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03May2017 Market Close: Wall Street Closes Lower, Fed Keeps Rate Unchanged, Investors Digesting Another Round Of Earning Reports

Written by Gary

Wall Street ended fractionally lower today (SPY -0.1%) after the U.S. Federal Reserve held interest rates unchanged. The Fed downplayed weak first-quarter economic growth while emphasizing the strength of the labor market, in a sign it was still on track for two more rate rises this year.

Todays S&P 500 Chart

Looking at the last three columns (below), the first one (Actual), is what was reported this morning. The second column (Forecast) is what analysts had forecast and the third column is the previous report. Full calendar HERE.

The Market in Perspective

Here are the headlines moving the markets.

Fed holds interest rates steady, downplays economic weakness

WASHINGTON (Reuters) - The U.S. Federal Reserve kept interest rates unchanged on Wednesday and downplayed weak first-quarter economic growth while emphasizing the strength of the labor market, in a sign it was still on track for two more rate rises this year.

S&P 500 ends lower as Fed holds on rates

NEW YORK (Reuters) - Wall Street ended slightly lower on Wednesday after the U.S. Federal Reserve held interest rates unchanged following its two-day policy meeting and investors digested another heavy round of earnings reports.

U.S. private hiring slows, services growth speeds up in April

(Reuters) - U.S. companies hired workers at a slower but still-solid pace in April while the services sector grew more than expected, supporting the notion the economic expansion remains on track despite a weak first quarter, private reports released on Wednesday showed.

Tesla's revenue more than doubles, helped by record deliveries

(Reuters) - Electric-car maker Tesla Inc reported quarterly revenue that more than doubled, driven by record deliveries of its Model X sports utility vehicles and Model S sedans.

Facebook profit surges 76.6 percent as ad sales jump

(Reuters) - Facebook Inc reported a 76.6 percent surge in quarterly profit on Wednesday, fueled by robust growth in its mobile ad business.

Aetna adds Virginia to list of Obamacare exits for 2018

NEW YORK (Reuters) - Health insurer Aetna Inc said on Wednesday it will not sell Obamacare individual insurance plans in Virginia next year, a move it attributed to "growing uncertainty" in the market and $200 million in expected losses on the business this year.

Oil mixed in choppy trading after U.S. crude stocks data

NEW YORK (Reuters) - Oil prices were little changed on Wednesday in a volatile session as the market mulled U.S. government data showing that while there were signs a crude glut may be receding, crude inventories remain large with gasoline demand weak.

Milken's big money investors 'grind it out' as bull market ages

NEW YORK (Reuters) - Top investment fund managers at the Milken Institute Global Conference this week said they had little choice but to focus on unusual and complicated corners of the financial markets as stock markets have risen and interest rates remain low.

VW resumes U.S. diesel sales after emissions scandal

WASHINGTON (Reuters) - Volkswagen AG said on Wednesday it resumed selling diesel cars in the United States last month, and that they accounted for nearly 12 percent of its April sales, a sign consumer demand for such cars had not been dampened by its emissions scandal.

'Blinkered' Fed Spikes Dollar, Clobbers Commodities

Just ignore it...

More crazy pills...

Bonds and Bullion were sold post-Fed...

But all in all only The Dow managed to cling to gains - even with the panic-Buy The fucking Fed Dip...

S&P closes the last 7 days....2388 2387 2388 2384 2388 2391 2387

GM Auto Inventory Hits 10 Year High: Most Since November 2007, One Month Before The Recession Started

When we summarized yesterday's disappointing monthly car sales report, which badly missing expectations showing the fourth consecutive month of declining auto sales - the first time this has happened since July 2009 - we noted what may be the biggest concern for the auto industry: inventory days continued to trend higher as OEMs push product on to dealer lots even though sale-through to end customers has seemingly stalled.

We highlighted GM, one of the few OEMs to actually disclose dealer inventories in monthly sales releases, which reported that April inventories increased to 100 days (935,758 vehicles) from 98 days at the end of March and just 71 days (681,402 vehicles) in April 2016. Indicatlvely, analysts say an overall inventory level of 60 to 70 days is healthy. 100 is not.

