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20Jun2017 Market Close: Stocks Lower On Weak Energy Sector, Crude Dropped Another 2% - Dollar Up As Pound Falls, While Fed Talks Rate Hikes

Written by Gary

A dent in sterling pushed the dollar to session highs, after Bank of England Governor Mark Carney stifled rate hike expectations. Crude futures settled at a seven-month low on Tuesday, as data expected to show a draw in U.S. crude stockpiles for the second-straight week failed to offset concerns about an uptick in global production. Comments on Monday by NY Fed Pres William Dudley about further rate hikes remained on traders' minds and stocks closed lower accross the board.

Todays S&P 500 Chart


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The Market in Perspective

Here are the headlines moving the markets.

Wall St. falls on oil tumble, consumer sector and Fed worries

(Reuters) - U.S. stocks closed lower on Tuesday as a sharp drop in oil prices hurt energy stocks and retail stocks were pulled down by concerns about Amazon.com's plan to boost its apparel business, while investors also worried about future Federal Reserve rate hikes.

U.S. crude ends at nine-month lows on global oversupply

NEW YORK (Reuters) - Oil fell about 2 percent on Tuesday, with Brent settling at seven-month lows and U.S. crude at its cheapest level since September, after increased supply from several key producers overshadowed high compliance by OPEC and non-OPEC oil producers with a deal to cut global output.

MSCI to add mainland China shares to key benchmark

NEW YORK (Reuters) - U.S. index provider MSCI said on Tuesday it will add mainland Chinese stocks to one of its key benchmarks, in a landmark decision for the global investment landscape and the Chinese government.

Uber to allow tips for drivers in reversal of longstanding policy

SAN FRANCISCO (Reuters) - Uber said on Tuesday it will for the first time allow drivers to collect tips through its smartphone app, an about-face from previous company policy, as part of the ride-services firm's broader effort to improve an often-contentious relationship.

Adobe's Creative Cloud fuels profit beat, shares surge

(Reuters) - Adobe Systems Inc reported a better-than-expected quarterly profit as the company benefited from more customers subscribing to its Creative Cloud package, which includes the popular photo-editing software Photoshop.

FedEx profit beats as demand rises across businesses

(Reuters) - FedEx Corp reported a higher-than-expected quarterly profit, as the package delivery company benefited from its TNT Express acquisition and higher sales across its express, ground and freight business units.

Ford bets on low oil prices, moves Focus production to China

DETROIT/WASHINGTON (Reuters) - Ford Motor Co said Tuesday it will move some production of its Focus small car to China and import the vehicles to the United States in a long-term bet on low oil prices and stable U.S.-China trade relations despite recent tensions.

U.S. judge faults CFPB 'indifference' toward Sprint settlement

NEW YORK (Reuters) - A federal judge on Tuesday faulted the U.S. Consumer Financial Protection Bureau's apparent "indifference" toward how to distribute money left over from its 2015 settlement with Sprint Corp over unauthorized customer charges.

Boeing gets boost from United and lifts demand forecast

PARIS (Reuters) - Boeing won a key endorsement from United Airlines for the latest model of its best-selling 737 on Tuesday and struck an upbeat tone by raising its 20-year industry demand forecast despite signs the pace of growth is slowing.

Inflation is no longer in stealth mode


  • IHS Markit index shows UK households pessimistic about finances for 2017-208

    UK household finances remain under intense pressure from rising living costs

    58 percent of respondents expected higher interest rates in 12 months time

    Inflation in the United Kingdom currently at near four-year high

    Prices up prices by 2.9pc year-on-year, biggest annual increase since June 2013

    In May consumer spending in the UK fell for the first time in almost four years

    By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. John Maynard Keynes, The Economic Consequences of the Peace (1919)

    Inflation is taxation without legislation Milton Friedman

    Inflation is no longer in stealth mode

Canada Passes Law Criminalizing Use Of Wrong Gender Pronouns

Authored by Rob Shimshock via The Daily Caller,

Canada passed a law Thursday making it illegal to use the wrong gender pronouns. Critics say that Canadians who do not subscribe to progressive gender theory could be accused of hate crimes, jailed, fined, and made to take anti-bias training.

Canada's Senate passed Bill C-16, which puts "gender identity" and "gender expression" into both the country's Human Rights Code, as well as the hate crime category of its Criminal Code by a vote of 67-11, according to LifeSiteNews. The bill now only needs royal assent from the governor general.

