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25May2017 Market Update: SP 500 Records New Historic High, Strong Earnings In Retail Sector, Crude Prices Tumble

Written by Gary

The SP 500 and Nasdaq rose to new historic record highs this morning, buoyed by strong earnings from the embattled retailer sector. Crude prices tumbles 4% as OPEC confirms production cut extension to April 2018 (WTI 48.76).


Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.51%, while the Bovespa is leading the IPC lower. They are down 0.44% and 0.27% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

Rare retail bright spot boosts S&P, Nasdaq to records

(Reuters) - The S&P 500 and Nasdaq Composite were in record territory in late morning trading on Thursday, buoyed by strong earnings from the embattled retailer sector.

OPEC, non-OPEC extend oil output cut by nine months to fight glut

VIENNA (Reuters) - OPEC and non-members led by Russia decided on Thursday to extend cuts in oil output by nine months to March 2018 as they battle a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.

Wilbur Ross seeks bigger budget for trade enforcement

WASHINGTON (Reuters) - U.S. Commerce Secretary Wilbur Ross said on Thursday that a $5.5 million increase requested for the agency's enforcement budget this year will have a "real impact" in cracking down on unfair trade practices and export security violations.

New Ford CEO relies on veterans to reboot profits

BENGALURU/DETROIT (Reuters) - Ford Motor Co on Thursday reshuffled senior management and brought back a former executive from Uber Technologies Inc, signaling its new chief executive officer will rely on tested company veterans to turn Ford around rather than outside talent.

Jobless claims edge up; goods trade deficit widens

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits rose slightly last week and the four-week moving average of claims hit a 44-year low, suggesting a further tightening of the labor market that could encourage the Federal Reserve to raise interest rates next month.

Moody's China downgrade 'illogical', overstates debt: People's Daily

SHANGHAI (Reuters) - The decision by Moody's Investors Service to downgrade China's credit rating is "illogical" and overstates the levels of government debt, a commerce ministry researcher said in an editorial in the official People's Daily newspaper on Thursday.

Lawsuit accuses GM of using 'defeat devices' in diesel trucks

(Reuters) - General Motors Co was accused in a lawsuit on Thursday of putting so-called "defeat devices," similar to those used by Volkswagen AG , into hundreds of thousands of its diesel trucks in order to pass federal emissions tests.

U.S. Treasury sees business taxes as fruitful ground for bipartisan deal

WASHINGTON (Reuters) - The Trump administration is particularly hopeful it can reach a bipartisan tax deal when it comes overhauling laws for business taxes, Treasury Secretary Steven Mnuchin said on Thursday.

Best Buy beats on profit, sales; shares at 11-year high

CHICAGO (Reuters) - Best Buy Co Inc reported an unexpected rise in first-quarter comparable sales and the No. 1 U.S. electronics retailer said it planned to save $600 million in costs by the end of fiscal 2021, sending shares to an 11-year high on Thursday.

Fed Trial Balloon: JPM Warns Fed May Start Shrinking Balance Sheet In September

It appears the Fed's balance sheet "trial balloons" using primary dealers as intermediaries have begun.

After yesterday's unexpectedly explicit guidance on the future of the Fed's balance sheet, which prompted Goldman, Citi, and various other banks to suggest they may bring forward their estimates for when the Fed will announce the start of "renormalization", moments ago JPM's Michael Feroli, traditionally the analysts "closest" to the Fed, did just that when he issued a report stating that that there is now "chance of a September start" to renormalization, with the values for monthly roll-off caps and phase-in period to be "revealed at the June FOMC meeting."

According to Feroli, JPM continues to look for normalization to commence at the December FOMC meeting but "there is some chance of a September start, though this would not have a material difference for our projections on a multi-year horizon. At the meeting at which normalization starts we expect the Committee to announce a set of monthly roll-off caps for the following year, which increase regularly every three months.

"Our best guess is that the initial caps are $4 billion a month for MBS and $8 billion a month for US Treasuries. In the preannounced schedule, these caps would be augmented each quarter by $4 billion and $8 billion, respectively, until at the end of the year they are $16 billion and $32 billion. Consistent with yesterday's minutes, even after the normalization process is fully phased in the monthly caps will still be in place, though in most months after the full phase-in they would cease to bind."