Of course, GM management was eager to deflect attention from this troubling statistic, and said that soaring inventories are normal and, somehow, "reflect strong sales", as per the press release: "As planned, GM's inventories reflect strong sales, lower car production and strategic, launch-related growth in truck and crossover stocks."

Or maybe not, because around the time of our post, Automotive News reported Nick Bunkley pointed out something troubling: with 935,758 unsold GM units collecting dust in dealer lots, this was the highest inventory number in 9.5 years, the highest since Nov. 2007, and, as Bunkley ...

China Reportedly Issues Final Warning To North Korea

With President Trump placing his faith in China's ability to keep its neighbor under control - through threats, promises, or oil embargoes - it appears, according to unconfirmed rumors spreading widely on Chinese social media Tuesday, that North Korea just got its final warning.

As Korea Times reports, Chinese news outlets have previously said Beijing could turn its back on Pyongyang if the latter conducted a sixth nuclear test. But the rumor that China has given North Korea a final warning has drawn particular interest from Weibo users.

China has sent a final warning to North Korea over its military provocations.

The rumor cited the May issue of Hong Kong monthly news outlet Dong Xiang.

It said a Chinese Ministry of Foreign Affairs junior minister invited Park Myung-ho, an official of North Korea, for a meeting. China's Foreign Minister Wang Yi attended the meeting and asked his junior to read aloud the warning to the North over the nuclear test.

The memorandum mentioned that China will condemn strongly, pull back on all economic cooperation and even blockade North Korea if it conducted the test.

A Chinese netizen said: "Maybe the bond between the nations is not that strong as we thought. North Korea is completely surrounded by enemies now."

The Chinese government did not provide any explanation or correction to the rumor, but this follows reports of

Redefining The Middle Class: It Isn't What You Earn & Owe, It's What You Own That Matters

Authored by Charles Hugh-Smith via OfTwoMinds blog,

No wonder the "middle class" has lost political power - it has lost the economic power of the ownership of productive assets.

Longtime correspondent Mark G. observed that the key phrase in yesterday's excellent commentary by correspondent Ron G. is property-owning middle class. Mark wrote: "It appears to me that the income bracket method used today isn't very informative."

Here is Ron's commentary again:

"The American economy and people are not being served by a government that was designed to be a Democratic Republic, whose architecture and balance of power depended on a property-owning middle class to be the countervailing force against Oligarchy; given the irreversible nature of the market and technology that contributed to the decline of the US middle class, (globalization, automation and AI), it is apparent that we will stay on this downward track of the middle class for the immediate future, and therefore more disparity, dispossession, and coercion will be needed to maintain control, and to me this means a future of intimidation, censorship and continued involuntary servitude."

What does property-owning actually mean? to answer that, we have to tease apart earnings, debt and what assets are owned.

The core contradiction in the present-day version of capitalism is between production and consumption: The system must produce goods and services that can be sold at a profit, and there has to be consumers who are able to buy the goods and services.

Over time, the focus in our culture and economy has shifted from production to consumption, and from acquiring capital to credit-funde ...

Fed Will Fight Even a Slow Economy

The central bank is still on track to raise rates twice this year despite weak economic growth.

What Apple Can't Buy

In the case of Apple's growing cash hoard, there is actually less than meets the eye because most of it resides offshore.

Drug Pricing Gets Worse, a Raid by the Feds Doesn't Help

Price declines appear to be accelerating ahead of earnings for big drug companies.

03 May 2017 FOMC Meeting Statement: Federal Funds Rate Unchanged

Econintersect: The Federal Open Market Committee (FOMC) - the board of directors of the Federal Reserve maintained the existing federal funds rate as expected. A summary of how the members viewed the economy:

.... the Committee views the slowing in [GDP] growth during the first quarter as likely to be transitory ....

This government outage is putting millions of student loan borrowers at risk

The CFPB is 'closely monitoring' student loan servicers, as borrowers contend with the outage.

Does Johnny Depp have a 'compulsive spending disorder'? It's a big problem for millions of Americans

About 6% of Americans struggle with compulsive buying behavior.

The Tell: Guy losing $1 million bet with Warren Buffett sounds ready to 'double down'

For the guy who initiated an almost-certain-to-lose $1 million bet with Warren Buffet, Ted Seides sounds like he would be ready to go double or nothing.

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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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