"Great news," announced Justin Trudeau, Canada's prime minister. "Bill C-16 has passed the Senate - making it illegal to discriminate based on gender identity or expression. #LoveisLove."

Great news: Bill C-16 has passed the Senate - making it illegal to discriminate based on gender identity or expression. #LoveisLove

— Justin Trudeau (@JustinTrudeau) June 16, 2017

"Proud that Bill C-16 has passed in the Senate," said Jody Wilson-Raybould, the country's attorney general and minister of justice. "All Canadians should feel #FreeToBeMe."

MSCI Finally Adds China A Shares To Its Emerging Market Index

After three consecutive unsuccessful attempts by China to have its A Shares included in the MSCI Emerging Market index, moments ago the fourth time proved to be the charm, when MSCI finally relented and agreed to add China's A shares to the much desired index.



MSCI WILL INCLUDE CHINA A SHRS IN MSCI EMERGING MARKETS INDEX

The news means that China's $6.8 trillion domestic stock market will finally be added to the flagship EM index, forcing the $1.6 trillion in investment funds that track the index to buy mainland equities, even as they will likely remain dwarfed by overseas-listed Chinese stocks which have an increasing sway over MSCI's developing nation gauge.

The inclusion comes as China's Shanghai Composite Index has struggled to rise amid a government crackdown on risk in the financial sector and waning interest by the nation's army of individual investors, who have instead discovered bitcoin and ethereum. The SHCOMP has fallen more 4% since its mid-April peak, sending correlation ratios with the rest of the world to below zero. It also means that China's offshore shares have become the priciest relative to Shanghai since 2014.

Perhaps the token move was greenlighted as the allocation would ultimately be quite de minimis: under the approved proposal, the weighting of yuan-denominated A shares would be just 0.5% of the index, half the previous suggested level.

WTI/RBOB Unch After API Signals Another Week Of Product Builds

With WTI/RBOB prices tumbling to 7-month lows intraday (not helped by Libya production), oil bulls hope for a bounce after API is not coming true despite a bigger than expected crude draw, both gasoline and distillates saw notable builds and oil prices could not make their mind up.

API



Crude -2.72mm (-1.2mm exp)

Cushing -1.269mm

Gasoline +346k (+500k exp)

Distillates+1.837mm

At a time when Gasoline demand should be rising and inventories dropping - neither happened the last two weeks and once again, according to API, gasoline built (as did distillates)...

Libya pumps most oil since 2013 as Wintershall fields resume (and Nigeria production rising) did not help...but the machines could not make their minds up after the API data...

"Obviously, the sentiment in the market right now is negative and bearish," Michael Loewen, a commodities strategist at Scotiabank in Toronto, said by telephone.

"OPEC has all of these barrels off the market right now, but what happens in 2Q when OPEC is expected to either lift or extend supply caps - There's lots of concern around that&rdquo ...

Barclays's Criminal Conundrum: Plead or Fight?

U.K. authorities filed charges against Barclays and former top executives for fraud related to fee payments to Qatari backers when it received capital infusions in the teeth of the financial crisis. It is the first criminal case against a crisis-era bank chief.

Trump Plan a Potential Bonanza for Trust Banks

Custody banks like Bank of New York Mellon and State Street would benefit from Trump's deregulation plans.

What Virtual Reality Needs to Get Real

High-end VR hasn't created a large enough installed base of customers for game publishers to commit major development dollars. And without must-have games, virtual reality just won't break out of its niche.

What We Read Today 20 June 2017

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).

BECOME A GEI MEMBER - IT's FREE!

Every day most of this column ("What We Read Today") is available only to GEI members.

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June 2017 Chemical Activity Barometer Remains Steady

from the American Chemistry Council

The Chemical Activity Barometer (CAB) rwas flat in June following a 0.2 percent gain in May, and a 0.3 percent gain in April.

Emerging Markets Report: MSCI to add 222 China A shares in emerging-markets index

MSCI will include China's A shares in its emerging markets index starting in June 2018, signaling a large scale repositioning of some $1.6 trillion in funds tracking the MSCI EM index.

NewsWatch: Stock market closes lower as oil slips into bear-market territory

U.S. stocks on Tuesday pull back from record territory, as investors dump energy shares following a sharp drop in oil prices.

The Wall Street Journal: AMD launches new Epyc chips in direct challenge to Intel

Advanced Micro Devices Inc. began selling a new generation of chips for the servers that drive computing in data centers, challenging Intel Corp. in that high-margin market for the first time in years.

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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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