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08May2017 Market Close: Wall Street Closed Mixed, Crude Prices Remain Lower, US Dollar Gains Over The Euro

Written by Gary

The SP 500 traded flat, sideways and mixed today (SPY -0.02%) after briefly touching record highs. Wall Street's "fear gauge" dropped to its lowest ($VIX 9.68) in over a decade following centrist Emmanuel Macron's victory in the French presidential election.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street flat after tapping record high

(Reuters) - The S&P 500 traded flat on Monday after briefly touching record highs, while Wall Street's "fear gauge" dropped to its lowest in over a decade following centrist Emmanuel Macron's victory in the French presidential election.

Property, merger bets dominate picks at Sohn conference

NEW YORK (Reuters) - Shares in a real estate developer, a cable company and the Canadian creator of the Teletubbies show all rose on Monday after being promoted at an event in New York where hedge fund managers present a diverse range of investment ideas.

Buffett: United made 'terrible mistake' with dragged passenger - CNBC

(Reuters) - Warren Buffett said on Monday that United Airlines made a "terrible mistake" in handling the fallout after a man was forcibly dragged off a United flight, a bloody confrontation that sparked global outrage.

With eye on millennials, Coach buys Kate Spade

(Reuters) - Handbag maker Coach Inc said it would buy Kate Spade & Co for $2.4 billion as it looks to tap the popularity of its smaller rival's quirky satchels and totes among millennials.

Ackman pitches Howard Hughes, citing management and real estate locations

NEW YORK (Reuters) - Billionaire investor William Ackman discussed real estate development company Howard Hughes Corp at the Sohn Investment Conference on Monday, citing strong management and desirable locations as reasons why it should become more valuable over time.

Gun maker stocks drop ahead of Sturm Ruger's quarterly report

SAN FRANCISCO (Reuters) - Shares of Sturm Ruger & Company fell 3.7 percent on Monday ahead of its quarterly report, which will offer a glimpse of the health of gun makers following a steep drop in demand after the election of Donald Trump as president.

Tyson Foods profit slumps, Florida seeks info in pricing probe

(Reuters) - Tyson Foods Inc said on Monday quarterly profit fell 21 percent, hurt by fires at two chicken plants, and that Florida's attorney general was seeking information from the company regarding a probe into possible anticompetitive behavior.

Quebec pension fund withholding support for Bombardier executive chairman

MONTREAL (Reuters) - Canada's second-largest pension fund, a key institutional shareholder in Bombardier Inc, said it has withheld support for the re-election of the company's executive chairman Pierre Beaudoin at its annual general meeting this week.

Sinclair Broadcast to buy Tribune Media for about $3.9 billion

(Reuters) - Sinclair Broadcast Group Inc said on Monday it would buy Tribune Media Co , one of the largest U.S. television station operators, for about $3.9 billion, giving Sinclair a greater foothold in big broadcast markets like New York and Chicago.

Speculators Have Never Been More Bearish On The Loonie

Since President Trump met his Candian counterpart Justin Trudeau in mid-February, speculators have piled into bearish Canadian Dollar positions.

In fact, between imploding housing bubbles, crashing oil prices, and escalating trade wars, bets on a battered Loonie have never been higher...

The Loonie is the worst-performing major currency this year...

How Uber Hurts Hertz

Authored by Wolf Richter via WolfStreet.com,

Undercutting competition by burning unlimited amounts of investor cash is part of the business model.

Shares of rental-car conglomerate Hertz Global Holdings closed at $14.98 on Friday, after reaching an all-time low of $14.32 on Thursday. These shares have only been around since last June, when Hertz spun off its equipment leasing division. They've plunged 73% from their high last July.

Hertz will report first quarter earnings on Monday. In the fourth quarter, it lost $440 million or $5.30 a share, much worse than "expected." Expectations for Q1 are so low that it will be hard to report "worse than expected" numbers.

November 9 was its big day. Its shares plunged 52% to $17.20. Carl Icahn had been vociferously hyping and buying the shares, including 15 million shares during the plunge. He has lost money relentlessly.

