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03Aug2015 Market Update: Averages Mixed, Oil Falling, U.S. Consumer Spending Slowing Pace, Economy Losing Momentum

Written by Gary

Markets opened flat, sea-sawed down fractionally and are in the process of climbing back up to flat status by the noon hour. The price of oil continues to fall, weighing on stocks, and as investors scoured economic reports for clues on the pace of growth.


Here is the current market situation from CNN Money

North and South American markets are lower today with shares in Brazil off the most. The Bovespa is down 0.88% while Mexico's IPC is off 0.31% and U.S.'s S&P 500 is lower by 0.02%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 62%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 16%
Investors Intelligence sets the breath Above 50 bullish 43.4%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. +18.67
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages. 43.03%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 49.15%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 52.60%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 21.69
StockChart.com Consumer Discretionary ETF (XLY) As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy 80.13
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10,863

What Is Moving the Markets

Here are the headlines moving the markets.

Ex-trader Hayes jailed for 14 years for Libor rigging

LONDON (Reuters) - Ex-trader Tom Hayes was sentenced to 14 years in jail by a London court on Monday after being found guilty of conspiring to rig Libor benchmark interest rates following a seven-year global investigation.

Greek stocks plunge, banks hammered, after five-week crisis shut down

ATHENS (Reuters) - Greece's stock market closed with heavy losses on Monday after a five-week shutdown brought on by fears the country was about to be dumped from the euro zone.

Here Is The Reason Why GM's July Car Sales Smashed Expectations

Moments ago GM impressed everyone once again when it reported that in the month of July it sold 272,512 cars in the US, or a 6.4% jump compared to a year earlier. This was an impressive beat to consensus expectations of just a 0.6% increase.

What caused this jump?

On one hand the relentless surge in reckless debt-financing for car purchases continues to be a major factor, and as Housing Wire reports (what we have covered extensively in the past) "auto debt accounted for 81% of the increase in overall non-mortgage debt among mortgage holders over the past 4 years."

But at this point it isn't just government-funded loans to subprime car purchasers. At this point it is the government itself which is buying GM cars hand over fist, thereby engaging in yet another indirect bailout of the formerly bankrupt automaker, which was bailed out by none other than the US government. To wit from GM's monthly sales report:

Fleet deliveries in July were down 20 percent year over year, as the company continues to execute its plan to reduce sales to rental customers and grow commercial and government deliveries. Government sales were up 38 percent, with deliveries to state and local governments up 59 percent. Commercial deliveries were up year over year for the 21st consecutive month. Rental deliveries were down 36 percent.

So fleet and rental deliveries ...

Construction Spending Growth Is Weak or Strong - You Choose.

Written by Steven Hansen

The headlines say construction spending grew below expectations. The backward revisions make this series very wacky. Our view is that if the data is correct - this was a strong growth month.

U.S. July auto sales top expectations, boosted by SUVs, trucks

DETROIT (Reuters) - U.S. auto sales were stronger than expected in July and kept the industry on pace for its best year in a decade, driven by the continuing shift toward sport utility vehicles and pickup trucks.

July 2015 ISM Manufacturing Survey Marginally Declined But Remains in Expansion

Written by Steven Hansen

The ISM Manufacturing survey continues to indicate manufacturing growth expansion - marginally declined this month. The key internal new orders modestly improved and remains in expansion. Backlog of orders contraction grew..

U.S. construction spending gain smallest in five months

WASHINGTON, (Reuters) - U.S. construction spending barely rose in June as private outlays posted their biggest drop in a year, but the underlying trend suggested the economy remained on solid ground.

Weak auto demand crimps U.S. consumer spending

WASHINGTON (Reuters) - U.S. consumer spending in June advanced at its slowest pace in four months as demand for automobiles softened, suggesting the economy lost some momentum at the end of the second quarter.

"Seasonally Data Dependent": Adjusted New Orders Highest In 2015; Unadjusted Lowest Since 2013

As reported earlier, the only silver lining in today's Manufacturing ISM reported which was not only released earlier after MNI broke the embargo, but a miss to expectations, had just one silver lining: New Orders rose from 56.0 to 56.5. This was also the highest New Orders print since December of 2014, and was the only bright spot in an otherwise terrible report.

Even the ISM's Holcombe was quick to praise it.



US ISM'S HOLCOMB: NEW ORDERS AT HIGH FOR YEAR VERY POSITIVE

However, a more than cursory look at the headline reveals something quite unpositive: the only reason they New Orders print came where it did, is due to seasonal adjustments.

As the chart below shows, which tracks the Manufacturing ISM New Orders history, while the seasonally adjusted New Orders datapoint was indeed the highest since 2015, the unadjusted, or one which merely reflects what respondents are saying even as they already factor in for seasonals (which goes back to the idiocy of seasonally adjusting a survey which is already subliminally adjusted) New Orders of 52.5 was the lowest print not only in 2015, but the lowest since December 2013.

Just to repeat because it bears repeating: the exact same data point can either be the highest since 2014 or the lowest since 2013 dep ...

Wall St. lower on weak data, slump in oil prices

(Reuters) - Wall Street was lower on the first trading day in August as oil prices touched a six-month low and data showed U.S. economy lost some momentum at the end of the second quarter.

Construction Spending Growth Slumps To 2015 Lows

A dramatic upward revision from 0.8% MoM to 1.8% MoM (after March's biggest jump since 1998), may be a small silver lining in the rear view mirror as construction spending growth tumbled to just 0.1% in May - the weakest since Nov 2014. It seems the climactic malinvestment boom in the last 3 months is faltering fast and is entirely unsustainable.

Charts: Bloomberg

U.S. factory activity rises slightly in July: Markit

NEW YORK, (Reuters) - Growth in the U.S. manufacturing sector edged up in July, according to an industry report released on Monday.

"Everyday Americans" Hillary And Bill Clinton Report $140 Million In Taxable Income Since 2007

Clinton told ABC's Diane Sawyer in a June interview, "We came out of the White House not only dead broke, but in debt."

Ever since Mitt Romney's tax disclosure fiasco in which allegations of tax avoidance and usage of offshore tax shelters played a major part in the democrat counter campaign, there has been great interest in the Adjusted Gross Income reported by presidential candidates. Which is why to avoid any surprises on the primary circuit, Hillary Clinton released the full data of her and Bill's tax income going back to 2007.

So without further ado, here is the Clinton family's adjusted gross income since 2007. The summary: $139.1 million in income since 2007, most of it thanks to speeches starting at $225,000 and going much higher.

And that is your "everyday Americans."

Over this period, the dynastic presidential family paid $43.9 million in Federal Tax:

A spread of just the Federal and Combined tax rate reveals the following picture:

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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