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10Aug2016 Market Close: US Markets Close Moderately Down After Reaching Record Levels In Past Sessions, Indicators Show Bearish Trends In The Making

Written by Gary

Wall Street ended lower today, retreating from record levels after a drop in oil prices pressured energy stocks and overshadowed a surge in Walt Disney. The DOW closed down almost 40 points, WTI crude down into the mid 41 handle and gold slipped to 1352 disappointing investors not having a clearer picture of what Mr. Market plans to do.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall St. ends down on oil price drop

NEW YORK (Reuters) - Wall Street ended lower on Wednesday, retreating from record levels after a drop in oil prices pressured energy stocks and overshadowed a surge in Walt Disney.

U.S. jobs openings increase in June, layoffs near two-year low

WASHINGTON (Reuters) - U.S. job openings increased in June and layoffs dropped to their lowest in nearly two years as labor market conditions tightened further, according a government report on Wednesday.

Delta cancels hundreds more flights, expects normal operations soon

(Reuters) - Delta Air Lines Inc on Wednesday canceled more than 300 flights and upended thousands of travelers' plans for the third day in a row after a power outage hit its computer systems, though it forecast a return to normal operations later this afternoon.

Exclusive: ACT shakes up security unit, plans audit after cheating reports

LONDON/SHANGHAI (Reuters) - ACT Inc, maker of America's most popular university entrance exam, is laying off its head of test security and plans to audit nearly 200 education centers after Reuters detailed widespread cheating in an ACT-owned college-prep program for international students.

Boeing won't raise 787 production unless market demands it

NEW YORK (Reuters) - Boeing Co said on Wednesday it will not increase 787 output unless sales improve, its clearest indication yet that its large jetliner production may have peaked for now.

Wendy's comparable sales miss as fewer diners eat out

(Reuters) - Burger chain Wendy's Co reported lower-than-expected quarterly comparable sales on Wednesday as a fall in grocery prices encouraged more diners to eat at home, sending the company's shares down as much as 8 percent.

Wall Street bonuses expected to decline for bankers, traders: report

(Reuters) - Wall Street bonuses are expected to decline this year for both bankers and traders, compensation consulting firm Johnson Associates Inc. said on Wednesday.

Banks and tech firms apply blockchain to trade finance

LONDON/HONG KONG (Reuters) - An HSBC and Bank of America Merrill Lynch venture and financial technology firm R3 said separately on Wednesday that they had created ways of using blockchain technology to simplify trade finance processes.

Auto safety chief hits America's hot roads to push recall repairs

MIAMI (Reuters) - Under a blazing sun in a Florida college parking lot, employees of the U.S. government's auto safety regulator, Toyota Motor Corp and a tire industry trade group checked vehicles for recall notices, under-inflated tires and improperly installed child safety seats.

Traders Stunned As Stocks Fail To Reach Record Highs, Bonds & Bullion Bid

Good 'payrolls' news is bad news again... Or is bad 'productivity' news also bad news?

Futures show us the Deja Deja Vu all over again today - US pre-open pump... to dump...

On the day, Small Caps underperformed but the late day panic bid erased a lot of the losses...

Surprise!! Financials started to catch down to the flattening post-payrolls yield curve... BUT BUT BUT the clever man on TV said that this was the big rotation into financials??

Bonds rallied back into the green post-payrolls as crude and stocks tumbled...

VIX 'soared' over 12...(up 3 days in a row) pushing S&P back into The Twlight ...

Stockman Rages "The Only Way To Restore Honest Capital Markets Is To Abolish The FOMC"

Submitted by David Stockman via Contra Corner blog,

The approximate hour Janet Yellen spends wandering in circles and spewing double talk during her post-meeting pressers is time well spent. When the painful ordeal of her semi-coherent babbling is finally over, she has essentially proved that the Fed is attempting an impossible task.

And better still, that the FOMC should be abolished.

The alternative is real simple. It's called price discovery on the free market; it's the essence of capitalism.

After all, the hot shot traders who operate in the canyons of Wall Street could readily balance the market for overnight funds. They would do so by varying the discount rate on short-term money.

That is, they would push the rate upwards when funds were short, thereby calling-in liquidity from other markets and discouraging demand, especially from carry trade speculators. By contrast, when surplus funds got piled too high, they would push the discount rate downward, thereby discouraging supply and inciting demand.

Under such a free market regime, the discount rate might well be highly mobile, moving from 1% to 10% and back to 1%, for example, as markets cleared in response to changing short-term balances. So what?

Likewise, the world is full of long-term savers like pension funds, insurance companies, bond funds and direct household investors on the supply side, and a long parade of sovereign, corporate and household borrowers on the demand side.

Through an endless process of auction, arbitrage and allocation, the yield curve would find its proper shape and levels. And like in the case of a free market in money, the yield curv ...

Hedge Funds Haven't Generated Any Alpha Since 2011: This Is What They Blame It On

To say that hedge funds have had a tough time navigating the world of activist central banks and pervasive central-planning, would be a vast understatement.

As Barclays writes in a recent report titled "Against All Odds", looking at hedge fund alpha and returns, from 1993 - May 2016, HFs produced cumulatively ~134% of alpha. However, peak cumulative alpha over the period was 139%, achieved in 2011, which suggests that in the last almost 4.5 years, HFs actually generated negative cumulative alpha starting around 2011. Incidentally, that is around the time when both central banks fully took over capital markets, when "expert networks" were busted, and when trading on inside information became virtually impossible.

More specifically, Barclays calculates, the average monthly alpha has declined to -0.07% (annualised ~0.8%) from 2011 to May 2016 compared to an average of +0.48% (-5.9% annualised) for the entire period analysed (1993 to May 2016).

Barclays then compared the risk and returns of HFs from the same time frame.

Figure 3 illustrates the relationship between the 36-month trailing excess returns versus the 36-month standard deviations of those returns (we use this as a proxy for risk) over various market cycles (i.e., '93 - '98, '99 - '02, '03 - '07, '08 - '11, '12 - '16). As we looked at the various market cycles we found an interesting 'pattern' in the relationship between risk and returns. If you exclude the first market cycle in the early to mid '90s, when HFs were able to generate significant excess returns quite steadily, t ...

Bond Markets: Ever More Bizarre

The latest example of how long-term low rates are turning markets upside-down: German bonds that guarantee the investor will lose money—unless they can find someone else willing to pay more.

How Yelp Keeps Making Its Voice Heard

Increasing local ad sales are offsetting a slowing user base.

Macy's Malaise Isn't Letting Up

Macy's has been hurt by the shift to online shopping, dwindling store traffic and increasing competition from discount retailers.

Market Extra: Why Marc Faber is calling for an ugly stock-market crash—again

Permabear Marc Faber says the market could shed more than half its value, possibly over the next year.

Market Extra: Pioneer of smart-beta investing warns strategy is being abused

Steadily increasing flows into popular, exchange-traded funds referred to as smart beta are likely sowing the seeds of a future crash, says one of the originators of the strategy.

Travel: Only one country spends more on traveling the world than the U.S.

China spent $164.9 billion on tourism in 2014. That beats out the $145.7 billion spent by U.S. globetrotters and the $106.6 billion spent by the Germans. On the flip side, the U.S. leads the way in drawing in tourists.

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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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