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U.S. job openings rise to seven-month high in February

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 U.S. job openings rise to seven-month high in February

U.S. job openings rose to a seven-month high in February while the pace of hiring slipped, pointing to a growing skills mismatch and a further tightening of labor market conditions.

Job openings, a measure of labor demand, increased 118,000 to a seasonally adjusted 5.7 million, the Labor Department said on Tuesday. That was the highest level since July and lifted the jobs openings rate to 3.8 percent after holding steady at 3.7 percent for four straight months.

Hiring, however, slipped to 5.3 million from 5.4 million in January. The hiring rate dipped to 3.6 percent from 3.7 percent the prior month.

“It shows you that there is one of the most gigantic skills mismatches out there across the country that we have ever seen in history,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.

The U.S. labor market is viewed as being near or at full employment. The unemployment rate is at a near 10-year low of 4.5 percent, below the most recent Federal Reserve median forecast for full employment.

(Reporting By Lucia Mutikani; Editing by Meredith Mazzilli)
Published at Tue, 11 Apr 2017 15:00:32 +0000

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Investors look to global growth for earnings power

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 Investors look to global growth for earnings power

By Caroline Valetkevitch| NEW YORK

America First may be a main policy of the White House and fuel to the stock market rally but U.S. investors are looking overseas for stronger earnings as S&P 500 companies are set to report their first quarter of double-digit profit gains since 2014.

A strong earnings season would help justify pricey stock valuations, with the S&P 500 rallying this month to its most expensive since 2004 on a forward price-to-earnings basis.

While the U.S. economy has gotten a lot of attention since the Nov. 8 election and President Donald Trump’s vows to boost the domestic economy, data during the quarter has suggested the global economy is strengthening.

That is welcome news for S&P components, since nearly half of their sales come from overseas.

Shares of the biggest U.S. companies, which tend to have the most overseas exposure, have been among the strongest performers over the past several weeks. For instance, the S&P 500 .SPX has outperformed its average stock .SPXEW this year since mid-February, after performing mostly in line at the beginning of the year. [www.bit.ly/2oQPVXF]

“The fact that we’re seeing stabilization in the global community will bode well for multinational companies and help earnings for the first quarter,” said Terry Sandven, senior equity strategist at U.S. Bank Wealth Management in Minneapolis.

“You’ve also seen the dollar not appreciate as much as many had forecast a quarter ago, so multinational companies may get some relief on the (foreign exchange) line,” he said.

A weaker dollar boosts offshore revenues when they are translated into the U.S. currency. The U.S. dollar index .DXY was down 1.8 percent in the first quarter, but it was still cheaper during last year’s first quarter.

 

STRONGER DATA AS EARNINGS LOOM

A survey this week showed euro zone business activity at a six-year high. Forecasts from the International Monetary Fund show a pickup in the global economy in 2017 and 2018, especially in developing economies.

However, some investors worry multinationals may have already priced in big gains in earnings.

“As long as nothing changes, these firms are going to be fine,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago, speaking of the strength of the largest American companies.

He warned, however, that stock prices may have taken in any good news. “The market has certainly fully discounted all that.”

The U.S. earnings season gets under way next week, with results from banks JPMorgan Chase (JPM.N), Wells Fargo (WFC.N) and Citigroup (C.N) among others.

The financial sector is projected to post a 15.4 percent profit gain, second only to energy among S&P sectors.

Energy companies, which carried most of the losses that extended an S&P 500 earnings recession until the second quarter of last year, are expected to do most of the heavy lifting this earnings season with a whopping 600 percent increase.

For the entire S&P 500, analysts are projecting earnings up 10.1 percent compared with a year ago, which would be the first double-digit increase since the third quarter of 2014, according to Thomson Reuters data.

Excluding the energy sector, S&P 500 earnings are expected to be up 6.1 percent.

Revenue is expected to have jumped 7 percent, the most since 2011, which should help compensate for higher wage and other costs facing companies, strategists said.

“We’re seeing revenues contribute materially more to that bottom-line growth,” said Patrick Palfrey, senior equity strategist at RBC Capital Markets in New York.

Big profit gains are expected in technology and materials as well, the data showed.

“It comes down to a synchronized global economic acceleration …; a rebound and stabilization in commodity prices and a higher interest rate environment,” Palfrey said.

(Reporting by Caroline Valetkevitch; Editing by Rodrigo Campos and James Dalgleish)
Published at Sat, 08 Apr 2017 00:00:33 +0000

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Stocks Give Up Ground Amid Slowing Job Growth

 

Stocks Give Up Ground Amid Slowing Job Growth

By Justin Kuepper | Updated April 7, 2017 — 6:22 PM EDT

The major U.S. indexes moved largely lower over the past week, as a better-than-expected manufacturing report early in the week was offset by lower-than-expected employment data. Non-farm payrolls rose just 98,000 in March – compared to a consensus of 175,000 – although investors were comforted by a sharp 0.2% drop in the unemployment rate and strong job gains in the manufacturing sector that drives middle-class spending. Of course, the Syrian air strike has also weighed on the market as concerns mount over Trump’s long-term plans.

International markets were mixed over the past week. Japan’s Nikkei 225 fell 1.3%; Germany’s DAX 30 fell 0.71%; and, Britain’s FTSE 100 rose 0.31%. In Europe, the Eurozone reported its best period of economic activity since the 2011 sovereign debt crisis with HIS Markit’s survey reaching a six-year high. In Asia, investors will be anxiously watching President Trump’s meeting with Chinese President Xi Jinping that began on Thursday in Mar-a-Lago where the two are likely to discuss trade policy and North Korea.

The S&P 500 SPDR (ARCA: SPY) fell 0.23% over the past week. After moving off of its 52-week high, the index has been hovering around its pivot point at $135.54. Investors should watch for a rebound toward R1 resistance at $239.48 or a breakdown from its 50-day moving average at $233.82 to S2 support at $227.87. Looking at technical indicators, the RSI recovered but remains neutral at 51.17, while the MACD remains in a bearish downtrend that dates back to early March — although it could see a bullish crossover in the near-term.

The Dow Jones Industrial Average SPDR (ARCA: DIA) rose 0.02% over the past week, making it the best-performing major index. After moving off its 52-week high, the index has traded in a narrow range just below its pivot point at $207.11. Traders should watch for a rebound to R1 resistance at $210.41 or a breakdown below its 50-day moving average at $205.46 to S2 support at $199.74. Looking at technical indicators, the RSI appears neutral at 49.22 while the MACD remains in a bearish downtrend that could soon reverse.

The PowerShares QQQ Trust (NASDAQ: QQQ) fell 0.31% over the past week. After briefly touching trend line and R1 resistance at $133.61, the index has traded sideways just above its pivot point at $131.51. Traders should watch for a breakout to R2 resistance at $134.85 or a move below trend line support to S1 support or its 50-day moving average at $129.64. Looking at technical indicators, the RSI appears a bit lofty at 59.79 while the MACD remains in bearish territory but could see a bullish crossover.

