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14Dec2016 Market Update: US Market Rising Again, Crude Prices Slipping Into The 51 Handle And The US Dollar Firming Upwards

Written by Gary

Wall Street has been mostly in the red, but as we enter the afternoon trading session (SPY -0.04%) we see some improvement that may end today's session in the green. The wholesale level rose 0.4% in November and retail sales rose 0.1% last month, missing expectations for a rise of 0.3%.


Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.02%, while the IPC is leading the Bovespa lower. They are down 0.86% and 0.31% respectively.

Traders Corner - Health of the Market

Index Description Current Value
Investors.com Members Sentiment: % Bullish (the balance is Bearish) 76%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 87%
Investors Intelligence sets the breath Above 50 bullish 67%
StockChart.com Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. 31.32
StockChart.com NYSE % of stocks above 200 DMA Index ($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 $OEXA200R rises above 65%
Secondary Bullish Indicators:
a) RSI is POSITIVE (above 50)
b) Slow STO is POSITIVE (black line above red line)
c) MACD is POSITIVE (black line above red line)
81%
StockChart.com NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 71%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 71%
StockChart.com 10 Year Treasury Note Yield Index ($TNX) ten year note index value 24.42
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 84.29
StockChart.com NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 11,210

Wall Street has been mostly in the red, but as we enter the afternoon trading session (SPY -0.04%) we see some improvement that may end today's session in the green. The wholesale level rose 0.4% in November and retail sales rose 0.1% last month, missing expectations for a rise of 0.3%.

What Is Moving the Markets

Here are the headlines moving the markets.

Trump and Silicon Valley look to smooth over frictions

WASHINGTON (Reuters) - U.S. President-elect Donald Trump and Silicon Valley executives have a chance to smooth over frictions when they meet at his Manhattan tower on Wednesday, after both sides made no secret of their disdain for each other during the presidential campaign.

Fed set to hike rates, policy outlook hinges on Trump presidency

WASHINGTON (Reuters) - The Federal Reserve will conclude its two-day policy meeting on Wednesday with an interest rate increase all but assured and issue new forecasts assessing whether the economic outlook has changed since Donald Trump won the White House.

Goldman names Solomon, Schwartz as Cohn's successors

(Reuters) - Goldman Sachs Group Inc promoted company veterans David Solomon and Harvey Schwartz as presidents and co-chief operating officers on Wednesday, setting up the two men to compete to replace Chief Executive Officer Lloyd Blankfein.

China may penalize U.S. automaker over price-fixing; GM, Ford shares off

SHANGHAI/BEIJING (Reuters) - Shares of U.S. automakers General Motors Co and Ford Motor Co skidded on Wednesday after a Chinese official warned the government could slap a penalty on an unnamed U.S. automaker for monopolistic behavior.

VW's bestselling Audi under microscope after EU emissions tests

BRUSSELS/BERLIN (Reuters) - Audi's top-selling model released excessive toxic diesel emissions in results from lab tests run by the European Commission and seen by Reuters, raising suspicions of wrongdoing at Volkswagen's luxury division.

U.S. retail sales, industrial output data point to slowing growth

WASHINGTON (Reuters) - U.S. retail sales barely rose in November and industrial production recorded its biggest drop in eight months, suggesting some loss of momentum in economic growth in the fourth quarter.

OPEC signals larger 2017 oil surplus, unless cuts implemented

LONDON (Reuters) - OPEC on Wednesday signaled a growing oil supply surplus next year unless members implement their deal to curb output from record levels and outside producers also deliver on cutback pledges made at the weekend.

LPC-Equinix doubles acquisition loan to 1 billion

LONDON (Reuters) - US data center operator Equinix has doubled the size of a leveraged loan it is raising to back its acquisition of data centers from Verizon Communications , increasing it to 1bn and tightening pricing following overwhelming investor demand, banking sources said on Wednesday.

Mortgage Applications Drop To 'Lehman' Lows As Rates Top 4%

Mortgage applications have fallen almost non-stop since their exuberant peak the week of July 4th, tumbling to 2016 lows to the same dismal level of activity as was witnessed after Lehman in Oct 2008. The reason is simple, as we detailed previously, the spike in mortgage rates has slashed the population of refinanceable borrowers from 8.3 million immediately prior to the election to less than 4 million, matching a 24-month low set back in July 2015.

With mortgages surging above 4.00%, mortgage applications have collapsed - equalling the dismal lows set during the Lehamn debacle in Oct 2008...

And as we detailed previously, the chart below profiles the sudden collapse of the refi market using October
and November rates. As Black Knight writes, it looks at the - quite
dramatic - effect the mortgage rate rise has had on the population of
borrowers who could both likely qualify for and have interest rate
incentive to refinance. It finds it was cut in half in just one month.

