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12May2016 Market Update: Markets Ease Into Negative Territory, Unemployment Rises, Apple Falls, WTI Crude Rising Again And The US Dollar Testing Resistance

Written by Gary

US markets opened higher as expected and then lost its early gains that has taken the averages down a full percentage point and turn negative in late morning trading after Apple fell to an almost two-year low. Unemployment benefits unexpectedly rose to the highest level in more than a year, raising further concerns about the health of the labor market. WTI crude fell from its session high of 47 back to the mid 45's and is now trending back up.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The Bovespa is up 1.18% while the IPC gains 0.08%. The S&P 500 is off 0.35%.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. jobless claims hit 14-month high; analysts blame Verizon strike

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits rose last week to a more than one-year high, but economists blamed striking telecommunications workers for the surge and said the data did not signal a deterioration in the overall labor market.

Wall Street falls as Apple hits two-year low

(Reuters) - Wall Street lost its early gains on Thursday to turn negative in late morning trading after Apple fell to an almost two-year low.

Fed to delay rate hike until September on tame inflation outlook: Reuters poll

(Reuters) - The U.S. Federal Reserve will likely wait until September before raising interest rates again, stretching to nine months the time since its first hike in nearly a decade, as it waits for clear signs inflation is picking up, a Reuters poll found.

Monsanto shares jump on new reports of takeover interest

(Reuters) - Shares of Monsanto Co rallied as much as 12 percent on Thursday on new reports that Bayer AG and BASF SE were interested in acquiring the world's largest seed producer, highlighting the drive for further consolidation in the sector.

Nissan buying $2.2 billion controlling stake in scandal-hit Mitsubishi Motors

YOKOHAMA, Japan (Reuters) - Nissan Motor Co has agreed to buy a 34 percent stake in Mitsubishi Motors Corp, taking de facto control with a $2.2 billion bet that bails out its smaller, scandal-hit rival.

Goldman tries to drum up leveraged finance business as trading, stock sales slow

(Reuters) - Goldman Sachs Group Inc is hosting its first ever leveraged finance conference next week as the Wall Street bank tries to strengthen its position in debt underwriting and looks for new avenues of growth.

VW eyes U.S. emissions deal as it pushes comeback plans: Stackmann

WOLFSBURG, Germany (Reuters) - Volkswagen is counting on a final deal next month with U.S. authorities as it pushes plans to launch crossover and electric vehicles in the United States, its sales chief said.

Oil down on Cushing build worry, U.S. crude off six-month high

NEW YORK (Reuters) - U.S. oil prices dipped on Thursday after jumping to six-month highs, when buying on a forecast for tighter global supplies gave way to selling on signs of another storage build at the hub for U.S. crude futures.

Foxconn founder tells Sharp staff layoffs needed to begin revival

TOKYO/TAIPEI (Reuters) - Foxconn founder Terry Gou said there would have to be layoffs at Sharp Corp to turn around the ailing Japanese company, but pledged that wages would rise and profit-sharing would again be the norm.

Buy, Hold, Or Sell? You Decide!

We're sure it'll be different this time. The Fed has our back. We've entered a new paradigm... Forget the 145 years of stock market history.

CNBC says it's always the right time to buy. Buy Amazon at $700. It's surely going to $1,000. They'll generate profits any year now.

Source: The Burning Platform blog

"We Are Unsure Whether To Wear A Helmet Or A Diaper" - Merger Arb Funds Crushed

2015 was the year of M&A: some $5 trillion in global merger and acqusition deals were announced, the highest level ever, topping even pre-crash 2007. In fact, last year there were more mega-deals, those valued at $20 billion or above, than ever. In all, there were 17 deals at or above that value compared with 35 such deals in the five years from 2010 through 2014. Such was the cheap debt-fuelled boom in large deals that the average size of all M&A valued at $500 million or above was $3.3 billion, up from $2.2 billion in 2014.

