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17May2016 Market Update: US Averages Slipping, DOW Down Triple Digits, Crude Falls From Session Highs, Investors Obviously Worried Regarding Weakening Global Finances

Written by Gary

Afternoon session sees more market weakness as the DOW dips below 17,600, now down triple digits. The US dollar is resting in the mid 94's and crude has slid sharply off its session high on rumors the supply glut is making a comeback. Averages slipped as upbeat consumer price data pointed to a steady build-up in inflation, boosting chances of an interest rate hike later this year.


Here is the current market situation from CNN Money

What Is Moving the Markets

Here are the headlines moving the markets.

Strong U.S. data bolsters second-quarter growth prospects

WASHINGTON (Reuters) - U.S. consumer prices recorded their biggest increase in more than three years in April as gasoline and rents rose, pointing to a steady inflation build-up that could give the Federal Reserve ammunition to raise interest rates later this year.

Wall Street slips as strong data raises chances of rate hike

(Reuters) - U.S. stocks slipped on Tuesday as upbeat consumer price data pointed to a steady build-up in inflation, boosting chances of an interest rate hike later this year.

Novartis splits drugs business into two, pharma chief to leave

ZURICH (Reuters) - Novartis is splitting its pharmaceuticals division into two business units, one focused on cancer medicines and the second on other drugs, it said on Tuesday.

Oil rally suggests supply worries wane, but for how long?

(Reuters) - A rally in U.S. crude oil prices recently has put the market on its firmest footing since the rout started in 2014, with the spread between prices for near-term delivery and future delivery narrowing, suggesting the worst of the supply glut may be over.

Home Depot raises forecasts after strong start to the year

(Reuters) - Home Depot Inc boosted its sales and profit forecasts for the year after a stronger-than-expected first quarter, providing a rare dose of good news to a gloomy retail sector.

Sumner Redstone has power to remove Viacom CEO from his trust

(Reuters) - Sumner Redstone has the power to remove Viacom Inc Chief Executive Philippe Dauman, but not his daughter Shari, from the trust that will control his $40 billion media empire after his incapacitation or death, according to two sources familiar with the matter.

U.S. oil hits seven-month high as inventory drop seen; caution over Libya

NEW YORK (Reuters) - U.S. crude prices hit seven-month highs on Tuesday on expectations of lower U.S. stockpiles and after wildfires threatened anew Canadian oil supplies, but pared some gains due to the potential for higher Libyan output.

Exclusive: China's Fosun sets sights as world leader but has plan to reduce debt - founder

LISBON (Reuters) - Fosun Group, China's largest private conglomerate, is aiming to become a world leader in insurance, tourism and healthcare but also has a "clear plan" to reduce its debts, chairman and co-founder Guo Guangchang said on Tuesday.

Exclusive: BP exploration boss leaves after spending cuts

LONDON (Reuters) - The head of exploration at BP , Richard Herbert, is leaving the British oil major after slightly more than two years in the job, a period in which the company slashed spending on the search for new deposits.

Stocks Slide After Lockhart/Williams Say Rate-Hike In June On The Table

Once again the narrative spewing forth from today's Fed speakers is that "the market is too pessimistic" presumably meaning the bond market because stocks are near record highs; and crucially, that despite collapsing industrial production, plunging GDP expectations, near-record inventories, and weakness in employment data that the US economy is "doing well" and that "June is a live meeting" for a rate hike... the equity market is not amused...


*LOCKHART SAYS HE WOULDN'T TAKE MOVE IN JUNE OFF TABLE (if the S&P remains above 2000)

*FED'S WILLIAMS SAYS JUNE FOMC A LIVE MEETING IN HIS VIEW (ooh scary!)

*LOCKHART: MKTS MAY BE MORE PESSIMISTIC THAN I AM AT THIS STAGE (but stocks are right?)

*WILLIAMS: WAGES PICKING UP BY MORE THAN SUGGESTED BY AVERAGES (in some magical dream place?)

Does this look like a market that is "too pessimistic" about the US economy?

Seems like bonds have been dead right all along?

Why 2,900 Is The Most Important Number In The World For US Equity Bulls

What happens if - just as it did in Aug 2015 and Jan 2016 - the S&P 500 starts caring about Chinese stocks? The answer, as BofAML's Stephen Suttmeier explains, is "nothing good."

The rallies for the Shanghai Comp (SHCOMP) and S&P 500 (SPX) both started with double bottoms off January/February lows and both could end with head and shoulders tops off the March-May highs. The SCHOMP broke 2900 on May 9 to confirm its head and shoulders top and the S&P 500 moved closer to support at 2039-2033, where a downside break would confirm its head and shoulders top.

SHCOMP below 2900 = bearish signal

The break below 2900 on the Shanghai Composite (SHCOMP) confirms a head and shoulders top that increases the risk for a retest of the January / February lows at 2638. Given the larger downtrend, we cannot rule out additional lower lows toward the prior highs from 2012-2013 near 2500-2440. Filling Monday's downside gap and nearby resistance at 2900-3013 is needed to call into question the bearish setup on SHCOMP.

SHCOMP: early May = early Jan = late Aug

The early May breakdown on the SHCOMP could have bearish implications similar to that of the double top completed in early January and the triangle breakdown from late August ...

The Rate Debate: Inflation Says Go, Markets Say Stop

Inflation has firmed to the point that the Federal Reserve can be more comfortable about raising rates again. But investors aren't there yet.

The Bond Boom: Don't Buy Everything Companies Are Selling

Borrowers have the upper hand in Europe's corporate bond market; investors should take care.

Why Vodafone Needs Liberty Global More Than Ever

Europe's largest cell network operator has become Europe's fastest-growing broadband provider. It is time to sort out the home market.

The Tell: Soros, Buffett stock disclosures don't tell the full story of what they own

13-F filings from hedge funds and other big investors can be entertaining and potentially profitable, but don't take it too far.

Home Depot's earnings were better than expected in more than one way

The home-improvement retailer beat expectations in a release that was concise, clear and used only GAAP numbers.

The Wall Street Journal: Obama administration set to extend overtime pay to millions

Analysts expect overtime salary threshold to be doubled to about $47,000.

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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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