And here are the finer details which the Fed may or may not have leaked to select banks, in an attempt to prepare for what is coming, and talking down the equity bubble:

"Sell The News" - WTI Tumbles Below $50 After OPEC Disappointment

Confident anchors across the media have been proudly proclaiming the rise above $50 as proof that the oil market is heading toward equilibrium again and OPEC's production cut deal extension will be awesome... except the market seems to be disappointed as it's clear no other non-OPEC nations will join the agreement (cough US shale cough) and "sell the news" has sent crude back below $50...

The full details are as follows:



No new countries will join the supply cut

Cut remains set at -1.8mmb/d, a continuation of the original deal

The next OPEC meeting will be November 30

And the reaction...

Obama Praises "Favorite Partner" Angela Merkel During Berlin Visit

Before heading to a NATO summit in Brussels where she would meet with President Donald Trump and a host of other world leaders, German Chancellor Angela Merkel indulged in an exercise of mutual praise with her "dear friend" former U.S. President Barack Obama as the pair appeared in public during a gathering at Berlin's Brandenburg Gate meant to celebrate the 500th anniversary of the Protestant Reformation, the Associated Press reports.

In an apparent attempt to rally support for Merkel ahead of the German federal election this fall, Obama praised Merkel's leadership ability, calling her one of his "favorite partners" during his presidency.

Unsurprisingly, Obama and Merkel couldn't resist throwing some shade at Trump, who famously refused to shake Merkel's hand when they met in Washington for the first time back in March.

In a veiled reference to his successor Donald Trump, who has proposed to cut support for diplomacy and international aid by nearly a third, Obama said those programs are essential aspects of national security policy.

"We can't isolate ourselves. We can't hide behind a wall," he said, to cheers from the audience.

The visit was a useful distraction for Merkel, whose continued occupancy of the chancellorship, once seemingly assured, is increasingly threatened by "anti-Trump" Martin Schultz and his social democratic party,

GM Tumbles After Allegations Of Rigging Truck Emissions Tests

General Motors' stock price is tumbling after reports that the carmaker is accused of putting defeat devices in its trucks to beat emissions tests, becoming the sixth carmaker accused of diesel cheating since 2015, when Volkswagen AG admitted to installing software to bypass pollution rules.

Bloomberg reports that People who own or lease more than 705,000 GM Duramax diesel trucks filed a class-action lawsuit Thursday, claiming GM installed multiple such devices in two models of heavy-duty trucks from 2011 to 2016.

The 190-page complaint is littered with more than 80 references to VW, and asserts that the environmental damage caused by each truck could surpass that of the German automaker's vehicles.

And the result is GM down 4%...

When $43 Billion Isn't Reward Enough for Success

A revised compensation plan for Patrick Drahi, founder of Cablevision-owner Altice, offers stock options that could make him one of the world's best-rewarded bosses.

Tighter Global Banking Rules Tilt Against Europe's Lenders

Long battle over update to Basel capital rules is finishing closer to U.S. demands.

How HP Stole Lenovo's Computer Crown

Lenovo needs to focus on its premium segment to regain its position as world's biggest computer maker from HP Inc.

May 2017 Kansas City Fed Manufacturing Remains Positive and Improves

Of the four regional manufacturing surveys released for May, one is in contraction whilst the rest are in expansion.

Best Buy is capitalizing on troubles at Sears and HHGregg in one particular category

Best Buy's appliance sales were helped by troubles with Sears, as well as store closures from HHGregg, which has filed for bankruptcy

The Tell: Did this not-safe-for-work internet sensation just signal a top in bitcoin?

Dan Bilzerian's penchant for automatic weapons, high-stakes poker, fast women and faster cars has made him an internet sensation. Now you can add go ahead and bitcoin to his list.

Europe Markets: European stocks end lower, led by Petrofac's 30% plunge

European stocks finish with a small loss Thursday, hampered by lower volume and a slide in oil prices following news the Organization of the Petroleum Exporting Countries will hold back from making deeper production cuts.

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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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