Some more details from the source:


The results of the U.S. presidential election triggered a treasury
bond selloff, resulting in a corresponding rise in both 10-year treasury
and 30-year mortgage interest rates

Mortgage rates have jumped 49 BPS in the 3 weeks following
the ...

"Fake News", Censorship, Darwin, And Democracy

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

Censorship is not helpful to democracy--rather, it is the death of democracy.

The mainstream media is awash with hyper-active headlines about "fake news." How can we make sense of this sudden obsession?

Perhaps we can start by separating "news" from "analysis" from "commentary." "News" is "he said this, she did that, this happened." Analysis tries to make sense of trends that are apparent in the news longer-term--for example, why did Trump win? Is the economy actually healthy or not? "Commentary" is opinion that establishes a point of view and defends it while attacking other POVs.

All three of these news flows are constantly being spun /manipulated to support specific agendas and narratives. Now we are being told some of these news flows are false/ misleading and their intent is to disrupt democracy.

I would counter that censorship is not helpful to democracy--rather, it is the death of democracy. It's all too obvious in the MSM hysteria over "fake news" that the narrative being pushed is: any criticism of Hillary or questions about her health, foundation, etc., were BY DEFINITION Russian propaganda.

Never mind that few if any voters changed their mind as a result of the "Russian hacking" (the Podesta emails); voters were already so polarized that the content of the the emails did not influence their decision, which was based on deeper foundations than "news."

The fear of those who want to preserve democracy is that under the excuse of "eliminating Russian propaganda" the status quo will restrict everyone who is inconveniently challenging the status quo narratives with data-based ...

"Less Room To Run" - What Wall Street Is Paying Attention To In Today's Fed Statement

When it comes to today's FOMC decision, there is little speculation: a 25 bps rate hike, the first in 2016 and only the second since the financial crisis, is now effectively assured: all 103 Bloomberg-surveyed economists expect a 25bp increase. The market agrees, and as shown in the chart below, implied rate hike odds are at 100%, with some even speculating that the Fed may hike by 50 bps.

Thus, as has been the case throughout the year, less emphasis is to be placed on the rate decision itself given the current expectations (despite them being for a hike), although this could be an entire reversal if the FOMC were to leave rates unchanged. Furthermore, participants expected the FOMC to wait until December, given that there will be accompanying Dot Plot projections and the chance for the Chair to explain herself and the decision in greater detail.

In recent months, the data releases have been solid and improving (despite a modest wobble over the past week) as we head towards the end of the year, and many of the Fed members have expressed the continuation of this improvement is likely to result in the hiking of rates towards the end of the year. The latest jobs report saw a marginal beat on the expected reading while unemployment dropped drastically to 4.6% vs. Exp. 4.9% (Holiday Season) while the PCE inflation metrics, core and headline, have continued to improve, which has always been on the Fed's radar. The most notable commentary from members includes: Bullard stating that a December hike looks reasonable, Mester commenting that another rate increase is a prudent step to take while Powell commented that the case for a hike has clearly strengthened.

It's also worth mentio ...

Deal-Hungry Sanofi Shouldn't Overpay for Actelion

Pharma giant Sanofi risks paying too much for a rare-disease biotech.

Zara Owner Inditex: Cheap Clothes But Expensive Shares

The Spanish giant is an exceptional performer, but an eye-watering valuation looks susceptible to a turn in the interest-rate environment.

U.K. Economy: Emerging Cracks in Brexit Facade

The pound has been supported by the resilience of the U.K. economy, but that may be changing.

October 2016 Headline Business Sales and Inventories Improve

Written by Steven Hansen

Econintersect's analysis of final business sales data (retail plus wholesale plus manufacturing) shows unadjusted sales were not as good as last month - but the rolling averages improved. Unadjusted Inventories declined relative to the previous month and inventory-to-sales ratios remain at recessionary levels.

November 2016 Industrial Production Down - Remains In Contraction

Written by Steven Hansen

The headlines say seasonally adjusted Industrial Production (IP) declined. Headline manufacturing also declined. Our view is marginally better than the headlines but nothing to write home about.

Market Extra: What Dow 20,000 means for stock-market investors

What's in a number anyway? That may be the question stock-market investors pose to themselves as the Dow Jones Industrial Average inches closer to the psychological milestone of 20,000.

Market Extra: Fed decision: How stock markets tend to perform in December

Stock investors on Wednesday have their attention fixed on the Federal Reserve's decision to raise rates for the first time in 12 months. Here's how the market tends to perform in the final rate increase of the year.

Peter Schiff sheds no tears as a Trump rally hammers gold, Dow nears 20,000

Gold is off nearly 10% since the Nov. 8 election. The Dow Jones Industrial Average is clambering toward 20,000—a major milestone for the blue-chip gauge as Wall Street grows euphoric over assets considered risky.

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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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