Wall Street closed higher (DOW +23 points) as investors remain unsure market direction. US dollar falls further, WTI crude remains higher in the 48 handle and gold is trending back up from session lows. The number of Americans filing for unemployment benefits fell more than expected last week, afternoon trading gains in energy shares and in Wal-Mart offset telecom's losses.
WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits fell more than expected last week, reinforcing views of labor market strength that could encourage the Federal Reserve to raise interest rates soon.
FLORENCE, Italy (Reuters) - The chief executive of Monte dei Paschi di Siena , Fabrizio Viola, and the Italian bank's former chairman, Alessandro Profumo, are under investigation for alleged false accounting and market manipulation, a source with knowledge of the matter said.
(Reuters) - Ride service Uber Technologies Inc said on Thursday it has acquired the self-driving trucks startup Otto, and it also announced that Volvo Car Group has agreed to a $300 million alliance to develop self-driving cars.
(Reuters) - Wal-Mart Stores Inc reported higher-than-expected quarterly earnings on Thursday, saying it benefited from cleaner and more efficient U.S. stores, investments in technology that improved online shopping and higher employee wages that fostered better customer service.
NEW YORK (Reuters) - Credit Suisse Group AG is accusing a group of five investment bankers who left for Jefferies Group LLC in May of stealing confidential information and trying to coax former colleagues to join them.
(Reuters) - The Federal Reserve Bank of New York and Bangladesh's central bank have agreed to withdraw additional payment security measures put in place after one of the world's biggest cyber heists, the theft of $81 million from Bangladesh Bank's account at the Fed, two sources said.
(Reuters) - United Continental Holdings Inc said on Thursday it appointed a new chief financial officer and chief commercial officer in the first major management shuffle since Oscar Munoz took the helm of the airline last September.
(Reuters) - Business activity in the U.S. mid-Atlantic region improved in August, but local employment deteriorated to its worst level in seven years, a survey from the Philadelphia Federal Reserve released on Thursday showed.
Authored by Bill Gross, originally posted Op-Ed at The Financial Times,
"You can pay me now . . ." counsels the sensible mechanic promoting Fram oil filters in the old-time advert, " . . . Or pay me later," interjects his pricier associate, as he tinkers with the broken engine of a customer who has ignored the advice. Central bankers should take heed. Dirty oil and artificially priced financial markets have much in common. Both can destroy engines eventually — and in the case of central banking it is the motor of the real economy that is at risk.
Historically, it has generally been assumed that lower bond returns would eventually lead to higher bond and equity prices, and that the capital gains and lower commercial and consumer interest rates associated with them would stimulate additional investment and consumption — a virtuous circle leading to job growth, mild inflation and higher profits.
The US Federal Reserve began a quantitative easing programme in 2009; interest rates are historically lower across much of the developed world. Meanwhile, gross domestic prod ...
Submitted by David Stockman via Contra Corner blog,
As the stock market reached its lunatic peak near 2200 in August, the certainty that the Fed is out of dry powder and that the so-called economic recovery is out of runway gave rise to one more desperate pulse of hopium.
Namely, that the central banks of the world were about to embark on outright 'helicopter money', thereby jolting back to life domestic economies that are sliding into deflation and recession virtually everywhere - from Japan to South Korea, China, Italy, France, England, Brazil, Canada and most places in-between.
That latter area especially includes the United States. Despite Wall Street's hoary tale that the domestic economy has "decoupled" from the rest of the world, the evidence that the so-called recovery is grinding to a halt is overwhelming.
After all, the real GDP growth rate during the year ending in June was a miniscule 1.2%. It reflected the weakest 4-quarter rate since the Great Recession.
And even that was made possible only by an unsustainable build-up in business inventories and the shortchanging of inflation by the Washington statistical mills. Had even a semi-honest GDP deflator been used, the US economy would have posted real GDP on the zero-line, at best.
So the stock market's 19% melt-up from the February 11 interim low of 1829 on the S&P 500 was positively surreal. There was not an iota of sustainability to it. In fact, "interim" was exactly the right word for a low that is going a lot lower, and soon.
Indeed, the spring-summer rebound was the work of eyes-wide-shut day traders and robo-machines surfing on a thinner and thinner cushion of momentum. What must come nex ...
Yesterday, in the FOMC notes, the Federal Reserve made a stark admission: "several expressed concern that an extended period of low interest rates risked intensifying incentives for investors to reach for yield and could lead to the misallocation of capital and mispricing of risk, with possible adverse consequences for financial stability." To this, Bank of America chief credit strategist Hans Mikkelsen had an amusing retort:
"We agree. However, because we are still in the reach for yield phase we remain bullish on HG corporate bond spreads."
In other words, it's a bubble and everyone - even the Fed - knows it, just as a recent survey also by BofA revealed, but keep on buying because, well, TINA.
But who is buying, and how much?
Answering the latter first, Mikkelsen notes that the HG US corporate bond market has more than doubled in size since the financial crisis. Indeed, as the chart below shows, since the financial crisis the amount of Investment Grade debt has surged from over $2 trillion to just under $6 trillion.
As for the more important question, namely "who bought all this debt", the answer is surprising: mostly domestic retail and foreign investors. Here is BofA:
"that expansion was bought by just two investors - mutual funds/ETF and foreigners (Figure 2).
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