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26May2017 Market Close: Wall Street Closed Flat And Unattractive Ahead Of The Three-day Weekend, Both Crude Prices And The US Dollar Settled Fractionally Higher

Written by Gary

US stocks traded mostly sideways closing flat (SPY -0.02%), taking a breather after recent record highs and a six-day streak of gains, though consumer shares were strong for a second session. Softening business investment and moderate consumer spending are clouding expectations of a sharp acceleration in the second quarter.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

U.S. economy slowed less than expected in first quarter; outlook cloudier

WASHINGTON (Reuters) - The U.S. economy slowed less than initially thought in the first quarter, but softening business investment and moderate consumer spending are clouding expectations of a sharp acceleration in the second quarter.

China's reforms not enough to arrest mounting debt: Moody's

BEIJING (Reuters) - China's structural reforms will slow the pace of its debt build-up but will not be enough to arrest it, and another credit rating cut for the country is possible down the road unless it gets its ballooning credit in check, officials at Moody's said.

Wall St. drifts before long weekend, but consumer stocks up

(Reuters) - U.S. stocks were little changed in afternoon trading on Friday, taking a breather after recent record highs and a six-day streak of gains, though consumer shares were strong for a second session.

In Aramco IPO pitch, Canada plays up its natural resources expertise

TORONTO (Reuters) - The Toronto Stock Exchange's efforts to win a slice of the massive Saudi Aramco public listing plays up the country's deep experience in natural resources as part of a broader offer to help the kingdom with its shift away from oil dependence.

OPEC ponders how to co-exist with U.S. shale oil

VIENNA (Reuters) - First, they ignored each other. Then, they went into a bruising fight. Finally, they are talking, albeit with opposing agendas.

Exclusive: China's COFCO overhauls Brazil business after accounting crisis - sources

LONDON/SAO PAULO (Reuters) - Chinese food commodities trader COFCO [CNCOF.UL] is overhauling its operations in Brazil, including a management reshuffle, as it restructures its Nidera Sementes Ltda business following accounting irregularities reported last year, according to company documents and sources.

Some investors bet Brazil has further room to fall

NEW YORK (Reuters) - Some investors are betting the worst is yet to come for Brazil's stock market, even after a brutal selloff last week.

Exclusive: Fidelity may back climate resolutions, a milestone for activists

BOSTON (Reuters) - Fidelity Investments may support shareholder proxy proposals calling on companies to report on sustainability matters this year, a major shift by the Boston asset manager as climate activists gain more traction at large U.S. corporations.

U.S. home prices to rise at a strong pace on tight supply: Reuters poll

(Reuters) - U.S. home prices look poised to rise at a robust pace over the next few years, mainly because of a chronic shortage of houses and steady demand, a Reuters poll showed on Friday.

Fed Plan Falters As Euro Inflation 'Surprise' Sparks Bund Fears

As SocGen's Kit Juckes noted earlier in the week, "The ECB, not The Fed, is in the driving seat," and nowhere is that more optically obvious than in the massive divergence between US-EU bond risk premia and US-EU inflation surprises.

The FOMC's intent to raise rates in June is clear and reflected in market pricing. But the commitment to any particular forecast of where rates are heading is less clear and seems secondary to a desire to hit the 2% inflation target. With President Trump's program stalled, the dollar is lacking domestic policy drivers and FX markets are more susceptible to policy elsewhere. This is good for the euro, and possibly for oil-sensitive currencies, and is carry friendly (yen negative) too.

Furthermore, as Reuters noted, recent U.S. inflation readings have returned to their long-term trend of underperforming against forecasts after a brief run of upside surprises earlier this year.

Meanwhile, inflation reports from Europe have topped expectations by the widest margin on record. The rest of the so-called Group of 10 largest developed economies are meanwhile beating forecasts by the most since the financial crisis nearly a decade ago, even after taking into account the drag from U.S. numbers. Even Japan, notorious for its decades-long struggles against deflation, is posting inflation data notably above forecasts.

The inflat ...

All Hell Breaks Loose In Toronto's House Price Bubble

Authored by Wolf Richter via WolfStreet.com,

"It's fear."

During the first two weeks in May, according to preliminary data from Toronto Real Estate Board, home listings surged 47% from the same period last year even as sales plunged 16%. The average selling price dropped 3.3% from April - and this, after a 33% year-over-year spike in home prices in March and a 25% surge in April. Something is happening to Toronto's blistering house price bubble.

Canada's largest alternative mortgage lender, Home Capital Group, which focuses on new immigrants and subprime borrowers turned down by the banks, is melting down after a run on its deposits that crushed its funding sources. The industry is worried about contagion.

At the same time, the provincial government of Ontario announced a slew of drastic measures, including a 15% tax on purchases by non-resident foreign investors to tamp down on the housing market insanity that left many locals unable to buy even a modest home.

It comes after Bank of Canada Governor Stephen Poloz warned in April that hom ...

Bitcoin Is Crashing (Again)

While Bitcoin is still up 13% on the week (its 8th weekly ruse of the last 9), the dollar price of the virtual currency is collapsing again in US trading (after a big rebound during the Asian session)...

Just as with yesterday, there is no immediate news catalyst for the flush.

Meanwhile, the huge arb with South Korea bitcoin pricing remains, and as of this moment is still nearly $1000.

Today's drop is the biggest since January (for now)...

The Fragile Truce Between Bonds and Stocks

This year has been good for both bond and stock investors. To rely on that benign picture lasting looks risky.

The Surprising Source of U.S. Profit Growth

It isn't America, but the rest of the world, that is driving corporate earnings growth.

Canada's Banks Can't Dodge Housing Risks Forever

Risks to Canadian banks from the country's housing bubble should not be overstated, but are very real.

Key Words: Clinton sly in broaching impeachment topic during Wellesley speech

Former Secretary of State Hillary Clinton on Friday delivered a commencement speech that referenced the Nixon presidency in a clear reference to the current troubles plaguing the Trump administration.

Hollywood is running out of '80s hits to reboot and only 3 of top 15 earners remain

Of the top 15 highest-grossing films from the 1980s, only three haven't been either remade, rebooted or turned into a sequel or franchise

Lingerie maker Nubian Skin brings nuance to the underwear color 'nude'

In a short amount of time, Nubian Skin has landed big name clients including superstar Beyoncé, affirming owner Ade Hassan's vision of making hosiery and lingerie for women with darker skin tones.

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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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