Wall Street pared early gains in choppy trading as tepid economic data and a renewed selloff in the bond market more than offset a flurry of corporate deals on Wednesday. Oil's rally looks increasingly disconnected from fundamentals of supply and demand as the U.S dollar has fallen into the support once again.
Here is the current market situation from CNN Money
North and South American markets are mixed. The S&P 500 is higher by 0.08%, while the Bovespa is leading the IPC lower. They are down 0.84% and 0.33% respectively.
German Bund yields have spiked back quickly to the highs of the day (from under 60bps to 70bps). This has sparked selling across most asset classes with US and European stocks waning quickly. Trannies are in trouble have tumbled post-open and are now -1.7% from payrolls.
$NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.
CHICAGO (Reuters) - Wal-Mart Stores said it will start disclosing directly to investors what it spends on lobbying on a state-by-state basis, responding to shareholder pressure to improve transparency on how the retailing giant seeks to influence public policy.
Yesterday, in a stunning admission that already frigid relations between China and the US (because according to the lying White House it is Russia that is "isolated", even as Putin was sitting next to China's president on May 9) are getting worse, if not outright hostile, by the day we learned that US Defense Secretary Ash Carter has asked his staff to look at military options to rebuke Chinese ambitions in the South China Sea area around the Spratly Islands, which has recently become a topic of contention between China and most of its neighbors, especially the Philippines and Vietnam.
And while apparently the US does not have its hands full already with orchestrating (and profiting from) two proxy regional wars, one in Ukraine and one in the Middle East, and feels compelled (by shareholders of US "defense" companies) to prove to the world it has long since lost its globocop status when China roundly ignores American threats, China wasted no time to do just that and overnight Beijing strongly condemned a proposed U.S. military plan to send aircraft and Navy ships near disputed South China Sea islands to contest Chinese territorial claims over the area.
WILMINGTON, Del. (Reuters) - DuPont said on Wednesday it had fended off a board challenge from activist investor Nelson Peltz, after shareholders backed all 12 directors nominated by the U.S. chemical conglomerate's management.
It's getting crowded at the top of Manhattan's apartment market. Builders are plowing ahead with scores of condominiums priced above $20 million in skinny glass towers throughout Manhattan, sparking fears of a supply glut.
TOKYO (Reuters) - Japan's three biggest carmakers are expanding a huge global recall triggered by potentially fatal air bags made by Takata Corp , saying on Wednesday they will take back millions of vehicles worldwide for investigation.
BRUSSELS (Reuters) - A slowdown in Germany weighed on the euro zone in the first quarter, but the bloc's economy still grew at its fastest in almost two years as cheap food and fuel boosted spending and a central bank stimulus program kicked in.
Zero Hedge first brought attention to the Atlanta Fed over two months ago, when the first massive divergence between bullish consensus and objective reality appeared. Since then it has been nothing but a downhill race for reality, with consensus scrambling to catch up. Moments ago, the Atlanta Fed just cut its Q2 GDP forecast once more, this time to 0.7% from 0.8%. This is on the back of a Q1 GDP which as of this moments is around -1.0%.
From the Atlanta Fed:
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 0.7 percent on May 13, down slightly from 0.8 percent on May 5. The nowcast for second-quarter real consumer spending growth ticked down 0.1 percentage point to 2.6 percent following this morning's retail sales report from the U.S. Census Bureau.
This means that the consensus will once again have to scramble and consult the Oracle Stone in their catch down to the Atlanta Fed.
It also means that the first half US GDP print will be negative and all else equal, would suggest a technical recession. It also means that for 2015 full year GDP to print at a "growing" 2.5%,
"Most since Lehman" has become the new meme for macro-economic data in the US as day after day brings another lacklustre superlative to be dismissed with some excuse by the cognoscenti of sell-side economists...
Of course, that is aside from anything related to aggregate jobs that is spewed by the government's official ministries of truth... (do not look at this chart)
* * *
So here are seven charts that scream "recession" is here...
Retail Sales are weak - extremely weak. Retail Sales have not dropped this much YoY outside of a recession...
And if Retail Sales are weak, then Wholesalers are seeing sales plunge at a pace not seen outside of recession...
Submitted by David Stockman via Contra Corner blog,
Payroll Friday puts you in mind of a live action Romper Room. The bubblevision children get big-eyed month after month—even as they hear the same old fairy tale from the BLS. And make no mistake, the headline jobs number is tantamount to fiction, even as it parades as science.
For all practical purposes, the monthly establishment survey number, which was 223,000 for April, is the ultimate emission of the momo game. The BLS essentially projects a trend line of gains in the various cells which make up the establishment payroll slate and then modifies them in each month's report by the deltas in the rag-tag survey results taken by the Census Bureau, as well as its own concoction of statistical flim-flam for seasonality, birth-death and myriad other technical tinkerings.
But what the headline number is not, is the result of a valid sample of US businesses, scientifically extrapolated to the entire economy such as that represented by the Gallup report on employment. As a result, once a trend line of business cycle recovery gets built into the BLS projection, the monthly number will always come up +/- 200k, save for an occasional monthly aberration or two. The headline is thus the product of an a priori model, not a current empirical measurement.
Every so often, of course, the economy hits a downdraft and the momentum factor goes into reverse. When that happens, massive downward revisions are made to recent monthly results, while current monthly totals show deep job losses. And then this bonfire of recession period job losses is revised sharply lower yet again in the annual benchmark adjustments.
Having tested down to Payrolls levels once again, German Bund yields have spiked back quickly to the highs of the day (from under 60bps to 70bps). This has sparked selling across most asset classes with US and European stocks waning quickly. Trannies are in trouble have tumbled post-open and are now -1.7% from payrolls.
Following API's data lastnight, DOE reported a 2.19 million barrel draw (more than expected) this week, crude oil prices immediately extended gains. However, that ramp quickly faded once it set in that the draw was actually notably lower than last week's. For some context, this leaves the total inventory still a near record 30% above average for this time of year. Prices were also not helped as total crude production rose modestly WoW.
2nd weekly draw in a row but it's slowing...
And production rose WoW...
Oil prices spiked then dumped on priduction news...
Many money managers believe that the recent selloff isn't sustainable, pointing to two key differences with the events of 2013's "taper tantrum": tempered economic expectations and more-balanced positioning by investors.
WASHINGTON (Reuters) - U.S. retail sales were flat in April as households cut back on purchases of automobiles and other big-ticket items, indicating the economy was struggling to rebound strongly after barely growing in the first quarter.
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