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29Jul2015 Market Close: Fed FMOC Says No Changes Yet, DOW Closed Up Triple Digits, Oil And Dollar Rise After FMOC Report

Written by Gary

As expected, volatility was the key word following the Fed's two-day policy setting committee meeting. It said, it sees improvement in the labor market with "solid job gains," and declining unemployment. Wall Street held on to gains which did not give investors more clarity on when the central bank is likely to begin raising interest rates. Markets Closed solidly in the green with the DOW closing up 121 points.

Todays S&P 500 Chart

Raising rates, which have been at zero since 2008, could lead to two very different scenarios. If the Fed's committee raises rates in September, it would be the Fed's show of confidence in the health of the economy and the direction it's going.

It is fairly well known that investors are not thrilled about a rate hike coming anytime soon. Many are concerned it will cause stocks to fall this year. A rate hike could also hurt investors abroad in emerging markets, where Fed actions in the past have caused major sell offs in developing countries.

Oil prices jumped about 2 percent after U.S. government data showed a large crude stockpile draw that signaled the market may have been wrong in predicting slumping demand for energy.

The Market in Perspective

Here are the headlines moving the markets.

Fed sees improving economy, jobs; September hike in view but not set

WASHINGTON (Reuters) - The U.S. economy and job market continue to strengthen, the Federal Reserve said on Wednesday, leaving the door open for a possible interest rate hike when central bank policymakers next meet in September.

House Speaker Boehner supports ending U.S. oil export ban

WASHINGTON (Reuters) - U.S. House of Representatives Speaker John Boehner on Wednesday expressed for the first time his support for repealing the 40-year-old ban on domestic crude oil exports, a move that could breathe new life into a bill in his chamber.

Wall Street closes higher after Fed leaves rates unchanged

(Reuters) - U.S. stocks finished higher on Wednesday after the U.S. Federal Reserve left its key interest rate unchanged and said the economy and job market continued to strengthen.

Facebook revenue jumps 39 percent as mobile ad sales rise

(Reuters) - Facebook Inc reported a 39 percent jump in quarterly revenue on Wednesday as more advertisers used its increasingly popular mobile app.

China Rescue, VIX Crash, & Fed Pump Squeeze Shorts Most In 6 Months

Summing up the talking heads opinions on China, Twitter, Yelp... and so on..

Overnight exuberance in the afternoon session in China....

China market makes me laugh $ASHR $SHSZ300 @prchovanec

— Walt Hudson (@WaltHudson) July 29, 2015

Provided the first momo pump in US stocks (but that faded back to unch ahead of the open and dismal housing data), FOMC prep sent us spiking before investors realized that while dovish it basically suggests the economy is crap...

Cash indices never looked back with a small pump'n'dump after the Fed statement...

This is Trannies best 2-day ramp since 2011...

President Obama Explains Where "The Economy Is Booming" (In 1 Cartoon)

Finally, an economic growth strategy...


Stocks Extend Gains After Fed Statement

Stocks extended gains Wednesday after the Federal Reserve offered few clues on when it plans to raise interest rates for the first time in nearly a decade.

Currency Devaluation: The Crushing Vice Of Price

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Devaluation has a negative consequence few mention: the cost of imports skyrockets.

When stagnation grabs exporting nations by the throat, the universal solution offered is devalue your currency to boost exports. As a currency loses purchasing power relative to the currencies of trading partners, exported goods and services become cheaper to those buying the products with competing currencies.

For example, a few years ago, before Japanese authorities moved to devalue the yen, the U.S. dollar bought 78 yen. Now it buys 123 yen--an astonishing 57% increase.

Devaluation is a bonanza for exporters' bottom lines. Back in late 2012, when a Japanese corporation sold a product in the U.S. for $1, the company received 78 yen when the sale was reported in yen.

Now the same sale of $1 reaps 123 yen. Same product, same price in dollars, but a 57% increase in revenues when stated in yen.

No wonder depreciation is widely viewed as the magic panacea for stagnant revenues and profits. There's just one tiny little problem with devaluation, which we'll cover in a moment.

