Volatility and low to moderate volume is a really tough market to play in and that is what we had today. First markets open high, slip to the red side - twice and then melt upwards to where the DOW closed +293 in the green. Oil did something similar and it really smacks of manipulation, but will never be investigated I am afraid.
Oh yes, the Beige Book didn't seem to affect the markets as they sea-sawed sideways until moments before the close where the major indexes moved up and closed at the session highs.
Todays S&P 500 Chart
Crude oil futures staged an intraday U-turn that lifted U.S. prices back above $46/bbl after an earlier dip to $43.22, with October WTI climbing 1.9% to $46.25; Brent crude also settled 1.9% higher at $50.50.
Analysts attribute the oil u-turn higher to the market digging deeper into the details of the latest U.S. supply data, which were not as bearish as it seemed at first glance; the drop in refinery runs was a surprise but occurred because of California refinery issues, not a drop in demand, says a senior analyst at Price Futures Group.
Momentum and technical trading are pushing up prices as well; "It's just feeding on itself... [creating] high momentum swings right now," says the senior VP for energy futures at the R.J. O'Brien brokerage.
NEW YORK (Reuters) - Bond guru Bill Gross, who has long called for the Federal Reserve to raise interest rates, said on Wednesday that U.S. central bankers may have missed their window of opportunity to hike rates earlier this year and doing so now could create "self-inflicted" instability.
(Reuters) - Wal-Mart Stores said on Wednesday it planned to reopen in late October to early November five U.S. stores whose closure had prompted a union to file a complaint with the National Labor Relations Board.
NEW YORK (Reuters) - Oil prices ended nearly 2 percent higher on Wednesday in volatile trade as rallying equities on Wall Street pulled crude up from lows after futures sank on concerns about global oversupply.
Analogies or metaphors are often effective in explaining complex issues. In this instance, oxygen and markets are used to do so. Markets are anthropomorphized, requiring them to have oxygen to survive.
Oxygen for financial markets comes from two sources — the economy and the Federal Reserve:
Economic Oxygen and Markets
The strength of an economy creates wealth. Without a strong economy no nation grows wealthy or stays wealthy. Asset valuations are ultimately grounded in the economy, at least in the long run. Rising employment, standards of living and financial asset prices accompany strong economies. Without these pre-requisites, long-term wealth cannot be created.
Today the relationship between economic oxygen and markets is unsustainable. The economy is not and has not been providing enought oxygen to sustain current levels.
Enter the paramedics we refer to as the Federal Reserve. They show up with their oxygen tanks to resuscitate the patient. The Fed injected enormous amounts of liquidity into the system with two initial purposes — bail out the banking system and stimulate the economy. Large amounts of funds offset banking system insolvency (at least for the time being). But liquidity is at best a temporary stay for a sick economy, despite Keynesian protests to the contrary. However these injections of emergency oxygen revived financial asset markets.
WASHINGTON (Reuters) - U.S. private employers maintained a steady pace of hiring in August despite recent global financial market turmoil, suggesting that labor market momentum likely remains strong enough for the Federal Reserve to consider an interest rate hike this year.
Just as China celebrates the 70th anniversary of the end of World War II with an extravagant parade designed to showcase the country's military prowess and project Xi Jinping's power to nervous onlookers in the West, the Pentagon says it has spotted five Chinese Navy ships in the Bering Sea, just off the coast of Alaska.
Five Chinese navy ships are currently operating in the Bering Sea, off the coast of Alaska, the first time the U.S. military has seen such activity in the area, Pentagon officials said Wednesday.
The officials said they have been aware in recent days that three Chinese combat ships, a replenishment vessel and an amphibious ship were in the vicinity after observing them moving toward the Aleutian Islands, which are split between U.S. and Russian control.
They said the Chinese ships were still in the area, but declined to specify when the vessels were first spotted or how far they were from the coast of Alaska.
The Pentagon official said there were a "variety of opinions" on how to interpret the Chinese ships' deployment.
"It's difficult to tell exactly, but it indicates some interest in the Arctic region," the official said. "It's different."
"Different" indeed, as in "uprecedented", and while we won't endeavor to jump to conclusions, we would note that the PLA hasn't exactly been shy when it comes to challenging the US from a maritime perspective of late and of course, the US has had its ships and carriers to the east and south of China for decades, ...
WASHINGTON (Reuters) - U.S. labor markets were tight enough to fuel small wage gains in some professions in recent weeks, though some companies already were feeling a chill from an economic slowdown in China, the Federal Reserve said on Wednesday.
The consolidated economic report from the 12 Federal Reserve Districts (Beige Book) said that "economic activity continued expanding across most regions and sectors during the reporting period from July to mid-August". The previous report said "economic activity expanded from mid-May through June". It is hard to tell if overall growth rate went up or down - and the usefullness of the Beige Book is diminished when the Fed does not "guess" whether there was a change in the rate of growth.
Back in March of last year, when previewing the events that have rocked the world over the past month (because nobody, nobody could have possibly anticipated the Chinese economic crash and the concurrent commodity tumble which are just two sides of the same bursting credit bubble coin) we wrote "Is This The Cheapest (And Most Levered) Way To Play The Chinese Credit-Commodity Crunch?"
We were referring to Glencore credit default swaps (i.e., default risk), which trading at just over 150 bps, were, from an upside/downside and every other perspective, the cheapest, most levered and most attractive risk bet to trade the upcoming Chinese/commodity crash as a result of Glencore massive exposure to the price of copper, which in its own words stood to lose over $1 billion in EBIT for every 10% move in the price of copper ...
... a sensitivity few had realized.
Fast forward to two weeks ago when the same day the Fed leaked its FOMC minutes and in the process unleashed the recent market correction, we wrote "The Next Leg Of The Commodity Carnage: Attention Shifts To Traders - Glencore Crashes, Noble Default Risk Soars" and finally, well over a yea ...
BERLIN (Reuters) - German sportswear firm Adidas is underlining its commitment to struggling U.S. brand Reebok by stepping up a major marketing campaign that returns it to its roots in the personal fitness business.
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