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05May2017 Market Commentary: Wall Street Opened Higher, Crude Prices Fall Sharply, US Dollar And Gold Also Slip

Written by Gary

US stock markets opened fractionally higher (SPY +0.1%). A slump in oil prices to the lowest in almost six months (WTI 43.80) rattled markets this morning, prompting a rally in safe-haven bonds.


Here is the current market situation from CNN Money

European markets are higher today with shares in London leading the region. The FTSE 100 is up 0.28% while France's CAC 40 is up 0.26% and Germany's DAX is up 0.13%.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. job growth rebounds sharply, unemployment rate hits 4.4 percent

WASHINGTON (Reuters) - U.S. job growth rebounded sharply in April and the unemployment rate dropped to a near 10-year low of 4.4 percent, signs of a tightening labor market that could seal the case for an interest rate increase next month despite moderate wage growth.

With Obamacare vote, House Republicans free to turn to tax reform

WASHINGTON (Reuters) - The Republican-controlled U.S. House of Representatives plans to turn to tax reform in earnest, after concluding a lengthy healthcare debate this week with a vote to repeal and replace Obamacare.

TransCanada profit beats on U.S., Mexican pipeline businesses

(Reuters) - Canada's No. 2 pipeline operator, TransCanada Corp , reported a better-than-expected quarterly profit, helped by higher earning from its U.S. and Mexican natural gas pipelines business.

GE CEO warns against U.S. protectionism, wants level playing field

WASHINGTON (Reuters) - General Electric Co Chief Executive Jeff Immelt warned the Trump administration on Thursday to avoid protectionist policies while calling on it to level the playing field for American companies with tax reform, revived export financing and improved trade agreements.

Oil spill leaves commodities spinning, safe-havens shine

LONDON (Reuters) - A slump in oil prices to the lowest in almost six months rattled markets on Friday, prompting a rally in safe-haven bonds, the yen and gold and taking the shine off a record-breaking week for world stocks.

With maiden jet flight, China enters dog-fight with Boeing, Airbus

SHANGHAI (Reuters) - China's home-grown C919 passenger jet completed its long-delayed maiden flight on Friday, a major first step for Beijing as it looks to raise its profile in the global aviation market and boost high-tech manufacturing at home.

ChemChina clinches landmark $43 billion takeover of Syngenta

ZURICH (Reuters) - ChemChina [CNCC.UL] has won more than enough support from Syngenta shareholders to clinch its $43 billion takeover of the Swiss pesticides and seeds group, the two companies said on Friday.

Delta apologizes for forcing family off flight

(Reuters) - Delta Air Lines apologized on Thursday after a couple said they were kicked off an overbooked flight with their two toddlers so their seats could be given to waiting passengers, the latest U.S. airline to apologize over incidents on board their flights.

AllianzGI CEO on wave of populism: 'More worried than I've ever been'

LUXEMBOURG (Reuters) - The explosion of populism that swept Donald Trump into the White House and triggered Brexit has made for the most worrying political climate in decades and greatly increased uncertainty for investors, the CEO of Allianz Global Investors said.

Dennis Gartman: "We Suffered Our Worst Days Of The Year These Past Two Days"

From Dennis Gartman's latest letter to clients, presented without comment.

We want very badly to believe that the great bull market that has been extant for as long as it has been... now having finished eight powerful years to the upside here in the US... continues in unabated fashion for the simple truth of the matter is that everyone, everywhere lives better in bull markets. The food tastes better; the music is clearer with sweeter melodies; the women are lovelier and the men are actually handsome. Cinderella lives in bull markets. In bear markets, suddenly the make-up runs; the dresses turn shabby; the bands play off-key and without rhythm and the men and women turn one upon the other. Life turns harshly for the worse.

Thus we want truly to believe that the bull market continues but we are beginning to have real doubts. Certainly a correction of some very real magnitude is upon us.

* * *

We suffered our worst days of the year these past two days in our retirement fund here at TGL, losing nearly 3% this week and in the process we cut back our positions dramatically and in violent, swift fashion. We cut back our steel position entirely; we cut back our positions in closed end bond funds entirely; we cut back our position in grains entirely, leaving us only with a position in the US' largest ball bearing manufacturer (which we had threatened to buy on a correction and which we did yesterday) and with our positions in gold predicated in EURs and Yen.

We know only this: that when things go awry it is best to cut positions as swiftly as one might. As Jesse Livermore was told by a more senior mentor about a position that he... Livermore... had had in place that was causing him to lose sle ...