The iShares Russell 2000 Index ETF (ARCA: IWM) fell 1.42% over the past week, making it the worst-performing major index. After briefly rising above its pivot point, the index moved lower to nearby its lower trend line support. Traders should watch for a breakout toward the upper end of its price channel at $142.00 or a breakdown lower to S2 support at $128.72. Looking at technical indicators, the RSI appears neutral at 47.68 while the MACD remains depressed, but could see a bullish crossover in the near-term.

The Bottom Line

The major U.S. indexes moved largely lower over the past week with the exception of the Dow Jones Industrial Average that posted a modest gain. Most indexes have neutral technical indicator readings, which provides few hints as to future price movements. Next week, traders will be several economic indicators including Janet Yellen’s speaking engagement on April 10, consumer sentiment on April 13, and retail sales data on April 14. Investors will also be closely monitoring the situation in Syria for signs of escalation.

Note: Charts courtesy of StockCharts.com. As of the time of writing, the author had no holdings in the securities mentioned.
Published at Fri, 07 Apr 2017 22:22:00 +0000

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March Employment Preview: Mixed Signals

 

March Employment Preview: Mixed Signals

by Bill McBride on 4/06/2017 12:04:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for March. The consensus, according to Bloomberg, is for an increase of 175,000 non-farm payroll jobs in March (with a range of estimates between 125,000 to 202,000), and for the unemployment rate to be unchanged at 4.7%.

The BLS reported 235,000 jobs added in February.

Here is a summary of recent data:

• The ADP employment report showed an increase of 263,000 private sector payroll jobs in March. This was well above expectations of 170,000 private sector payroll jobs added. The ADP report hasn’t been very useful in predicting the BLS report for any one month, but in general,this suggests employment growth ABOVE expectations.

• The ISM manufacturing employment index increased in March to 58.9%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll increased about 30,000 in March. The ADP report indicated 30,000 manufacturing jobs added in March.

The ISM non-manufacturing employment index decreased in March to 51.6%. A historical correlation between the ISM non-manufacturing employment index and the BLS employment report for non-manufacturing, suggests that private sector BLS non-manufacturing payroll jobs increased about 115,000 in March.

Combined, the ISM indexes suggests employment gains of about 145,000.  This suggests employment growth BELOW expectations.

Initial weekly unemployment claims averaged 250,000 in March, down from 234,000 in February. For the BLS reference week (includes the 12th of the month), initial claims were at 258,000, up from 244,000 during the reference week in February.

The increase during the reference suggests more layoffs during the reference week in March than in February. This suggests a somewhat weaker employment report in March than in February.

• The final March University of Michigan consumer sentiment index increased slightly to 96.9 from the February reading of 96.3. Sentiment is frequently coincident with changes in the labor market, but there are other factors too like gasoline prices and politics.

• Weather: There was probably some payback from the warmer than normal weather in February. According to research economist Francois Gourio at the Chicago Fed: “Our models predict a strong negative weather effect for March NFP – around 100K jobs less than with normal weather”. This suggests a weaker than expected report.

• Conclusion: None of the indicators alone is very good at predicting the initial BLS employment report.  The ADP report suggests another strong report, however the ISM surveys suggest weaker job growth. Weekly unemployment claims suggest weaker job growth, and the weather impact appears to be negative.  I’ll break with my recent “over” picks, and take the “under” for March.

Published at Thu, 06 Apr 2017 16:04:00 +0000

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Back On Track

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By FirmBee from Pixabay

Back On Track

by THE MOLEAPRIL 5, 2017

It’s still a bit early in the day but at the time of this writing it seems like we are back on track on all fronts. Equities have managed to extend yesterday’s humble gains overnight and unless we’re turning on the dime again after the open we have decent odds for continuation higher throughout the day. However that said I will be able to make a more firm assessment of the situation once I see the Zero continue to plot in positive territory after the opening bell.

2017-04-05_spoos_update

I also should point out that the price action is becoming a LOT more volatile here compared with the almost robotic ascend over the previous three months. Which means a surprise move back down could materialize at a moment’s notice. It seems participants are getting a bit more antsy up here, so make sure your current exposure does not exceed your comfort zone.

Make Or Break

To be crystal clear and on record about this: We may as easily pop 50 handles from here as we may drop 50 handles or more in a session or two. This is is not the same type of market you’ve enjoyed in the first quarter of this year. Act accordingly.

2017-04-05_crude_update

As you know I’m not one to bet on lucky breaks but as I’m only [part] human I can’t help but being grateful for not having my trail run on crude Monday night.  That was one nasty scare and of course it’s been nothing but white/green candles ever since. Lacking a decent spike low nearby I am simply moving my stop to around -1R MFE. Let’s see if she can make it to the magic 53 mark. Happy Mole indeed.

2017-04-05_USDJPY_update

USD/JPY was a long entry on Monday and it seemed to be heading right for the chopping block as well. Fortunately the blade somehow missed us and we’re almost back from whence we came. We’re not off the hook however and in retrospect I think the entry was a bit premature as I should have waited for a more pronounced retest of the lower 100-day Bollinger as well as the Net-Lines demarking the previous spike low near 110. For now I will do nothing here but if we don’t see movement here by the end of the week (up preferably) then I may just pull this one as momentum seems to be continuing sideways.

I won’t be adding any new setups until I see some sort of resolution here hopefully sometime this week. We are at a technical inflection point with intra-day volatility on the rise. It’s okay to get positioned here but I caution everyone against a) becoming directionally biased and b) getting over exposed. Tis’ the time to keep a low profile and to wait for instructions.

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Published at Wed, 05 Apr 2017 13:26:17 +0000

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Down But Not Out

Down But Not Out

by THE MOLEAPRIL 4, 2017

It seems everything made a u-turn yesterday which of course affected our campaigns across the board. Let’s review the damage but instead of licking our wounds we’re actually going to use this as another valuable lesson in tape reading. That’s right – when sudden events knock you on your ass then learning from the experience is mandatory.

2017-04-04_copper_update

Copper didn’t play ball and I wound up taking the express elevator to the woodshed. But there’s a lot more here to see than just a stop out. If you direct your attention to the daily panel you’ll see that the tape was coiled up to the max after literally months of highly volatile churn. The long setup presented was the single best opportunity for copper to finally escape the trading range and turn all that volatility into something productive.

But it was not to be and although the bullish scenario cannot be completely counted out just yet the odds just decreased quite a bit and leave the door open for even more sideways churn. Buyers as well as sellers are on notice here and that leaves us without a clear direction. So at this point all we have left is highly volatile sideways tape. Which is excellent for nimble range traders of course.

2017-04-04_spoos_update

The E-Mini is in better shape but the weakness we saw yesterday now needs to be recovered pronto or sellers may cease the opportunity to introduce a fast and painful leg to the downside which would most likely bring us to near 2285. Once again we are seeing less direction and increasing intra-day volatility which suggests we may be looking at a medium term top.

