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05Jul2017 Market Update: Wall Street Mixed, Crude Prices Down, The US Dollar Stronger, But Volatile

Written by Gary

Late afternoon trading show the DOW down and flat, the Nasdaq up nicely at +0.7% and WTI crude falling sharply in the low 45 handle.


Here is the current market situation from CNN Money

North and South American markets are higher today with shares in Mexico leading the region. The IPC is up 0.47% while Brazil's Bovespa is up 0.17% and U.S.'s S&P 500 is up 0.13%.

What Is Moving the Markets

Here are the headlines moving the markets.

S&P, Dow flat as energy drags; Fed minutes awaited

(Reuters) - A fall in oil prices took a toll on energy stocks, capping gains on the S&P 500 and the Dow, while a rise in shares of chipmakers lifted the Nasdaq.

U.S. card firm Vantiv goes global with $10 billion Worldpay buy

(Reuters) - U.S. credit card processor Vantiv agreed to buy Britain's Worldpay for 7.7 billion pounds ($10 billion) on Wednesday in a move expected to trigger further deals.

Exclusive: EU considers record fine as panel checks Google Android case - sources

BRUSSELS (Reuters) - EU antitrust regulators are weighing another record fine against Google over its Android mobile operating system and have set up a panel of experts to give a second opinion on the case, two people familiar with the matter said.

Jana values EQT break-up at $4.5 billion: securities filing

(Reuters) - Jana Partners LLC on Wednesday detailed its criticism of natural gas producer EQT Corp's plan to buy Rice Energy Inc , laying out its argument as to why the hedge fund believes an EQT break-up would be better for shareholders than the pending $6.7 billion deal.

Airbus signs deal to sell 140 planes worth $23 billion to China

BERLIN (Reuters) - Airbus has signed an agreement to sell 140 aircraft to China, it said on Wednesday, in a deal worth almost $23 billion at list prices.

U.S. accounting watchdog probes PwC's audits of BT Italy: source

MILAN (Reuters) - The U.S. accounting watchdog is investigating accounting firm PricewaterhouseCoopers's [PWC.UL] audits of British telecoms group BT's Italian business, which has been hit by a book-keeping scandal, a source close to the matter said.

Mexico says Trump-Pena Nieto meet unlikely to lead to big deals

MEXICO CITY (Reuters) - A meeting between Mexican President Enrique Pena Nieto and U.S. President Donald Trump on Friday at the G20 summit in Germany will last about 30 minutes and probably not lead to any major agreements, Mexico's foreign minister said on Wednesday.

Exclusive: Energy giants court Qatar for gas expansion role despite crisis

LONDON (Reuters) - The West's three biggest energy corporations are lobbying Qatar to take part in a huge expansion of its gas production, handing Doha an unintended but timely boost in its bitter dispute with Gulf Arab neighbors.

'Pharma bro' Shkreli barred from discussing trial around courthouse

(Reuters) - A U.S. judge on Wednesday ordered Martin Shkreli to stop talking about his fraud case in or around the Brooklyn courthouse where he is standing trial, five days after the former drug company executive burst into a room full of spectators and attacked the credibility of a government witness.

One Trader Warns "Many Assets Are Ripe For A Correction" & Korea Is The Excuse To Sell

With Emerging Market bonds suffering sudden and large outflows (after reaching record low levels of risk), IPOs collapsing, and 'no brainer' FANG stocks unable to keep a bid, it appears - despite the hype of a 30-component-index heavily weighted towards financials being near its record highs - that all is not well in the "buy everything.. especially the highest beta crap" investing world in which traders have become so used to existing.

As former FX trader Mark Cudmore notes North Korea could be just the excuse that anxious buy-and-holders need for a period of risk aversion...

Via Bloomberg,

Many risk assets are ripe for a correction from elevated levels and North Korea's latest provocation provides sufficient excuse for traders to act.

North Korea's missile tests have been ignored all year, so why is this time different?

Partially because diplomatic solutions are making no progress and so a U.S. military response is becoming more likely.

But, more importantly, it's raising tensions between China and the U.S.

That latter point is far more critical in the immediate-term.

It comes just ahead of a G-20 that was already expected to be fractious, and in the context of potential U.S.-imposed metal tariffs triggering a trade spat.

Most equity markets ...

Corporate Tax Revenues Flash a MAJOR Warning

Perhaps the single most accurate predictor of the economy has rolled over into recession territory.

We're talking about tax revenues.

GDP growth, unemployment data, ISM surveys... all of these can and are massaged by statisticians to create a rosier picture of the economy than reality. By way of example, we recently noted that 95% of all net job growth since 2008 was in fact created via an accounting gimmick. In reality, the jobs were never created at all.

Tax revenues, particularly corporate tax revenues, are very difficult to fake. Either the money came in the door, or it did not.