North Korea Accuses CIA Of Plotting A "Biochemical Attack" Against Kim Jong-Un

In the latest verbal fireworks involving the Pacific Rim's most unstable nation, overnight North Korea accused the CIA and the South Korea National Intelligence service of supporting a terrorist cell plotting to kill its "supreme leadership" with a bio-chemical weapon and said such a "pipe-dream" could never succeed.

According to AFP, the North's Ministry of State Security released a statement saying "the last-ditch effort" of U.S. "imperialists" and the South had gone "beyond the limits."

"The Central Intelligence Agency of the US and the National Intelligence Service (NIS) of south Korea, hotbed of evils in the world, hatched a vicious plot to hurt the supreme leadership of the DPRK and those acts have been put into the extremely serious phase of implementation after crossing the threshold of the DPRK," the North's KCNA news agency quoted the statement as saying adding that "They hatched a plot of letting human scum Kim commit bomb terrorism targeting the supreme leadership during events at the Kumsusan Palace of the Sun and at military parade and public procession after his return home."

"A hideous terrorists' group, which the CIA and the NIS infiltrated into the DPRK on the basis of covert and meticulous preparations to commit state sponsored terrorism against the supreme leadership of the DPRK by use of biochemical substance, has been recently detected."

In taking a page right out of the Turkish "shadow government" playbook, North Korea said the cell had "infiltrated" North Korea but the Ministry of State Security will "ferret out and mercilessly destroy to the last one the terrorists of the US CIA," the local ministry said as cited by the state ...

Italy Dependent On ECB "Buyer Of Last Resort" As Foreign Investors Dump Bonds Amid Capital Flight

Authored by Mike Shedlock via MishTalk.com,

Italy is increasingly dependent on the ECB to hold down bond yields as foreign investors dump Italian bonds like mad.

Eurointelligence bills this as "Further Evidence of Capital Flight in Italy".

In a column earlier this week, Federico Fubini notes that, according to the Bank of International Settlements, in 2016 international banks reduced their exposure to Italy by 15%, or over $100bn, half of it in the last quarter of the year.

The counterpart to this exposure reduction is the increase in the negative Target2 balance of Italy, which the ECB has already attributed to foreign investors selling into its asset purchase programs, and reinvesting the proceeds away from Italy.

As a result of all this, Italy's financial stability is increasingly dependent on the ECB.

The Capital Flight article by Federico Fubini is in Italian. Here is an unmodified snip from the article.

Frontrunning: May 5



A kinder, gentler Trump for third healthcare try (Reuters)

Senate Moves Obamacare Repeal to Slow Lane After House Squeaker (Bloomberg)

14 Players to Watch in Senate Health-Care Overhaul (WSJ)

Futures flat ahead of jobs report; IBM drops (Reuters)

Oil Stems Losses in Volatile Trading (WSJ)

Uber faces criminal probe over software used to evade authorities (Reuters)

Saudi Arabia says Trump visit to enhance cooperation in fighting extremism (Reuters)

Merkel's Party Rebound Faces First Test in German State Vote (BBG)

Macron stretches lead as French presidential campaign enters final day (Reuters)

U.S. Jet Fighters Flex Muscle Amid Russia Tensions (WSJ)

OPEC Runs Out of Options to Boost Oil Price (

Oil-Plunge Explanation Isn't That Scary

After six exuberant months, oil and commodities markets have awakened to the realization that neither China's big stimulus nor Trump's election is a game changer. But that doesn't signal the collapse of global growth.

Wall Street Shouldn't Ignore Health-Care Overhaul

Investors have barely stirred over the high drama in Washington over the American Health Care Act, but they need to carefully monitor developments as the bill may be less kind to the health-care industry than the Affordable Care Act was.

Screws Tighten on Risky Chinese Insurance

In China, lucrative bets are usually followed by a regulatory clampdown. So it was only a matter of time before China's acquisitive and unlisted life insurers started feeling the pain.

Rail Week Ending 29 April 2017: April's Total Movements Up 5.2% Year-over-Year

Week 17 of 2017 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors again declined.

iHeartRadio costs jump in latest quarter, adding to suspicion its days are numbered

iHeartMedia Inc. on Thursday followed through with its promise to include "going concern" language in its next quarterly earnings, with the warning in its first-quarter report of "substantial doubt" as to its ability to survive another year.

Apple is once again borrowing in the bond market to reward its shareholders

Apple hit the corporate bond market on Thursday, with a six-part offering aimed at raising cash for dividends, share buybacks and to pay down existing debt.

Key Words: Pelosi a fountain of metaphors after Republican health bill clears House

Rep. Nancy Pelosi, the House minority leader, was a veritable font of metaphorical language as Republicans in the chamber passed a bill Thursday to supplant the Affordable Care Act, a.k.a. Obamacare.

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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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