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21Sep2015 Market Close: DOW Closes Up 126, Averages Remain In Sideways Channel

Written by Gary

We did end with a mixed market, but the DOW closed up triple digits while the Nasdaq closed in the green at the unchanged line. The averages remain in the sideways trading zone started on 8-26-2015 with what looks like a spinning top candle which has usually been followed by a market reversal. Unfortunately, it can not be determined which way because it is nether at the top or bottom of a cycle. Maybe, tomorrow, 'elevator Tuesday', will be the charm for the bulls.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Apple targets shipping date for electric car for 2019: WSJ

(Reuters) - Apple Inc has designated building an electric car as a "committed project" and has set a target shipping date for 2019, the Wall Street Journal reported on Monday.

Wall Street gains with financials; biotechs drop

(Reuters) - U.S. stocks climbed in late Monday afternoon trading, rebounding from losses late last week with from gains Apple and financial shares, but a drop in biotech shares limited the advance.

Volkswagen shares plunge on emissions scandal, U.S. widens probe

BERLIN/WASHINGTON (Reuters) - Volkswagen shares plunged by nearly 20 percent on Monday after the German carmaker admitted it had rigged emissions tests of diesel-powered vehicles in the United States, and U.S. authorities said they would widen their probe to other automakers.
...

U.S. crude up 4 percent on lower stockpile bets; Brent spread narrows

NEW YORK (Reuters) - Oil prices rallied on Monday, with U.S crude surging more than 4 percent on signs of declining stockpiles, less drilling that could reduce future output and a jump in gasoline futures that boosted the overall petroleum complex.

Rates, weak forex cut into trading revenue at U.S. banks: OCC

(Reuters) - Insured U.S. commercial banks earned 28.1 percent less in trading revenue in the second quarter compared with first quarter, squeezed by low interest rates and weak currency trading, the Office of the Comptroller of the Currency said.

Ex-Morgan Stanley adviser pleads guilty in connection with data breach

NEW YORK (Reuters) - A former Morgan Stanley financial adviser who was fired in connection with a major breach of client information pleaded guilty on Monday to taking confidential data for hundreds of thousands of customer accounts from a bank computer without permission.

Global Stocks Rise

Global stock markets steadied Monday, following heavy losses last week after the Federal Reserve left interest rates on hold.

"Time's Up" - Government Shutdown Odds Spike To 75%

Two weeks ago, when no one was talking about the possibility of a government shutdown, we warned it was coming. Today, as Politico reports, with very little time left to reach a deal, budget experts project a 75% chance of a shutdown.

While a shutdown is anything but certain, of course. But it's hard to see how the situation could change dramatically in the very short time left before the start of the fiscal year. It's far more likely the odds will get worse rather than better. Politico's Stan Collender's most recent projection is that there is now a 75 percent chance of a shutdown. As he explains,

As an almost 40-year veteran of the federal budget wars and one of the few people who has served on the staffs of both the House and Senate budget committees, I've reached this lofty number by reading the budget tea leaves that others seem almost desperate to discount, disregard or ignore.

First and foremost, there is not enough time to reach a deal. Not only have none of the fiscal 2016 appropriations yet been signed into law, none have even passed both the House and Senate. With less than two calendar weeks (and far fewer days of potential legislative work) to go, the only way to keep the government from shutting down will be for Congress and the president to agree on a continuing resolution to fund the government for a short time while a larger deal is negotiated.

Such a short-term CR will be very difficult for any number of reasons, but the co ...

To gauge inflation outlook, don't look to markets, Fed paper says

SAN FRANCISCO (Reuters) - Market-based measures of the outlook for inflation are poor predictors for actual inflation, research published Monday by the San Francisco Federal Reserve Bank shows.

Existing-Home Sales Dropped in August

A lack of supply contributed to slower sales, but real estate agents saw improvements in the housing market as more first-time buyers stepped up.

October might be 'tight' to set aside global concerns: Fed's Lockhart

ATLANTA (Reuters) - Atlanta Federal Reserve President Dennis Lockhart said on Monday the six weeks until the Fed's next meeting in October may not be enough time to quell concerns about the global economy and possible risks to the U.S. recovery.

Market Mostly Up a Day After a Sell-Off

Shares of Volkswagen were slumping after revelations that the automaker rigged emissions tests in the United States.

Time Warner Cable shareholders approve deal with Charter

(Reuters) - Time Warner Cable Inc's shareholders approved the company's $56 billion takeover by Charter Communications Inc, according to preliminary votes at a special shareholder meeting.

The New Bond Market: How One Manager Doubles Down on Danger

When oil prices collapsed late last year, the Franklin Income Fund lost more than $2 billion. So portfolio manager Ed Perks doubled down.

Economic Collapse Full Frontal: The Brazil Case Study

To be sure, emerging markets are for the most part an across-the-board trainwreck right now, as a confluence of factors including still-depressed Chinese demand, sluggish global growth and trade, depressed commodity prices, and a looming (supposedly) Fed hike have conspired to push emerging economies from LatAm to AsiaPac to the brink.

