Sebi allows foreign investors to buy shares via primary markets

Representative image.Representative image.
NEW DELHI: Markets regulator Sebi has allowed foreign investors to acquire shares through primary markets in depositories and clearing corporations.

Prior to this, foreign investors could acquire shares of depositories and clearing corporations only through secondary market.

The move comes at a time when Central Depository Services Limited (CDSL) is preparing to launch its initial public offering.

As per norms, total foreign holding in depositories and clearing corporations is capped at 49 per cent.

The Securities and Exchange Board of India (Sebi) has now amended Stock Exchanges and Clearing Corporations regulations as well as Depositories and Participants norms, to drop a provision that required purchase of shares by foreign investors within 49 per cent limit only through secondary markets.

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source”cnbc”

Market’s 4-day winning spell stalls, sensex trips 104 points

Representative image.Representative image.
MUMBAI: In a climb-down from its 4-month high, the sensex on Tuesday took its first hit in five sessions by falling over 104 points even as the Nifty slipped below the 8,800-mark, weighed down by rate-sensitive banking, realty and other stocks ahead of the RBI monetary policy.

The rupee lost ground against the dollar to 67.44 (intra-day), which precipitated the fall.

Investors were anxious concerned about uncertainties over the timing of Federal Reserve rate hike, US policies under President Donald Trump, the upcoming French election and rising crude price that could impact inflation, going ahead. A weak closing in Asia tracking overnight losses in the US owing to all these unknowns triggered selling, brokers said.

The 30-share barometer opened a shade higher and rose further before profit-booking kicked in, but settled at 28,335.16, a loss of 104.12 points, or 0.37 per cent.

Over the past four sessions, the index had risen 783.32 points.

The 50-share NSE Nifty broke below the crucial 8,800 level and settled lower by 32.75 points, or 0.37 per cent, at 8,768.30. Intra-day, it traded between 8,809.30 and 8,741.05.

The upmove in the previous four sessions mostly came on the back of a series of market-friendly budgetary proposals and expectations that RBI would reduce the policy rate at its policy meet tomorrow.

In the 30-share sensex heatmap, 20 ended with losses and 10 turned higher. A lower opening in Europe completed the picture.

Tata Motors slid the most (3.52 per cent), followed by Coal India (2.88 per cent). Others such as ONGC, Adani Ports, Lupin, GAIL, Dr Reddy’s, RIL and Axis Bank added to the fall.

Infosys, L&T, Maruti Suzuki, Asian Paints, HDFC and ITC, among others, rose, keeping the fall limited.

The BSE metal index took the biggest knock, down 1.25 per cent, followed by auto, oil and gas and healthcare.

In line with overall trend, the broader markets ended in negative zone, with the mid-cap index down 0.18 per cent and small-cap 0.09 per cent.

source”cnbc”

Markets look for lots of action in President Trump’s first week

Donald Trump finally has the power of the presidency and markets are braced for lots of action.

Expectations are high for a flurry of excitement and activity from Washington in the week ahead as President Trump gets to work. But markets probably will not yet get much in the way of clues on how quickly the new administration will push the tax and growth policies that have driven both stocks and interest rates higher.

Trump is expected to make the repeal of Obamacare a priority. He is also seen moving quickly on the topics of trade with Mexico, immigration and regulations in areas like energy. However, it’s less likely that there will be much new on the programs markets care about most since they also must wind through Congress.

As traders fixate on Washington, there are also about 20 percent of the S&P 500 companies reporting in the coming week, including Alphabet, Boeing, Caterpillar, Microsoft and McDonald’s. Of the S&P companies already reporting, 65 percent have beaten earnings estimates, and earnings growth based on the reports and estimates looks to be 6.5 percent for the fourth quarter, according to Thomson Reuters.

Traders had hoped Trump would play up the pro-growth agenda during his inaugural address Friday. Instead, he focused on the theme of putting America first in a speech that had a strong protectionist ring.

“I expect volatility to be a little bit higher in the first 100 days than it was in the last part of 2016, when there was a sigh of relief and focus was more on the macro and the hopes for the macro,” said Kate Moore, BlackRock chief equity strategist. “We’re going to have a lot more volatility, as some of this policy gets ironed out and we get more clarity.”

She said it could take a while to see what tax reform will look like.

