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24May2017 Market Update: Wall Street Relatively Quiet Ahead Of The Fed's Expected Interest Rate Hike, WTI Crude Slips Fractionally And The US Dollar Trading Sideways

Written by Gary

US stocks were mostly flat early on this afternoon, aiming for a fifth straight day of gains, ahead of the minutes of the Federal Reserve's latest meeting that could be a expected interest rate hike next month.

Here is the current market situation from CNN Money

North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 3.54% while Mexico's IPC is up 0.88% and U.S.'s S&P 500 is up 0.05%.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall St. edges higher as Fed minutes release draws near

(Reuters) - U.S. stocks were modestly higher early on Wednesday afternoon, aiming for a fifth straight day of gains, ahead of the minutes of the Federal Reserve's latest meeting that could cement the chances of a widely expected interest rate hike next month.

Moody's downgrades China, warns of fading financial strength as debt mounts

SHANGHAI/BEIJING (Reuters) - Moody's Investors Service downgraded China's credit ratings on Wednesday for the first time in nearly 30 years, saying it expects the financial strength of the economy will erode in coming years as growth slows and debt continues to rise.

OPEC nearing deal to extend oil output cut to March 2018

VIENNA (Reuters) - OPEC and non-member oil producers moved closer on Wednesday to clinching a deal on extending output cuts by nine months to clear a global stocks overhang and prop up the price of crude.

Home sales fall as tight supply boosts prices

WASHINGTON (Reuters) - U.S. home resales fell more than expected in April, weighed down by a chronic shortage of houses on the market that is keeping house prices elevated and sidelining prospective buyers.

'Fight for 15' targets McDonald's shareholder meeting

OAK BROOK, Ill. (Reuters) - Hundreds of fast-food workers demanding wage increases marched on Wednesday outside of the McDonald's Corp headquarters in a Chicago suburb during the company's annual shareholder meeting.

Loeb sees $20 billion more value from Dow-DuPont merger

(Reuters) - Activist investor Daniel Loeb's Third Point LLC said Dow Chemical and DuPont could unlock $20 billion in additional value by tweaking their plan to split into three companies following their merger.

Linde, Praxair reach agreement on details of merger

FRANKFURT (Reuters) - German industrial gases group Linde and U.S. peer Praxair have reached a deal in principle on details of their proposed $70 billion merger, Linde said on Wednesday.

U.S. appeals court hears arguments weighing on Wall Street policing

WASHINGTON (Reuters) - A U.S. appeals court panel questioned government lawyers at length on Wednesday in oral arguments on whether or not the Securities and Exchange Commission's hiring of administrative law judges for in-house proceedings violated the Constitution.

Bitcoin soars above $2,400 to all-time high

(Reuters) - Digital currency bitcoin hit a fresh record high on Wednesday, surging above $2,400, as demand for crypto-assets soared with the creation of new tokens to raise funding for start-ups using blockchain technology.

Trader: "The Plunge Protection Team Is Happening In Bonds... Right Out In The Open"

Having lambasted the market's abhorrent response to the worst terror attack in Britain in 12 years yesterday, Bloomberg's Richard Breslow takes aim at the flip-flopping consensus rearing its ugly head in bond land worldwide.

As he writes, it's become very fashionable to get on the bandwagon that sovereign yields are never, or at least no time soon, going to rise.

A number of the biggest banks have joined the parade just recently. This relies largely on making the obverse of the assumptions they stated with great assurance for much of this year. It's also borne out of impatience for this conviction view to start working already. That's not a great investing thesis.

Contributing to this capitulation is the fact that U.S. numbers haven't been nearly what analysts were hoping for. Even if they clearly show an economy that can't be described as in crisis. But what isn't accounted for in this line of reasoning is that global growth is improving further and faster than anyone factored in. It was a mistake to look at the U.S. in isolation at the beginning of the year and it's just as questionable to do so now.

The last thing the ECB wants to do is upset the apple cart of peripheral markets, but it's undeniable that they are beginning the process of softening up the market for an eventual change in policy.

With the numbers coming in strong and the rhetoric contemplating the when and how rather than if, every ECB event has become a major one. Whenever Mario Draghi speaks, traders will be listening on tenterhooks. After sp ...

