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17Aug2016 Market Update: Wall Street Investors Sitting On Hands Waiting For Fed's July Minutes, Texas Tea Testing 50 Handle And US Mortgages Fell To Six Month Low

Written by Gary

US markets have paired morning losses, but remain flat and in the red as investors held off from making big bets ahead of the release of the Fed's minutes. Crude prices trimmed overnight losses rising back towards five-week highs after data showed that U.S. crude and gasoline supplies fell last week.


Here is the current market situation from CNN Money

North and South American markets are lower today with shares in Brazil off the most. The Bovespa is down 0.47% while Mexico's IPC is off 0.15% and U.S.'s S&P 500 is lower by 0.03%.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 72%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 75%
Investors Intelligence sets the breath Above 50 bullish 66%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. -24.82
StockChart.com NYSE % of stocks above 200 DMA Index ($OEXA200R) $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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
86%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 70%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 75%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 15.68
StockChart.com Consumer Discretionary ETF (XLY) As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy 81.29
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 10.789

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street lower as investors cautious ahead of Fed minutes

(Reuters) - U.S. stocks were lower on Wednesday as investors held off from making big bets ahead of the release of the minutes of the Federal Reserve's July policy meeting.

Ex-Wall Street banker convicted for giving father insider tips

NEW YORK (Reuters) - An ex-Wall Street investment banker was convicted on Wednesday of engaging in insider trading by tipping his father off to unannounced healthcare mergers, a victory for prosecutors after an appellate ruling made it harder to pursue such cases harder.

Target cuts fiscal-year profit forecast; shares drop

(Reuters) - Retail chain Target Corp cut its fiscal-year profit outlook on Wednesday after quarterly sales fell more than expected due to lower demand for electronics and a weak start to a revamp of its grocery business.

Lowe's sales miss estimates as short spring hurts

(Reuters) - Home improvement chain Lowe's Cos Inc reported a lower-than-expected quarterly profit and cut its full-year earnings forecast, hurt by a shorter spring in the northern United States and fewer big-ticket purchases at its stores.

Monsanto gives Bayer limited access to its books: sources

FRANKFURT (Reuters) - Monsanto has given German suitor Bayer limited access to its books after turning down a sweetened $64-billion takeover offer last month, two sources familiar with the situation told Reuters.

U.S. mortgage demand to buy homes hits six-month low: MBA

NEW YORK (Reuters) - Weekly applications for U.S. mortgages to buy homes slipped to a six-month low even as interest rates on fixed-rate home loans fell, according to data from an industry group released on Wednesday.

Staples forecasts fifteenth straight quarterly sales decline

(Reuters) - Staples Inc , the biggest U.S. office supplies retailer, forecast its 15th straight quarter of declining sales as it closes stores in the face of intensifying competition.

Russian court turns down appeal from Google in anti-monopoly case

MOSCOW (Reuters) - A Russian court on Wednesday turned down an appeal from Google in an anti-monopoly case over pre-installed applications on mobile devices running the Android operating system, Interfax news agency reported.

Special Report: Not so SWIFT - Bank messaging system slow to address weak points

LA HULPE, Belgium (Reuters) - More than a dozen current and former board directors and senior managers of SWIFT, the bank messaging system that helps transmit billions of dollars around the world every day, have told Reuters the organization for years suspected there were weaknesses in the way smaller banks used its messaging terminals - but did not address such vulnerabilities.

Former Insider Nails Confused FOMC: "At The Moment, The Best Description For The Fed Is Schizophrenic"

"We have come to the point where psychological terms best describe the Federal Reserve's communications policy," said Danielle DiMartino Booth, who runs the research consultancy Money Strong. Before that, though, she worked in the Dallas Fed as then-president Richard Fisher's top lieutenant, so she has a better feeling than most for what's going on inside the Eccles Building.

WSJ asks - What is the term she uses to describe the Fed right now?

"At the moment," she said, "the best term is 'schizophrenic.' "

Authored by Danielle DiMartino Booth,

In the blink of an eye. In a heartbeat. In a New York minute. Life can and does change in these thinnest slices of time. And yet for Don Henley's anthem to the swiftness of change, and just how quickly those sharing our lives' most precious moments can be lost, he ran against the norm for 6.22 minutes of endless pain and sorrow.

New York Minute, recorded in 1989 for Henley's best-selling solo album, The End of Innocence, proved to not only have staying power, but to also be "the album's most unique and interesting tract." The iconic title already in mind, he turned to songwriter Danny Kortchman for help with the lyrics. His stated aim: capture the atmosphere of a late 1980's New York City, a gritty ...

Former JPMorgan Banker Convicted Of Insider Trading

In one of the few cases of insider trading leading to an actual conviction, earlier today, a former Wall Street investment banker was found guilty for engaging in insider trading by tipping his father off to unannounced healthcare mergers, a victory for prosecutors after an appellate ruling made pursuing such cases harder. Sean Stewart, who previously worked at JPMorgan and Perella Weinberg was found guilty by a federal jury in Manhattan on all nine counts he faced, including securities fraud.