“I think we will get a little more clarity and then it’s very likely we will have a slightly better road map when it comes to taxes over the next two months. I think that’s going to be hugely important. We will have more comments and certainly more sense of the road map when it comes to trade,” she said.

Moore said one of Trump’s most important comments in the past week was that the dollar is too strong. A strong dollar hurts corporate profits and hurts emerging markets.

“The main takeaway I had from Trump and his comments on the dollar … was an acknowledgment that we don’t want the dollar to be too strong, going into trade negotiations,” said Moore. She said long dollar is a very crowded trade and she does not believe it will appreciate as much as many expect. That’s simply because the global is improving and differences in monetary policy and growth between the U.S. and other regions won’t be as great.

Moore said she’s neutral on U.S. stocks and would become more bullish if earnings continue to improve and there’s more clarity around policy from Washington. She said there is a lot of reason for more dispersion on stock performance. “It’s going to be from growth, inflation, policy and [Trump’s] tweets and very likely how effective companies have been in containing their costs and managing to maintain their margins at this point,” she said. “It seems to me there are a lot of reasons for differentiation at this point.”

Stocks in the past week were flattish, with the S&P 500 down 0.2 percent at 2,271, and the Dow was about 0.3 percent lower at 19,827. Treasury yields had a big move in the past week, with the 10-year nearly touching 2.30 percent and rising to 2.50 percent by Friday.

Moore likes small caps and also emerging markets. “I think the fears of a trade war are overblown. It’s one of the reasons we continued to be maintaining a constructive outlook for emerging markets,” she said.

She said Trump’s inaugural comments Friday were “downbeat” and it was disappointing that he pointed to problems in the economy when there is near full employment and earnings growth is picking up.

The fact Trump’s comments sounded protectionist unsettled some in the markets who were hoping he would sound more traditional and not as if he could start a trade war. Economists put trade concerns at the top of the list of what could change the growth outlook.

“By far the number one issue on the global economy in the next year is how far down the path of trade tensions do we go here, and mixed into those is also geopolitical tensions as well. So do we have a gradual process, where there’s some concession on all sides and things will move smoothly, or do things get very heated and people start to worry about serious back-and-forth tariffs?” said Ethan Harris, head of global economics at Bank of America Merrill Lynch.

Trump is expected to open talks with Mexico and Canada on the North American Free Trade Agreement, which has been in place since the 1990s. He has called for tariffs on Mexican produced goods though he is not expected to take any action yet. Mexico’s president called a press conference on Monday at which he is expected to discuss trade with the U.S.

Harris said it will be important to see how Trump deals with China. Trump in the past week said he would not label the country a currency manipulator right away, as he threatened, and that he would speak to Chinese officials first. Harris said China has been trying to prevent its currency from falling, not pushing it lower.

“Certainly Trump is going to want to do something that gets China’s attention … something that kind of jolts the negotiating process,” he said. “I don’t know whether that will be what he does out of the gate. It could be after he waits for some of the other stuff like the Affordable Care Act to go through. I think it’s a first 100 days story.”

For the U.S. markets next week, Harris said fourth-quarter GDP released on Friday will be important. He expects growth of 2.4 percent, a bit higher than consensus.

“Basically if you look at the broad data story right now, the economy is showing a little sign of picking up. Confidence is picking up. Some of this is optimism is about fiscal policy and deregulation, and some of this was already happening in the data before the election,” said Harris. He said Trump has so far been a positive for the economy and now risks being negative if he is too aggressive on trade.

“He’s taking over at a pretty good time. The economy is at full employment, wages are beginning to accelerate. You’re not in a world where the Fed has to tighten too quickly. It is a positive way to start,” Harris said. “Right or wrong, a president gets credit for the economy. He is inheriting a good economy. Obama inherited a disaster.”

Moore also said the economy was already kicking in to a better gear before the election.

“We actually think growth and reflation and momentum started before the U.S. election. The market acknowledged the momentum, and that turning point was super charged by the U.S. election,” she said.

She’s looking to hear more from Trump on his plans. “It was not perhaps the most optimistic presidential speech I’ve heard. I think the real key is how Trump and his cabinet pivot to be truly looking forward instead of just criticizing what has and hasn’t’ happened and perceived weakness in the U.S. economy,” she said.

 source”cnbc”

Fed’s Bullard to Trump: Enough with pro-growth promises, the markets want action

The 10-year Treasury yield is settling down after a postelection pop, as the market looks to President-elect Donald Trump and Republicans in Congress to deliver on economic growth promises, St. Louis Federal Reserve President James Bullard told CNBC on Thursday.
Appearing on “Squawk Box,” Bullard said there’s no need to dramatically increase rates right now.

