US markets melting higher, volume falling off, WTI crude falls short of $50 as it continues to climb and the USD remains down in the high 95's. U.S. consumer spending rose for a second straight month in May, but there are fears Britain's vote to leave the EU could hurt confidence and prompt households to cut back on consumption.
Here is the current market situation from CNN Money
North and South American markets are sharply higher today with shares in Brazil leading the region. The Bovespa is up 2.13% while Mexico's IPC is up 1.75% and U.S.'s S&P 500 is up 1.56%.
$NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Following a major market correction, the conditions for safe re-entry are when:
a) Daily $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
WASHINGTON (Reuters) - U.S. consumer spending rose for a second straight month in May on increased demand for automobiles and other goods, but there are fears Britain's vote to leave the European Union could hurt confidence and prompt households to cut back on consumption.
BRUSSELS/BERLIN (Reuters) - Europe's Industry Commissioner Elzbieta Bienkowska has called on Volkswagen to also compensate European drivers after the company agreed to pay out up to $15.3 billion in the United States to settle claims over the diesel emissions scandal.
(Reuters) - General Electric Co.'s slimmed down financing arm shed its "too big to fail" designation on Wednesday, no longer deemed by the U.S. government "systemically important" and so liable to wreck the economy in the event it runs into distress.
OTTAWA (Reuters) - Canada, the United States and Mexico on Wednesday vowed to deepen their economic ties, pushing back against anti-free-trade sentiment that has shifted political debate in the United States and Europe.
WASHINGTON (Reuters) - Swedish furniture company IKEA Group [IKEA.UL] is recalling almost 36 million chests and dressers in the United States and Canada but said the products linked to the deaths of six children are safe when anchored to walls as instructed.
NEW YORK (Reuters) - Investor groups are using the high-profile battle for control of Viacom Inc to rally support for their campaigns against dual-class share structures which give founders and insiders outsized voting rights.
CHICAGO (Reuters) - Monsanto Co is in talks with Bayer AG and other companies regarding "alternative strategic options," a month after it rejected the German company's $62-billion takeover offer, the U.S. seed producer said on Wednesday.
As we warned heading into the Brexit vote, it appeared that many human investors had quite a bit of misplaced confidence in the Remain vote, and it ultimately turned out that we were right. It also turns out that the algos have traded the event better than humans as well.
Despite the polls indicating a Remain vote heading into Brexit, which led many investors to bet on what could perhaps be considered a preferred outcome, algos weren't reflecting that "projection bias" and continued to signal buy in more risk-off assets such as the yen, gold and government bonds the WSJ reports.
Yves Balcer, co-founder of Fort LP, a model-driven investment firm with about $2 billion in AUM, expected Britain to vote for remaining in the EU, however Balcer's trading model was just focused on the global economic environment, and thus the firm continued to buy assets such as the yen and government bonds which ultimately benefited from the Brexit vote. "We didn't change anything ahead of Brexit" Balcer said. As a result, both of the firm's portfolios were up more than 3% on Friday.
Equity hedge funds fell 2.1% on Friday alone according to data from Chicago-based Hedge Fund Research, and the losers generally appear to be funds too heavily weighted toward cyclical stocks such as airlines or financials.
One macro fund run by H20 Asset Management was hammered on Friday, losing 14.4% according to Bloomberg.
As a reminder of what happened following Brexit to those who were positi ...
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Brexit can be constructively viewed as a systemic step towards solving existing scarcities.
In the conventional narrative, Brexit is about immigration, escaping the EU's bureaucrats of Brussels, class war or political theater. It may be about all of these, but beneath these surface issues lies a deeper dynamic: a recognition that the entire system is broken and a new arrangement of power, responsibility and risk is required.
In this view, Brexit is a positive step in the right direction, away from centralization and central planning and towards decentralized arrangements that enable more dynamic, localized solutions.
Longtime readers know that I focus on scarcity as the source of value creation: what's scarce generates value, profits and high wages, and what's abundant declines in value due to supply and demand.
Correspondent Ron G. views Brexit as a systemic step towards solving existing scarcities. Scarcity is not limited to goods and services; agency and autonomy can be scarce; responsibility that connects risk and return can be scarce; level playing fields can be scarce; rule of law can be scarce; opportunity can be scarce; entrepreneurial drive can be scarce; self-reliance can be scarce; social innovation can be scarce; social capital can be scarce, and the willingness to accept losses and the risks required to change the power structure can be scarce.
Political expediency can be over-abundant, as can protected privilege.
Ron submitted this photo and commentary on Brexit and scarcity:
We delve into Portfolio Strategy and the lesson of not panicking right after an event that wasn`t priced into financial markets. Unfortunately, Karen Finerman of New York-based hedge fund Metropolitan Capital Advisors panicked in my opinion after the initial first blush reaction to the Brexit event.
It may very well work out for her in the long term, but it was definitely a portfolio mistake that cost her fund money in the short term. She could always rebalance her portfolio once the dust settled a bit, but she sold her assets at a bad price just on a weekly basis, and the market was more than happy to take advantage of her selling at the bottom on a weekly basis. In summation, make sure you don`t out think yourself, or get "Fancy Play Syndrome" which is a poker analogy of trying to get too cute with a strategic play.
Furthermore, the ETF industry takes advantage of market incompetence by fund managers who lack the ability to properly stock pick assets in this portfolio class. All ETFs are complete garbage in my opinion, and Fund Mangers need to stop relying on ...
While the bulk of JPM's intraday commentary is largely an attempt to explain today's latest low volume ramp...
... whose lack of participation JPM believes is "a function of disbelief/skepticism", Adam Crisafulli does bring up an interesting point: with earnings around the corner, and Wall Street once again overly optimistic about the Q2 to Q3 earnings improvement, will Brexit be the catalyst used by corporations to blame the earnings recession extending from 5 quarters (through the second quarter), into Q3 or further.
First, here is Crisafulli on today's sector trends:
Trading trends are pretty slow and that is a function of disbelief/skepticism in the recent rebound (there is a lot of doubt that the SPX will wind up getting off this easy from the referendum and thus people are reluctant to chase). The underlying price action is a pretty-standard risk-on move but a few items are standing out. Banks are outperforming but would prob. be doing a lot better if yields were higher. Tech, health care, industrials, and materials are all up ~1.5-1.7%+ (outpacing by a mild amount). Nothing is dramatically outperforming w/the exception of larger money center banks, internets, energy and transports (up ~2% each). Note that safe-haven assets aren't weak - gold is up, TSYs are flat-to-up, and the safe haven groups are doing OK (staples, REITs, utilities, and telecoms are all lagging but not by that much).
And here is part about the how Brexit is about to be scapegoated to justify another round of "small misses"
The National Association of Realtors (NAR) seasonally adjusted pending home sales index declined. Our analysis of pending home sales is more positive than the NAR's, but we are forecasting relatively poor June home sales. The quote of the day from this NAR release:
... even if rates rise soon, sales have legs for further expansion this summer if housing supply increases enough to give buyers an adequate number of affordable choices during their search ...
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