That's no secret and neither is the fact that Brazil was long expected to be the epicenter of any future EM crisis just as it was, in many ways, the picture of EM success during better times.

Having said all of that, the extent to which everything that could go wrong for Brazil did go wrong for Brazil is truly something to behold. Indeed, even we've been surprised with the pace at which the situation has deteriorated and in the wake of the S&P downgrade the market is now left to ponder just how much worse things can get and also whether somehow, the embattled government can manage to get its fiscal house in order before the whole thing falls apart completely. On that note, we present the following assessment from Goldman which pretty much sums up the myriad obstacles that lie ahead:

We expect the economy to continue to face headwinds from:

the ongoing fiscal and quasi-fiscal adjustment

higher interest rates

increasingly exigent credit conditions

rapidly weakening labor market

higher levels of inventory in key industrial sectors

higher public tariffs and taxes

high levels of household indebtedness

weak external demand

soft commodity prices

politica ...

A Century Of Fed Fools (Or How To Turn $1000 Into $40 Since 1913)

Submitted by Anthony Sanders via Confounded Interest blog,

The Federal Reserve system was created in December 1913 with the stroke of the pen by then President Woodrow Wilson.

Since that time, consumer purchasing power has fallen from $1,000 in December 1913 to $40 today.

Since 2007, the purchasing power of the dollar continues to fall along with average hourly wage growth YoY.

Thanks a heap, Woody.

wilsonfgold

JPMorgan Chase CEO Jamie Dimon says iPhones helps balance out U.S. Income Inequality.

Let them eat iPnones?

Apple Confirms Discovery of Malicious Code in Some App Store Products

Security researchers said hackers took advantage of the fact that many Chinese developers use copies of code that are held on Chinese servers, resulting in a malicious version of Xcode.

TSLA Dumped, AAPL Pumped As iCar Planned For 2019

The iCar is coming...


*APPLE SAID TO SET 2019 TARGET SHIP DATE FOR ELECTRIC CAR: WSJ

*WSJ CITES PEOPLE FAMILIAR WITH APPLE PLANS FOR ELECTRIC CAR

As The Wall Street Journal reports,

Apple Inc. is accelerating efforts to build an electric car, designating it internally as a "committed project" and setting a target ship date for 2019, according to people familiar with the matter.

The go-ahead came after the company spent more than a year investigating the feasibility of an Apple-branded car, including meetings with two groups of government officials in California. Leaders of the project, code-named Titan , have been given permission to triple the 600-person team, the people familiar with the matter said.

Apple has hired experts in driverless cars, but the people familiar with Apple's plans said the Cupertino, Calif., company doesn't currently plan to make its first electric vehicle fully autonomous. That capability is part of the product's long-term plans, the people familiar with the matter said.

There are many unanswered questions about Apple's automotive foray. It isn't clear whether Apple has a manufacturing partner to become the car equivalent of Hon Hai Precision Industry Co., the Taiwanese contract manufacturer that builds most iPhones and is known by the trade name Foxconn. Most major auto makers build and run their own factories, but that hasn't been Apple's strategy with iPhones or i ...

Fed's Lockhart says risks of delaying rate hike not significant

ATLANTA (Reuters) - Atlanta Federal Reserve President Dennis Lockhart said on Monday the risks of the Fed waiting to raise interest rates were not significant, another reason he felt it wise to delay a hike until it was clear that global economic uncertainty would not hurt the U.S. economy.

The Mystery Of The "Missing Inflation" Solved, And Why The US Housing Crisis Is About To Get Much Worse

Over the past few months (not to mention last 7 years), the topic of America's "missing inflation" has gained major prominence, because while supposedly every other aspect of the economy is humming along (which really just means that record numbers of waiters, bartenders and temp workers are hired and collect minimum wage salaries), CPI remains so low it (together with China to a lesser extent) was used as justification by the Fed to not hike rates for 55th consecutive FOMC meeting, even though 75% of polled economists said, after 9 years of ZIRP, Fed lift off would take place last week.

One problem with the Fed's measures of inflation, as we have documented in the past, is that they are wrong, if not with malicious intent, then purely due to definitional purposes. Recall our July comparison between CPI and PCE and our warning that "With The Spread Between CPI And PCE Blowing Out The Most Since 2009, Is The Fed Making A Big Mistake" in which we warned that "with a rate hike, as small as [25 bps] the Fed can and will almost certainly start a chain of events that results in the "ghost of 1937" waking up. We don't know if, like during the first Great Depression, it leads to a 50% plunge in stocks, but for those long risk here, it hardly makes sense to stick around and find out."

The Fed did not hike.

But a bigger problem for the the Fed's measures of how the overall economy is doing (and/or overheating) is that the Fed telling the vast majority of Americans that inflation is negligible, leads to riotous laughter.

The reason for this is a simple, if dramatic, one: the U.S. transformation from a homeownership society, to one of renters.

We hinted at the key features of this unprecedented conversion in June,

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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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