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19Oct2016 Market Close: Wall Street Closes Higher On Low Volume, WTI Crude Prices Melt Into The $51 Handle And The US Dollar Refuses To Die, Something Has To Give

Written by Gary

US markets closed higher (SPY +0.2%) having traded mostly sideways all afternoon and late morning. Investors obviously are enjoying better than expected corporate EPS news, but is that enough to quell analysts talk of an eminent correction? Indicators are neutral, but keep your seat belts handy.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street advances on oil, earnings

NEW YORK (Reuters) - U.S. stocks notched a second straight day of gains on Wednesday, as climbing oil prices lifted the energy sector and earnings from Morgan Stanley provided a boost to financials.

Google signs up CBS for Internet TV service: sources

(Reuters) - Alphabet Inc unit Google has reached an agreement with CBS Corp to carry the network on its web TV service and is in talks with 21st Century Fox and Viacom Inc to distribute its channels, three sources told Reuters on Wednesday.

Fed moves to quell charges of opacity, lack of diversity

NEW YORK (Reuters) - The Federal Reserve has rolled out a series of announcements, online forums and meetings with Americans this year in response to outspoken civic groups and many Democrats, including Hillary Clinton, calling for a more transparent and inclusive U.S. central bank.

Oil rises after surprise drop in U.S. inventories; stocks tick up

NEW YORK (Reuters) - Crude oil prices rose to a 15-month high on Wednesday after a surprise U.S. inventory drawdown, boosting energy shares.

Yahoo seeks clarity from U.S. on national security orders to companies

(Reuters) - Yahoo Inc said on Wednesday it formally urged the United States to provide clarification around national security orders that the government issues to internet companies to obtain user data.

Morgan Stanley profit jumps on bond-trading comeback

(Reuters) - Morgan Stanley reported a better-than-expected profit on Wednesday, boosted by a surge in bond trading that helped all Wall Street banks last quarter.

U.S. single-family house building jumps in September, building permits up also

WASHINGTON (Reuters) - The construction of U.S. single-family housing surged in September, though a drop in apartment building pushed overall home building activity to an 18 month low.

U.S. economy shows hints of broadening wage pressures: Fed

WASHINGTON (Reuters) - The U.S. economy showed some signs of rising wage pressures in September and early October but overall compensation growth remained modest, the Federal Reserve said on Wednesday, a further sign of the cloudy outlook facing Fed policymakers as they mull a rise in interest rates.

Oil up over 2 percent; U.S. crude at 15-month high on big drawdown

NEW YORK (Reuters) - Oil prices rose more than 2 percent on Wednesday, with U.S. crude settling at its highest in 15 months after the government reported a surprisingly large drop in inventories for the sixth week out of seven.

Saudi Arabia Is Already Spending The New Bond Money

The ink wasn't even dry yet on the just concluded historic, upsized and dramatically oversubscribed bond sales by Saudi Arabia which raised $17.5 billion in three tranches, pricing more cheaply than many investors had expected and virtually on the same as the recent similar bond issue by higher-rated Qatar, and Saudi Arabia was already begun spending the money. Roughly at the same time as the wire transfers were taking place, the Saudis were busy repaying debts to state contractors, after long delays that squeezed company finances and hurt investor sentiment.

As London-based Capital Economics calculated, the total notional amount raised would finance around a third of next year's state budget deficit and almost all of the kingdom's current account gap, meaning its foreign exchange reserves were unlikely to fall much further in coming years.

And sure enough, the Kingdom did not waste any time in spending the new money.

According to Bloomberg, among the payments made are those to some major builders as well as companies outside the construction industry, both of which had been in arrears in some cases for months, and which in some prominent occasions such as the Binladin Group, involved the terminations of tens of thousands of workers. Some companies were told 30 to 40 percent of the outstanding dues will be paid before the end of the year, with the remainder to be settled in 2017, two people said.

As we reported at the time, Saudi Arabia had started delaying pa ...

A Steep Drop in Oil Imports - The Big Takeaway in EIA Report (Video)

By EconMatters

Gasoline was the weak part of the EIA Report today, along with what appears to be an outlier in Oil Imports, which tapered any enthusiasm for the market at the close. Do we get a big build next week as Imports hit the calendar week?

EconMatters All Rights Reserved | Facebook | Twitter | YouTube |

How Do You Invest In The 'New Normal'?

By Chris at www.CapitalistExploits.at

Today I spoke with an old friend, Chris Mayer. Chris is the investment director at the Bonner family office. We covered a lot of things including:

  • The rise of passive investing and the inevitable consequences of what is almost certainly a bubble.

    How investors are increasingly buying equities and treating them as bond proxies.

    How it's harder to say which sector is cheap and which isn't - more than at any time in Chris' 25 years of investing and why this is the case.

    How we're in a market which rewards companies for buying back stock and increasing dividends (even to the detriment of the overall financial position of the company) and what Chris focuses on as a consequence.

    Why holding cash is exactly what companies should be doing in this market environment (despite being penalised for it).

    How index weighting is perversely penalising stronger companies relative to their peers.

    Two short ideas he took away from Jim Grant's recently concluded conference.

    Thoughts on investing in frontier markets.

'Subtle Forward Guidance' - Trying To Fool The Marginal Oil Investor Everything's Under Control

Submitted by Eugen von Bohm-Bawerk via Bawerk.net,

In the years following the 2008 crash and today, the use of forward guidance from central banking policy makers has become increasingly important. What this nonsense ultimately has translated into is a ridiculous track record in posting upbeat assessments on the economic environment, aimed at trying to fool the marginal investor into believing "there are no need for worry, central bankers have everything under control". Unsurprisingly, as with all psychological conditioning, forward guidance have lost its effect as more and more market participants lose confidence in central banks and their promise that everything will eventually mean revert to happier days. Contrary to what the smartest people on the planet are saying. Fool me once, shame on you, fool me twice shame on me.

This unfortunate practice is making in-roads into the most important of commodity markets: crude oil. Ever since the last QE taper in June 2014 triggered a dollar rally and a corresponding crash in oil prices, OPEC has been struggling to find its role in this new normal. Market power has, with the emergence of QE and ZIRP/NIRP, been moved to a different set of central planners than themselves, namely those controlling the flow of credit into and around the system.

oil-and-usd

Emulating central banking tactics and to comp ...

Cybersecurity: Peace of Mind Isn't Priceless

Fortinet's recent warning is the latest sign that cybersecurity demand is moderating.

Microsoft's Expensive Cloud Bet Is Paying Off

The software giant's continued transition to the cloud will likely dictate its stock price's next move.

Salesforce Dreams Look More Grounded

The cloud company's list of potential M&A targets makes more strategic sense than a Twitter acquisition would.

Airbnb revises New York rules in 11th-hour bid for survival

Airbnb is suggesting more self-regulation in response to a New York bill sent to Governor Andrew Cuomo that could curb listings on the home-rental site.

Deep Dive: Wall Street's 15 favorite energy stocks as oil prices rebound

There are signs of better times ahead for U.S. energy producers, says Phil van Doorn.

Deep Dive: Six solid dividend stocks unfairly punished by investors

Instead of chasing performance, investors might want to consider these jilted darlings, 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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