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19May2016 Market Close: US Averages Close Lower, WTI Crude Closes Higher, Investors Worried About New Financial Revelations In China And June Interest Rate Hikes

Written by Gary

US markets closed down with the DOW off 91 points and S&P 500 ended down for its lowest close in two months today as Wall Street became more worried that the U.S. Federal Reserve might raise interest rates as early as June. Crude closed higher at $48. The interim indicators are bearish and are most likely to continue into tomorrow morning opening.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Ex-Dean Foods chairman, gambler charged for insider trading; Mickelson settles

NEW YORK (Reuters) - U.S. authorities on Thursday charged a former chairman of Dean Foods Co and a professional Las Vegas gambler with engaging in an insider trading scheme that netted over $40 million and included a tip that benefited professional golfer Phil Mickelson.

Wall St. falls on Fed rate hike worry

NEW YORK (Reuters) - The S&P 500 fell to its lowest level since March on Thursday as Wall Street became more worried that the U.S. Federal Reserve might raise interest rates as early as June.

U.S. economic data point to second-quarter GDP rebound

WASHINGTON (Reuters) - The number of Americans filing for unemployment aid fell from a 14-month high last week, the latest sign the economy was picking up speed in the second quarter and likely would be healthy enough for the Federal Reserve to raise interest rates in June.

Wal-Mart profit beats expectations; stock jumps

(Reuters) - Wal-Mart Stores Inc on Thursday reported a higher-than-expected quarterly profit as increased drug prices and solid demand for basic apparel items boosted sales, and its shares jumped more than 9 percent.

Dudley joins chorus of Fed officials seeing rate hikes soon

NEW YORK (Reuters) - The U.S. economy could be strong enough to warrant an interest rate increase in June or July, New York Federal Reserve President William Dudley said on Thursday, cementing Wall Street's view that the Fed will tighten policy soon.

UPS CEO sees 'slight chance' of Congress approving TPP deal this year

BOSTON (Reuters) - The head of United Parcel Service Inc said on Thursday he believes there is a "slight chance" the U.S. Congress will approve a sweeping pan-Pacific trade deal this year, but only after the November presidential election.

JD Power-LMC forecast May U.S. auto sales down 5.7 percent

DETROIT (Reuters) - The days of lofty year-over-year increases in monthly U.S. auto sales may be reaching an end, industry consultants J.D. Power and LMC Automotive said on Thursday.

Exclusive: EU aims to rule on Amazon's Luxembourg tax deal by July - sources

BRUSSELS - EU state aid regulators aim to rule on Amazon's tax deal with Luxembourg by July, two people familiar with the matter said on Thursday, and it may order the country's tax authorities to recover about 400 million euros ($448 million) in back taxes.

Hawk & Hawker Send Stocks Negative For 2016, Yield Curves Crush Continues

From uber-doves to ultra-hawks in 3 weeks (and a few hundred Dow points), today's FedSpeak did not rescue stocks as everyone assumed it did as Dudley's Dud dropped risk...

"Sell In May" is working once again...

This week's chaos is more clearly seen in futures with every rip sold and every dip bought...

While the big dump occurred early, it wouldn't be 'Murica if we didn't ramp back maniacally trying to save the S&P from negative territory year-to-date... VIX topped 17.5 at the highs today (2-month highs)

Post-FOMC Minutes, Trannies and Small Caps are the worst performers...

China Furious After US Launches Trade War "Nuke" With 522% Duty

Now that China's brief infatuation with "rationalizing" excess capacity in its massively glutted (and insolvent) steel sector is over after lasting all of 2-3 months, China is back to doing what it did in late 2015 (and what it has always done) when as we reported, a surge in Chinese exports led to the first salvos in the trade war between China - the world's biggest exporter of various steel products and is responsible for half the entire world's steel output - and countries who are importing dumped Chinese products at the expense of their own steel and mining industries.

Nowhere has this trade tension been more obvious than in the UK, where in recent months angry, protesting steel workers have been demanding rising protectionist steps against a country they, rightfully, see as unleashing a global commodity deflation driven by out of control, and unprofitable by highly subsidized, production by Chinese steel mills.

The US was not left unscathed: we reported in December that "The Trade Wars Begin: U.S. Imposes 256% Tariff On Chinese Steel Imports" and since then things have progressively turned worse, finally culminating overnight with an outburst of anger from Chinese officials who, after attempting to flood not just the US but also the entire world with their commodity in general and steel in particular, exports...

... Pushing prices even lower...

'There Will Be Banker Blood': Why JPM Is Afraid Of "Quiet Trading Floors"

With banker bonuses set to drop this year, it should be no surprise that things are not all sunshine and roses on Wall Street. After 30 years of dramatically outperforming Main Street, Wall Street wages may be set for some mean-reversion as JPMorgan analysts take an ax to the biggest global investment banks' earnings. As Bloomberg reports, "quiet trading floors" are set to depress global investment banks' second-quarter revenue 24 percent, with weakness across equities, interest rates, currencies, with a regionally-driven weakness from Asia.

While equity trading volume declines are well known, FX trading volumes are tumbling...

And bond trading is declining rapidly...

As Bloomberg reports, trading revenue at investment banks on both sides of the Atlantic has been under pressure as volatility in financial markets and fears over global growth resulted in the most subdued start to a year since 2009. Backed by a healthier domestic economy, U.S. investment banks are continuing to take market share from their retreating European competitors, and trading is becoming more co ...

SaxoBank CIO Warns "Central Banks Can Do Nothing"

Authored by SaxoBank's Michael McKenna via Tradingfloor.com,


2016 has seen a popular reaction against zero-bound policies

Political elites are struggling to preserve an unfruitful status quo

'The world has become elitist in every way': Jakobsen

Political middle has become crowded, stagnant; new spectrum of ideas needed

Investment in education and research needed; zero rates are a dead end

Saxo chief economist remains 'very positive' overall

In April 2015, Saxo Bank chief economist Steen Jakobsen said that zero rates, zero growth, zero productivity, and zero reforms have left a great many countries adrift in a "new nothingness".

The products of this nothingness, said Jakobsen, include apathy, stagnation and "an economic outlook based more in peoples' heads than in reality". On the cultural level, he continued, the widespread lack of dynamism and new ideas has empowered a political class that is "mainly interested in maintaining the status quo", even as that status quo provides sharply diminishing returns.

US GDP growth, for instance, is hugging the zero line:

US real GDP

Wal-Mart Joins Amazon in Squeezing Retail Rivals

Wal-Mart's strong quarter may represent less of a bellwether for other retailers than a tolling bell.

Little Reason to Cheer for Deere

The slump in U.S. farm machinery demand is likely to take another toll on Deere's fiscal second-quarter earnings on Friday.

Monsanto and Bayer: A Tough Row to Hoe

Bayer's unsolicited bid for Monsanto appears to be a long shot.

In One Chart: These 5 jobs will earn the most extra pay from the new overtime rules

More than 4 million workers may benefit from the new overtime pay rules.

Should the government forgive farmers's student loans?

Young farmers just enlisted a prominent ally in their fight to ease their student loan burden.

Lawrence G. McMillan: Negative indicators suggest investors take a breath

While there are a number of indicators pointing in opposite directions with regard to this market, a few of the more ominous ones are giving us pause.

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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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