The 10-year yield spiked along with the stock market after Trump won the presidency on expectations that his tax cut and deregulation plans would boost the economy.

Bullard said he does not see Trump’s agenda having much impact this year.

The Fed expects to raise interest rates three times this year, after policymakers increased the cost of borrowing money by a quarter-point in December. It was only the second hike in the past decade.

The current range for short-term rates stands at0.5 percent to 0.75 percent.

Bullard, who’s not a voting member on the Fed’s policymaking committee in 2017, said that increasing rates again because of higher economic growth would be good news.

The next Fed meeting is set for Jan. 31-Feb. 1. But investors have to wait until the March gathering for another news conference from Fed Chair Janet Yellen. At this point, the market isn’t putting much odds on a hike at either meeting.

During the campaign, Trump made it clear he’s no fan of Yellen — accusing her of being politically motivated to keep rates low to continue to support the economy to burnish President Barack Obama’s legacy.
The 10-year Treasury yield is settling down after a postelection pop, as the market looks to President-elect Donald Trump and Republicans in Congress to deliver on economic growth promises, St. Louis Federal Reserve President James Bullard told CNBC on Thursday.
Appearing on “Squawk Box,” Bullard said there’s no need to dramatically increase rates right now.

The 10-year yield spiked along with the stock market after Trump won the presidency on expectations that his tax cut and deregulation plans would boost the economy.

Bullard said he does not see Trump’s agenda having much impact this year.

The Fed expects to raise interest rates three times this year, after policymakers increased the cost of borrowing money by a quarter-point in December. It was only the second hike in the past decade.

The current range for short-term rates stands at0.5 percent to 0.75 percent.

Bullard, who’s not a voting member on the Fed’s policymaking committee in 2017, said that increasing rates again because of higher economic growth would be good news.

The next Fed meeting is set for Jan. 31-Feb. 1. But investors have to wait until the March gathering for another news conference from Fed Chair Janet Yellen. At this point, the market isn’t putting much odds on a hike at either meeting.

During the campaign, Trump made it clear he’s no fan of Yellen — accusing her of being politically motivated to keep rates low to continue to support the economy to burnish President Barack Obama’s legacy.

There’s an expectation Trump may aim to shake up the central bank with a heavier emphasis on business experience among policymakers, to which Bullard said: “It’s great to have a mix of people involved in the Fed.”

“You don’t want everyone to be a clone. You want a variety of backgrounds. I think we have that now. If we could get more of that, I think that would probably be a strength for t

There’s an expectation Trump may aim to shake up the central bank with a heavier emphasis on business experience among policymakers, to which Bullard said: “It’s great to have a mix of people involved in the Fed.”

“You don’t want eversource”cnbc”yone to be a clone. You want a variety of backgrounds. I think we have that now. If we could get more of that, I think that would probably be a strength for t

source”cnbc”

Thank one group of companies for the stock market’s climb to record highs

Analyst: Banks will continue to outpeform until end of next year

Analyst: Banks will continue to outpeform until end of next year  Thursday, 8 Dec 2016 | 1:35 PM ET | 02:18

The stock market’s dramatic surge to record highs can largely be attributed to the leap in bank stocks.

Without the sector, the S&P 500 would not have closed at a record Thursday, but would still be only 0.25 percent below the old record it hit Aug. 15, according to Howard Silverblatt of S&P Dow Jones Indices. Meanwhile, his data shows that Goldman Sachs has accounted for nearly a third of the Dow Jones industrial average’s gains since the election.

There’s been a “total turnaround in the financials, and a lot of it is perception about what could be done” under President-elect Donald Trump, Silverblatt said.

Source: CNBC analysis using FactSet

After starting the year as the worst performer in the S&P 500, banks have been the best sector since Election Day on Nov. 8, rallying more than 18 percent to hit their highest level since December 2007 as of Thursday. The S&P 500 has climbed nearly 5 percent since the election, also to all-time highs.

