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18Nov2016 Market Close: Wall Street Closes Fractionally Down, Investors Seeking Direction, Crude Settles In The Mid 45 Handle And The US Dollar Remains Strong

Written by Gary

US markets closed down, led by Healthcare, (SPY -0.2%), but it appears the BTFDers jumped in during the last minute of trading. Crude prices fractionally higher, the US dollar settles at 101.40 and gold remains at the tipping point (1208). Short-term indicators neutral in a highly stressed market.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street ends down, led by healthcare

NEW YORK (Reuters) - U.S. stocks ended lower on Friday, with healthcare stocks leading the declines as investors cashed in on a post-election rally and waited for clarity on the next U.S. administration's policies.

Volkswagen to cut 30,000 jobs

WOLFSBURG, Germany (Reuters) - Volkswagen and its labor unions agreed to cut 30,000 jobs at the core VW brand in exchange for a commitment to avoid forced redundancies in Germany until 2025, a compromise which leaves the carmaker's profitability still lagging rivals.

Can Trump make coal great again? At least some companies think so

WASHINGTON (Reuters) - Most of the U.S. coal industry doubts Donald Trump can fulfill his promise to make the ailing industry great again in a country awash in dirt-cheap natural gas, a competing fuel.

JPMorgan has clutch of CEO understudies, people guessing on winner

NEW YORK (Reuters) - JPMorgan Chase & Co is once again facing questions about who will succeed its larger-than-life chief executive after Jamie Dimon was courted by the incoming U.S. president for the role of Treasury secretary.

Pacific rim leaders debate future of trade after Trump win

LIMA (Reuters) - Leaders of Pacific rim nations gathered in Peru on Friday seeking to salvage hopes for regional trade as prospects of a Donald Trump presidency in the United States sounded a possible death knell for the Trans-Pacific Partnership (TPP) free trade pact.

After initial Trump trade, politics keep stocks on edge

NEW YORK (Reuters) - Arguing over politics is a Thanksgiving Day tradition, but Donald Trump's presidential election adds a new twist to any bickering at next week's holiday dinner table: What the new U.S. government could mean for your stock portfolio.

Dollar at strongest since 2003; bond selloff resumes

NEW YORK (Reuters) - The U.S. dollar climbed on Friday to its highest level since 2003 on continued bets on faster inflation and higher interest rates, while Treasuries resumed a selloff that left benchmark yields on track for their steepest two-week increase in 13 years.

China files appeal in U.S. anti-dumping case: WTO

GENEVA (Reuters) - China has filed an appeal against a ruling by the World Trade Organization (WTO) in a dispute over methodologies used by the United States to calculate anti-dumping tariffs targeting Chinese imports, a WTO statement said.

Dollar index posts biggest two-week gain in 20 months

NEW YORK (Reuters) - The dollar rose to its highest level since April 2003 against a basket of currencies on Friday, marking its biggest two-week increase since March 2015 as traders piled bets on a massive dose of fiscal stimulus under a Trump U.S. presidency.

Trumpgasm Sends Stocks To Longest Win Streak In 13 Years Despite Currency, Curve, & Credit Carnage

Collapsing currencies, bond bloodbaths, soaring cost of funds, and crumbling crude... Fuck that! Stock indices are at record highs!!!!

Some context for the recent moves...


Russell 2000 Biggest 2 week gain since July 2009

Dow Biggest 2 week gain since Dec 2011

S&P Biggest 2 week gain since Oct 2014

EURUSD Longest win streak since Lehman (Oct 2008)

Dollar Index Biggest 2 week gain since Lehman (Oct 2008)

US Treasury Bond Biggest 2 week loss since Jan 2009

Global Bonds Biggest 2 week loss EVER

Gold Biggest 2 week loss since June 2013

Copper Biggest 2 week gain since Feb 2010

Which leaves asset classes at extremes...


USD Index Most Overbought since September 2014

USDJPY Most Overbought since June 2015

USDCNH Most Overbought since Aug 2015

Dow Most Overbought since Nov 2014

Russell 2000 Most Overbought since Jan 2013

Major Financials SPDR Most Overbought since April 2010

Regional Financials Most Overbought EVER

Copper Most Overbought EVER

Gold Most Oversold since Nov 2015

Global Bonds Most Oversold since April 2000

EM Bonds Most Oversold since Dec 2014

Treasury Bond Most Oversold since June 2007

Spot the odd 'market' out... US Equities are the only winners...