2017-04-04_crude_update

Crude also took it on the chin but miraculously yesterday’s sell off missed my trailing stop by a few ticks. And given the current snap back this would have been extra annoying. So far so good however. Clearly this contract has had its own share of volatility which has a tendency of trapping buyers as well as sellers in endless gyrations and then suddenly blast off in the opposite direction. We got a very lucky entry here last week and thus my expectations forward are (and should be) low.

2017-04-04_soybeans

Soybeans is not a contract we have been trading but since this is a tape reading lesson I definitely wanted to present it here. I often mentioned how futures contracts have a knack for picking a direction and never looking back. The daily panel clearly shows this type of behavior throughout its recent history.

For trend traders this is great news because a failure of support (or resistance) can turn into a very juicy contrarian campaign. A great opportunity, which I missed as I was on vacation, presented itself in March when daily support near the lower Bollinger gave way and resulted in a systematic long squeeze which continues to this day. The point of recognition of course was the spike low near 990 which up to this moment had looked like perfect support for staging a long campaign.

When the inverse, i.e. a breach of the SL, happened however the odds pretty much flipped on a dime and the rest is history. I have often presented binary campaigns, meaning a long and short entry at the same time, for this very reason. Some junior reason have sometimes joked that I could not be proven wrong this way. But missed the point for the very reasons explained above. Sometimes price finds itself at an inflection point where a few ticks separate high odds of a short resolution from similar odds of a long resolution. This is a great example of exactly such a binary situation and what transpired when ‘conditions on the ground’ changed in an instant. If you have ever served then I am sure you are familiar with that very phrase.

A few more goodies below the fold – we are looking at a swing trading example and I posted an update on a very important development I covered yesterday:

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Published at Tue, 04 Apr 2017 13:57:10 +0000

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Beyond jobs, car sales to give insight on consumer health

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By Rodrigo Campos| NEW YORK

Forget the jobs report. The most interesting bit of U.S. economic data next week is Monday’s auto sales release, which will offer a measure of the middle-class consumer and a sector of the stock market that has had a rough ride so far in 2017.

Economists are looking for another solid month of sales north of 17 million new vehicles at a seasonally adjusted annualized rate for March but nothing like the 18.4 million hit in December, the highest since August 2005.

The number would however point to a third consecutive decline on a 12-month rolling basis. With sales peaking and prices set to drop, the secondary effects are expected to be felt beyond car makers and dealers.

Lease and used-vehicle prices are expected to fall sharply this year, according to Ally Financial, which cited its estimate earlier this month when it lowered its 2017 profit forecast.

Morgan Stanley said in a Friday note used-car prices could tumble between 25 and 50 percent by 2021, with both new cars and off-lease supply hitting record highs this year.

“There’s an avalanche of used cars ready to hit the market place,” said Brad Lamensdorf, co-manager of the AdvisorShares Ranger Equity Bear ETF.

According to Lamensdorf, the need to move inventory has translated into reckless lending. “It’s not fraudulent, but people are up to their neck in debt,” he said. “Default rates are going to be much more significant.”

The stock market is taking note. The S&P 1500 automotive retail index .SPCOMAUTR is down 6.5 percent year to date, with Advance Auto Parts (AAP.N), AutoNation (AN.N) and Sonic Automotive (SAH.N) down double digits in 2017.

Carmax (KMX.N), which reports earnings on Thursday, is seen as a bellwether in the used-car industry. Its stock is down 8 percent so far this year.

Another red flag from the sales floor: the average number of days a new vehicle sat before being retailed hit 70 in the first 19 days of March according to a note from J.D. Power and LMC Automotive. That is the highest since July 2009.

With the market tightening, industry insiders expect more price cuts.

“The competitiveness of the industry continues to be evident in ever-rising incentive levels,” said Deirdre Borrego, senior vice president of automotive data and analytics at J.D. Power in a note.

“Incentives will reach a new high for the month of March.”

At the same time, competition to finance loans is likely to further increase credit risk for auto lenders, Moody’s Investors Service said this week.

Ally Financial stock (ALLY.N) fell 9.6 percent in March.

Even the challenge to General Motors (GM.N) this week from a hedge fund, aimed at boosting a lagging stock price, reflects the concern that the industry is hoarding cash without significant prospects for growth.

NO RECESSION, BUT …

The market for autos, however important, is not as big a part of the U.S. economy as the housing market was when its collapse in 2008 triggered the sharpest recession since the Great Depression.

However, and taking into account all the moving parts of the industry’s supply chain, a halt in the auto sector could strain an economy that is already eight years into a recovery cycle. And it would hurt blue-collar workers the most.

If a jump in auto loan defaults materializes, there is also the risk that consumers will shut their wallets and hurt economic growth, two-thirds of which depends on consumer spending.

“When you look at how consumers are spending there is a question mark if the less-than-prime buyer is suddenly having issues,” said Ian Winer, head of equities at Wedbush Securities in Los Angeles.

“The spillover effect is: what other industries are also using rather aggressive financing in order to get revenue? Jewelry and mattresses jump out at me as two big examples.”

Tempur Sealy shares (TPX.N) have fallen 32 percent year to date.

(Additional reporting by Nick Carey and Joe White; Editing by James Dalgleish)
Published at Sat, 01 Apr 2017 00:56:45 +0000

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Stocks Move Higher as Risks to the Rally Mount (SPY, DIA)

 

Stocks Move Higher as Risks to the Rally Mount (SPY, DIA)

By Justin Kuepper | Updated March 31, 2017 — 4:14 PM EDT

The major U.S. indexes moved higher over the past week, as of late Friday afternoon, driven by improving economic conditions and earnings growth. Final fourth-quarter gross domestic product (GDP) readings came in above expectations at 2.1% thanks to a 3.5% increase in consumer spending. Jobless claims also fell by 3,000 to 258,000 in the latest weeks, which is near their lowest level in decades. However, investors remain concerned about an increasingly uncertain political climate with the healthcare bill and intelligence investigations.

International markets were mixed over the past week. Japan’s Nikkei 225 fell 1.78%; Germany’s DAX 30 rose 2.06%; and, Britain’s FTSE 100 rose 0.07%. In Europe, Eurozone sentiment edged lower but remained strong in March as inflation expectations remain high. In Asia, Japan’s economy has witnessed higher factory output and a low jobless rate, but household spending remains soft, and consumer inflation was flat after removing the effect of rising energy costs – a development that could complicate the Bank of Japan’s policy actions.

The S&P 500 SPDR (ARCA: SPY) rose 0.94% over the past week, as of Friday afternoon. After rebounding from its 50-day moving average at $232.99, the index reached midway towards its R1 resistance at $239.21. Traders should watch for a move to R1 resistance levels or a renewed move downward to re-test its 50-day moving average or pivot point at $232.52. Looking at technical indicators, the RSI recovered but remains neutral at 55.72, while the MACD remains in a bearish downtrend that dates back to early March.

