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06Jul2017 Market Update: Wall Street Reacts Negatively To Weak Employment Data, WTI Crude Surges Past The 46 Handle And Then Plunges, The US Dollar Continues Its Slide

Written by Gary

US stocks were lower in late afternoon trading today as weak jobs data and the critical non-farm payrolls report due on Friday concerned investors. Traders also fretted about rising tensions . . .


Here is the current market situation from CNN Money

North and South American markets are lower today with shares in Brazil off the most. The Bovespa is down 0.74% while U.S.'s S&P 500 is off 0.61% and Mexico's IPC is lower by 0.61%.

. . . in the Korean peninsula. The United States said it was ready to use force if need be to stop North Korea's nuclear missile program after the country test launched a ballistic missile that could hit Alaska.

Nasdaq futures fall, dragged lower by Tesla, Alphabet and Amazon

Microsoft plans thousands of job cuts in a sales staff overhaul to fuel cloud growth

Tesla's 13% plunge this week puts it near bear market territory; market cap falls back below GM's

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street falls on weak ADP data, North Korea tensions

(Reuters) - U.S. stocks were lower in early afternoon trading on Thursday as weak jobs data from the private sector struck a bleak tone for the critical non-farm payrolls report due on Friday, while investors fretted about rising tension in the Korean peninsula.

Microsoft plans to cut 'thousands' of jobs: source

(Reuters) - Microsoft Corp plans to cut "thousands" of jobs, with a majority of them outside the United States, a person familiar with the matter told Reuters.

Tesla shares drift lower as Model S fails to ace some safety tests

(Reuters) - Shares of Tesla Inc fell for the third straight day on Thursday, after its Model S sedan failed to get the top score in some tests conducted by a U.S. safety group and a larger rival secured supplies to power its electric vehicle program.

Qatar Airways set to start buying shares in American Airlines

DUBLIN (Reuters) - Qatar Airways is to press on with plans to build a stake of up to 4.75 percent in American Airlines in the near future, despite the "categorical" opposition of the U.S. company's management, Qatar Chief Executive Akbar al-Baker said on Thursday.

EU charges Merck KGaA, GE, Canon over merger rules

BRUSSELS (Reuters) - General Electric , German drugmaker Merck KGaA , and Japan's Canon risk hefty fines after EU antitrust regulators accused them of providing misleading information during separate merger deals.

U.S. private payrolls growth slows; jobless claims rise

WASHINGTON (Reuters) - U.S. private employers hired fewer workers than expected in June and applications for unemployment benefits last week increased for a third straight week, pointing to some loss of momentum in job growth as the labor market nears full employment.

Dish, Amazon chiefs discuss wireless partnership: WSJ

(Reuters) - Dish Network Corp Chief Executive Charlie Ergen and Amazon.com Inc head Jeff Bezos have discussed a partnership to enter the wireless business, the Wall Street Journal reported, citing people familiar with the matter.

$1 billion headache for Airbus as Qatar cancels four jets

PARIS (Reuters) - Qatar Airways has axed orders for four A350s because of delivery delays, Airbus said on Thursday, handing the European planemaker a new headache over what to do with jets worth $1.2 billion at list prices as it tries to close a sales gap with rival Boeing.

JPMorgan tops Canadian M&A activity in energy-driven first half

TORONTO (Reuters) - Canadian mergers and acquisitions rose about 13 percent to C$120.5 billion ($93.2 billion) in the first half of 2017, driven by big-ticket energy deals and robust cross-border activity, according to Thomson Reuters data released on Thursday.

Stockman: "We're On The Fast Track To 'Carmageddon'"

Authored by David Stockman via The Daily Reckoning,

Back in the 1950s when GM had 50% of the auto market they always said that, "As General Motors goes, so goes the nation."

That was obviously a tribute to GM's economic muscle and its role as the driver of growth and rising living standards in post-war America's booming economy. Those days are long gone for both GM and the nation. GM's drastically reduced 20% market share of U.S. light vehicle sales in June was still an economic harbinger, albeit of a different sort.

GM offered a record $4,361 of cash incentives during June. That was up 7% from last year and represented 12% of its average selling price of $35,650 per vehicle, also a record. But what it had to show for this muscular marketing effort was a 5% decline in year-over-year sales and soaring inventories. The latter was up 46% from last June.

My purpose is not to lament GM's ragged estate, but to note that it — along with the entire auto industry — has become a ward of the Fed's debt-fueled false prosperity. The June auto sales reports make that absolutely clear.

In a word, consumers spent the month "renting" new rides on more favorable terms than ever before. But that couldn't stop the slide of vehicle "sales" from its 2016 peak.

In fact, June represented the 6th straight month of year-over-year decline. And the fall-off was nearly universal — with FiatChrysler down 7.4%, Ford and GM off about 5% and Hyundai down by 19.3%.