In contrast, financial stocks — which included real estate until those stocks’ separation into a new sector in September — declined by 0.47 percent over the period between the end of 2014 and Election Day 2016. The broader S&P 500 took more than a year from May 2015 to post a new high this past July.

“It’s very difficult to get a sustained rally without the financials rallying,” said Jack Ablin, chief investment officer at BMO Private Bank.

He found that the S&P 500 tends to follow the performance of the financials sector, which has the second-greatest weighting in the index.

Banks are “really advancing on the back of higher interest rates. It’s probably the one sector that benefits from higher rates. I think investors are not only gravitating to it, but they are using it as a hedge,” Ablin said. Higher interest rates increase banks’ profit margins.

The financial sector is watched as an indicator of economic growth. The more business activity there is, the more loans are taken out, and the more money banks can make.

“It’s typically healthy that the financials are leading. It’s suggesting the economy is in good shape. It’s not something we’ve had” over the last few years, said Bruce Bittles, chief investment strategist at Baird.

Financials were already on the rise ahead of the U.S. presidential election, as the economic outlook improved, as trading volumes picked up and as global central bank policy appeared to turn less stimulative.

Since the election, Treasury yields have jumped on expectations of economic growth stemming from Trump’s promised tax cuts and infrastructure spending. The incoming administration is also expected to roll back some of the regulations imposed on banks after the financial crisis.

“What we ultimately get is stimulus and regulatory rollback,” said Tom Wright, director of equities at JMP Securities. He said those policies should have a much bigger effect than would a 25 basis point rate hike (0.25 percentage point) from the U.S. Federal Reserve.

“Generally, investors have been underweight (banks) for a long time, in the broader brush of things, since the financial crisis in ’09,” he said. “This is a major shift, and there are larger pools of money that are going into financials.”

For example, in the week after the election, RBC Capital Markets began recommending financial stocks as the firm revised its views on seven S&P 500 sectors.

Bespoke Investment Group predicted in a Thursday note that the sector still has room to run higher.

“Financials dropped more than 80 percent during the financial crisis, while the energy sector fell 40 percent from mid-2014 through January of this year,” the note said. “So while sectors like consumer discretionary and industrials have also rallied sharply higher since the election, they have exploded higher into new all-time high territory. Financials and energy, on the other hand, both still need to gain roughly 30 percent to get back to their prior all-time highs.”

Meanwhile, the rally has spread. Not only have the S&P 500, Dow Jones industrial average and Nasdaq composite hit records, but so have the small-cap Russell 2000 index and the Dow transports. The transports posted their first new high in two years on Wednesday, and all six major indexes hit fresh highs Thursday.

“From a technical standpoint, the situation has improved, even though valuations are stretched,” said Ablin, who played down the concerns of investors “equaling this to a tech bubble of the late ’90s.”

“Now it’s just a matter of waiting for the fundamentals to catch up with what the expectations are,” he said

source”cnbc

Former GS banker Leissner to be prohibited from Sinagpore markets over 1MDB breaches: MAS

Sam Kang Li | Bloomberg | Getty Images

Singapore’s monetary authority on Friday announced its intention to issue a prohibition order against a former Goldman Sachs director who was responsible for managing the investment bank’s relationship with the controversial Malaysian sovereign wealth fund 1MDB.

The Monetary Authority of Singapore said it intended to issue a prohibition order against former Goldman director Tim Leissner for allegedly making false statements on behalf of the investment bank without its knowledge of consent.

The order would prohibit Leissner from taking part in the management of any capital market services in Singapore for 10 years.

MAS said Leissner issued an authorized reference letter to a financial institution based in Luxembourg in June 2015, using a Goldman Sachs Asia letterhead, which said the investment bank conducted due diligence on Low Taek Jho and his family and did not detect any money laundering concerns.

MAS added these statements were untrue and were made by Leissner without Goldman’s knowledge.

Leissner managed client relationship with 1MDB for all its three bond issues from 2012 to 2013.

MAS also said it completed its inspection of Standard Chartered bank’s Singapore branch in relation to its 1MDB-related fund flows which took place from 2010 to 2013.

The monetary authority said it found significant lapses in the bank’s customer due diligence measures and controls for ongoing monitoring and said it resulted in numerous breaches of MAS’s anti-money-laundering regulations.

Standard Chartered’s Singapore branch will be fined 5.2 million Singapore dollars ($3.65 million), MAS said.