The Dow Jones Industrial Average SPDR (ARCA: DIA) rose 0.38% over the past week, as of Friday afternoon. After briefly touching its 50-day moving average at $204.65, the index rebounded toward its trend line resistance. Traders should watch for a move to R1 resistance at $211.33 or move lower to re-test its 50-day moving average and pivot point at around $204.21. Looking at technical indicators, the RSI appears neutral at 49.35, but the MACD remains in a bearish downtrend since early March.

The PowerShares QQQ Trust (NASDAQ: QQQ) rose 1.41% over the past week, as of Friday afternoon. After rising past its R1 resistance at $131.92, the index lost some steam towards the end of the week on its move to R2 resistance. Traders should watch for an extended rally to R2 resistance at $134.09 or a move lower to its lower trend line and 50-day moving average at $128.83. Looking at technical indicators, the RSI appears overbought at 66.53, but the MACD could experience a bullish crossover over the near-term.

The iShares Russell 2000 Index ETF (ARCA: IWM) rose 2.56% over the past week, as of Friday afternoon. After breaking through its pivot point and 50-day moving average at $136.53, the index is moving toward its upper trend line resistance. Traders should watch for a breakout from R1 resistance at $140.41 or a move lower to re-test its pivot point. Looking at technical indicators, the RSI appears slightly overbought at 57.24, but the MACD witnessed a bullish crossover that could signal a trend reversal.

The Bottom Line

The major U.S. indexes moved higher over the past week with mixed momentum readings from the MACD indicator. Next week, traders will be watching several key economic indicators including manufacturing data on April 3, FOMC minutes on April 5, jobless claims on April 6, and of course, employment data on April 7. Political developments out of the White House could also have an impact on the market as the risk of disruption of the status quo has been elevated.

Note: Charts courtesy of StockCharts.com. As of the time of writing, the author had no holdings in the securities mentioned.

(Why?)
Published at Fri, 31 Mar 2017 20:14:00 +0000

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Schedule for Week of Apr 2, 2017

by Unsplash from Pixabay

Schedule for Week of Apr 2, 2017

by Bill McBride on 4/01/2017 08:11:00 AM

The key report this week is the March employment report on Friday.

Other key indicators include the March ISM manufacturing and non-manufacturing indexes, March auto sales, and the February Trade Deficit.

Also the Q1 quarterly Reis surveys for office and malls will be released this week.

—– Monday, Apr 3rd —–

ISM PMI10:00 AM: ISM Manufacturing Index for March. The consensus is for the ISM to be at 57.1, down from 57.7 in February.Here is a long term graph of the ISM manufacturing index.

The ISM manufacturing index indicated expansion at 57.7% in February. The employment index was at 54.2%, and the new orders index was at 65.1%.

10:00 AM: Construction Spending for February. The consensus is for a 1.0% increase in construction spending.

—– Tuesday, Apr 4th—–

U.S. Trade Deficit8:30 AM: Trade Balance report for February from the Census Bureau.This graph shows the U.S. trade deficit, with and without petroleum, through January. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The consensus is for the U.S. trade deficit to be at $44.5 billion in February from $48.5 billion in January.

Early: Reis Q1 2017 Mall Survey of rents and vacancy rates.

Vehicle SalesAll day: Light vehicle sales for March. The consensus is for light vehicle sales to decrease to 17.4 million SAAR in March, from 17.5 million in  February (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the February sales rate.

10:00 AM: Manufacturers’ Shipments, Inventories and Orders (Factory Orders) for February. The consensus is a 1.0% increase in orders.

—– Wednesday, Apr 5th —–

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.8:15 AM: The ADP Employment Report for March. This report is for private payrolls only (no government). The consensus is for 170,000 payroll jobs added in March, down from 298,000 added in February.

Early: Reis Q1 2017 Office Survey of rents and vacancy rates.

10:00 AM: the ISM non-Manufacturing Index for March. The consensus is for index to decrease to 57.0 from 57.6 in February.

2:00 PM: FOMC Minutes for the Meeting of March 14 – 15, 2017

—– Thursday, Apr 6th —–

8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 250 thousand initial claims, down from 258 thousand the previous week.
—– Friday, Apr 7th —–

8:30 AM: Employment Report for March. The consensus is for an increase of 178,000 non-farm payroll jobs added in March, down from the 235,000 non-farm payroll jobs added in February.The consensus is for the unemployment rate to be unchanged at 4.7%.

Year-over-year change employmentThis graph shows the year-over-year change in total non-farm employment since 1968.

In February, the year-over-year change was 2.35 million jobs.

A key will be the change in wages.

10:00 AM: Monthly Wholesale Trade: Sales and Inventories for February.

3:00 PM: Consumer credit from the Federal Reserve.  The consensus is for a $15.0 billion increase in credit.

Published at Sat, 01 Apr 2017 12:11:00 +0000

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Fannie, Freddie may write down $21 billion due to U.S. tax cut: BMO

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Fannie, Freddie may write down $21 billion due to U.S. tax cut: BMO

U.S. mortgage finance giants Fannie Mae (FNMA.PK) and Freddie Mac (FMCC.PK) may write down $21 billion of tax-related assets if there is a deep cut in the federal corporate tax rate as promised by President Donald Trump, according to an analyst at BMO Capital Markets on Friday.

These assets, known as deferred tax assets, are items such as tax credits that may be used to reduce a company’s taxes.

If the rate cut is lowered to 20 percent from 35 percent, the value of Fannie and Freddie’s deferred tax assets is worth less and it would be recognized against their capital.

The two agencies, which guarantee home loans and mortgage-backed securities, are holding little capital since they are not allowed to retain their earnings after they have been under conservatorship or government guardianship due to heavy losses from the housing market collapse more than eight years ago.

Fannie drew $116.1 billion and Freddie $71.3 billion from the U.S. Treasury Department to cover those losses. They have remitted all their profits, which are more than their draw, to the Treasury under the conservatorship arrangement.

In absence of much capital cushion, the government-sponsored enterprises (GSEs) would need borrow nearly a total of $17 billion from Treasury, BMO’s head of fixed-income strategy, Margaret Kerins, wrote in a research note.

Such a move, however, would not hurt the value of their bonds or disrupt mortgage market, she said.

“However, the potential for renewed draws is likely to be politically unpopular and may spark preemptive Treasury action

and Congress to prioritize GSE reform in addition to headline risk,” Kerins wrote.

(Reporting by Richard Leong; Editing by Jonathan Oatis and Marguerita Choy
Published at Fri, 31 Mar 2017 19:44:34 +0000

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Premarket: 5 things to know before the bell

 

premarket stocks trading futures
Click chart for in-depth premarket data.