That day, Hertz doused car-befuddled Wall Street analysts with a dose of reality about the auto bubble. Deprecation of its vehicles was soaring as residual values were dropping. It also cited falling rental volume and falling rental rates in the US.

In 2015, it was forced to restate earnings due to accounting "errors" going back to 2011 and announced it was being investigated by the SEC.

Hertz, which is junk-rated and has $15 billion in debt, including $9.45 billion in "vehicle debt," has a tidal wave of bond maturities coming its way that it must figure out how to refinance. Some of its deteriorating metrics have breached debt covenants, and it has been forced to negotiate with its creditors to amend the creditor agreement to avoid technical default.

Now it's &ldqu ...

RBC Asks (& Answers) "What In The Market Most Concerns You?"

While China 'ripples' are top of mind for professional investors currently (though you would not know it from the constant AAPL, AMZN, NFLX chatter on mainstream business media), RBC's head of cross-asset strategy Charlie McElligott takes a step back to look at the overall picture once again.

China's deleveraging is hitting everything - how long before it 'ripples' across the Pacific? Or will the PBOC fold and inject liquidity?

Even Friday's US NFP headline beat had something in it for the risk-bears / bond-bulls, as the average hourly wages disappointed, and the prior month was revised lower. The Fed then remains on message with regards to their hiking trajectory message. In turn, this continues to fuel the fire for the "Fed policy error" crowd, as the perception is that the Fed is tightening into a disinflationary and slower growth trajectory environment.

As a reminder, iwas the worst quarterly growth for a Fed rate hike since 1980...

This is by far the most common mention from clients when answering the question "What in the current market backdrop most concerns you?"

And as noted below, the removal of the French election 'left tail' risk (EU existential crisis averted) will now too

'Soft' Data Collapses Back To 'Hard' Data Reality

Who could have seen this coming?

We have noted the stark divergence between still robust expectations/ surveys/ confidence (soft data) and relatively weak final sales/ production/ spending (hard data) numerous times in the past few months.

But note how the recent collapse in "soft" upside surprises has totally eliminated this gap.

This is relatively straight forward to explain in context. Both the underlying macro data change and consensus indices for soft data were running at post GFC highs at the end of March/early April.

Real bond yields (below) were tracking the hard data Citi economic surprise index and equities the soft numbers (above).

Soft data strength relative to hard has been concentrated in a few main areas... and all are rolling over.

As we have indicated previously, consumer confidence strength does not make us confident that personal spending will reaccelerate...

As the soft ESI reverts, it may be less influential for markets from here and the focus will likely shift to the u ...

PPG Needs to Get Messy to Win Paint Mega Merger

PPG can't turn properly hostile on Akzo Nobel, so it needs to be prepared for a lengthy game of cat-and-mouse with the company's board

Live! Is Where the Growth Is at for Cable

Sports programming has long been considered the glue binding U.S. consumers to their pay-TV subscriptions, which is why cable networks have shelled out billions for the rights. Now news is reaffirming its own power to keep viewers hooked.

TPG's Offer for Fairfax Not Yet Fit to Print

TPG Group-led consortium's $1.6 billion bid for one of Australia's leading media companies could fall short.

The Margin: John Oliver calls on time-wasters and Trump trolls to swarm FCC website

Comedian John Oliver saved one of his finer rants for his latest take on the net-neutrality debate, rallying Instagram models, gamers, YouTube stars and even Donald Trump's internet fans, to rise up—"or, more accurately, remain seated in front of your computer screen"—and raise virtual hell with the Federal Communications Commission.

Market Extra: A popular gauge of Wall Street fear threatens to hit rock bottom

Fear isn't a factor on Wall Street. That's the message that a popular way of measuring market jitters is conveying on Monday.

Commodities Corner: Morgan Stanley warns of growing risk to its 2018 outlook for oil

Growing U.S. crude production and a potential end to OPEC-led output cuts by late 2017 threaten expectations for a balanced market next year, according to Morgan Stanley.

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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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