One exporter's depreciation becomes an immediate problem for other exporters: when Japan devalued its currency, the yen, its products became cheaper to those buying Japanese goods with U.S. dollars, Chinese yuan, euros, etc.

That negatively impacts other exporters selling into the same markets--for example, South Korea.

To remain competitive, South Korea would have to devalue its currency, the won. This is known as competitive devaluation, a.k.a. currency war. As a result of currency w ...

Exclusive: FCA's Chrysler group faces U.S. product drought through 2016

DETROIT (Reuters) - Fiat Chrysler Automobiles NV will face a shortage of new products in North America over the next 18 months, especially hot-selling trucks and crossover vehicles, according to three sources familiar with the company's plans.

Anthem profit beats as medical costs stay at low end of estimates

(Reuters) - Health insurer Anthem Inc , which plans to buy rival Cigna Corp for $47 billion, on Wednesday said medical costs, particularly in its Medicaid and Medicare businesses, were at the low end of expectations and helped boost second-quarter profit.

"It Depends On What The Meaning Of The Word "Some" Is": Goldman Says Don'tt Read Too Much Into Fed Statement

When even Jon Hilsenrath is clueless what the Fed is trying to say, we go with old faithful, the company that runs the NY Fed, Goldman Sachs. Here is Jan Hatzius' take.

The statement following today's FOMC meeting made relatively few changes compared to June, and did not affect our view that the first rate hike is most likely to occur in December. The most notable change was the addition of the word "some" in the committee's description of desired progress in the labor market. Specifically, the June FOMC statement said that it will be appropriate to raise interest rates "when it has seen further improvement in the labor market" (and is reasonably confident that inflation will move back to two percent). Today's statement said that rate hikes would be appropriate after "some further improvement in the labor market". This change indicates that the committee requires a smaller cumulative improvement in labor market slack before liftoff. But the new language is a small tweak and does not suggest, in our view, that Fed officials are reading recent labor market developments in a wholly different way.

So if your read of the word "some" is different from Goldman's read of the word "some", then surely drama is about to unfol,d like for example that of Jefferies economists which amusing said "Addition of word "some" into forward guidance section on further improvement in labor mkt raises question whether FOMC sees "light at the end of the tunnel" in terms of reaching full employment." So if you are currently unemployed, discuss what "some" means and you may soon have a job.

As for the rest:

Elsewhere the statement was little changed. In the opening paragraph on economic conditions, the ...

Boeing may move work abroad with Exp-Im future uncertain: chairman

WASHINGTON (Reuters) - Boeing Co Chairman Jim McNerney said on Wednesday the aircraft maker was actively considering moving "key pieces" of its operations to other countries given the uncertainty about the future of the Export-Import Bank, whose charter expired on June 30.

MasterCard's revenue misses estimates on higher incentives

(Reuters) - MasterCard Inc , the operator of the world's second largest payment network, reported lower-than-expected quarterly revenue as the company offered more rebates and incentives to win new and renewed deals.

Limited Supplies Hold Back June Home Sales

The National Association of Realtors said its pending home sales index fell 1.8 percent in June, though it was up 8.2 percent for the past 12 months.

Damn It, Janet - Act Now, Before It Is Too Late!!

Submitted by Sean Corrigan via The Cobden Centre,

Laying The Foundations

As the Yellen Fed inches painfully towards taking its first 'data-dependent' steps to raise rates (albeit with the promise that such a process will follow the disastrous, well signposted creep upward which enabled so much damage to be wrought after the Tech Bust), the evidence mounts as to just how belated any such action will be. Take housing, for instance.

Here, the latest release shows that multi-unit starts were the best since 1985 after rising 13.5%YOY to stand 275% off their lows. Adding to the sense of building excess, the ratio of starts for 5+ to single-unit buildings has not been topped since the inflationary peak of 1973. Permits are also robust, rising 30%YOY to hit an 8-year high with the multi-unit variety up +70% to a 25-year high. The ratio to singles was the best since 1986 and thus lay close to a 40-year peak.

