Markets closed higher as risk taking has returned, but off the session highs. Volume was moderately low in today's session after new orders for U.S. factory goods fell for a second straight month, but energy shares were the ones that drove U.S. stocks higher. Oil closed in the high 47's while the US dollar peaked earlier and settled in the low 97's.
Todays S&P 500 Chart
"We're back to where we were before that downturn took place, with reasonable earnings, modest growth and low interest rates," said Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates Inc. in Bethlehem, Pennsylvania. "That's a backdrop that's allowing upward momentum to re-enter the market. All of the fears built into the market in August and September haven't come to fruition."
"When you see energy and cyclicals continue to rally like this it's because they're under-owned sectors," said Michael Antonelli, an institutional equity sales trader at Robert W. Baird & Co. "They're the sectors that were left for dead. When you get these pain-trade rallies like we're seeing right now, those are the sectors that people go to because they're under-owned."
WASHINGTON (Reuters) - New orders for U.S. factory goods fell for a second straight month in September as the manufacturing sector continues to struggle under the weight of a strong dollar and deep spending cuts by energy companies.
WASHINGTON/DETROIT (Reuters) - The top U.S. auto safety regulator on Tuesday imposed a fine that could be as high as $200 million on air-bag supplier Takata Corp and ordered it to stop making inflators that use ammonium nitrate as a propellant. The National Highway Traffic Safety Administration cited the chemical as a factor in explosive air-bag ruptures that have caused seven deaths and nearly 100 injuries in the United States.
BERLIN/FRANKFURT (Reuters) - Volkswagen said on Tuesday it found data "inconsistencies" on carbon dioxide emissions for 800,000 more cars, the latest sign of trouble for Europe's biggest automaker, already reeling from an emissions scandal.
CALGARY (Reuters) - TransCanada Corp is pushing ahead to develop Energy East, an all-Canadian alternative pipeline project to its struggling U.S. Keystone XL pipeline, and will soon reveal the location of a new export terminal.
DETROIT (Reuters) - The U.S. auto industry is on track for a record year of annual sales, General Motors Co said on Tuesday, as the top U.S. automaker and its rivals reported October sales that far exceeded expectations.
WASHINGTON (Reuters) - Lockheed Martin Corp said it expects to close its $9 billion acquisition of Sikorsky Aircraft from United Technologies Corp on Friday, now that it has received final regulatory approval from China.
The simple answer: the risk/return is simply not worth it.
Whether it is two recent yet "generational" crashes still fresh in most investors' minds, or the countless micro flash crashes witnessed daily and countless market fragmentation events thanks to the ubiquitous penetration of HFT in every asset class which have led to partial or wholesale market closures and a risk to principal far beyond what is embedded in the "fundamentals", not to mention the risk that faith in central planning simply runs out in any given moment, for many equities are simply, as SocGen puts it, "too scary."
In short, for most return of capital is now far more important than return on capital.
We note this just in case Steve Liesman is confused "why"...
If you frequent these pages, you may remember Skopos Financial, the subprime auto lender thatâ€™s been busy packaging all manner of questionable auto loans and offloading credit risk to investors via some of what can only be described as the most noxious looking ABS deals in the history of securitization.
Earlier this year for instance, Skopos sold some $150 million worth of paper backed by a collateral pool wherein 20 percent of the loans were made to borrowers with a credit score ranging from 351 to 500. In other words, a fifth of the loans backing the deal are to the least creditworthy borrowers in the country. Hereâ€™s a look at the details:
This comes against a backdrop of rising US auto sales (see the numbers for October, out earlier today) and it's not difficult to explain the gains. Just take a look at the following data from Experian on the lunatic loan terms being extended to borrowers (from Q1):
Average loan term for new cars is now 67 months â€" a record.
Average loan term for used cars is now 62 months â€" a record.
Loans with terms from 74 to 84 months made up 30% of all new vehicle financing â€" a record.
Loans with terms from 74 to 84 months made up 16% of all used vehicle financing â€" a record.
Treasury yields climb Tuesday for a second straight session, reaching their highest level since Sept. 16, as expectations that the Federal Reserve will raise interest rates in December continue to increase.
Econintersect wants your comments,
data and opinion on the articles posted. As the internet is a
"war zone" of trolls, hackers and spammers - Econintersect must balance its
defences against ease of commenting. We have joined with Livefyre
to manage our comment streams.
To comment, using Livefyre just click the "Sign In" button at the top-left corner of
the comment box below. You can create a commenting account using your
favorite social network such as Twitter, Facebook, Google+, LinkedIn or
Open ID - or open a Livefyre account using your email address.
You can also comment using Facebook directly using he comment block below.
Econintersect Live Market
Print this page or create a PDF file of this page
The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.
Take a look at what is going on inside of Econintersect.com