, Italy and Spain) — the eurozone economy expanded by 0.4% in the first quarter, marking a pickup from the 0.3% growth recorded in the final quarter of last year. since the first half of 2010, all four of the eurozone’s largest economies (Germany, France, Italy and Spain) recorded growth and the currency area grew more rapidly than both the U.S. and U.K.
5. Federal Reserve Rate Hike Choice is September or December According Former Member — according to the former Fed Vice Chairman Donald Kohn says a June rate hike is off the table following weaker-than-expected April retail sales data. Federal Reserve Chairwoman Janet Yellen has said the central bank will start considering rate hikes at the June meeting. Interest rates have been near zero since the end of 2008.
6. Bullish Sentiment Drops To Lowest Level In More Than 2 Years — courtesy of BIG, bullish sentiment dropped from 27.1% down to 26.7%. While the size of the drop in bullish sentiment was small, this week marks the tenth straight week that bullish sentiment has been below the bull market average and also the tenth decline in bullish sentiment over the last twelve weeks.

The week ahead — Economic data from Econoday.com:

“If I had to characterize the market in 2015, I would call it a ‘trading sardine market’ not an ‘eating sardine market’.” — Doug Kass

1. S&P500 in Rising Wedge Chart Formation — the current chart shows the S&P500 in an in-decisive pattern. Breakout occurs when the S&P500 breaks decisive upside above 2120 or breaks to downside below 2085. StockCharts defined rising wedge chart formation as
“The rising wedge can be one of the most difficult chart patterns to accurately recognize and trade. While it is a consolidation formation, the loss of upside momentum on each successive high gives the pattern its bearish bias. However, the series of higher highs, and higher lows, keeps the trend inherently bullish. The final break of support indicates that the forces of supply have finally won out and lower prices are likely. There are no measuring techniques to estimate the decline – other aspects of technical analysis should be employed to forecast price targets.”

2. U.S. Factory Orders Climb 2.1% in March — orders for durable goods — products meant to last at least three years — jumped 4.4% in March, the Commerce Department reported.
3. 10-Year Yields Spiking Globally — a worldwide sell-off in government bonds deepened last week, buoyed by rising German Bund yields that recently hit record highs and narrowed their gap with U.S. Treasuries. Benchmark 10-year Bunds now trade at 0.53%, having hit a record low of 0.05% last month, when many expected them to turn negative.
4. The Third Year of the Presidential Cycle — historically, the third year of the Presidential Cycle been the equity market’s best year in terms of performance, but with a gain of less than 3% YTD, 2015 has gotten off to a slow start.
Below is the chart which lists the S&P 500′s YTD returns in the third year of each Presidential Election Cycle since 1931.

The week ahead — Economic data from Econoday.com:

“Don’t short a DULL market” — unknown

1. China Eases Again with Bank Reserves Cut — following the country’s soft GDP data last week, China’s central bank cut the reserve requirement ratio for all banks by 100 bps to 18.5%, adding more liquidity to the world’s second-largest economy to combat slowing growth. China’s GDP is still expected to fall to a quarter-century low of around 7% this year from 7.4% in 2014, even with the additional stimulus.
2. Bird flu Hits Iowa Chickens as Virus Outbreak Escalates — MarketWatch, U.S. Department of Agriculture reported an Iowa farm’s flock of about 5.3 million chickens has been hit with avian influenza, marking a sharp escalation of the virus outbreak that has rattled the poultry industry since it began late last year. Poultry companies and animal-health officials are struggling to respond to the worst outbreak of avian influenza in years, with cases in upper Midwest states like Minnesota, Wisconsin and Iowa rapidly mounting over the past two weeks.
3. China to Open Card Markets — the no. 2 economy’s bank card-clearing market will be open to foreign competitors beginning June 1 2015. It comes as China rebalances its economy toward consumption and liberalizes the finance sectors. Visa (V) & MasterCard (MA) are the beneficiary.
4. US Business Investment Plans Fall for 7th Straight Month — the Commerce Department reported non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, declined 0.5 percent last month after a revised 2.2 percent drop in February, which was the biggest drop since July 2013. The decline likely weighed down by a strong dollar and lower energy prices, suggesting the economy could struggle to rebound from a soft patch hit at the start of the year.