However, as Bloomberg observes, this year M&A is hitting a more dubious record: deals gone bust as some 10%, or $504 billion, of all deals announced last year have been terminated following a furious crackdown by the US Treasury on tax inversions which killed what would have been the biggest M&A deal ever, Pfizer's acquisition of Allergan, as well as numerous other deals found to have been anti-competitive by the FTC.

Wednesday was especially bad for bankers as two mergers valued at a combined $21 billion collapsed. The latest cancelled deals mean 2015 has been stripped of its title as the biggest year for dealmaking, dropping to $4.06 trillion compared with 2007's $4.09 trillion

Size isn't the only factor drawing scrutiny. Antitrust enforcers at the Justice Department in April frustrated Canadian Pacific Railway Ltd.'s bid to buy Norfolk Southern Corp., opposing a voting trust structure that called for Canadian Pacific's chief executive to run Norfolk Southern.

According to Bloomberg, in many cases the ...

Exposing The Job Market Reality - Only Purple Squirrels Need Apply

Today's dismal jobless claims data, combined with last week's dismal-er payrolls print, makes one wonder what "everything is awesome" narrative-confirming data point will be used next by the talking heads. As ECRI's Lakshman Achuthan explains, with job openings at near-record highs, according to the JOLTS data, some see an extraordinarily tight labor market. While that may be the positive spin everyone is looking for, what they seemed to have missed amid the euphoric headlines was the drop in actual hiring.

As the chart shows, the difference between the number hired and the number of job openings dropped to about half a million shortly before the start of the last two recessions (shaded areas). It then surged, peaking a little below two million soon after those recessions ended.

Following those two post-recession highs, hirings minus firings kept trending down for years. However, in the current cycle, it fell almost to the half-million mark by mid-2012, but then kept trending down, and has been negative almost continuously since early last year.

The point is that the difference between the number hired and the number of job openings is not merely shrinking, but has plunged to a negative half a million jobs. How can that be happening at the same time most headlines suggest the job market is strong?

When the number of job openings surges so much faster than economic growth, it results in a large and growing divergence between those ostensible job openings and authentic hiring. This is not an indication of a truly tight labor market. If it were, wages would be soaring, whereas wage growth h ...

Paul Ryan Signals "Unity" With Donald Trump: Live Webcast

Following their much anticipated meeting first thing this morning, Donald Trump and Speaker Paul Ryan touted that they are "totally committed to working together" in a joint statement after their high-profile Thursday morning meeting, calling for "shared principles" and a "conservative agenda."The meeting between the two GOP heavy hitters, brokered by Republican National Committee chairman Reince Priebus, captured the political world Thursday amid questions of whether the two could coexist now that Trump is the presumptive GOP presidential nominee.

"The United States cannot afford another four years of the Obama White House, which is what Hillary Clinton represents," the pair said in the joint statement released by Ryan's political office.

œThat is why it's critical that Republicans unite around our shared principles, advance a conservative agenda, and do all we can to win this fall."

The statement adds that the pair had a "great conversation" where the two hashed out their "few differences" but recognized "common ground." The pair expressed confidence that they would ultimately unite, hailing the meeting as "a very positive step toward unification."

Earlier:

Following today's eagerly anticipated summit between Paul Ryan and Donald Trump, don't expect a joint press conference or photo op. As the Hill notes, Ryan is showing no signs that he's prepared to swiftly endorse Trump when they emerge from their huddle at Republican National Committee (RNC) ...

How Nissan Can Take Advantage of Mitsubishi's Scandal

Taking a 34% stake in the smaller Japanese car maker could give it upside in electric cars and in Southeast Asia.

As Brexit Vote Looms, Is the BOE Rate Clock Still Ticking?

The Bank of England is gloomy about the risks of Brexit, but the market may still be too complacent about the rate outlook.

Untold Story That Could Revive Autohome Bidding War

Chinese car website Autohome is increasingly looking undervalued and its shareholders are looking underpaid.

Why a fall in Kate Spade's shares might mean a buying opportunity

Kate Spade shares have fallen in the past week, providing an opportunity for investors, analysts say.

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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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