1. First of four: The first quarter of 2017 is set to end Friday. It’s been a wild and profitable ride for investors.

The Dow Jones industrial average, S&P 500 and Nasdaq all hit their highest levels ever in the past few weeks. For the quarter, the Dow is up 4.9%, the S&P 500 has surged 5.8% and the Nasdaq has rallied by a stunning 9.9%.

But it could end with a whimper. U.S. stock futures are looking rather weak.

European markets are all negative in early trading, though the moves down are rather small. Asian markets ended the day with mixed results.

2. Rand rout: South Africa has fired its finance minister, sending the country’s currency crashing.

The rand nosedived nearly 4% against the dollar after President Jacob Zuma ousted Pravin Gordhan, plunging the country into a new round of political turmoil and economic uncertainty.

Gordhan had built a reputation as a steady hand who expertly guided South Africa’s economy.

Some of South Africa’s biggest companies slammed the move, warning that it would have severe consequences for the economy, and could lead to the country’s credit rating being downgraded.

South African financial services firms listed in London plunged. Investec fell nearly 9%, while Old Mutual fell 6%.

3. Trade talk: President Donald Trump will make the next move in his bid to reshape U.S. trade policy on Friday, signing two executive orders aimed at combating foreign trade abuses.

These new executive orders come a week before Trump is set to meet with Chinese President Xi Jinping.

China is America’s biggest trading partner — the relationship is worth about $663 billion annually. But the U.S. has a trade deficit with China because it buys a lot more of its goods and services than the other way round.

President Trump, who wants to shrink the deficit, warned this meeting “will be a very difficult one.”

4. Earnings and economics:Blackberry(BBRY, Tech30) is releasing earnings before the open Friday.

The Bureau of Economic Analysis plans to release its Personal Income report for February at 8:30 a.m. ET.

The University of Michigan is releasing its March consumer sentiment report at 10 a.m.

5. Coming this week:

Friday –Blackberry(BBRY, Tech30) earnings; Final day of the first quarter of 2017

Published at Fri, 31 Mar 2017 09:13:44 +0000

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Wall Street rises, aided by growth data; Nasdaq ends at record

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Wall Street rises, aided by growth data; Nasdaq ends at record

By Lewis Krauskopf

Wall Street gained on Thursday, led by financial shares, after data showed U.S. economic growth was stronger than previously reported last quarter, helped by robust consumer spending, and the tech-heavy Nasdaq set a record closing high.

The energy sector .SPNY rose for a third straight day, supported by stronger oil prices CLc1 and a 8.8-percent gain for ConocoPhillips (COP.N), the biggest percentage riser on the S&P 500 after it agreed to sell oil and gas assets.

The S&P 500 gained for a third straight day, rebounding after its worst week of the year last week.

U.S. economic growth slowed less than previously reported in the fourth quarter as robust consumer spending provided a boost, the Commerce Department said. Gross domestic product increased at a 2.1 percent annualized rate instead of the previously-reported 1.9 percent pace.

A record-setting rally for stocks in the wake of President Donald Trump’s November election stalled somewhat this month, with some investors pointing to risks to Trump’s agenda, including tax reform, after his fellow Republicans failed to pass a healthcare bill.

The GDP report is “basically an affirmation that, hey, at the end of the day, Washington will do and say whatever they are going to do, but the economy is marching forward,” said Karyn Cavanaugh, senior market strategist at Voya Investment Management in New York.

“It’s not just the U.S. economy, but we do see definitely improvement throughout the world,” Cavanaugh said.

The Dow Jones Industrial Average .DJI rose 69.17 points, or 0.33 percent, to 20,728.49, the S&P 500 .SPX gained 6.93 points, or 0.29 percent, to 2,368.06 and the Nasdaq Composite .IXIC added 16.80 points, or 0.28 percent, to 5,914.34.

The Nasdaq closed at a record high after rising for a fifth straight session.

Financial shares .SPSY surged 1.2 percent, with Bank of America (BAC.N) and Citigroup (C.N) propping up the S&P 500.

The defensive utilities sector .SPLRCU was the worst-performing group, falling 0.7 percent.

Investors are also turning their attention to the impending first-quarter earnings season to justify lofty valuations for stocks. The S&P 500 is trading at about 18 times earnings estimates for the next 12 months against its long-term average of 15.

First-quarter earnings for S&P 500 companies are expected to rise 10.1 percent, according to Thomson Reuters I/B/E/S.

“We continue to see decent-to-improving economic data primarily in employment,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in New York. “We are likely to see a good quarter in terms of earnings, so I think there is some anticipation perhaps in the market here.”

In corporate news, Lululemon Athletica (LULU.O) shares plunged 23.4 percent after the Canadian yoga and leisure apparel retailer said first-quarter comparable sales were expected to fall.

About 6 billion shares changed hands in U.S. exchanges, below the 6.8 billion daily average over the last 20 sessions.

Advancing issues outnumbered declining ones on the NYSE by a 1.56-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored advancers.

The S&P 500 posted 20 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 99 new highs and 19 new lows.

 

(Additional reporting by Tanya Agrawal in Bengaluru; Editing by Sriraj Kalluvila and Nick Zieminski)
Published at Thu, 30 Mar 2017 20:33:56 +0000

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The Number of Millionaires Continues to Increase

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The Number of Millionaires Continues to Increase

Charlotte Wold | Updated March 29, 2017 — 2:27 PM EDT

The number of millionaires is growing rapidly and is concentrated largely in the U.S.. By comparison, overall the wealth growth since the millennium – $139 trillion – appears to have been slow since the Great Recession, according to a report released by the Credit Suisse Research Institute.

More Millionaires

The number of millionaires in the world has increased by 155%, while the number of ultra high net worth individuals (defined in the report as people with a net worth above US $50 million) increased by 216%. Of the latter, 51% reside in North America. According to a forecast included in the report, the U.S. will have the highest growth of millionaires in the world over the next five years.

How big? The number of U.S. households with a net worth of $1 million or more, not including primary residence (NIPR), increased by 400,000 to reach a record 10.8 million in 2016

In the U.S., there are 13.6 million people with $1 million or more in wealth, up 283,000 from last year. By the year 2021 the number of millionaires will reach 18 million – a 33% increase – significantly higher than any other country. Another report by Spectrem Group released in March, 2017, suggests that the number is even higher, the number of U.S. households with a net worth of $1 million or more (not including primary residence (NIPR)) increased by 400,000 in 2016.

Credit Suisse also suggests that inequality in the U.S. is on the rise. Although the average wealth is $345,000, the median wealth is only $30,000, a significant drop from last year and three times as low as countries with similar average wealth.

Global Wealth

In the UK, 406,000 people now find themselves outside the millionaire’s club, after US $1.5 trillion was wiped from the country’s household wealth. The decline is largely blamed on Brexit. Overall global wealth has grown 5.2% annually in terms of USD since the year 2000 – a modest growth, according to the report. In dollar terms wealth has grown by $139 trillion; by comparison, the estimated GDP of the entire world in 2015 is US $73.2 trillion.