Global Bonds Suffer Biggest Crash In Over 25 Years

With US Treasuries the most oversold since 2007, Bloomberg reports that bonds around the world are headed for their steepest two-week loss in at least 26 years as President-elect Donald Trump sends inflation expectations surging.

The Bloomberg Barclays Global Aggregate Index has fallen 4 percent in the period through Thursday.

It's the biggest two-week rout in the data, which go back to 1990. Federal Reserve Chair Janet Yellen fueled the decline by saying Thursday an interest-rate hike could come relatively soon.

But as Bloomberg reports, not everyone is charging into this trend...

"We maintain our short position in Treasuries," said Mohit Kumar, head of rates strategy at Credit Agricole SA's corporate and investment banking unit in London, referring to bets an asset's price will decline. "That said, we don't expect a sustained selloff from here. Valuation is not rich any more and is close to fair."

"Trump is a game changer," Park Sung-jin, the Seoul-based head of investment at Mirae Asset Securities C ...

Albert Edwards Previews The Trump Recession: "Minus 1% Yields, Helicopter Money"

In his interview with the Hollywood Reporter's Michael Wolff, Donald Trump's chief strategist, Steve Bannon made one particularly notable statement. When discussing his vision for the economy, he answered with the following explanation of how he views the interplay of monetary and fiscal policy under president Trump:

"Like [Andrew] Jackson's populism, we're going to build an entirely new political movement," he says. "It's everything related to jobs. The conservatives are going to go crazy. I'm the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it's the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We're just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement."

There is just one problem with Bannon's comprehensive vision to inject $1 trillion in the economy: absent a central bank backstop to soak up the soaring deficits, rates will explode uncontrollably as the furious bond vigilantes - awoken after nearly a decade of being frozen in carbonite - return and wreak havoc after years of impotent inactivity, sending yields soaring, in the process making any fiscal stimulus plan impossible, while the economy tumbles into a stagflationary recession.

Which brings us to the latest note by SocGen's Albert Edwards, in which he rhetorically asks if "a continued US Treasury bond rout will mean Trump is in for a big surprise?"

Needless to say, Edwards thinks the answer is yes. Here's why.

Equity Breadth Is Flashing A Negative Signal About Growth Prospects

Submitted by Eric Bush via Gavekal Capital blog,

We all know that stocks are a leading indicator of economic growth and disappointingly recent breadth measures suggest that economic activity may slow over the next several months.

1-copy-copy-copy-copy-copy

In the charts below, we show the percentage of stocks trading above the 200-day moving average for various market aggregates, regions and sectors (with a 1-quarter lead) against the 3-month moving average of the ISM Manufacturing Index.

Equity breadth tends to directional lead changes in the PMI. So if equity breadth is increasing, the PMI tends to accelerate. Unfortunately, the fact that equity breadth has been declining over the past couple of months is pointing to a possible slowdown in the ISM Manufacturing PMI.

The percentage of developed market equities trading above the 200-day moving average has fallen from 77% on 9/22/16 to 50% as of yesterday.

1-copy-copy-copy-copy-2

By region, breadth is best in DM Americas (59%) compared to 53% in DM Asia and just 36% in DM EMEA.

Volkswagen's New Margin Target Underwhelms

A long-awaited "pact for the future" with unions leaves the embattled German auto maker stuck in a low gear.

Trump Trade Does Little For Italian Banks' Big Problems

Political risk and capital raising mean a crucial two weeks for Italy.

Strong Dollar Means Weak Chinese Airlines

The Trump trade of strong dollar and higher bond yields should bring immediate pain to Chinese airlines. Yet share prices aren't showing it.

Currencies: Dollar extends climb to 10th session as Yellen refuels the bulls

The dollar gets past a key level against the dollar after upbeat U.S. data and comments from Fed Chairwoman Janet Yellen.

Personal Finance Daily: The gap in bachelor's degrees between minority and white students is growing and how to save money this holiday season like a pro

Friday's top personal finance stories

Market Extra: Trump win a windfall for stock market's little guys

Donald Trump's election win has trickled down to the little guys on Wall Street, as the Russell 2000 index of small-cap stocks surges to its longest win streak in 13 years and retail investors swing to the most bullish they have been in nearly two years.

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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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