The week ahead — Economic data from Econoday.com:

“I’m always thinking about losing money as opposed to making money. Don’t focus on making money; focus on protecting what you have.” – Paul Tudor Jones

1. China Grows at Slowest Pace Since Financial Crisis — China’s economy grew at its slowest pace since the global financial crisis in the first quarter of 2015. China’s exports sank 15% vs. March. This figure was a shock to economists who’d forecast an 11.7% rise. Overall Q1 shrank 6.3% vs. the 6% growth target in ’15.
2. Standard & Poor’s Downgraded Greece’s Credit Rating to CCC+ with a Negative Outlook — S&P cited a substantial risk of a Greek default due to the country’s drawn out negotiations with its creditors.
3. Greek Government Bonds Plunge as Default Fears Grow — MarketWatch, Greek government bonds plunged late last week, shaken by yet another downgrade and growing expectations that the country will be forced into a default. yields on the country’s two-year bonds had soared close to 4 percentage points on the day to more than 27%. Meanwhile, yields on the country’s 10-year debt advanced by a little more than 1 percentage point to a shade under 13%— their highest in over two years. An inverted yield curve, where shorter-term debt yields more than longer-dated bonds, is a classic signal that investors see a very high risk of default.
4. China Regulators to Allow Short-Selling by Fund Manager — the new regulation was announced last Friday to allow fund managers to lend shares for short-selling and will also expand the number of stocks investors can short sell. The moves were announced by the Securities Association of China aimed at increasing supplies of securities and cooling down China’s markets. Various forms of government stimulus and a frenzy of buying by investors have driven the Shanghai Composite index up by 33% year-to-date, while the Hong Kong Hang Seng index up 17% year-to-date.
5. S&P Energy Sector (XLE) Rebound — the Energy Sector has held its respective quadruple bottom, and has broken out above its downtrend line. Below is Energy Sector chart for the last 12-month.

The week ahead — Economic data from Econoday.com:

There will not be any Weekly Re-Cap for the week of April 6 to April 10 2015. We are away for some needed R&R.

Have a good week.

The staffs at EGS.

“I measure what’s going on, and I adapt to it. I try to get my ego out of the way. The market is smarter than I am so I bend.” – Martin Zweig

1. China Policy Makers Signaled Easing Talks — China policy makers signaled the country had capacity to ease monetary policy and boost sluggish growth at the Boao Forum for Asia on last week. China’s central bank has already taken a series of easing steps since November, cutting interest rates twice and slashing banks’ reserve requirements.
2. US Factory Orders Rose in February For First Time in 6 Months — Reuters, the Commerce Department reported new orders for manufactured goods increased 0.2 percent, the largest gain since July, after a revised 0.7 percent drop in January. Orders excluding transportation rose 0.8 percent, the biggest rise in eight months. Shipments of factory goods rose 0.7 percent after four straight months of declines.
3. Greece Tells Creditors It Will Run Out of Cash on April 9 — Greece made an appeal for more loans before reforms on which new disbursements hinge are agreed and implemented, but the request was rejected, euro zone officials said. Also, the ECB raised its cap on emergency liquidity assistance that Greek banks can draw from the country’s central bank by €700M, increasing the ELA ceiling to €71.8B. The central bank has been raising the cap in increments to keep pressure on Greece to strike a deal.
4. March Payroll Data Shows Weak Jobs Report — Job growth slumped to a 15-month low in March, the Labor Department reported last Frid. Various tracking models used by economists show growth in gross domestic product slowing sharply to around or under a 1% annual rate in the first quarter. The slowdown has been blamed on the cold winter weather to the slowdown at West Coast ports to the impact of low oil prices and the stronger dollar.
5. Iran and the West Reach Nuclear Deal — Pres Obama hailed the tentative nuclear deal that would severely restrict Iran, including slashing the number of installed centrifuges and barring high uranium enrichment for 15 years. After IAEA inspections confirm compliance, the US and EU would suspend crippling sanctions.

The week ahead — Economic data from Econoday.com: