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Why Oil May Plunge to $30 a Barrel

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Why Oil May Plunge to $30 a Barrel

By Mark Kolakowski | Updated June 15, 2017 — 11:19 AM EDT

The price of oil may sink to between $30 and $35 per barrel next year and stay there for a while, according to Dr. Fereidun Fesharaki, founder and chairman of global oil and gas consulting firm FGE, who spoke to CNBC. Despite “robust demand,” Fesharaki told CNBC that “there is too much oil on the market.”

Late last month, OPEC said that it would extend an 1.8 million-barrel-a-day (B/D) cut to oil output by nine months through March 2018, but Fesharaki believes that this is not enough to stabilize prices. Rather, he told CNBC that an immediate cut of an additional 700,000 B/D is necessary. The spot price of benchmark West Texas Intermediate (WTI) crude oil was $46.10 per barrel as of June 12, according to the U.S. Energy Information Administration (EIA).

Increasing Oversupply

Various facts appear to support Fesharaki’s thesis. Stockpiles of oil worldwide are large and growing, an indicator of persistent oversupply, according to data from the International Energy Agency (IEA) cited by the Wall Street Journal. As of April, inventories of oil in industrialized nations were 292 million barrels above their five-year average, according to the same sources. (For more, see also: Why Oil Prices Could Double to $90.)

While OPEC strains to reduce supply, it nonetheless has allowed Nigeria and Libya to increase production, and output by OPEC as a whole actually rose in May to its highest level so far in 2017, per IEA data reported by CNBC. Additionally, the IEA projects that non-OPEC nations collectively will expand their output by 700,000 B/D in 2017 and 1.5 million B/D in 2018, slightly more than the forecasted growth in global demand. More than half this growth will come from the U.S., which the IEA expects to increase production by 430,000 B/D in 2017 and 780,000 B/D in 2018.

Recessionary Impact?

While a fall in the price of any commodity normally sparks an increase in demand, Fesharaki told CNBC that “A drop in the price of oil is like an earthquake or a tsunami” that actually could dampen demand. He also said that the last time the price of oil fell, so did the stock market, and he feels that “a substantial drop in the price of oil would create a global recession.” Plummeting oil prices would be an economic negative for oil producing nations, according to other analysts cited by CNBC. However, this scenario is more likely in countries that are primarily producers and exporters, rather than consumers, of oil.

The Case For $90 Oil

Bill Strazzullo, chief market strategist at Bellcurve Trading Inc., has taken a contrarian view, boldly predicting that oil can be trading at $90 in the next three to five years. He expects global economic expansion to be the driving factor. Strazzullo gained credibility when oil was trading at about $100 and he (correctly) forecasted that it would crash to $30. Meanwhile, the OECD finds that, on the whole for its 35 members (which include four noteworthy oil producers, the U.S., Canada, the U.K. and Norway), higher oil prices are a net economic negative.

Published at Thu, 15 Jun 2017 13:24:00 +0000

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Chance of Fed hitting ‘terminal rate’ looking terminal: James Saft

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Chance of Fed hitting ‘terminal rate’ looking terminal: James Saft

By James Saft

The main thing terminal about the Federal Reserve’s ‘terminal’ interest rate projections are the chances of rates actually making it that high in the foreseeable future.

As expected, the Fed hiked on Wednesday by 25 basis points to 1.0-1.25 percent, but did so against an inflation and consumer backdrop which casts grave doubt that it will actually be able to reach the 3 percent ‘terminal’ rate it sees as a future baseline.

Arguing that recent shortfalls in inflation were “transitory,” the Fed kept to its forecast of one more 25-basis- point rate hike this year and three in 2018. This despite the fact the Fed hasn’t actually hit its 2 percent annual inflation target on its preferred measure in more than five years.

The Fed also expects to carry on hiking rates, presumably in part in order to get some ammunition to expend when next the economy falters, while at the same time moving forward with plans to begin shrinking its $4.5 trillion balance sheet “this year”.

The financial markets aren’t having any of it, and are pricing in one more increase in the next year.

Little wonder after today’s data, which should have given a data-dependent central bank good reason to pause. U.S. consumer price inflation in May fell 0.1 percent month-on-month while core, excluding food and energy, is up just 1.7 percent in a year, down from 1.9 percent a month ago. Core consumer sales also stalled in May, growing not at all.

All of this makes the Fed’s forecasts, and the hawkish tone struck by Fed Chair Janet Yellen at the press conference, look as if they are, in part, seeking to signal confidence so as to achieve ends not justified by the data.

“The Fed remains the test case for whether central banks can ever ‘normalize’ rates. We expect it to try, but fail – hiking the funds target just once or maybe twice more in future forecast-round months,” Neil Williams, Group Chief Economist, Hermes Investment Management, said after the hike.

“With the lagged effects of previous hikes yet to come through – it takes an average 18 months before rate hikes affect consumer spending in full – delayed tax cuts, potential protectionism and cold winds elsewhere, this should mean a ‘peak’ rate under two percent.”

Beyond the broader economic implications of a peak or, if you will, terminal rate below 2 percent, the prospect puts the Fed in the ticklish situation of very likely heading into a downturn dependent not just on interest rate rises but also on its willingness to begin buying assets once again. That and forward guidance, yet another largely discredited policy.

 

HEADING LOWER

Remember too, that one key difference since last the Fed hiked in March is that there is now much less confidence in the Trump administration’s ability to carry out either meaningful stimulative spending or midwifing a tax cut package which would do more than pump up equity prices.

To be sure, the Fed is still saying that inflation will head back up toward its 2 percent target. But with core PCE up just 1.5 percent now, the Fed’s year-end forecast of 1.7 percent is still two tenths of a percent lower than in March.

“The unemployment rate has dropped by half a point in the past four months, but the Fed now expects, comically, no further decline across the rest of the year. This makes no sense at all and likely will have to be revised in September,” Ian Shepherdson of Pantheon Macroeconomics wrote in a note to clients. The Fed also appears not to expect labor force participation to increase meaningfully.

If so, unemployment, now 4.3 percent, could tick down from here. What is striking is that the unemployment rate is falling further below the rate at which the Fed figures unemployment should accelerate, but yet it accelerates not.

Unemployment and inflation simply are not interacting as textbooks say they should. Markets are looking at the data and taking it seriously; the Fed is sticking, for now, with the textbooks.

“One side has to blink, and given the Fed’s 50-year obsession with the unemployment rate, it’s unlikely to be Dr. Yellen,” Shepherdson wrote.

If inflation finally comes through, the Fed will look like heroes; if not, like auto mechanics with the wrong set of tools and the wrong manual.

(Editing by James Dalgleish)

 

Published at Thu, 15 Jun 2017 05:45:12 +0000

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Is the Completed Double Top on Apple the First Bearish Domino to Fall?

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Is the Completed Double Top on Apple the First Bearish Domino to Fall?

Brandon Chapman June 14, 2017

Published at Wed, 14 Jun 2017 20:14:00 +0000

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Weak U.S. consumer prices, retail sales put spotlight on Fed

A shopper passes a window display at the Beverly Center mall in Los Angeles, California November 8, 2013. REUTERS/David McNew

Weak U.S. consumer prices, retail sales put spotlight on Fed

By Lucia Mutikani| WASHINGTON

U.S. consumer prices unexpectedly fell in May and retail sales recorded their biggest drop in 16 months, suggesting a softening in domestic demand that could limit the Federal Reserve’s ability to continue raising interest rates this year.

The Fed is expected to increase borrowing costs later on Wednesday, but the signs of retreating inflation pressures and moderate consumer spending could worry policymakers who have previously viewed the softness as transitory.

“For the Fed, today’s reports are a twin disappointment,” said Michael Hanson, chief economist at TD Securities in New York. “Continued softness in the economic data could call into question the Fed’s conviction, but that is unlikely to be a main theme at today’s meeting, in our view.”

The Labor Department said its Consumer Price Index dipped 0.1 percent last month, weighed down by declining prices for gasoline, apparel, airline fares, motor vehicles, communication and medical care services, among others.

The second drop in the CPI in three months followed a 0.2 percent rise in April. In the 12 months through May, the CPI rose 1.9 percent, the smallest increase since last November, after advancing 2.2 percent in April.

The year-on-year gain in the CPI in May was still larger than the 1.6 percent average annual increase over the past 10 years. Economists had forecast the CPI unchanged last month and advancing 2.0 percent from a year ago.

The so-called core CPI, which strips out food and energy costs, rose 0.1 percent in May after a similar gain in April as rents continued to increase moderately. The core CPI increased 1.7 percent year-on-year, the smallest rise since May 2015, after advancing 1.9 percent in April.

The Fed has a 2 percent inflation target and tracks an inflation measure which is currently at 1.5 percent.

While the U.S. central bank is expected to raise interest rates by 25 basis points on Wednesday, its second hike this year, the weakness in inflation and retail sales, if sustained, could put further monetary tightening in jeopardy.

INCOMING DATA CRUCIAL

“Clearly officials will be mindful of incoming inflation trends in the coming months before greater confidence can be made with second half of the year policy normalization plans,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

The dollar fell to a seven-month low against a basket of currencies on the data, while prices for U.S. Treasuries rallied. U.S. stocks were little changed ahead of the Fed’s interest rate decision.

In a separate report, the Commerce Department said retail sales fell 0.3 percent last month amid declining purchases of motor vehicles and discretionary spending after a 0.4 percent increase in April. May’s drop was the largest since January 2016 and confounded economists’ expectations for a 0.1 percent gain.

Retail sales rose 3.8 percent in May on a year-on-year basis. While some of the drop in monthly retail sales reflected lower gasoline prices, which weighed on receipts at service stations, sales at electronics and appliance stores recorded their biggest decline since March 2010.

Excluding automobiles, gasoline, building materials and foodservices, retail sales were unchanged last month after an upwardly revised 0.6 percent rise in April. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product and were previously reported to have increased 0.2 percent in April.

Consumer spending accounts for more than two-thirds of the U.S. economy. Despite last month’s weak core retail sales reading, low inflation could translate into higher consumer spending in the calculation of GDP.

The economy grew at a 1.2 percent annualized rate in the first quarter, held back by a near stall in consumer spending and a slower pace of inventory investment.

Output increased at a 2.1 percent pace in the October-December period. The Atlanta Fed is forecasting GDP rising at a 3.2 percent annualized rate in the second quarter.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci and Meredith Mazzilli)

Published at Wed, 14 Jun 2017 17:18:26 +0000

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Active Trader Predicts Vix Spike & Nasdaq Selloff

 

Active Trader Predicts Vix Spike & Nasdaq Selloff

By: Chris Vermeulen | Mon, Jun 12, 2017


Goldman Sachs Crashes Tech FANG Stocks!

Last Friday June 9th, 2017, Robert Bouroujerdi, a Goldman Sachs analyst, “warned that the $600 billion outperformance by the 5 biggest tech stocks known as ‘FAAMG’ — Facebook, Amazon, Apple, Microsoft and Alphabet — had contributed about 42 percent of all stock market gains over the last year. Goldman worries that the boom has created an “valuation air-pocket,” similar to the ridiculously high valuations for tech stocks during the Dot-Com boom.”

Goldman Sachs comments “market’s over-reliance on FAAMG for growth and appreciation has created positioning extremes, factor crowding and difficult-to-decipher risk narratives.”

Almost like the Dot-Com bubble, investors are piling into the tech stocks with the belief that these companies will continue to generate billions in revenues and branch out into other enterprises to drive innovation and growth. I talked about this two weeks ago; “The Fourth Industrial Revolution, which will be referred to as: Tech Hypergrowth”

(Click to enlarge)

The QQQ’s were trading at $140.15 per share last Friday, June 9th, 2017, but by afternoon, they were down $3.42 (-2.38%). Year-to-date, the QQQ’s have gained 18.29% versus an 8.75% rise in the SPX index during the same period. The heavy losses were focused and contained. It was an orderly coordinated profit taking day!

There was a sector rotation in The Dow Industrials which closed at a new high. Prior to the past year, the last two times that the Dow Jones closed at a high, while the Nasdaq sold off hard, was back in 1999 and 2007.

The Tech sector has been driving the general market yet higher since November of 2016. I keep scanning the horizons in every direction and I just cannot see anything that would trigger more than a minor correction day. Of course, a minor correction could deliver outsized impacts, given the heavy weighting of a few stocks. as well, as passive index investing.

(Click to enlarge)

Are the Financials and The Small Caps Back?

Small Cap stocks, IWM, vaulted all the way up to $139, and it has had a strong follow through on Friday, June 9th, 2017, well above $140. That is a nearly 4% move from trough to peak since Wednesday June 7th, 2017, in a dramatic “V-shaped rally” in Small-Cap stocks.

The DOJI candlestick on the breakout is a sign of INDECISION! I am currently waiting for a re-test of 138.50 before entering this trade. According to decades of studying historical seasonal chart patterns, the month of June almost always closes lower than its’ open. Its’ worst days are June 15th to June 18th. MRM Traders played TNA for the recent run up in price.

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In the SPY, impressive asset flows have hit SPY lately, topping more than $6 billion in this move higher in the past week.

Why Stocks Keep Going Up!

Dr. Ed Yardeni discussed why:

“So far, the current bull market has marched impressively forward despite 56 anxiety attacks, by my count. They were false alarms. I remain bullish. My long-held concern is that the bull market might end with a melt-up that sets the stage for a meltdown. The latest valuation and flow-of-funds data certainly suggest that the melt-up scenario may be imminent, or underway.” Article

In the aftermath of “The Great Financial Crisis of 2017”, Global Central Banks began to buy stocks and bonds and other financial assets in very large quantities and they continue to do so! It is estimated that they will continue to buy $3.6 trillion dollars during 2017. They continue to pump up the global stock markets. This is their response in correcting the forces of past excesses. Their financial engineering may be able to keep this bubble growing bigger and bigger for many years to come. They have reached a point of no return and have no plans to unwind balances sheets.

Will the Financials Lead the Market Higher?

The banking stocks were among the beneficiaries of the tech slump, with BAC, GS and JPM all defying their head and shoulders setups at this time. The XLF, is suggesting further near-term gains for the financial sector while heading into this coming week’s FOMC meetings on June 13th and June 14th, 2017.

(Click to enlarge)

By Chris Vermeulen for Safehaven.com


Chris Vermeulen

Chris Vermeulen
President of AlgoTrades Systems
www.TheGoldAndOilGuy.com

10126 Hwy 126 East, RR#2
Collingwood, ON, L9Y 3Z1

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized
market technical analyst and trader. Involved in the markets since 1997.

Chris’ mission is to help his clients boost their investment performance while
reducing market exposure and portfolio volatility.

Chris is also the founder of TheGoldAndOilGuy.com, a financial education and
investment newsletter service. Chris is responsible for market research and
trade alerts for of its newsletter publication.

Through years of research, trading and helping thousands of individual investors
around the world. He designed an automated algorithmic trading system for the
S&P 500 index which solves his client’s biggest problem related to investing
in the stock market: the ability to profit in both a rising and falling market.

AlgoTrades’ automated trading systems allows
individuals to investing using either exchange traded funds or the ES mini
futures contracts. It is supported by many leading brokerage firms including:

– Interactive Brokers
– Trade MONSTER
– MB Trading
– OEC OpenECry
– The Fox Group
– Dorman Trading
– Vision Financial

He is the author of the popular book “Technical
Trading Mastery – 7 Steps To Win With Logic
.” He has also been featured
on the cover of AmalgaTrader Magazine, Futures Magazine, Gold-Eagle, Safe
Haven,The Street, Kitco, Financial Sense, Dick Davis Investment Digest and
dozens of other financial websites. His list of personal and professional
relationships approaches 25,000, people with whom he connects and shares
is market insight with out of his passion for trading.

Chris is a graduate of Seneca College where he specialized in business operations
management.

Chris enjoys boating, kiteboarding, mountain biking, fishing and has his ultralight
pilots license. He resides in the Toronto area with his wife Kristen and two
children.

Copyright © 2008-2017 Chris Vermeulen

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Published at Mon, 12 Jun 2017 11:18:55 +0000

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Tech Stocks Fall in Volatile End to the Week

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Tech Stocks Fall in Volatile End to the Week

By Justin Kuepper | June 9, 2017 — 4:40 PM EDT

The major U.S. indexes were mixed this week, with small-caps outperforming and tech stocks underperforming. In the tech sector, Bloomberg reported on Friday that Apple’s new iPhone might not feature a 1-gigabyte processor, which sent shares of the tech giant lower. Citron Research – a short-focused research firm – also reported that Nvidia Corp. (NVDA) shares might be overvalued and sent chip-makers lower on the day.

International markets were mixed over the past week. Japan’s Nikkei 225 fell 0.83%; Germany’s DAX 30 fell 0.06%; and, Britain’s FTSE 100 fell 0.32%. In Europe, the British pound moved significantly lower after Prime Minister Theresa May failed to win a majority in Parliament despite calling for an early election. In Asia, Japan’s first-quarter gross domestic product growth was revised lower to a 1% annual rate, which sent shares lower on the week.

The S&P 500 SPDR (ARCA: SPY) fell 0.31% over the past week. After rising to R1 resistance at $237.22 earlier this month, the index has trended mostly sideways since then. Traders should watch for a breakout from upper trend line resistance at around $245.00 to R2 resistance at $246.30 or a move lower to the pivot point at $239.65. Looking at technical indicators, the RSI remains in overbought territory at 64.51, while the MACD remains in a bullish uptrend dating back to late-May of this year.

The Dow Jones Industrial Average SPDR (ARCA: DIA) rose 0.32% over the past week. After breaking out from an ascending triangle late last month, the index has risen to its R1 resistance at $212.20. Traders should watch for a breakout to R2 resistance at $214.39 or a move lower to re-test its trend line support at around $210.00. Looking at technical indicators, the RSI appears overbought at 68.38 while the MACD remains in a bullish uptrend that appears to be moderating over the past few weeks.

The PowerShares QQQ Trust (NASDAQ: QQQ) fell 2.43% over the past week, making it the worst-performing major index. After briefly breaking out from trend line resistance, the index moved sharply lower to its pivot point at $139.67. Traders should watch for a rebound toward its trend line and R1 resistance at $143.46 or a further breakdown to S1 support at $137.49. Looking at technical indicators, the RSI moderated to a neutral 51.09, but the MACD appears on the cusp of a bearish crossover.

The iShares Russell 2000 Index ETF (ARCA: IWM) rose 1.19% over the past week, making it the best-performing major index. After breaking out from R1 resistance at $139.70, the index rose briefly to R2 resistance at $143.07 before giving up some ground. Traders should watch for a breakout from R2 resistance to new highs or a move lower to re-test R1 support at $139.70. Looking at technical indicators, the RSI appears lofty at 65.10, but the MACD remains in a bullish trend higher.

The Bottom Line

The major U.S. indexes were mixed over the past week. Next week, traders will be watching several key economic indicators including the Federal Reserve’s FOMC meeting on June 13-14, industrial production on June 15, and consumer sentiment on June 16. The market will also be keeping a close eye on the evolving political situation in the United States and the United Kingdom where leadership continues to experience difficulties.

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

Published at Fri, 09 Jun 2017 20:40:00 +0000

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Brexit? Trump vs. Comey? Who cares? Stocks up again

 

Brexit? Trump vs. Comey? Who cares? Stocks up again

  @lamonicabuzz

Keep calm and carry on. That’s Wall Street’s motto — despite concerns that the latest U.K. election results threaten to delay the Brexit process.

U.S. stocks rose Friday even though Theresa May’s Conservative Party lost its majority in parliament. This could make it difficult for the U.K.’s official Brexit negotiations, scheduled to start on June 19, to begin on time.

The Dow still popped about 100 points to hit a new all-time high.

The S&P 500 and Nasdaq notched records as well — although several high-profile tech stocks took a big tumble in mid-afternoon trading following a Goldman Sachs report that questioned the run in the largest tech companies.

The Goldman report focused on the five tech giants that dominate the S&P 500 and Nasdaq — Facebook(FB, Tech30), Amazon(AMZN, Tech30), Apple(AAPL, Tech30), Microsoft(MSFT, Tech30) and Google owner Alphabet(GOOGL, Tech30). The Nasdaq was down 2% in late trading Friday.

But CNNMoney’s Fear & Greed Index, which looks at seven measures of market sentiment, even briefly moved into Greed territory before shifting back to Neutral mode.

Investors are not only shrugging off any worries about a much more chaotic Brexit — and the implications that it could have on the U.K. economy and eurozone.

They are also showing no signs of concern about former FBI director James Comey’s Senate testimony about allegations that Russia tried to influence the U.S. elections to help President Trump win.

This market is like an old Timex watch. It takes a licking but keeps on ticking.

Now it’s understandable if all of this seemingly not great news has you pulling a Liz Lemon from “30 Rock.” What the what?

How can stocks continue to trudge higher in light of all of this uncertainty in the U.S. and the U.K.?

Simply put, investors are continuing to view all the political noise as just that — noise.

The bottom line is that drama in Washington and London has yet to have a negative impact on what really drives the markets — consumer and business spending.

The first-quarter earnings of companies were very strong. Corporate America notched its best growth in profits since 2011.

As long as American consumers and big U.S. multinational companies keep spending, stocks could very well go even higher.

It also helps that the Federal Reserve is likely to not raise interest rates too aggressively either.

The Fed is expected to boost rates again next week, but probably by just a quarter of a percentage point. That would leave rates in a range of 1% to 1.25% — that’s still extremely low.

Low rates should keep consumers and businesses happy — and the economy on track to grow at a decent pace.

That’s key since it’s starting to look as if Trump’s promises to boost the economy with a massive stimulus plan, tax reform and deregulation could be put on hold until next year because of the fallout of the Comey drama.

It’s true that political instability in Washington is not going away anytime soon. It’s possible that calls for Trump’s impeachment or resignation could grow louder once again.

But presidents often get too much credit (or blame) for the market and economy. The stability at the Fed has gone a long way toward placating the market.

Investors went from celebrating an expected Hillary Clinton win last summer, to cheering Trump and his pro-growth agenda, to brushing off concerns about Trump turmoil.

Why? The one constant is that Yellen is doing everything she can to keep Wall Street happy.

Trump has gone from bashing Yellen on the campaign trail to praising her for keeping rates low. He has even acknowledged there’s a chance he could reappoint her as Fed chief when her term expires next year.

Cue the Alanis Morissette. Isn’t it ironic? Don’t you think?

Published at Fri, 09 Jun 2017 18:50:58 +0000

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Wall St. flat as Comey’s testimony underway

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Wall St. flat as Comey’s testimony underway

By Tanya Agrawal

U.S. stocks were little changed in choppy late morning trading on Thursday as former FBI Director James Comey’s testimony got underway.

Comey is being grilled by Washington politicians over his claims that President Donald Trump asked him to drop an investigation of former national security adviser Michael Flynn as part of a probe into Russia’s alleged meddling in the 2016 presidential election.

Comey said he had no doubt that Russia interfered with the election but was confident that no votes had been altered.

“Today is about Washington and the drama surrounding Comey’s testimony. But the talk about the demise of President Trump’s presidency or growth agenda seems premature, short of a smoking gun,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

“I expect equities to generally tend sideways today, short of any new revelations coming out of the testimony.”

Earlier on Thursday, the European Central Bank signaled no further interest rate cuts as euro zone prospects improved but said subdued inflation meant it would continue to pump more stimulus into the region’s economy.

Investors are also keeping an eye on the outcome of the UK general election, with opinion polls showing Theresa May’s Conservative Party leading between 5 and 12 percentage points over the main opposition Labour Party, suggesting she would increase her majority.

At 10:35 a.m. ET, the Dow Jones Industrial Average .DJI was up 5.62 points, or 0.03 percent, at 21,179.31, the S&P 500 .SPX was down 1.51 points, or 0.06 percent, at 2,431.63.

The Nasdaq Composite .IXIC was down 0.56 points, or 0.01 percent, at 6,296.82.

Eight of the 11 major S&P sectors were lower, with the defensive utilities index’s .SPLRCU 1.08 percent loss topping the decliners.

Shares of Alibaba Group Holding (BABA.N) were up 9.5 percent at $137.55 after the company said it expects revenue growth of 45-49 percent in the 2018 fiscal year.

Yahoo (YHOO.O), which owns a 15.5 percent stake in Alibaba also rose 7.2 percent to $54.18.

Nordstrom (JWN.N) jumped 11.4 percent to $45.09 after the department store operator said that some members of the controlling Nordstrom family have formed a group to consider taking the company private.

Among other retailers, Macy’s (M.N) was up 2.1 percent, and J.C. Penney (JCP.N) 1.2 percent.

Declining issues outnumbered advancers on the NYSE by 1,410 to 1,252. On the Nasdaq, 1,408 issues rose and 1,162 fell.

 

(Reporting by Tanya Agrawal in Bengaluru; Editing by Anil D’Silva)
Published at Thu, 08 Jun 2017 14:53:55 +0000

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Schedule for Week of June 4, 2017

 

Schedule for Week of June 4, 2017

by Bill McBride on 6/03/2017 08:11:00 AM

This will be a light week for economic data.

On Thursday, the ECB meets and former FBI director James Comey is schedule to testify before the Senate intelligence committee.

—– Monday, June 5th —–

10:00 AM: the ISM non-Manufacturing Index for May. The consensus is for index to decrease to 57.0 from 57.5 in April.10:00 AM ET: The Fed will release the monthly Labor Market Conditions Index (LMCI).

—– Tuesday, June 6th —–

Job Openings and Labor Turnover Survey10:00 AM: Job Openings and Labor Turnover Survey for April from the BLS.This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Jobs openings increased in March to 5.743 million from 5.682 million in February.

The number of job openings (yellow) were down 2% year-over-year, and Quits were up 6% year-over-year.

—– Wednesday, June 7th —–

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.3:00 PM: Consumer credit from the Federal Reserve.  The consensus is for a $17.0 billion increase in credit.

—– Thursday, June 8th —–

8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 241 thousand initial claims, down from 248 thousand the previous week.10:00 AM: The Q1 Quarterly Services Report from the Census Bureau.

12:00 PM: Q1 Flow of Funds Accounts of the United States from the Federal Reserve.

—– Friday, June 9th —–

No major economic releases scheduled.

Published at Sat, 03 Jun 2017 12:11:00 +0000

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Dow races to new record

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Trump bump still won't slump
Trump bump still won’t slump

Remember when Wall Street was worried about President Trump?

No? Neither does Wall Street.

The Dow popped 136 points to 21,144 on Thursday, landing at its first record close since March 1. The S&P 500 and Nasdaq also finished at all-time highs.

While many American were focused on the fallout from President Trump’s decision to withdraw from the climate deal, market analysts said Thursday’s march higher on Wall Street was linked to healthy signals from the U.S. economy.

“It’s not because of the climate accord. People expected that,” said David Kelly, chief global strategist at JPMorgan Funds.

Investors were instead fired up by a report from ADP showing the U.S. added 253,000 private-sector jobs in May. Wall Street is betting that’s a very good sign ahead of Friday’s more closely-watched government jobs report.

“It was a very strong reading and helps reduce worries the economy had lost momentum,” Kelly said.

The Dow is now up more than 500 points since the Trump-fueled selloff on May 17.

Solid jobs numbers on Friday should clear the way for the Federal Reserve to raise interest rates later this month. They would also reassure investors that the rebound in corporate profit growth can continue.

In many ways, the Dow is just playing catch-up with the other indexes that were already in record territory. While the Nasdaq is up 16% this year and the S&P 500 has rallied 8.5%, the Dow is up a more modest 7%.

Art Hogan, chief market strategist at Wunderlich Securities, said Wall Street’s better mood is partly because Trump’s scandals are getting less attention.

“There’s been no new drama, except for a misspelled word in a tweet,” said Hogan. “James Comey testifies next week, so that’s not this week’s disaster du jour.”

Published at Thu, 01 Jun 2017 20:26:39 +0000

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Premarket: 5 things to know before the bell

 

Premarket: 5 things to know before the bell

premarket wednesday
Click chart for more in-depth data.

1. U.K. election jitters: The British pound was under pressure Wednesday after a new election projection showed that Prime Minister Theresa May could lose her majority in parliament.

Investors had been counting on a big win for May in the June 8 election, but the YouGov projection suggests that her party could lose a sizable number of seats. The result might be political gridlock.

Kallum Pickering, an economist at Berenberg Bank, said that unreliable polling data and an uncertain political landscape make the election result especially difficult to predict.

“To put it one way, we would not be very surprised if there was surprise!” he said.

The pound was trading 0.5% lower on Wednesday at just below $1.28. The currency has fallen 14% since the day of the Brexit referendum.

2. ExxonMobil meeting:Exxon(XOM) will hold its annual shareholder meeting on Wednesday, and climate change will top the agenda.

The event will feature a vote on a proposal that requires for Exxon to stress test its assets for risks posed by curbs on carbon emissions and new technology like electric cars.

The vote is seen as ground zero for efforts to get fossil fuel companies to acknowledge the ground is shifting beneath them.

3. Global market overview:U.S. stock futures were flat early on Wednesday.

European markets were mixed in early trading. Asian markets ended the session mixed.

The Dow Jones industrial average shed 0.2% on Tuesday, while the S&P 500 and Nasdaq declined 0.1%.

 

4. Earnings and economics: Fashion retailers Michael Kors(KORS) and Vera Bradley(VRA) are set to release earnings before the open, while Hewlett Packard Enterprise(HPE, Tech30) will follow after the close.

Investors will get closer look at the U.S. housing market on Wednesday. Data on mortgage applications will be released at 7 a.m. ET, with a home sales report following at 10:00 a.m.

America’s closest neighbors will also publish reports on their economies. Canada’s GDP data is expected at 8:30 a.m. At 1:30 p.m., Mexico’s central bank will release its inflation report.

India will release its first quarter GDP growth data at 8 a.m. on Wednesday. Economists believe India’s economy maintained its impressive 7% GDP growth pace, keeping it atop the list of the world’s fastest growing major economies.

Chinese manufacturing data showed a slight rebound in May.

5. Coming this week:

Wednesday – ExxonMobil(XOM) shareholders meeting; Michael Kors(KORS) and Vera Bradley(VRA) earnings; U.S. housing mortgage applications and home sales data; Canadian GDP report; Chinese manufacturing data
Thursday – Lululemon(LULU) and Express(EXPR) earnings; U.S. crude inventories; Institute for Supply Management manufacturing index;
Friday – Jobs report

Published at Wed, 31 May 2017 09:07:46 +0000

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Resistance Levels Suggest Commodities Are Headed Lower

by 2966152 from Pixabay

Resistance Levels Suggest Commodities Are Headed Lower

By Casey Murphy | May 30, 2017 — 10:34 AM EDT

Commodities have fallen out of favor in recent months as investors around the globe seek out growth and yield. Lackluster demand for commodities has caused many investors to turn toward equities and other asset classes. As you’ll read below, the charts of several commodity-related assets are suggesting the downtrend could just be getting started. (For further reading, checkout: The Downtrend In Commodities Is Set To Continue).

PowerShares DB Commodity Index Tracking Fund

When it comes to investing in commodities, the best way to gain exposure is through the use of futures contracts. With that said, trading futures requires a specific account, which requires a relatively high level of sophistication to be able to trade comfortably. Luckily for retail investors, exchange-traded products such as the PowerShares DB Commodity Index Tracking Fund (DBC), allow investors to gain exposure to a basket of futures contracts on fourteen of the world’s most important physical commodities. Taking a look at the chart, you can see that the price has recently tested the resistance of the 200-day moving average and has failed to break above (shown by the red arrow). The bounce off of the resistance is typical behavior based on technical analysis. When the failed move above the 200-day moving average is combined with the bearish crossover between the 50-day and 200-day moving average (shown by the red circle), it suggests that the downtrend is in its earliest phase. Based on this chart, the bears will likely set their short-term targets near the May lows and then watch for a break lower from there. (For more on this topic, check out: 3 Charts That Suggest the Downtrend in Commodities Will Continue).

Wheat

With summer approaching many investors start to shift focus toward agriculture commodities such as wheat and soybeans. Taking a look at the five-year weekly chart of the Teucrium Wheat Fund (WEAT), it is clear that the wheat market is trading within one of the strongest downtrends around. The combined resistance of the 50-week moving average and long-term descending trendline will be used by active traders as guides for order placement. It will likely to continue to prove strategic for the bulls to remain on the sidelines until the price is able to notch several consecutive closes above one of the aforementioned resistance levels. (For more, see: Technical Indicators Suggest Agriculture Commodities Are Headed Lower).

Soybeans

As discussed above, agriculture commodities have struggled to find support in recent weeks as investors flock to other market segments that they believe offer better returns. Like wheat, soybeans are also trading within a defined downtrend. Based on the chart of the Teucrium Soybean Fund (SOYB), you can see that the bears are in control of the momentum and the recent failed attempt to overcome the 50-day moving average is an indication that prices are likely to continue to move lower. Active traders will also likely use the bearish crossover between the MACD and its signal line as confirmation of the move lower and most will likely set their stop-loss orders above either the swing high from earlier this month or above $18.25.

The Bottom Line

Commodities have fallen victim to lackluster fundamentals combined with an insatiable appetite for risk by most global investors. Based on the charts above, it appears as though the nearby resistance levels will prevent a sustainable move higher and that the bears are likely to continue dominating the underlying trends. (For more, see: 3 Commodity Charts to Watch in 2017).
Published at Tue, 30 May 2017 14:34:00 +0000

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Consumer spending jumps; monthly inflation rebounds

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Consumer spending jumps; monthly inflation rebounds

By Lucia Mutikani| WASHINGTON

U.S. consumer spending recorded its biggest increase in four months in April and monthly inflation rebounded, pointing to firming domestic demand that could allow the Federal Reserve to raise interest rates next month.

The Commerce Department said on Tuesday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.4 percent last month after an upwardly revised 0.3 percent gain in March. Households spent more on both goods and services last month.

April’s increase was the biggest since December and could ease concerns about second-quarter economic growth after weak reports on core capital goods orders, the goods trade deficit and inventory investment in April. Consumer spending was previously reported to have been unchanged in March.

U.S. stock index futures pared losses after the data while the dollar edged up against the yen. Prices of U.S. Treasuries were trading slightly higher.

Consumer spending grew at its slowest pace in more than seven years in the first quarter, helping to restrict gross domestic product growth to a 1.2 percent annual rate in the first three months of the year. GDP growth estimates for the second quarter range between a rate of 2 percent and 3 percent.

Minutes of the Fed’s May 2-3 policy meeting, which were published last week, showed that while policymakers agreed they should hold off hiking rates until there was evidence the growth slowdown was transitory, “most participants” believed “it would soon be appropriate” to raise borrowing costs.

The U.S. central bank hiked rates by 25 basis points in March. Expectations of further policy tightening next month are also supported by steadily rising inflation.

The personal consumption expenditures (PCE) price index rebounded 0.2 percent in April, reversing March’s 0.2 percent drop. In the 12 months through April, the PCE price index increased 1.7 percent after rising 1.9 percent in March.

Excluding food and energy, the so-called core PCE price index also bounced back 0.2 percent after dipping 0.1 percent in March. In the 12 months through April, the core PCE price index increased 1.5 percent after rising 1.6 percent in March.

The core PCE is the Fed’s preferred inflation measure. The central bank has a 2 percent target for core PCE.

But rising inflation is cutting into both consumer spending and income growth. When adjusted for inflation, so-called real consumer spending rose 0.2 percent last month after advancing 0.5 percent in March.

While personal income rose 0.4 percent last month, as wages jumped 0.7 percent, income at the disposal of households after accounting for inflation advanced 0.2 percent. Real disposable income increased 0.4 percent in March.

Savings were little changed at $759.1 billion last month.

(Reporting by Lucia Mutikani; Editing by Paul Simao.
Published at Tue, 30 May 2017 12:53:31 +0000

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Jobs report; ExxonMobil’s big meeting; Earnings season winds down

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Unemployment rate at lowest in 10 years
Unemployment rate at lowest in 10 years

Jobs report; ExxonMobil’s big meeting; Earnings season winds down

  @shannonfgupta

1. Jobs report: On Friday, the Labor Department will reveal how many jobs were added in May.

A strong report could bolster the case for another interest rate hike. The Federal Reserve has already said it will likely raise rates in June — a sign it’s confident in the economy’s health. The Fed last triggered a hike in March.

Unemployment dropped to 4.4% in April, it’s lowest level since 2007. Economists believe the U.S. economy is now at or near full employment.

2. ExxonMobil’s big meeting: Exxon will be holding its annual shareholders meeting on Wednesday.

Stock holders will likely bring up climate concerns. Exxon has called on President Trump to remain in the Paris climate deal, saying the global agreement provides an “effective framework for addressing the risks of climate change.”

The meeting comes two weeks after Exxon announced plans to open its first Mobil gas station in Mexico. The company also promised to invest $300 million in operations and marketing over the next decade.

3. Earnings season winds down: We’re almost done with first-quarter earnings, and investors hopeLululemon(LULU) will go out with a bang (or at least a sparkle).

The fitness retailer’s stock slid in March after its CEO admitted that its clothing was just, well, boring. Vera Bradley, Michael Kors and Express are also on the earnings docket.

4. Big tech conference: Media and tech leaders will descend on Recode’s annual Code Conference next week.

Hillary Clinton, Venture capitalist Marc Andreesen, Google CFO Ruth Porat and Netflix CEO Reed Hastings are among the scheduled speakers.

The conference in Los Angeles will focus on a variety of topics, including the future of digital tech and product development.

5. Coming this week:

Monday – Markets closed for Memorial Day

Tuesday – “House of Cards” season 5 premiers on Netflix(NFLX, Tech30)

Wednesday – ExxonMobil(XOM) shareholders meeting; Michael Kors(KORS), Vera Bradley(VRA) and Hewlett Packard(HPE, Tech30) earnings

Thursday – Lululemon(LULU) and Express(EXPR) earnings

Friday – Jobs report
Published at Sun, 28 May 2017 12:06:28 +0000

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Stocks Rise as Earnings Surpass Expectations

 

Stocks Rise as Earnings Surpass Expectations

By Justin Kuepper | May 26, 2017 — 4:58 PM EDT

The major U.S. indexes moved higher over the past week as first-quarter earnings estimates continue to surpass analyst expectations. According to FactSet, one-third of S&P 500 companies have beat mean earnings estimates, and 64% have beat mean sales estimates. New home sales swung 11.4% lower to an annualized rate of 569,000 and existing home sales fell 2.3% to a 5.57 million annualized rate, but long-term averages remain firmly in positive territory, and existing home prices remain strong with a 6% year over year gain to $244,800.

International markets were mixed over the past week. Japan’s Nikkei 225 rose 0.52%; Germany’s DAX 30 fell 0.29%; and, Britain’s FTSE 100 rose 0.7%. In Europe, the European Central Bank talked down the impact of the ‘Brexit’ on the Eurozone economy as economic activity hovered near a 6-year high. In Asia, Moody’s lowered China’s credit rating for the first time since 1989 citing concerns over rising debt. The rating was lowered by one notch to A1 from Aa3, putting in the same category as countries like Israel and Japan.

The S&P 500 SPDR (ARCA: SPY) rose 1.42% over the past week. After rebounding from its lower trend line support, the index rebounded past its R1 resistance at $240.90 to its upper trend line resistance. Traders should watch for a breakout to R2 resistance at $243.73 or a breakdown to the 50-day moving average at around $236.97. Looking at technical indicators, the RSI has moved closer to overbought levels at 63.56, while the MACD may have experienced a bullish crossover after a brief decline.

The Dow Jones Industrial Average SPDR (ARCA: DIA) rose 1.33% over the past week. After rebounding from lower trend line support, the index reached its upper trend line support and R1 resistance at $211.23. Traders should watch for a breakout to R2 resistance at $214.00 or a breakdown to the 50-day moving average and pivot point at $207.04. Looking at technical indicators, the RSI is approaching overbought levels at 62.90, but the MACD may have experienced a bullish crossover.

The PowerShares QQQ Trust (NASDAQ: QQQ) rose 2.45% over the past week, making it the best-performing major index. After rebounding from its lower trend line support, the index reached upper trend line resistance at around $142.00. Traders should watch for a breakout to new highs or a breakdown to R2 resistance at $140.20 on the downside. Looking at technical indicators, the RSI is overbought at 71.82 while the MACD may be experiencing a bullish crossover after a modest decline.

The iShares Russell 2000 Index ETF (ARCA: IWM) rose 1.12% over the past week, making it the worst-performing major index. After rebounding from lower trend line support, the index reached the pivot point at $138.18. Traders should watch for a breakout toward upper trend line resistance and R1 support at $142.70 or a move lower to lower trend line support and S1 support at $134.54. Looking at technical indicators, the RSI appears neutral at 50.35 while the MACD remains relatively flat over the past few sessions.

The Bottom Line

The major U.S. indexes moved higher over the past week, although several of them remain in overbought territory. Next week, traders will be closely watching several key economic events, including personal incomes on May 30, jobless claims on May 31, and employment data on June 2. Of course, investors will also be keeping a close eye on the evolving political situation in the United States and other countries.

Note: Charts courtesy of StockCharts.com. As of the time of writing, the author had no holdings in the securities mentioned.
Published at Fri, 26 May 2017 20:58:00 +0000

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Funds to cut fixed income research as EU rules shake up sector

by stevepb from Pixabay

 

Funds to cut fixed income research as EU rules shake up sector

By Simon Jessop| LONDON

New rules on pricing investment research are shaking up the European fixed income, currency and commodity (FICC) industry, with many funds planning to scale back or ditch a service that banks use to drum up business.

Investment banks and other brokers have long provided research to funds as a way of attracting them to their trading business, and there has never been a formal bill attached. However, they must break out the cost of the research and charge for it separately under the EU regulations, MiFID II, which come into force in the new year.

Many funds using FICC research are concerned this will simply land them with an additional cost. Eight funds spoken to by Reuters said they expected to reduce the research services they use as a consequence of the reform.

Their reactions supported the results of a poll of 270 fixed-income investors at a capital markets conference in London this month which found 59 percent had either not decided whether to continue using broker research or had decided to dispense with it altogether.

On the other side, the drop-off in demand could hit the investment banks, if funds consequently reduce the number of brokers they trade with. The new rules severely limit the amount of detailed research funds can receive for free.

The uncertain situation facing both banks and investors reflects the nebulous nature of the current arrangement in the FICC industry.

Unlike in some equity markets such as Britain, where funds already pay for research separately from trading, in FICC markets it is open to interpretation how investors pay for the service – or whether they do so at all.

“Given the fundamental differences in the infrastructure of the fixed income market, applying the same rules to FICC will create some difficulties,” said Jon Howard, chief operating officer at London-based hedge fund Anavio Capital Partners.

 

FUNDS’ FEARS

FICC research includes insight on macroeconomic trends and interest rate movements, as well as on currencies, commodity markets and corporate bond and loan issues.

Many funds say the cost is usually included by brokers in “the spread” between the buying and selling prices of the products they deal in – and if a separate research fee is introduced, then the spread should therefore be narrowed.

Some banks, however, say research is just one of several factors influencing the spread and that any narrowing is unlikely under the new rules, according to industry sources.

Given that, fund managers say they fear they will be left with a new bill for research and no proof that the spread has been narrowed by the broker to compensate them.

“Historically, that research cost is in the spread. Now the Street (investment banks) is telling you ‘we’re going to charge you separately now’, but that’s not really going to make the spread change, I don’t think,” said Matthieu Duncan, chief executive at French firm Natixis Asset Management.

Gildas Surry, partner at Axiom Alternative Investments, which manages around $1 billion in assets, said the change would hit smaller fund firms harder.

“The cost of this adaption period will be dear for the industry … It will generate more profits for the dealer community, but for smaller managers it will be even more difficult for them to grow.”

 

BANKS’ POSITION

Ten investment banks contacted by Reuters declined to comment on the matter. Two others, speaking on condition of anonymity, said the spread had only a limited relation to the cost of research.

“Typically banks write FICC research as a cost of being in business and to promote their capabilities. Trading and market pricing takes place in a competitive environment,” said Julian Allen-Ellis, Director of MiFID at the Association for Financial Markets in Europe, which represents leading banks.

“The major factors influencing an instrument’s spread include credit risk, market liquidity, volatility, the bank’s inventory position, its capitalization and many others. It would be impossible to isolate and remove a single factor from the spread and show a correlated change.”

The European Securities and Markets Authority (ESMA), Europe’s markets watchdog, did not respond to a request for comment on Friday. It has previously said that the new rules will increase transparency for investors and ensure they receive value for money.

It has given scope for “short market updates with limited commentary or opinion” to be classed as a minor non-monetary benefit and therefore be given for free. Some material commissioned and paid for by corporate debt issuer may also be given for free, it said.

How brokers and funds will value research is still up in the air.

Pricing models being discussed between funds and banks vary from a flat fee for basic read-only access to tiered access for more expensive services, said Axiom’s Surry.

Given the complex nature of the discussions, any arrangements that are agreed could change over the next couple of years, fund and bank sources said.

 

(Additional reporting by Vikram Subhedar and Alex Chambers; Editing by Pravin Char)
Published at Fri, 26 May 2017 13:53:10 +0000

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Schedule for Week of May 21, 2017

by geralt from Pixabay

Schedule for Week of May 21, 2017

by Bill McBride on 5/20/2017 08:11:00 AM

The key economic reports this week are April New and Existing Home sales, and the second estimate of Q1 GDP.

—– Monday, May 22nd —–

8:30 AM: Chicago Fed National Activity Index for April. This is a composite index of other data.

—– Tuesday, May 23rd —–

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

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

The consensus is for a decrease in sales to 604 thousand Seasonally Adjusted Annual Rate (SAAR) in April from 621 thousand in March.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for May.

—– Wednesday, May 24th —–

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 March 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 April from the National Association of Realtors (NAR). The consensus is for 5.67 million SAAR, down from 5.71 million in March.

Housing economist Tom Lawler estimates the NAR will report sales of 5.56 million SAAR for April.

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

2:00 PM: FOMC Minutes for the Meeting of May 2 – 3, 2017

—– Thursday, May 25th —–

8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 237 thousand initial claims, up from 232 thousand the previous week.

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

—– Friday, May 26th —–

8:30 AM: Durable Goods Orders for April from the Census Bureau. The consensus is for a 0.9% decrease in durable goods orders.

8:30 AM: Gross Domestic Product, 1st quarter 2017 (Second estimate). The consensus is that real GDP increased 0.8% annualized in Q1, up from the advance estimate of 0.7%.

10:00 AM: University of Michigan’s Consumer sentiment index (final for May). The consensus is for a reading of 97.6, down from the preliminary reading 97.7.

Published at Sat, 20 May 2017 12:11:00 +0000

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Traders renew bets on U.S. rate increase in June

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Traders renew bets on U.S. rate increase in June

U.S. interest rates futures fell on Friday, suggesting traders revived bets the Federal Reserve would raise interest rates in June as financial markets recovered from their sharp losses earlier this week.

While this week’s data supported the notion the U.S. modest economic expansion remains intact, the dollar and Wall Street stocks tumbled on Wednesday due to concerns that the widening probes into U.S. President Donald Trump’s 2016 presidential campaign’s possible ties with Russia would hamper the passage of tax cuts and other federal fiscal stimulus.

Since Thursday, the greenback .DXY and equities prices have rebounded, rekindling bets the U.S. central bank remains on track for further rate increases later this year, analysts said.

Encouraging data on jobless claims and business activity in the U.S. Mid-Atlantic region on Thursday helped to bolster investor confidence in the economy.

“In response to the strong data and rebound in stocks, Fed pricing partly reversed the move Wednesday to further take out much of anything past June and start to even call June more into question,” Morgan Stanley economist Ted Wieseman wrote in a research note.

On Wednesday, the Dow and S&P 500 suffered their biggest one-day percentage drop since Sept. 9, while the dollar index touched its lowest level since Nov. 9.

Traders shrugged off comments on Friday from St. Louis Fed President James Bullard who said the Fed’s expected rate-hike path may be too aggressive in the wake some recent weaker-than-expected economic data.

On Tuesday, the government said housing starts unexpectedly fell 2.6 percent in April, while industrial output recorded a 1 percent increase last month, the biggest gain in more than three years.

Federal funds futures implied traders saw about a 74 percent chance the Federal Reserve would raise interest rates by a quarter point to 1.00-1.25 percent FFM7 FFN7 at its June 13-14 policy meeting, CME Group’s FedWatch program showed.

This compared with a 65 percent probability on Wednesday, which was the lowest since April 21.

Fed funds futures suggested traders priced in a 45 percent chance the U.S. central bank would increase key short-term rates to 1.25-1.50 percent by its December policy meeting FFZ7.

This was higher than Wednesday’s 38 percent which was the lowest since April 19.

(Reporting by Richard Leong; Editing by Alistair Bell)
Published at Fri, 19 May 2017 18:11:34 +0000

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Wall St. retreats after S&P, Nasdaq hit record highs

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Wall St. retreats after S&P, Nasdaq hit record highs

By Yashaswini Swamynathan

U.S. stocks reversed course as some investors locked in gains after the S&P 500 and the Nasdaq hit record highs, with healthcare and industrial stocks leading the decliners.

While strong first-quarter earnings supported the indexes in the past few weeks, global geopolitical tensions and developments in Washington could unsettle the market’s record-setting spree.

Investors turned cautious after reports that President Donald Trump disclosed highly classified information to Russia’s foreign minister about a planned Islamic State operation.

The latest development could distract the Trump administration from its priorities such as tax reform, healthcare and simpler regulations.

The dollar index .DXY – which measures the greenback against six other major currencies – hit a six-month low, while prices of safe-haven gold rose.

“This kind of backdrop is very conducive to stock-pickers and that is helping drive idiosyncratic positions across markets,” said Matt Miskin, senior capital markets research analyst at John Hancock Investments in Boston, Massachusetts.

Home Depot’s (HD.N) first-quarter performance was a bright spot. The stock gave the biggest boost to the S&P 500 and the Dow with a 1.7 percent gain.

A report from the Federal Reserve showed U.S. factory output in April rose at its fastest clip in three years, supporting a view that economic growth was rebounding in the second quarter after a sluggish start to the year. [nTLAGGED9W]

“As long as we have growth, whether it is earnings or economic data, the markets are likely to be able to take such (political) headlines in stride,” Miskin said.

At 11:05 a.m. ET (1505 GMT), the Dow Jones Industrial Average .DJI was down 15.73 points, or 0.07 percent, at 20,966.21, the S&P 500 .SPX was down 3.09 points, or 0.13 percent, at 2,399.23 and the Nasdaq Composite index .IXIC was up 1.06 points, or 0.02 percent, at 6,150.73.

Ten of the 11 major S&P 500 sectors were lower. Healthcare .SPXHC was the top loser with a 0.5 percent decline.

Pfizer (PFE.N) was down 1.8 percent at $32.54 after Citigroup downgraded the drug developer’s stock to “sell” from “neutral”.

Staples (SPLS.O) was off 5 percent and was the top percentage loser on the S&P 500 after the office supplies retailer reported a decline in quarterly sales.

Akebia Therapeutics (AKBA.O) was up 15 percent at $14.85 after the drug developer entered into an agreement with Vifor Pharma Group, which also made a $50 million equity investment in the company.

Declining issues outnumbered advancers on the NYSE by 1,755 to 978. On the Nasdaq, 1,686 issues fell and 979 advanced.

The S&P 500 index showed 50 new 52-week highs and 12 new lows, while the Nasdaq recorded 85 new highs and 40 new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Saumyadeb Chakrabarty)
Published at Tue, 16 May 2017 15:45:25 +0000

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The dollar’s Trump bump has vanished

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The Trump rally, 100 days in
The Trump rally, 100 days in

President Trump’s victory and promise to implement an “America First” agenda propelled the US dollar to 13-year highs.

But the Trump bump has proved fleeting for the greenback, which has lost virtually all of its post-election gains.

The US dollar lost further ground against rivals on Tuesday. The euro jumped 1% to $1.109, the strongest level since the days before Trump’s victory in November.

Likewise, the dollar index, which measures the greenback against a basket of rival currencies, dropped to territory unseen since just after the election.

So why is the dollar in the doldrums? Currency analysts point to a range of factors, including relief over France’s presidential election, weak US economic growth to kick off this year and concern that Trump’s political trouble will doom his economic agenda.

“Today, your key driver is the fact that Trump is facing an existential threat here,” said Karl Schamotta, director of global market strategy at Cambridge Global Payments.

Schamotta pointed to the political fallout over reports that Trump shared classified information with a Russian official. (Trump has defended his conversations with Russia.)

Win Thin, a currency strategist at Brown Brothers Harriman, similarly blamed the new dollar weakness in part on Trump’s latest Russia controversy.

The news “not only heightened ongoing concerns about the Administration’s ties with Russia but also is seen by some as jeopardizing the administration’s aggressive legislative agenda,” Thin wrote in a report on Tuesday.

Trump’s economic proposals — slashing taxes, cutting regulation and pumping up infrastructure spending — lifted the US dollar after the election because many thought they could give the American economy a shot in the arm.

But Trump’s agenda has been delayed by political setbacks, as evidenced by the failure thus far to repeal and replace Obamacare.

However, other currency analysts think the US dollar’s stumble has little to do with Trump. They point to how the stock market appears unfazed by Trump’s problems, with the S&P 500 hitting a record high on Tuesday.

“Trump’s new soap opera story,” isn’t a main driver for the dollar, Peter Boockvar, chief market analyst at The Lindsey Group, wrote in a report.

Instead, Boockvar believes the greenback has been hurt by shifts in the global economy and central bank policy. He pointed to how the euro has been helped by a record European trade surplus in March, highlighted by a 13% jump in goods exports.

While Europe’s economy has regained momentum, the US slowed down significantly at the beginning of this year. First-quarter GDP was just 0.7%, the weakest in three years. That’s a far cry from the 3% or 4% growth Trump has been promising.

“It’s not full steam ahead here by any means,” said Schamotta.

Another big difference between the US and Europe: the euro has recently benefited from positive political news. France relieved global markets by electing Emmanuel Macron as its next president over Marine Le Pen, who had called for the nation to dump the euro.

The retreat for the US dollar isn’t great news for Americans planning to travel abroad. Don’t expect a big discount while shopping in Europe.

But the currency shift is just fine for big multinationals like Nike(NKE) and Apple(AAPL, Tech30) that sell lots of stuff overseas. A strong dollar makes an iPhone more expensive to foreign buyers.

That’s why last month Trump told The Wall Street Journal the dollar is “getting too strong.”

“Partially that’s my fault because people have confidence in me,” Trump said at the time.

 Published at Tue, 16 May 2017 16:00:43 +0000

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