A Standard Chartered spokesperson responded to CNBC’s request for comments and said the bank regretted that 1MDB-related transactions passed through Standard Chartered Bank Singapore accounts between 2010 and early 2013.

“We reported the suspicious transactions, both before and at the time we exited the accounts in early 2013, and have been fully cooperating with the authorities investigating this matter.”

The spokesperson added the bank will donate the profits related to the 1MDB transactions to charitable causes.

A Goldman Sachs spokesman told CNBC in an emailed statement the investment bank had discovered the incident in January 2016 and “identified as a clear violation of the firm’s standards.”

“At that time we promptly took steps to separate Mr. Leissner from the firm and reported the matter to regulatory authorities in several jurisdictions, including Singapore. We continue to cooperate with the MAS,” the spokesperson said. Leissner left Goldman in February 2016.

'Perfectly clear' billions illegally extracted from 1MBD: Journalist ***please do not upload***

‘Perfectly clear’ billions illegally extracted from 1MDB: Journalist  Sunday, 20 Nov 2016 | 5:51 PM ET | 04:31

The troubled Malaysian state development fund, 1Malaysia Development Berhad (1MDB), has been at the center of investigations and court cases globally following allegations that billions of dollars were looted from it.

The long-running scandal has included allegations that diverted funds flowed to Malaysian Prime Minister Najib Razak’s personal bank account and to his stepson, Riza Aziz, whose company, Red Granite Pictures, produced the film “The Wolf of Wall Street.”

Low was a friend of Najib’s family; in June, Reuters reported an investigation found Low was the sole owner of a company called Good Star, which received $1.03 billion from 1MDB.

Najib, Aziz and Low have previously denied any wrongdoing.

In June, the Wall Street Journal reported that U.S. investigators were examining if the investment bank violated the Bank Secrecy Act for not informing regulators about a potentially suspicious transaction involving 1MDB.

The Journal reported after raising $3 billion via a bond issue for 1MDB, Goldman sent the proceeds to a Swiss bank account controlled by the troubled state fund, with much of that amount then disappearing offshore and some reappearing in Najib’s account.

In July, U.S. authorities issued subpoenas to Goldman for documents related to its dealings with 1MDB, according to the Journal.

MAS separately announced it found “lapses and weaknesses” in anti-money-laundering controls in Singapore-based banks DBS, UBS, and Standard Chartered related to 1MDB. MAS also said it was examining the extent of Goldman’s local unit’s involvement in bond deals for 1MDB.

source”cnbc”

Facebook launches ‘Messenger Lite’ for Android users in emerging markets

Facebook has launched a stripped-down version of its messaging app called Messenger Lite, which is designed to work with slower internet speeds and basic Android smartphones in emerging markets, the social networking giant announced Monday.

Messenger Lite uses up less than 10 megabytes compared to around 156 megabytes for the full version of the app. Users of Messenger Lite can use core features such as basic messaging, sending and receiving photos, links and stickers. The new Lite app however will not have full access to other features such as bots that Facebook recently introduced.

Facebook

Facebook’s Messenger Lite is starting to roll out t to people in Kenya, Tunisia, Malaysia, Sri Lanka and Venezuela, with availability in more countries in the coming months.

It marks the U.S. social media giant’s latest foray into developing markets where it is looking to connect the next billion users by improving internet access and online services. Last year, the company released Facebook Lite for Android users in emerging markets.

Google’s Android mobile operating system is the dominant player in emerging markets over rival Apple’s iOS, due to lower cost of the devices that run the software.

Facebook has also been testing drones that are able to “beam” internet to remote parts of the world. But its efforts in developing markets have not always been plain sailing. Facebook ran into headwinds in India with its Internet.org program. It offers a package called Free Basics which allows users in developing markets to access certain services on their mobile phones for free without data charges. Facebook, perhaps unsurprisingly, is one of the apps that can be accessed as part of this.

Critics called said Free Basics went against the principles of net neutrality – the idea that all traffic online should be treated equally. India then banned Free Basics in February.

Facebook Messenger Lite is a different approach to developing markets and the platform, which now has one billion users globally, has become key to Facebook’s growth efforts. Earlier this year the company introduced chatbots on the platform – apps or pieces of software that users can interact with via speech or text. They are then able to respond providing information or even carrying out a task.

