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23Jun2017 Market Update: Wall Street Fractionally Higher, DOW Off 3 Points, Nasdaq Up Four Percent, Crude Price Remain Low And Volatile, Rig Count Up By 8

Written by Gary

The SP 500 and the Nasdaq Composite are higher in early afternoon trading today (SPY +0.2%) as technology shares rose and oil prices turned volatile remaining near multi-month lows.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The S&P 500 is up 0.20% while the IPC gains 0.13%. The Bovespa is off 0.08%.

Traders Corner - Health of the Market

S&P 500 rises as energy tries to snap 4-day losing streak

Oil prices cut gains as data show U.S. oil-rig count up 23 consecutive weeks

Baker Hughes BHI, -0.20% on Friday reported that the number of active U.S. rigs drilling for oil climbed by 11 to 758 rigs this week. That marked a 23nd weekly rise in a row. The total active U.S. rig count, which includes oil and natural-gas rigs, rose by eight to 941, according to Baker Hughes. Oil prices pared earlier gains following the data, with August West Texas Intermediate crude CLQ7, +0.19% up 9 cents, or 0.2%, at $42.83 a barrel on the New York Mercantile Exchange for the session. It was trading at $43.07 before the data.

What Is Moving the Markets

Here are the headlines moving the markets.

S&P, Nasdaq rise as tech stocks gain, oil rebounds

(Reuters) - The S&P 500 and the Nasdaq Composite were higher in late morning trading on Friday as technology shares rose and oil prices rebounded from multi-month lows.

Oil creeps up from 10-month low, down nearly 4 percent on week

NEW YORK (Reuters) - Oil futures climbed almost 1 percent on Friday on lift from a falling dollar but remained down for a fifth week in a row and close to a 10-month low as OPEC-led production cuts have failed to substantially reduce a global crude glut.

U.S. new home sales jump, median price surges to record high

WASHINGTON (Reuters) - New U.S. single-family home sales rose in May and the median sales price surged to an all-time high, suggesting the housing market had regained momentum.

EU promises tough line on U.S., China while pushing for free trade

BRUSSELS (Reuters) - German Chancellor Angela Merkel warned U.S. President Donald Trump on Friday that Europe would react in kind if the United States did not play fair in trade, while EU leaders also agreed to consider screening investments by state-owned Chinese firms.

Ford recalls 15,600 cars in South Africa over fire risk

JOHANNESBURG (Reuters) - Ford Motor Co is recalling nearly 16,000 Ikon and Figo models in South Africa due to a potential fire risk, it said on Friday.

Canada's CIBC completes $5 billion PrivateBancorp buy

TORONTO (Reuters) - Canadian Imperial Bank of Commerce has completed the $5 billion acquisition of Chicago-based PrivateBancorp , which will help it diversify from its domestic market, it said on Friday.

Official urges limited Fed role in addressing U.S. inequality

CLEVELAND (Reuters) - The Federal Reserve cannot directly address the problems of inequality, globalization and the challenges facing lower-income Americans, a Fed official said on Friday, though it can help identify solutions for legislators to take up.

Are you being served? Planemakers alter sales pitch to boost profit

PARIS (Reuters) - Airbus and Boeing leave this week's Paris Airshow with plans for ambitious growth in aviation services, as flattening demand for new jets and pressure to raise profit margins encourages planemakers to deepen their exposure to airline operations.

Ford's China move casts new cloud on Mexican carmaking

MEXICO CITY (Reuters) - A second U-turn this year by Ford Motor Co in Mexico has raised the specter of Chinese competition for local carmaking, adding to pressure on the industry after repeated threats by U.S. President Donald Trump to saddle it with punitive tariffs.

The Incredible Shrinking Relative Float Of Treasury Bonds

Via Global Macro Monitor blog,

Lots of hand wringing these days about the flattening yield curve. We still maintain our position that the signal from the bond market is significantly distorted due to the global central bank intervention (QE) into the bond markets. See here and here.

Most of what is happening with the U.S. yield curve is technical. Sure, traders can get a wild hair up their arse, believing the economy is slowing and try and game duration by punting in the cash or futures markets. Given the small relative float of the U.S. Treasury bond market, however, it doesn't take much buying to move yields. In the words of economists, the supply curve of outstanding Treasuries is very inelastic.

This is illustrated in the following chart. The combined market cap of just Apple and Amazon at today's close is larger than the entire the float of outstanding Treasury notes and bonds that mature from 2027-2027. We define float (US$1.16 trillion) as total Treasury securities (2027-2047) outstanding (US$1.73 trillion) less Fed holdings (US$575 billion).

Largest East Coast Pipeline Reveals Demand For Gasoline Is Crashing

There's a reason this week's EIA survey showing gasoline and oil supplies declining has failed to stop RBOB prices from collapsing to 7-month lows: The start of the summer has done nothing to revive sluggish demand. That's because despite what the EIA survey said, little has been done to reduce record fuel inventories.