The evident rollover of U.S. auto sales is a very big deal because the exuberant auto rebound from the Great Recession lows during the last six years has been a major contributor to the weak recovery of overall GDP.

In fact, ...

BMO Finds An A New Source Of Systemic Risk

In a time of suffocating, crushing market complacency (which has made the lives of financial analysts so boring, they have even quantified what complacency is), a pet hobby that has emerged within the financial community is to find new possible sources of underappreciated systemic risk. One such attempt comes from BMO's Mark Steele today, who notes that aside from the pressure that the short to medium end of the curve is dishing out as Central Banks turn hawkish, "the market dishes out some of its own early signals of a more important nature."

Steele says he created a basket of Chinese Bank CDS to look for systemic risk there, and yesterday it notably broke above a narrowing trend - Exhibit 1.

Breaking the basket down, BMO highlights China Construction Bank as the key member that shows the greatest, albeit liquidity induced, "breaking bad" spike - Exhibit 2

Here, Steele will stop readers before they go asking about BofA, or SocGen, credit risk, to say that the bank's systemic risk basket sleeps like a baby. His spin would be to tell you that it seems an opportune time to buy protection - Exhibit 3.

Unveiling the Silver in the LBMA London vaults

Submitted by Ronan Manly, BullionStar.com Sometime in the coming days, the London Bullion Market Association (LBMA) plans to begin reporting the amount of real physical gold and silver that is actually stored in the network of LBMA vaults in London. This follows an announcement made by the LBMA on 8 May. There are 7 commercial vault operators (custodians) in the LBMA custodian vault network namely:

HSBC

JP Morgan

Brinks

Malca Amit

ICBC Standard Bank

Loomis (formerly Viamat)

G4S

Note that ICBC Standard Bank has a precious metals vault in London which is operated by Brinks on behalf of ICBC Standard. It is also quite possible that some of the HSBC vaults, such as the famous GLD gold vault, are located within Brinks facilities. Adding in the Bank of England gold vaults under the Bank of England's head office in the City of London, the LBMA vaulting network comprises eight sets of vaults. However, the Bank of England vaults do not store silver, or at least there is no evidence that the Bank of England stores silver. However, the other 7 vault operators can and do store ...

Witness In Shkreli Trial Says "Most Hated Man In America" Made Him Millions

Benjamin Brafman, attorney for former Turing Pharmaceuticals CEO Martin Shkreli has based Shkreli's defense on the notion that, while his client may have misled investors in hedge funds and pharmaceutical companies that he controlled, most of them made money thanks to Shkreli's business acument and investing prowess.

Even Sarah Hassan, a witness for the prosecution, admitted as much when she testified that Shkreli paid her back with $400,000 in cash, plus shares in Retrophin, a biotech company founded by Shkreli - though Shkreli's repeated evasions felt like "a betrayal."

And on Wednesday, testimony from another witness supported Brafman's assertion: Darren Blanton, a Dallas-based biotechnology investor, told the jury that, although Shkreli lied to him repeatedly about his investing track record and the amount of capital he managed, the former pharma entrepreneur helped him make millions in profits.

Here's Reuters:

"Darren Blanton, a Dallas-based biotechnology investor who appeared in Brooklyn federal court as a witness for U.S. prosecutors, told jurors he invested in Shkreli's hedge fund MSMB Capital after being told the fund was managing $35 million in assets and had an independent auditor.

He said he later learned both of those claims were false and f ...

Trump Is Right: China Could Press North Korea More on Trade

In addition to banning coal imports from North Korea, China could tighten the trade screws on its neighbor a lot more if it wanted to.

Who Dictates Global Bond Yields? Europe for Now

Bond investors, look to Europe. The delicate dance of expectations between the European Central Bank and government-bond markets is the biggest driver of yields right now.

CEO-Worker Pay Ratio Generates Outrage---and Some Insight

A controversial new metric on executive pay is on Congress's chopping block. Shareholders should want it to survive, even if it only provides a sliver of insight into the companies they own.

May 2017 Trade Balance Umproved

Written by Steven Hansen

Trade data headlines show the trade balance improved from last month. Our analysis paints an stronger picture for trade using the rolling averages.

Deep Dive: Fund manager profited from tech, says now is time to focus on health-care sector

Jerome Dodson of the Parnassus Endeavor Fund, one of the best-performing large-cap growth funds, says the tech sector's "next move may be down."

The Wall Street Journal: Imagine a world with no more traffic lights

Self-driving cars could drastically reduce vehicle fatalities—and eliminate the need for traffic lights.

The Wall Street Journal: How to field questions about your salary history

Tips for job seekers who don't want to disclose their past salary.

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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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