Stewart, 35, a Yale University graduate, was one of 107 people accused of insider trading since 2009 by prosecutors under Manhattan U.S. Attorney Preet Bharara. His trial was Bharara's first since a 2014 appellate ruling narrowed the scope of insider trading laws.

Stewart is scheduled to be sentenced by U.S. District Judge Laura Taylor Swain on February 17.

In a case profiled previously, prosecutors said from 2011 to 2014 Stewart provided his father Robert tips about five mergers, including INC Research's acquisition of Kendle International Inc, so his father could make lucrative trades before the deals' were announced. According to Reuters, Robert Stewart, 61, in some instances had a friend he met working at a real estate firm, Richard Cunniffe, conduct trades in his own accounts, because of concern he was too close to the source. The trading enabled the elder Stewart and Cunniffe, 62, to make $1.16 million, prosecutors said.

Sean Stewart testified in his own defense. He displayed no emotion as the forewoman read the verdict, which came after more than a week of deliberation.

Robert Stewrat, Sean's father, previously avoided prison for his role in the insider-trading conspiracy. In May,

Your Complete, Last Minute FOMC Minutes Preview, And How To Trade Them

Over the past 24 hours, market action has been framed by speeches from two Fed officials heading into today's FOMC minutes (from the Fed's July 26-27 meeting) release which may "reflect greater confidence in the labor market and domestic economic growth than in June." Comments from Williams and Dudley appeared to offer contrasting views on the rate path but the market remains unconvinced that an increase is imminent, unless Yellen puts it firmly on the table when she speaks next Friday at Jackson Hole.

Today's minutes will be more interesting than previously thought after the influential and usually relatively dovish NY Fed President Dudley's unscheduled comments yesterday. He suggested that a September hike was "possible" and that "we're edging closer towards the point in time where it will be appropriate to raise rates further." He added that 10y Treasuries were "pretty low given the circumstances" and that the Fed funds futures market was underpricing rate hikes. We've heard this sort of thing a lot in recent years from FOMC members without much eventual action so we shouldn't over interpret but it was inevitable that it would impact rates pricing yesterday.

Looking at markets, futures price a 51% chance of a December rate increase, up modestly from earlier this week, thanks to Dudley's Tuesday comments.

In the minutes, market participants will watch for any discussion on labor markets, possible rate hike timing and the effectives of policy. One hour before the minutes are released, St. Louis Fed's dove Bullard will speak in St. Louis.

Among the key items the market will be looking at:


The key thing to look out for in the min ...

Gold Is At Extreme Correlations Against Stocks, Bonds, & Oil

Submitted by Eric Bush via Gavekal Capital blog,

Gold has been exhibiting some extreme correlations over the past three months. And by extreme, we mean the most negatively correlated it has been to stocks, bonds and oil prices in decades (or ever in some cases). Let's take a look at some charts.

Since 1974, the 65-day rolling correlation between gold prices and US 10-year yields has averaged exactly 0%, i.e. there usually isn't any relationship between the two. However, over the past 65-days the correlation has moved to more than -60%. The only other time this correlation has been this negative was in October 2001.

1 - Copy - Copy - Copy

Moving to equities, since 1984 the equity-gold correlation has only surpassed -50% a handful of times (1987, 1990, 1993, 2001, 2002, 2003, and 2008). The latest reading of the 65-day correlation is -58% and as only been surpassed once (2003).

1 - Copy - Copy (2) - Copy

The correlation between the VIX and gold is at an extreme as well but this time on the positive end of the spectrum. The 65-day correlation currently stands at 53%. Frighteningly, since 1990 (when the VIX series begins) the only other times this correlation was so tight was when the US was in the middle of a rece ...

Aetna's Healthy Perspective on Obamacare

Aetna's decision to scale back from Affordable Care Act exchanges shouldn't worry investors.

Why Some Banks Are Thankful for Money-Market Strains

In 2008, higher Libor was a thing to fear, now it looks set to bring benefits.

Why an Accounting Scare Eclipses Hain Celestial's Value

Potential accounting problems at Hain Celestial Group threaten to undermine its growth story.

Market Snapshot: Stocks pare losses as Bullard signals low rate environment before Fed minutes

U.S. stocks sharply pare losses Wednesday following a hint that interest rates can stay low, as investors awaited minutes from the Federal Reserve's July policy meeting, which will be watched for clues on the prospects of a 2016 rate increase.

The Wall Street Journal: Target to spend $20 million on private bathrooms after customer revolt

The move comes after customers protested the company's policy of allowing transgender people to use whichever bathroom matched their gender identity.

Deep Dive: 10 value stocks that have become more attractive in the past year

Some analysts are saying it's time to switch from growth stocks to value stocks, says Phil van Doorn.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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