The squeeze has gotten so bad, Northeast Colonial Pipeline Co., the operator of the biggest US fuel pipeline system, said that demand to transport gasoline to the country's populous northeast is the weakest in six years, the latest symptom of a global oil market grappling with oversupply. It's notable that this peak has arrived despite the advent of the summer driving season, which has seen gasoline demand pull back from last year's record highs, according to Reuters.

Because of the oversupply in the northeast, "line space"... the cost of renting "space" on the pipeline to assure one's ability to get supplies of gasoline when necessary... has gone negative, according to Reuters. What can be more exemplary of excess inventories and of reduced demand for gasoline than this?

Refiners are in part to blame for the problem - they have continued to pump motor fuel at record levels for the second year in a row, worsening the oversupply problem, for fear of losing access to pipeline capacity.

More broadly, attempts by large producers to reduce glob ...

The Passing Of The Pelosi Era

Authored by Patrick Buchanan via Buchanan.org,

In the first round of the special election for the House seat in Georgia's Sixth District, 30-year-old Jon Ossoff swept 48 percent. He more than doubled the vote of his closest GOP rival, Karen Handel.

A Peach State pickup for the Democrats and a huge humiliation for President Trump seemed at hand.

But in Tuesday's final round, Ossoff, after the most costly House race in history, got 48 percent again, and lost. If Democratic donors are grabbing pitchforks, who can blame them?

And what was Karen Handel's cutting issue?

Ossoff lived two miles outside the district and represented the values of the Democratic minority leader, whom he would vote to make the speaker of the house, Nancy Pelosi of San Francisco.

The Pelosi factor has been a drag on Democrats in all four of the special elections the party has lost since Trump's November triumph.

Prediction: Democrats will not go into the 2018 Congressional elections with San Fran Nan as the party's face and future. No way. As President Kennedy said, "Sometimes party loyalty asks too much."

Post-Trump, it is hard to see Republicans returning to NAFTA-GATT free-trade globalism, open borders, mass immigration or Bushite crusades for democracy. A cold realism about America's limited power and potential to change the world has settled in.

And just as Trump put Bush-Romney Republicanism into the dumpster in the 2016 primaries, Hillary Clinton's defeat, followed by losses in four straight special elections, portend a passing of the guard in the Democratic Party.

So where is the party going?

Clearly, the energ ...

JPMorgan's Head Quant Doubles Down On His "Market Turmoil" Forecast: Here's Why

After getting virtually every market inflection point in 2015, and early 2016, so far 2017 has not been Marko Kolanovic's year, whose increasingly more bearish forecasts have so far been foiled repeatedly by the market, and the same systematic traders that he periodically warns about. As a reminder, his most recent warning came last week, when he cautioned that even a modest rebound in VIX could lead to dramatic losses for vol sellers. As a reminder, here is the punchline from his latest note:

Days like May 17th and similar events "bring substantial risk for short volatility strategies. Given the low starting point of the VIX, these strategies are at risk of catastrophic losses. For some strategies, this would happen if the VIX increases from ~10 to only ~20 (not far from the historical average level for VIX). While historically such an increase never happened, we think that this time may be different and sudden increases of that magnitude are possible. One scenario would be of e.g. VIX increasing from ~10 to ~15, followed by a collapse in liquidity given the market's knowledge that certain structures need to cover short positions.

So in light of a market that refuses to post even the smallest of drawdowns (we are not sure if the words "selling", "correction" or "crash" have been made illegal yet), has Kolanovic thrown in the towel and declared smooth seas ahead? To the contrary: in a note released late last night, he echoes warnings made recently by both Citi and BofA, and predicts that receding monetary accommodation from ECB and BOJ will likely lead to "market turmoil, and a rise in volatility and tail risks" and just in case there is some confusion, he reiterate ...

Brexit One Year Later: Markets Might Get It Wrong Again

The Brexit vote sank the pound but buoyed the FTSE 100. That relationship might be changing.

For Consumers, Less Debt but Lots of Bills

As a group, U.S. households' debt-to-income and debt-to-asset ratios in the first quarter fell to their lowest levels since the early 2000s. But financial obligations beyond debt payments, such as rents and auto leases, are taking a bigger bite out of pay.

Weibo Gets in Beijing's Way

Investors need to consider the political risk faced by China's version of Twitter.

Europe Markets: European stocks close at lowest in a week as oil shares sag

Equities in Europe fall Friday, as energy shares extend losses in what's been a dreadful week for oil prices, while investors assessed mixed signals about the eurozone economy.

Key Words: Johnny Depp offered to sell what's left of his soul to address financial woes

More dirt was uncovered in the lawsuit filed by Depp's ex-business manager.

The New York Post: Johnny Depp: 'When was the last time an actor assassinated a president?'

Johnny Depp insinuated that he wanted to assassinate President Donald Trump during an appearance at a film festival in U.K. by offering to be the next actor to kill a president.

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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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