Published at Wed, 29 Mar 2017 18:27:00 +0000

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Wall Street posts sharp gains, fueled by strong consumer data

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FILE PHOTO: A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S. December 28, 2016. REUTERS/Andrew Kelly/File Photo

Wall Street posts sharp gains, fueled by strong consumer data

By Lewis Krauskopf

U.S. stocks ended sharply higher on Tuesday, with financial and energy shares surging as data showed U.S. consumer confidence soaring to a more than 16-year high.

The S&P 500’s best day in nearly two weeks came after a record-setting rally for stocks in the wake of President Donald Trump’s election in November had stalled this month. The Dow Jones Industrial Average snapped an eight-day losing streak, which had been its longest run of losses since 2011.

U.S. consumer confidence surged to a more than 16-year high in March amid growing labor market optimism, while the trade deficit in goods narrowed sharply in February. The economy’s strengthening fundamentals were bolstered by other data showing further increases in house prices in January.

The data “underscore what has been going on really in this whole rally, and that is that confidence is pretty high and optimism is high and that has kind of been underpinning the resiliency of the equity markets,” said Jim Davis, regional investment manager at U.S. Bank Wealth Management in Springfield, Illinois.

The Dow Jones Industrial Average .DJI rose 150.52 points, or 0.73 percent, to 20,701.5, the S&P 500 .SPX gained 16.98 points, or 0.73 percent, to 2,358.57 and the Nasdaq Composite .IXIC added 34.77 points, or 0.6 percent, to 5,875.14.

Tuesday’s gains follow declines last week as investors fretted over Trump’s ability to enact his agenda after his fellow Republicans failed to pass their healthcare bill.

However, investors appear to have shrugged off the setback, choosing instead to focus on Trump’s promise of reforming the U.S. tax code, which has been a key driver in the post-election record rally.

“You have got maybe some rethinking of the political calculus related to the demise of healthcare, but what that may mean for a quicker focus on tax reform,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

The financial and energy sectors, which have lagged the broader market this year, fueled the S&P 500 on Tuesday.

The financial sector .SPSY jumped 1.4 percent, with JPMorgan (JPM.N) and Bank of America (BAC.N) giving big boosts to the S&P 500. Energy shares .SPNY gained 1.3 percent, supported by stronger oil prices CLc1.

The Dow Jones Transport Average .DJT, seen by some as a barometer of the economy, gained 1.8 percent for its second-best day of the year.

Apple (AAPL.O) rose 2.1 percent and gave the biggest boost to the S&P and the Nasdaq, as the shares hit an all-time high.

In corporate news, General Motors (GM.N) rose 2.4 percent after activist investor David Einhorn’s Greenlight Capital urged the carmaker to split its stock into two classes.

Tesla (TSLA.O) rose 2.7 percent after disclosing that Chinese technology giant Tencent Holdings (0700.HK) had taken a 5 percent stake in the electric car maker for $1.78 billion.

Darden Restaurants (DRI.N) jumped 9.3 percent, making it the best performer on the S&P 500, after the Olive Garden owner announced quarterly results and said it would buy Cheddar’s Scratch Kitchen for $780 million.

Advancing issues outnumbered declining ones on the NYSE by a 2.91-to-1 ratio; on Nasdaq, a 1.63-to-1 ratio favored advancers.

The S&P 500 posted 18 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 82 new highs and 33 new lows.

(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D’Silva and Dan Grebler)
Published at Tue, 28 Mar 2017 21:06:46 +0000

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Investors yank $8.9 billion from U.S. stocks, most in 9 months

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Growing concern over handling of GOP bill
Growing concern over handling of GOP bill

  @mattmegan5

Doubts about the future of President Trump’s agenda have put Wall Street on the defensive.

Investors have yanked $8.9 billion from U.S. stock funds during the week that ended March 22, according to research firm EPFR Global. That’s the biggest retreat since last June.

Some of the hardest-hit stocks were the ones that soared after the election. Investors pulled money from banks, manufacturers and small-cap stocks, which have the most exposure to the fluctuations of the American economy.

At the same time, the Dow has backed away from all-time highs, losing 250 points this week. The index is on track for its worst weekly performance since the week before Trump’s victory.

Analysts point the finger at Republicans’ struggles to pass a bill repeal and replace Obamacare. Investors fear that a failure on health care could delay or even derail Trump’s promise of “massive” tax cuts — a pledge that has underpinned the rally on Wall Street.

“The Trump trade was always going to have a ‘where’s the beef’ moment,” Bank of America Merrill Lynch strategists wrote in a report to clients.

BofA said failure to pass the health care bill is “unlikely to cause a ‘TARP moment,'” referring to the 9% crash in the S&P 500 after Congress initially rejected the Wall Street bailout package in September 2008.da

Still, BofA said health care failure could cause a “credibility hit” that “temporarily” pushes stocks and Treasury yields lower.

EPFR said the exodus from U.S. stocks is a sign that investors have taken a “turn towards the defensive” as they question whether the Trump administration “has the necessary focus and political skills to get its economic agenda through Congress.”

For instance, investors yanked $1.1 billion from small-cap stocks last week, the most in six months, according to EPFR. Small-cap stocks are typically based in the United States, and investors had hoped Trump’s America First agenda and promise of 4% economic growth would juice profits. But the Russell 2000, which measures small-cap stocks, has started to struggle and lost 2% of its value this week.

Likewise, industrial stocks, a group expected to benefit from Trump’s focus on trade, suffered their biggest outflows since mid-January.

Banks were another big winner after the election amid hopes of higher interest rates, which allow banks to make more money, and less regulation. But investors withdrew $600 million from financial stocks in the last week.

So where are investors putting their money instead?

Emerging markets and bonds benefited from the U.S. uncertainty, with both enjoying significant inflows in the past week.

Gold, which tends to do well during times of investor fear, is also going back into style. Investors poured $1.1 billion into gold funds in the last week.

Looking ahead, the key for Wall Street will be whether it looks like Trump and Republican leaders can quickly pivot from health care to tax reform.

Treasury Secretary Steven Mnuchin on Friday promised that Trump’s new tax reform plan is coming “very soon.” He expressed confidence that tax reform will happen this year, if not by August as he originally predicted then definitely by the fall.

But tax reform won’t be an easy deal, either.

The Trump rally is “dependent upon the delivery of tax reform,” David Kotok, chairman and chief investment officer of Cumberland Advisors, wrote in a note to clients.

“The longer that process takes and the more questionable the outcome, the higher the risk to stock prices,” Kotok wrote.
Published at Fri, 24 Mar 2017 18:20:44 +0000

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Wall Street dips in dramatic session as health bill pulled

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., March 22, 2017. REUTERS/Lucas Jackson

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Wall Street dips in dramatic session as health bill pulled

By Lewis Krauskopf

A dramatic session on Wall Street ended with stocks slightly lower on Friday as they pared losses in late-afternoon trading after Republicans pulled their bill to overhaul the U.S. healthcare system.

The benchmark S&P 500 shot up briefly into positive territory before falling back into the red as Republicans pulled the legislation due to a shortage of votes just before the markets closed, leaving investors to assess how the healthcare bill’s failure would affect President Donald Trump’s broader economic agenda.

Investors had worried earlier this week that the failure of the bill, which would have dismantled the law known as Obamacare, would prove an ominous sign for Trump’s ability to push through his economic agenda, including tax reform.

But some analysts and investors have seen a failure of the bill as a catalyst to bring forward action on tax reform in particular.

“Now that they’ve taken the healthcare issue off the table, I think the market is more optimistic that they can do other things that are more doable that are not so complicated, such as regulatory reform and lowering taxes,” said Margaret Patel, senior portfolio manager at Wells Fargo Asset Management in Boston.

The Dow Jones Industrial Average .DJI fell 59.86 points, or 0.29 percent, to end at 20,596.72, the S&P 500 .SPX lost 1.98 points, or 0.08 percent, to 2,343.98 and the Nasdaq Composite .IXIC added 11.05 points, or 0.19 percent, to 5,828.74.

The back-and-forth over the bill this week has led to some of the most volatile trading Wall Street has seen since Trump’s election in November. For the week, the S&P 500 fell 1.4 percent, its worst weekly decline of the year.

“This is now an indication that the president’s agenda is probably going to be more ambitious than Congress can manage,” said Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York. “It is probably going to mean that equity markets are going to have to factor in a degree of dysfunction that investors were hoping they wouldn’t have to.”

The S&P 500 has climbed 9.6 percent since Trump’s election, notching a series of record highs along the way. But the rally has stalled recently, and Tuesday’s 1.2 percent drop set off concerns about the beginning of a larger fall.

“The economy and earnings were doing better since before the election,” said Paul Zemsky, chief investment officer for multi-asset strategies and solutions at Voya Investment Management in New York. “If people want to drop the S&P by 300 points because this doesn’t pass, I and others will be down there to buy it.”

Shares of hospital operators finished sharply higher, with Tenet Healthcare (THC.N) up 7.4 percent. The potential dismantling of Obamacare has pressured hospital stocks over concerns the benefits the companies gained from coverage expansion would diminish.

In corporate news, Micron Technology (MU.O) jumped 7.4 percent after the chipmaker’s revenue and profit forecasts beat expectations. The stock was the biggest percentage gainer on the S&P and helped lift the Nasdaq.

GameStop (GME.N) tumbled 13.6 percent after the company’s profit projection fell below estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.07-to-1 ratio; on Nasdaq, a 1.30-to-1 ratio favored advancers.

The S&P 500 posted 19 new 52-week highs and three new lows; the Nasdaq Composite recorded 58 new highs and 40 new lows.

About 6.2 billion shares changed hands in U.S. exchanges, below the 7.1 billion daily average over the last 20 sessions.

(Additional reporting by Rodrigo Campos, Sam Forgione and Chuck Mikolajczak in New York and Tanya Agrawal in Bengaluru; Editing by Nick Zieminski and James Dalgleish)

 

Published at Fri, 24 Mar 2017 22:56:35 +0000

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Vehicle Sales Forecast: Sales Over 17 Million SAAR in March

 

Vehicle Sales Forecast: Sales Over 17 Million SAAR in March

by Bill McBride on 3/24/2017 02:20:00 PM

The automakers will report March vehicle sales on Tuesday, April 4th.

Note: There were 27 selling days in March 2017, unchanged from 27 in March 2016.

From WardsAuto: Forecast: U.S. March Sales to Reach 17-Year High

A WardsAuto forecast calls for U.S. automakers to deliver 1.61 million light vehicles in March, a 17-year high for the month. The forecasted daily sales rate of 59,776 over 27 days is a best-ever March result. This DSR represents a 2.6% improvement from like-2016 (also 27 days). March is anticipated to be the first month in 2017 to outpace prior-year.

The report puts the seasonally adjusted annual rate of sales for the month at 17.2 million units, below the 17.4 million SAAR from the first two months of 2017 combined, but well above the 16.6 million from same-month year-ago. …
emphasis added

From J.D. Power: March U.S. auto sales seen up nearly 1.9 pct -JD Power and LMC

U.S. auto sales in March will increase almost 1.9 percent from a year earlier, even as consumer discounts continue to remain at record levels, industry consultants J.D. Power and LMC Automotive said on Friday.

March U.S. new vehicle sales will be about 1.62 million units, up about 1.9 percent from 1.59 million units a year earlier, the consultancies said.
The forecast was based on the first 16 selling days of the month.

The seasonally adjusted annualized rate for the month will be 17.3 million vehicles, up from 16.8 million a year earlier.

Looks like another strong month for vehicle sales, but incentives are at record levels and inventories are high.

Published at Fri, 24 Mar 2017 18:20:00 +0000

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Premarket: 5 things to know before the bell

 

premarket stocks trading future
Click chart for in-depth premarket data.

  @AlannaPetroff

1. It’s a pullback, not a sell-off: Global stocks are in retreat mode Wednesday, but losses are relatively minor.

Investors are taking some money off the table following a record-setting, Trump-inspired rally. And they’re putting their cash into government bonds.

“There is no obvious explanation for the poor performance but markets might be starting to question President Trump’s ability to deliver on his policy promises,” said Andreas Johnson, an economist at Swedish bank SEB.

Crude oil futures also declined to trade at their lowest levels of the year, just below $47.50 per barrel.

U.S. stock futures were edging down a bit.

European markets declined in early trading, with many indexes down by about 1%.

Asian markets ended the day with losses. Japan’s Nikkei notched the biggest drop of 2.1%.

The moves follow a sizable drop for U.S. stocks on Tuesday. The Dow Jones industrial average fell 1.1%, the S&P 500 declined 1.2% and the Nasdaq was down 1.8%.

The pull back started on the same day that Bank of America Merrill Lynch released a survey showing that 34% of fund managers believe stocks are “overvalued”.

2. Stock market movers — FedEx, Nike, Fiat Chrysler, ING: Shares in FedEx(FDX) were being delivered up in extended trading while shares in Nike(NKE) were kicked down after both companies released new quarterly earnings.

Shares in Fiat Chrysler(FCAU) declined by 3% in Europe on reports that French prosecutors are investigating the auto group over cheating on emissions tests. The company did not immediately return requests for comment.

Shares in the Dutch bank ING(ING) dropped by about 6% after the company said it’s being investigated in Europe and the U.S. for issues related to “money laundering and corrupt practices.” It warned that potential fines “could be significant.”

3. Takeover turned down: U.S. firm PPG Industries(PPG) is not having much luck with its attempts to woo and acquire the Dutch chemical firm AkzoNobel.

AzkoNobel, which makes Dulux paint, said Wednesday is rejected a second unsolicited offer from PPG. The offer of cash and stock was valued around €22.4 billion ($24.2 billion).