If the economy is booming, corporate tax revenues rise as companies generate greater revenue/income, resulting in them paying more in taxes. And if the economy is rolling over, corporate tax revenues plunge as companies close up shop and stop paying taxes.

On that note, take a look at the chart below.

Source: WSJ

As you can see, state and local corporate tax revenues have rolled over in a massive way. If we were to analyze this chart like a stock, you'd see the "uptrend" of growth was completely broken.

Why does this matter?

Because it serves as a clear signal that the US economy is rolling over in a big way. Indeed, the last time we saw state and local corporate tax revenues roll over like this was in late 2007/ early 2008.

We all know what happened to stocks after that. The only difference between then and now is the 2017 stock market bubble is even larger.

Turkey Warns It's Ready For Military Intervention In Syria, Accuses US Of Creating A "Terrorist Army"

Speaking in an interview with France 24, in which Turkish president Recep Erdogan lashed out at Germany for not allowing him to address the Turkish community there and preventing him from bringing his bodyguards to the upcoming G20 meeting in Hamburg, Erdogan warned that Turkey is ready to intervene militarily in north Syria to repel Syrian Kurdish forces there, forces which recall are armed and supported by the US but are seen as a terrorist organisation by Turkey.

He also said that to avoid military intervention, a de-escalation zone could soon be established by Turkish and Russian troops in the region.

Separately, Turkey's deputy Prime Minister Numan Kurtulmus told Reuters on Wednesday that Turkish military preparations in northwest Syria are "legitimate measures against a threat from Kurdish forces in the Afrin region, and Turkey will retaliate against any hostile move." He added in an interview that "This is not a declaration of war. We are making preparations against potential threats" adding that "It's ... a legitimate measure so that we can protect our independence. We cannot remain silent against those sending missiles from Afrin."

Kurtulmus was responding to the head of the Syrian Kurdish YPG militia, who told Reuters that Turkish military deployments near Kurdish-held areas of northwestern Syria were a declaration of war which could trigger clashes within days.

"Their (YPG) primary goal is a threat to Turkey, and if Turkey sees a YPG movement in northern Syria that is a threat to it, it will retaliate in kind," Kurtulmus said. "This isn't a fantasy fo ...

Beware The Predictions Of "Experts" Like Janet Yellen

Authored by Ryan McMaken via The Mises Institute,

Speaking in London, Federal Reserve chair Janet Yellen Tuesday predicted that the "the system is much safer and much sounder" and explained that the Federal Reserve is prepared to deal with numerous enormous shocks to the economy.

In her conversation with Lord Nicholas Stern, Yellen also went on to list the reasons that, thanks to central bank intervention, there is unlikely to be another financial crisis "in our lifetimes."

For those who have lived through more than one business cycle, however, alarm bells tend to go off every time an economist, central banker or high-ranking government official declares that there's little to no danger of economic turmoil in the near future.

[ZH: She was not alone...The Bank of England's governor Mark Carney wrote in a letter to The G-20 this week...

"A decade after the start of the global financial crisis, G20 reforms are building a safer, simpler and fairer financial system. The largest banks are considerably stronger, more liquid and more focused."

"We have fixed the issues that caused the last crisis. They were fundamental and deep-seated, which is why it was such a major job."

Well, here's what Carney's predecessor at the BOE, Mervyn King, said in 2007...

How to Solve Problems of Misaligned Executive Pay

Excessive, opaque pay packages for company bigwigs are a perennial problem for shareholders. A few U.K. companies are embracing a new approach: Scrap targets and make bosses long-term shareholders. U.S. boards should take note.

Payments Business Gets a $10 Billion Jolt

Proposed major cross-border deal between U.S. and U.K. payments leaders propels industry into spotlight.

Trump Meeting Putin Won't Make Russian Investments Great Again

As Donald Trump and Vladimir Putin get set for their first face-to-face meeting, investors are left to ponder how little things change in Russia

May 2017 CoreLogic Home Prices Year-over-Year Growth Rate Now 6.6%.

Written by Steven Hansen

CoreLogic's Home Price Index (HPI) shows that home prices in the USA are up 6.6 % year-over-year year-over-year (reported up 1.2 % month-over-month). CoreLogic HPI is used in the Federal Reserves' Flow of Funds to calculate the values of residential real estate.

The Fed: Selected highlights from the Fed's minutes

The following are highlights of the minutes of the Federal Open Market Committee meeting from June 13-14 released Wednesday:

The Fed: Fed might start balance-sheet drawdown in September, FOMC minutes hint

The Federal Reserve could trigger a long-awaited move to reduce its massive $4.5 trillion in debt holdings by September, a summary of the central bank's last meeting suggest.

Illinois still on brink of becoming first state rated junk but one step away from a budget

Illinois, already the lowest-rated U.S. state, took another step on Tuesday to ward off a deepening budget crisis and the imminent risk of becoming the first state ever branded with a junk bond rating.

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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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