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02Aug2016 Market Close: Wall Street Down, DOW Down 91 Points, SP500 Down -0.6%, WTI Crude Prices Down, US Dollar Down, Investors Not Happy

Written by Gary

Wall Street closed down after trading mostly sideways after weak U.S. economic data disappointed investors, but off the session low. WTI crude settled in the mid 39's ahead of weekly API inventory report today as oversupply concerns remain, the US dollar finished lower at the 95 handle and gold ended the day at 1372.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

U.S. consumer spending exits second quarter with strong momentum

WASHINGTON (Reuters) - U.S. consumer spending rose more than expected in June as households bought a range of goods and services, showing underlying strength heading into the third quarter.

Wall St. stumbles as discretionary stocks weigh

NEW YORK (Reuters) - Wall Street fell on Tuesday, with each of the major indexes on track for their worst day in over a month, as economic data and weaker than expected auto sales spurred growth concerns.

Fed's Kaplan urges patience in raising rates, points to global risks

BEIJING (Reuters) - A raft of global risks that could adversely affect the United States remains on the horizon and requires close monitoring, Dallas Federal Reserve Bank President Robert Kaplan said on Tuesday.

U.S. July auto sales miss estimates, shares drop

DETROIT (Reuters) - The biggest U.S. automakers on Tuesday reported July U.S. sales that disappointed Wall Street as skittish investors feared the industry's long pleasure trip of strong sales may soon be over, sending their shares skidding about 4 percent.

Musk, big investors likely to boost stakes in Tesla

DETROIT (Reuters) - Elon Musk and key institutional investors will probably tighten their control over electric car maker Tesla Motors Inc after it acquires sister company SolarCity Inc , a Reuters analysis shows.

U.S. regulators extend 'living will' deadline for some large banks

WASHINGTON (Reuters) - Thirty-eight large financial companies will get an additional year to develop plans for how to unwind their business in an orderly way in the event of bankruptcy, U.S. banking regulators said on Tuesday.

Judge refuses bonuses for executives at bankrupt Sports Authority

WILMINGTON, Del. (Reuters) - A U.S. bankruptcy judge refused on Tuesday to allow Sports Authority to pay up to $2.85 million in bonuses to four executives for overseeing the winding down of the national sporting goods chain.

Exclusive: LexisNexis and start-up join to curb bitcoin money-laundering

LONDON (Reuters) - A company that provides banks with anti-money-laundering controls has teamed up with a bitcoin security firm to try to curb nefarious uses of the digital currency, such as drug trafficking and terrorism financing.

Pfizer in $486 million settlement of Celebrex, Bextra litigation

NEW YORK (Reuters) - Pfizer Inc on Tuesday said it has reached a $486 million settlement of litigation accusing it of causing big losses for shareholders by concealing safety risks associated with its Celebrex and Bextra pain-relieving drugs.

A "1 In 10,000 Year Event": JPM Head Quant Explains Why The S&P Refuses To Sell Off

Ever since Brexit, traders - and mostly bears - have been scratching their heads over not only by the S&P500's tremendous rally but also but the market's seeming ability to immediately digest through any incremental negative news, both economic and geopolitical and rebound immediately from a support level at around 2,150. And while there has been speculation of central bank intervention to prop up the S&P any time it approaches this key level (something which several years ago would be considered ridiculous but now is all too possible), it turns out there is another - perhaps even more unexpected - reason why the market remains "pinned" in its historic trading range of 2,150 to 2,180.

Here it the explanation from JPM's head quant, Marko Kolanovic.

Lets look at the recent collapse in US equity realized volatility (realized volatility over ~3 weeks of only 4.5%). Over the past 14 trading days, the market did not move more than ~50bps on any given day, and on 8 days it moved ~10bps only. Figure below shows S&P 500 making "Uturns" and virtually staying unchanged most of the days since July 14.

Naively assuming a normal distribution of returns, one would expect this scenario to happen once every ~10,000 years. The fact that we see this type of behavior demonstrates market inefficiency—in this case driven by hedging of option exposure. Quite literally, the market was pinned. Over the past 3 weeks, the amount of call options exceeding put options (in terms of gamma exposure) averaged almost $40bn (per 1%), which is the largest call to put gamma imbalance ever observ ...

Why Investors Everywhere Should Watch Japan's Bond Market

Japan has become the land of the rising bond yields. Given the massive rally in bonds globally this year, it merits close attention.

BMW: Why It's No Time to Mount This Motor Cycle

The German car maker is investing heavily to compete with the likes of Tesla, just as the consumer buying cycle hits an inflection point.

Japanese Banks Show Glimmer of False Hope

Japanese banks reported strong trading income, generated by selling down a dwindling portfolio of government bonds. This won't last.

Think the Avon Lady is American? Think again

Avon makes more than half its sales in emerging markets.

Earnings Results: Aetna just became the fifth big health insurer with Obamacare exchange issues

What does this mean for the Affordable Care Act's future?

Deep Dive: Mutual-fund manager who is whipping the S&P 500 warns of inflation risks

The Permanent Portfolio's Michael Cuggino learned his craft in the dark days of double-digit inflation and stagflation, says Phil van Doorn.

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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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