Shares in AzkoNobel declined 3% in Europe after hitting an all-time high on Tuesday.

4. Housing market in the Trump era: Economists expect a report from the National Association of Realtors to show that sales of existing homes in the U.S. cooled off in February. The report is out at 10 a.m. ET.

Existing home sales increased 3.3% in January, which was the strongest pace of sales since early 2007.

5. Coming this week:

Wednesday – U.S. existing home sales report; Starbucks(SBUX) annual shareholder meeting
Thursday – Accenture(ACN) reports earnings; U.S. new home sales report
Friday – Samsung annual shareholder meeting

Published at Wed, 22 Mar 2017 10:16:44 +0000

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Dow slides nearly 240 as fear returns to market

Dow slides nearly 240 as fear returns to market

  @lamonicabuzz

Is the honeymoon period between Wall Street and President Trump over?

The Dow fell by about 238 points Tuesday, a drop of more than 1%. It was its biggest slide of the year and biggest decline since the election. The broader S&P 500 was also down more than 1%.

Neither index had ended the day with a 1% drop since mid-October. This was their worst day since September.

The Nasdaq, which includes many hot tech stocks such as Apple (AAPL, Tech30), Facebook (FB, Tech30) and Amazon (AMZN, Tech30), fell nearly 2%.

This recent market weakness seems to be a sign that the market tone has shifted to a more negative one, at least temporarily.

CNNMoney’s Fear & Greed Index, which tracks seven measures of market sentiment, is now showing signs of Fear. The index was in Extreme Greed territory just a month ago. It all just goes to show how quickly emotions on Wall Street can change.

In fact, some market watchers noted that when everyone is bullish, that’s usually a sign that the market could be due for a drop. Too much of a good thing cannot last.

“We are currently experiencing multi-decade high extremes of optimism, and we view this euphoria as a warning sign,” said Brad Lamensdorf, founder of research firm LMTR, in a report Tuesday.

Other market experts were suggesting that the slump was due to investors growing skeptical about how quickly things can actually get done in Washington.

“President Trump’s legislative agenda is getting mired in a congressional swamp, as starry-eyed optimism runs headlong into bloodshot realism,” wrote BMO chief investment officer Jack Ablin in a note to clients Tuesday.

Ablin alluded to concerns that some members of Trump’s own party are having with the Republican leadership’s plans to repeal and replace Obamacare, lower taxes and spend “bigly” on infrastructure spending.

Shares of the Health Care Select Sector SPDR ETF (XLV), which includes drug makers, insurers and other big health care companies, fell about 1%.

Caterpillar (CAT), which could be a big beneficiary of any new funding to build roads, bridges and a wall on the Mexican border, was down 3%.

“[Trump’s] health care proposal appears to be losing momentum faster than most NCAA brackets,” Ablin quipped, adding that some Republicans in Congress are “loath to racking up more debt” to pay for stimulus.

Some traders also cited a Reuters story that quoted Sen. Sherrod Brown of Ohio saying that Democrats would not support a “a wholesale rollback” of the Dodd-Frank financial regulation rules put into place during the Obama administration.

Brown is the top Democrat on the Senate Banking Committee. Reuters reported that he made the remarks at an American Bankers Association conference.

Bank stocks, which had rallied sharply since November on the hopes Trump would undo Dodd-Frank, were among the biggest losers Tuesday. Bank of America (BAC) plunged nearly 6% while JPMorgan Chase (JPM) and Wells Fargo (WFC) were down about 3%.

One market expert said that the recent slump in stocks shows that investors are now coming to the realization that Trump won’t be able to get everything he wants done as fast as he’d like.

“Trump is trying to be the CEO president. That doesn’t work in politics,” said KC Mathews, chief investment officer with UMB Bank. “Right now, it’s all about hope.”

But the selloff was broader than banks and health care stocks.

Detroit’s Big 3 auto stocks GM (GM), Ford (F) and Fiat Chrysler (FCAU) all fell about 3% even though oil prices were sliding. Auto sales tend to go up when gas is cheaper. But there are growing concerns that the best days for the car companies could be behind them.

Tech stocks fell too, even as the Nasdaq hit record highs earlier Tuesday.

This could be just a healthy pullback after a strong run for the market. Stocks are all still up for the year after all.

And White House press secretary Sean Spicer said Tuesday that the administration has “always cautioned” against looking at “one day” and noted that the market “still continues to be up tremendously.”

Few experts are predicting a correction — which is a 10% pullback from a market high. Even fewer see a bear market, a 20% drop or more, on the horizon.

Mathews said that if Trump doesn’t make any significant headway with Congress on some of his key initiatives by late summer, then that could spark a correction.

Bruce Bittles, chief investment strategist with Baird, agreed that it will be key for Trump and Congress to actually get something done in order for the market rally to keep going.

The bull market celebrated its 8th birthday earlier this month. Can it survive to hit a 9th next year?

“It’s usually buy the rumor and sell the news. But there is no news yet. There is optimism, but still a lot of caution,” he said. “If Washington gets gridlocked, then we run into headwinds.”

–Matt Egan contributed to this report

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Schedule for Week of Mar 19, 2017

 

Schedule for Week of Mar 19, 2017

by Bill McBride on 3/18/2017 08:11:00 AM

The key economic report this week are February New and Existing Home sales.

—– Monday, Mar 20th —–

8:30 AM: Chicago Fed National Activity Index for February. This is a composite index of other data.
—– Tuesday, Mar 21st—–

No economic releases scheduled.
—– Wednesday, Mar 22nd —–

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.9:00 AM: FHFA House Price Index for January 2017. This was originally a GSE only repeat sales, however there is also an expanded index.

Existing Home Sales10:00 AM: Existing Home Sales for February from the National Association of Realtors (NAR). The consensus is for 5.55 million SAAR, down from 5.69 million in January.

Housing economist Tom Lawler expects the NAR to report sales of 5.41 million SAAR in February.

During the day: The AIA’s Architecture Billings Index for February (a leading indicator for commercial real estate).

—– Thursday, Mar 23rd —–

8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 240 thousand initial claims, down from 241 thousand the previous week.8:45 AM, Speech by Fed Chair Janet L. Yellen, Opening Remarks, At the 2017 Federal Reserve System Community Development Research Conference, Washington, D.C.

New Home Sales10:00 AM ET: New Home Sales for February from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the January sales rate.

The consensus is for a increase in sales to 565 thousand Seasonally Adjusted Annual Rate (SAAR) in February from 555 thousand in January.

11:00 AM: the Kansas City Fed manufacturing survey for March.

—– Friday, Mar 24th —–

8:30 AM: Durable Goods Orders for January from the Census Bureau. The consensus is for a 1.5% increase in durable goods orders.10:00 AM: Regional and State Employment and Unemployment (Monthly) for February 2017

Published at Sat, 18 Mar 2017 12:11:00 +0000

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