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17May2017 Market Close: Wall Street Spooked By FBI Memo, Crude Prices Settled In The High 48 Handle, The Euro Is Gaining Further Against The Dollar

Written by Gary

US markets never recovered after the waterfall opening (SPY -1.7%). Losses throughout the day came from a memo by former FBI chief Comey suggesting that President Trump tried to interfere with a federal investigation, setting off alarm bells on Wall Street.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Google challenges Apple's Siri by opening digital assistant to iPhone

(Reuters) - Alphabet Inc's Google said on Wednesday it would make its digital assistant available on Apple Inc's iPhone, making a play for the higher end of the smartphone market and challenging Apple's Siri feature on its own devices.

Wall Street tumbles as investors flee latest Trump crisis

(Reuters) - The S&P 500 was heading for its biggest one-day tumble since September and shares extended losses through the day after reports of a memo by former FBI chief James Comey suggested that President Donald Trump tried to interfere with a federal investigation, setting off alarm bells on Wall Street.

Wall Street regulator detects fewer signals of illegal 'layering'

WASHINGTON (Reuters) - A surveillance program by Wall Street's self-funded regulator has seen a huge decline in alerts that may indicate potential market manipulation, after it launched a new initiative last year to help brokerages spot problematic clients.

Chinese state media says U.S. should take some blame for cyber attack

BEIJING (Reuters) - Chinese state media on Wednesday criticized the United States for hindering efforts to stop global cyber threats in the wake of the WannaCry "ransomware" attack that has infected more than 300,000 computers worldwide in recent days.

Ford to cut 1,400 white-collar jobs, shares tumble

NEW YORK (Reuters) - Ford Motor Co said on Wednesday it plans to cut 1,400 salaried jobs in North America and Asia through voluntary early retirement and other financial incentives as the No. 2 U.S. automaker looks to boost its sagging stock price.

Target optimistic on full-year forecast after profit beat

(Reuters) - Target Corp reported higher-than-expected quarterly profit and sales and set an optimistic tone for the year, saying its full-year profit could come in at the higher end of its forecast.

Facebook faces EU fine over misleading WhatsApp data: source

BRUSSELS (Reuters) - U.S. social network Facebook is set to be penalized by EU antitrust regulators for allegedly providing misleading data related to its WhatsApp acquisition three years ago, a person familiar with the matter said on Wednesday.

Germany's Lidl to price groceries up to 50 percent below U.S. rivals

NEW YORK (Reuters) - German discount grocery chain Lidl, which is opening its first U.S. stores this summer, said its products would be up to 50 percent cheaper than competitors, which are already caught up in a price war.

Qualcomm sues four Apple contract manufacturers

(Reuters) - Chipmaker Qualcomm Inc filed a lawsuit against four Apple Inc contract manufacturers, including Foxconn Technology Group, for not paying royalties, as its legal battle with the iPhone maker intensifies.

Artist's Impression Of The Mainstream Media This Week



If Vol-Neutrals Are Finally Liquidating, Could They Crash The Market? Here Is The Math

It was just over two months ago - well before VIX hit its record stretch of nearly 20 days below 11 - when we first discussed why one of the major threats to the complacent market was the danger of a forced liquidation by trend-following and vol-neutral, CTA, risk-arb and other systematic funds - many of whom have been the fundamental catalyst for the unprecedented VIX compression seen in May - resulting in an explosive unwind of vol positions.

Of course, nobody knew just what catalyst could led to such an outcome, which is perhaps why last night's quasi-black swan sequence of events involving Trump, which has prompted at least some analysts to suggest could end in impeachment, has had such a dramatic impact on stocks. It is also why vol kept grind lower and lower, as the mechanics of vol-supression in the fund level, as observed most recently in the Catalyst fund collapse, created a feedback loop whereby lower vol led to even more vol selling, and so on, until eventually VIX dropped to an all time low below 9 just a few days ago.

Now, it may be payback time.

First, here's what we know.

According to Bank of America, a combination of upward trending global equity markets with very low volatility have "conspired to push trend following CTA (Commodity Trading Advisor) equity positioning to near record levels. As the chart below show, CTAs have outsized, near-record positions in global equities."

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Is China Intentionally Making It Harder To Manipulate Gold?

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Wall Street Chimps Out After Memogate: The Trump Train Has Stopped

Here is an anecdotal discussion that is likely taking place inside of every asset management firm of repute now, in light of recent Trump controversy. There's nothing worse than the unknown -- the dark, cavernous, winding hallways that lead to catacombs festooned with traps.

Larry Kudlow and Mark Zandi joined a desk filled with CNBC anchors to discuss the recent events, which have Kudlow scratching his hairless head.

"Why didn't Comey instruct the Attorney General that he heard an obstruction of justice?", pondered Kudlow.

Zandi made the point that all of these distractions and 'murkiness' only serves to derail tax reform. Kudlow conceded that tax cuts might be dead -- but wasn't giving up hope for healthcare reform.

Mark Zandi rejected a 'thesis' by a CNBC anchor who stated his sources inside the GOP saying they were going to pursue their own agenda and not Trump's. Zandi said, 'at the end of the day, you need leadership from the executive branch to get anything done' -- citing issues with the debt ceiling and tax reform that are being left abandoned due to all of the ginned up scandal.

'I don't just believe he's going to court for impeachment in the house of representatives. [...] I can't just throw in the towel. That would be absolutely incorrect,' concluded Kudlow.

Markets are in free-fall mode, now lower by 330. The Nasdaq is off by more than 130, as investors flee risk assets for bonds, gold, REITs and utilities. The USD/JPY cross has been shattered, which typically occurs during market routs -- now off by 1.76%. The dollar is lower vs the euro by 0.6%. And, the 10 yr treasury yield is down 11bps to 2.21%.

Volatility is the big winner today -- the Black Swan bet, higher by 35% to $14.39.

Content originally published at

Move Over Dollar, the Euro Is in the Driver's Seat

U.S. political turbulence and economic disappointment, combined with unrealized election fears in Europe, mean the euro could gain further against the dollar.

Tencent Faces Rising Costs to Grab Audience

Chinese internet giant Tencent is doing a great job keeping its users glued to their smartphones, but to meet increased investor expectations, that screen time has to turn into more money.

Banks Can Go Higher Even Without Trump's Help

Fundamental trends still argue in favor of owning bank shares, even if the Trump presidency disappoints.

Market Extra: Wall Street's 'fear gauge' threatens largest daily pop in 8 months

A popular gauge of fear on Wall Street on Wednesday is on track to see its biggest daily jump in eight months, according to FactSet data.

Market Extra: Investors betting on Wall Street calm get crushed as stock market sells off

Popular bets on low volatility are pummeled, as the market endures its first big selloff of 2017 following a protracted period of calm on Wall Street.

Trump Today: Trump Today: President says no politician 'has been treated worse' than he has

President Donald Trump spoke to the commencement ceremony at the U.S. Coast Guard Academy on Wednesday, telling the graduating class he's been treated worse than any politician in history and that adversity makes one stronger. Trump didn't tweet during the day, even after a bombshell report about him asking for an investigation to be quashed.

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