Courtesy: Bloomberg
Courtesy: Bloomberg

No surprise, perhaps, that real construction spending is up more than 10% in a year to its best level since the GFC. In fact, this measure was only ever higher during the period 1998-2008 which started with the loose policies of the 'Committee to Save the World' and ended with the even looser ones of the 'Committee to Save the World from the Committee to Save the World'!

Wall St. Is Higher, Bolstered by Strong Earnings Reports

Twitter shares sank 14 percent after the social media company reported sluggish customer growth.

VIX "Flash-Crashes" To 11 Handle After Dovish Fed Statement

We assume this means the 'market' will break before the close unless we make new highs...

Total Collapse: Greece Reverts To Barter Economy For First Time Since Nazi Occupation

Months ago, when Alexis Tsipras, Yanis Varoufakis, and their Syriza compatriots had just swept to power behind an ambitious anti-austerity platform and bold promises about a brighter future for the beleaguered Greek state, we warned that Greece was one or two vacuous threats away from being "digitally bombed back to barter status."

Subsequently, the Greek economy began to deteriorate in the face of increasingly fraught negotiations between Athens and creditors, with Brussels blaming the economic slide on Syriza's unwillingness to implement reforms, while analysts and commentators noted that relentless deposit flight and the weakened state of the Greek banking sector was contributing to a liquidity crisis and severe credit contraction.

As of May, 60 businesses were closed and 613 jobs were lost for each business day that the crisis persisted without a resolution.

On the heels of Tsipras' referendum call and the imposition of capital controls, the bottom fell out completely as businesses found that supplier credit was increasingly difficult to come by, leaving Greeks to consider the possibility that the country would soon face a shortage of imported goods.

On Tuesday, we brought you the latest on the Greek economy when we noted that according to data presented at an extraordinary meeting of the Hellenic Confederation of Commerce and Entrepreneurship, retail sales have fallen 70%, while The Athens Medical Association recently ...

Bill Gross Explains (In 90 Seconds) How It's All A Big Shell Game

"There is no doubt that the price of assets right now is a question mark... and ultimately when Central Banks stop manipulating markets where that price goes is up for grabs... and probably points down"

As Gross tweeted...

Gross: All global financial markets are a shell game now. Artificial prices, artificial manipulation. Where's the real pea (price)?

Janus Capital (@JanusCapital) July 29, 2015

This clip carries a public wealth warning...

Fed Mouthpiece Hilsenrath Confirms Inflation Concerns May Delay "Liftoff"

Janet Yellen and the FOMC have spoken (in dovish tones) and now so has WSJ's own Fed whisperer Jon Hilsenrath, whose pre-packaged missive (penned under the now default 20 minute pre-release embargo) rehashes essentially what we discussed earlier today.

In short, the jobs market is telling the Fed one thing ("continued imporovement", although Yellen is apparently looking for a bit more), while inflation (held down by lackluster Chinese demand which has in turn exacerbated a global deflationary supply glut) is saying something different, setting up a "cliffhanger" split decision in September and a tentative 25 bps trial balloon hike at the December meeting because after all, at some point Yellen will have to test the waters to discover if an "exit" is even possible without sending Wall Street into an all out panic.

Here's Hilsenrath's 593-word take via WSJ on the Fed's 539-word statement:

The Federal Reserve on Wednesday kept interest rates near zero but cited progress in the U.S. job market, a sign it remains on course to raise interest rates in September or later this year.

At the same time, however, it flagged a nagging concern about low inflation, which is creating caution among officials and could convince them to delay the day of the first increase.

The Fed concluded its two-day policy meeting with a decision to l ...

29 July 2015 FOMC Meeting Statement: Still No Clue to When the Federal Funds Rate Will Be Raised. Economic Growth Rate Appears Unchanged.

Econintersect: The Federal Open Market Committee (FOMC) - the board of directors of the Federal Reserve continued to give no clues as to when they will raise the Federal Funds rate. They stated ....

.... that economic activity has been expanding moderately in recent months.

This is the same words used in the previous statement in June which would indicate the FOMC is not seeing any change in the rate of economic expansion.

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