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03Jun2016 Market Update: US Averages Pares Morning Losses, Wall Stree Trading In The Red, WTI Crude Drops Into Mid 48's Along With The US Dollar

Written by Gary

US averages are down fractionally, but off the session morning lows. Early afternoon trading remains negative after shockingly weak nonfarm payrolls data raised doubts if the economy could withstand an interest rate hike in the near term. Oil prices also slipped today on concerns about the U.S. economy, a weaker dollar, Baker Hughes oil rig count increasing and relief that most OPEC members do not plan to flood the market with excess crude.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The Bovespa is up 0.73% while the IPC gains 0.55%. The S&P 500 is off 0.44%.

Oil futures fall further after Baker Hughes reports rise in U.S. rig counts

Oil futures lost more ground Friday after Baker Hughes showed that the weekly number of active U.S. rigs drilling for crude rose by 9 to 325 as of Friday. The total U.S. rig count climbed by 4 to 408. July crude was at $48.35 a barrel on the New York Mercantile Exchange... Full Story

What Is Moving the Markets

Here are the headlines moving the markets.

Weak U.S. employment report dims prospect of Fed rate hike

WASHINGTON (Reuters) - The U.S. economy created the fewest number of jobs in more than 5-1/2-years in May as manufacturing and construction employment fell sharply, suggesting slippage in the labor market that could make it harder for the Federal Reserve to raise interest rates.

Banks lead Wall St. slide after dismal jobs data

(Reuters) - Financial stocks led Wall Street lower in early afternoon trading on Friday after shockingly weak nonfarm payrolls data for May raised doubts if the economy could withstand an interest rate hike in the near term.

BMW revamps R&D for new era of self-driving cars

MUNICH (Reuters) - BMW is overhauling its research and development activities to focus on self-driving cars, board member Klaus Froehlich told Reuters, a move which includes a revamp of its "i" sub-brand of carbon-fibre based electric vehicles.

Ex-Oppenheimer adviser arrested for trading on Pfizer employee's tips

NEW YORK (Reuters) - A former Oppenheimer & Co Inc investment adviser was arrested Friday on charges he traded on inside information supplied by a Pfizer Inc employee about potential deals it was considering.

Russia to maintain OPEC relations, plans autumn meeting

MOSCOW (Reuters) - Russia, the world's top oil producer, plans to continue its consultations with OPEC and may hold a meeting with the group this autumn, Energy Minister Alexander Novak told reporters.

Executive suicides scratch Switzerland's picture perfect veneer

ZURICH/FRANKFURT (Reuters) - An unusual number of suicides by top executives in Switzerland has prompted introspection in its business community over how senior managers are dealing with stress as its companies struggle to retain their status in the global economy.

Sumner Redstone has capacity to make trust decisions, says doctor

(Reuters) - A psychiatrist who examined Sumner Redstone twice last month found the 93-year-old retained the mental capacity needed to remove Viacom Inc Chief Executive Philippe Dauman from the trust that will eventually control the company, according to a spokesman for the media mogul.

Oil slips on U.S. economy concern, Brent holds near $50

NEW YORK (Reuters) - Oil prices dipped on Friday on concerns about the U.S. economy, but Brent crude held close to $50 a barrel in choppy trading with support from a weaker dollar and relief that most OPEC members do not plan to flood the market with excess crude.

Valeant gets another default notice from bondholders

(Reuters) - Troubled Canadian drugmaker Valeant Pharmaceuticals International Inc said it received another notice of default from bondholders for the delay in filing its first-quarter report.

It's Probably Nothing: JPMorgan Recession Indicators Surge To New Cycle Highs

As the economy stalls out with dismal GDP and employment data, it is no surprise that JPMorgan is now seeing its recession indicators hitting new highs.

JPM says that the probability of a recession beginning within 12 months has moved from 30% on May 5th, to 36% today...

Our preferred macroeconomic indicator of the probability that a recession begins within 12 months has moved up from 30% on May 5 to 34% last week to 36% today (Table 1, bottom row and Figure 1, blue line). This marks the second consecutive week that the tracker has reached a new high for the expansion.

Also, JPM's models based on financial market pricing is now indicating a risk of recession

With the rally in risk markets over the last month, our models based on financial market pricing now see a recession risk moderately below our model based on macroeconomic data (Table 2).