“Messenger Lite was built to give people a great Messenger experience, no matter what technology they use or have access to,” Tom Mulcahy, engineering manager for Messenger Lite, wrote in a blog post on Monday.

source”cnbc”

‘Bad Goldilocks’ emerges as market’s worst enemy

Remember “Goldilocks,” that pristine economic condition where growth was strong but not so strong as to induce tighter Fed policy? Well, now meet her evil twin.

This is the new state of affairs in the U.S., where growth isn’t strong enough to inspire much confidence but not weak enough to induce easing from the U.S. central bank.

It’s an uncomfortable place for investors, evidenced by a move away from stocks despite a strong week for the markets.

Read MoreGlobal economy faces a ‘five-finger discount’

Global equity funds surrendered a net $12.2 billion in outflows last week, the highest level of redemptions in five months and the seventh consecutive week of net outflows, according to Bank of America Merrill Lynch, whose chief investment strategist Michael Hartnett used the “bad Goldilocks” term to frame the current situation.

Source: The British Library

The outflows came amid a market that is up nearly 6 percent from at least a near-term intraday low hit Feb. 11, as measured by the S&P 500. Despite the market gains, investors remain leery over economic conditions, indicating the recent rally could be just a short squeeze likely to unravel.

Read MoreI don’t know what the bulls are smoking: Stockman

Mixed signals are the economy’s biggest problem: While consumers continue to spend and the jobs market looks solid, particularly in terms of weekly jobless claims, other aspects continue to underperform.

Manufacturing, exports and business investment numbers are weak, corporate profits are contracting, and estimates of recession chances are climbing. Revised numbers for fourth-quarter gross domestic product are likely to show growth of just 0.2 percent, less than the meager 0.7 percent initial estimate and perilously close to contraction, according to Credit Suisse economists.

“The U.S. economy has not been immune to the shocks emanating from global economic and financial market stress. Net export growth has slowed significantly, equipment spending is much softer, and businesses aren’t building inventories as fast as they might have otherwise,” Credit Suisse said in a note to clients. “However, … the domestic weakness to date has been concentrated mainly in specific pockets of the economy — especially those related to the energy sector.”

Wall Street’s efforts to ring-fence oil haven’t gone over well with investors. Worries are rising that the sector’s problems could bleed into other parts of the economy.

Read MoreHedge funds go bargain-hunting for energy stocks

Under some circumstances, it would be natural for investors to wonder whether the Fed might come to the rescue with some policy accommodation. In this case, though, that seems unlikely for a number of reasons.

Cleveland Fed President Loretta Mester on Friday expressed a widespread sentiment among policymakers, namely that the current weakness is bound to pass and there’s no reason to ease.

“At this point, I see the market volatility and sharp drop in oil prices as posing risks to the forecast, but I believe it is premature to conclude they necessitate a material change in my modal economic outlook,” Mester, a policy hawk, said in a speech.

It’s not that the Fed doesn’t have the tools, it’s more that deploying them at this point would look like a panic move from an institution that is trying to calm markets. (Some easing measures mentioned in recent days include negative rates on bank deposits at the Fed and additional rounds of quantitative easing or Operation Twist, a balance sheet-neutral round of Fed bond-buying.)

Indeed, it will be a thin line for the Fed to walk, with an economy that is showing some signs of inflationary pressures — Friday’s consumer price index gain among them — along with deflationary signs in energy and a wage picture that is somewhere between.

Bad Goldilocks, then, looks to be the nemesis ahead both for investors and central bankers.
[“source -cncb”]

‘Bad Goldilocks’ emerges as market’s worst enemy

Remember “Goldilocks,” that pristine economic condition where growth was strong but not so strong as to induce tighter Fed policy? Well, now meet her evil twin.

This is the new state of affairs in the U.S., where growth isn’t strong enough to inspire much confidence but not weak enough to induce easing from the U.S. central bank.

It’s an uncomfortable place for investors, evidenced by a move away from stocks despite a strong week for the markets.

Read MoreGlobal economy faces a ‘five-finger discount’

Global equity funds surrendered a net $12.2 billion in outflows last week, the highest level of redemptions in five months and the seventh consecutive week of net outflows, according to Bank of America Merrill Lynch, whose chief investment strategist Michael Hartnett used the “bad Goldilocks” term to frame the current situation.