Blistering Demand For 5Y Trasury Auction; First "Stop Through" In 2017

After 4 consecutive 5Y auctions that resulted in a "tail", moments ago the Treasury sold $34 billion in 5Y paper which finally "stopped through" the When Issued for the first time since December, printing at a High Yield of 1.831%, 0.7bps through the 1.838% When Issued.

Another confirmation that like yesterday's 2Y auction today's 5Y issuance was stronger than expected, was the jump in the Bid to Cover which rose to 2.67, the highest since December, and well above the 2.42 6 month average, as total bids of $95.0 billion were received for $38.1BN in notes. Additionally, the internals were strong too, with Indirecst rebounding from last month's 57.3% low to 68.7%, above the 6 month average of 63.1%, while Directs were awarded 8.6% of the auction, above the 5.3% in April and 6MMA. Dealers were left just 22.7% of the auction, the lowest going back to August 2016.

Overall, a very strong auction, and certainly better than what the market had expected.

The Key Things To Look For In Today's FOMC Minutes, And How To Trade Them

Despite a near-collapse in the US economic surprise index - a key leading indicator, and major negative for the US economy...

... and recent disappointing inflation readings, largely attributed to the telecom sector in general and unlimited phone plan packages, not to mention the 0.7% Q1 GDP print, today's FOMC minutes scheduled (released at 2:00pm today with the usual 3 week lag) are likely to reveal a relatively optimistic Fed with many Committee members expecting the weakness early on in 2017 to prove "transitory."

Points of focus in the minutes will include future plans for the balance sheet (with reduction coming under increased scrutiny in recent times), after minutes of the March meeting showed that many of the policymakers thought a change in the Fed's reinvestment policy would "likely be appropriate later this year."

As a reminder, Fed officials left the interest rate unchanged within a range between 0.75% and 1% at their May 3 meeting, whose minutes could indicate whether they are preparing to lift it by a quarter percentage point at their next meeting June 13-14. As such, traders and analysts will will be combing through the minutes to better understand the Fed's current contraditory, and clearly non-data dependent assessment of the country's growth and inflation, as well as policymakers' forecast for activity going forward in the remaining seven months of the year.

Also according to Stifel's Lindsey Piegza the market will also be looking for clues in the latest minutes as to the Committees' likely handling of the $4.5T balance sheet. Some analysts have anticipated specifics of a tapering to be revealed in the May FOM ...

Russell 2000 Flash-Crashes

"Probably nothing..."

Small-cap stocks briefly erased gains, with the Russell 2000 plunging 0.4 percent in less than a minute as volume exploded...

As Bloomberg notes, about 3.84 million shares traded in the benchmark index at 11:51 a.m., more than 10 times the volume in the previous minute.

Trading also surged in futures, with more than 10,000 contracts changing hands between 11:50 and 11:53, 58 times the volume in the previous three minutes.

Mini futures on the Russell 2000 Index fell about 9 points 1,375.9 in a few seconds, while the iShares Russell 2000 ETF slid more than half a percentage point to $137.

Small Caps were not the only thing act strangely today - VIX dumped and pumped around 1030ET...

S&P and Dow are glued to unchanged from the Trump Dump ahead of FOMC Minutes...

China's Downgrade: It's Not Just About the Government

Moody's decision to cut China's credit rating could make it more costly for Chinese companies and banks to issue bonds.

Fannie and Freddie Endgame Takes Shape

A consensus is starting to emerge between lawmakers and the Trump administration on how to reform the U.S. housing finance market.

Investors' Faith in Michelin Looks Over-Inflated

The tire maker's stock is trading at peak multiples even as higher rubber prices and a weakening car market threaten its margins.

April 2017 Headline Existing Home Growth Declines

Written by Steven Hansen

The headlines for existing home sales growth declined saying "Demand is easily outstripping supply in most of the country and it's stymieing many prospective buyers from finding a home to purchase". Our analysis of the unadjusted data agrees.

Government pursues insider-trading case over so-called 'political intelligence'

Criminal and civil charges were filed Thursday in a landmark case that seeks to prevent insider trading off political intelligence.

Young, married women should learn this skill

It isn't enough to occasionally check an account — you need to be proactive about money.

3 out of 4 American children in families rely on their mothers' salaries

Whether married, cohabitating or single, moms have much lower salaries than their male counterparts.

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