That Didn't Take Long: Fed's Brainard Goes Full Dove One Week After Yellen's Hawkstravaganza

Last Friday, stocks soared as Yellen dropped hawkish hints that The Fed would raise rates "because it was appropriate" implying everything is awesome.

One week later - following a terrible Fed-narrative-imploding jobs print - Hillary Clinton-donor and Fed member Lael Brainard goes back to full dove-tard:



*BRAINARD: U.S. JOBS IN MAY REPORT SUGGESTS LABOR MKT HAS SLOWED

*BRAINARD SEES BENEFITS TO FED WAITING FOR ADDITIONAL DATA

Nothing would surprise us less to see stock go green today on this dovish news - just as they did last Friday on hawkish sentiment. If (Fed speaks) THEN (Buy).

Additional headlines/excuses are...



*BRAINARD: CAN'T TAKE RESILIENCE OF U.S. RECOVERY FOR GRANTED (but but Janet said)

*BRAINARD: CAN'T RULE OUT SIGNIFICANT ADVERSE REACTION TO BREXIT (better wait then!)

*BRAINARD: RECENT DEVELOPMENTS MIXED, DOWNSIDE RISKS REMAIN (but but Janet said)

*BRAINARD: FED HAS MADE CONTINUED PROGRESS TOWARD ITS GOALS (really?)

*BRAINARD: DOLLAR SEEMS MORE SENSITIVE TO FED POLICY SURPRISES (no shit)

*BRAINARD: RISKS TO FED'S INFLATION GOAL WEIGHTED TO DOWNSIDE (but dollar means strong US economy?)

*BRAINARD: DON'T DISMISS REEMERGENCE OF RISKS AROUND CHINA (better not hike then just in case)

*BRAINARD SEES FED POLICY PATH LIKELY SHALLOW FOR SEVERAL YEARS (lower for...ever)

Goldman Slaughters Its Clients Again: Chinese Yuan Surges Most In Five Years Day After Goldman Says Sell

Goldman just did it again.

In fact, the bank whose FX recommendations have become so notoriously terrible they are on par with those of Dennis Gartman, has absolutely outdone itself this time because less than 24 hours after Goldman said to sell the Yuan, the Chinese currency just had its biggest one day move in over 5 years!

Recall that it was just last night when we presented not only Goldman's (largely accurate) RMB-FOMC Monetary Policy Loop, which merely showed the reflexive relationship between the Fed, the dollar, the PBOC and the Yuan (and everything else inbetween)...

... but also Goldman's latest FX forecast. To wit: "we shift to an outright negative view on the RMB, in line with this week's Asia Views and our bearish RMB forecast."

Said otherwise, as of last night, Goldman was telling its clients to go short the Yuan.

We concluded that this "begs the question: is Goldman then quietly selling the USD and buying the Yuan, as it is has an alleged tendency of doing by frontrunning its clients... or is its reco genuine this time."

What happened next?

Well, today's payrolls happened, and the result was an absolute slaughter for Goldman's favorite US Dollar, as suddenly rate hike this summer is off the table, but a rate hike any time may be a pipe dream. And since a collapse in the USD means a surge in all other currencies, most notably the Yuan, here is what happened to the Chinese currency after today's payrolls report.

A Jobs Jolt for the Fed

A poor employment report has sent the odds of the Federal Reserve raising rates this summer spiraling down.

Jobs Report Sends Bank Stocks Back to Square One

The weak unemployment numbers are bad news for bank shares in more ways than one.

Noble Group Raises Cash But Hopes Still Dashed

Noble's founder Richard Elman is leaving the scene and only partly participating in the company's cash call.

McDonald's wants more change, reportedly closing in on deal to move HQ into Chicago

The fast-food chain is reportedly nearing a deal to relocate its headquarters from suburban Chicago to downtown as rethinking its facilities and boosting efforts to draw fresh talent are also on its revitalization menu.

Market Snapshot: Stocks pare losses as investors weigh ugly jobs report

U.S. stocks declined Friday after government data showed the economy created just 38,000 jobs last month, the weakest level of hiring in six years.

The Fed: Fed's Brainard calls for 'waiting' as labor market has slowed

Federal Reserve Gov. Lael Brainard on Friday called for the central bank to wait for more data before lifting interest rates as she said the jobs report shows the labor market has slowed.

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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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