Source: The British Library

The outflows came amid a market that is up nearly 6 percent from at least a near-term intraday low hit Feb. 11, as measured by the S&P 500. Despite the market gains, investors remain leery over economic conditions, indicating the recent rally could be just a short squeeze likely to unravel.

Read MoreI don’t know what the bulls are smoking: Stockman

Mixed signals are the economy’s biggest problem: While consumers continue to spend and the jobs market looks solid, particularly in terms of weekly jobless claims, other aspects continue to underperform.

Manufacturing, exports and business investment numbers are weak, corporate profits are contracting, and estimates of recession chances are climbing. Revised numbers for fourth-quarter gross domestic product are likely to show growth of just 0.2 percent, less than the meager 0.7 percent initial estimate and perilously close to contraction, according to Credit Suisse economists.

“The U.S. economy has not been immune to the shocks emanating from global economic and financial market stress. Net export growth has slowed significantly, equipment spending is much softer, and businesses aren’t building inventories as fast as they might have otherwise,” Credit Suisse said in a note to clients. “However, … the domestic weakness to date has been concentrated mainly in specific pockets of the economy — especially those related to the energy sector.”

Wall Street’s efforts to ring-fence oil haven’t gone over well with investors. Worries are rising that the sector’s problems could bleed into other parts of the economy.

Read MoreHedge funds go bargain-hunting for energy stocks

Under some circumstances, it would be natural for investors to wonder whether the Fed might come to the rescue with some policy accommodation. In this case, though, that seems unlikely for a number of reasons.

Cleveland Fed President Loretta Mester on Friday expressed a widespread sentiment among policymakers, namely that the current weakness is bound to pass and there’s no reason to ease.

“At this point, I see the market volatility and sharp drop in oil prices as posing risks to the forecast, but I believe it is premature to conclude they necessitate a material change in my modal economic outlook,” Mester, a policy hawk, said in a speech.

It’s not that the Fed doesn’t have the tools, it’s more that deploying them at this point would look like a panic move from an institution that is trying to calm markets. (Some easing measures mentioned in recent days include negative rates on bank deposits at the Fed and additional rounds of quantitative easing or Operation Twist, a balance sheet-neutral round of Fed bond-buying.)

Indeed, it will be a thin line for the Fed to walk, with an economy that is showing some signs of inflationary pressures — Friday’s consumer price index gain among them — along with deflationary signs in energy and a wage picture that is somewhere between.

[“source -cncb”]

Can the markets predict recessions? What we found out

It turns out investors probably should heed those national park signs warning hikers to “Beware of Bears.”

In a 1966 Newsweek article, the eminent economist Paul Samuelson famously quipped that the stock market had predicted nine of the past five recessions. It’s a remark that is often repeated to deride the powers of the stock market to predict the economy.

CNBC went back to see if Samuelson was right and, if so, does he remain right? As the gauge of the market, we looked at all the bear markets of the postwar era, using data compiled by the financial research firm Bespoke, where stocks fell 20 percent, stayed down for longer than a month and where there was no 20 percent rally.

Traders work on the floor of the New York Stock Exchange.

Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.

Before getting to the current results, the first thing we found is that Samuelson was technically wrong, but right in spirit. Using data from his day, he actually understated how lousy the market was at predicting recessions, at least by the standards we employed. When Samuelson wrote in 1966, the market was nearing the end of an eight-month-long bear market, one that would not lead to a recession. In fact, the previous nine bear markets starting in 1966 led to just three recessions.

The current results show Samuelson’s quip was spot on. There have been 13 bear markets in the postwar era. These 13 bear markets have led to recessions seven times within about 12 months. So instead of Samuelson’s 9 of 5 (think about it like shooting 55 percent), it’s really 13 of 7 (53 percent). Pretty impressive for a quip.

(Down about 10 percent from the highs, the market remains a long way from our bear market recession indicator, though economists have been raising the probability of one.)

On average, bear markets give investors about eight months of warning that a recession is on the way. That is, the average recession after a bear market doesn’t begin until 253 days later. But there’s a wide range: The 2007 recession began just 53 days after the 2007 bear market began. But it took 367 days before the November 1968 bear market yielded to the 1969 recession. (We counted that as a success for bear market predictions because it was only two days outside of the one-year limit).
[“source -pcworld”]