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13Jul2017 Market Update: Wall Street Gains, DOW Up 23 Points, WTI Crude Hits Low 46 Handle

Written by Gary

US equities posted fractional gains in late afternoon trading today (SPY +0.1%) as technology stocks rose, while investors shifted their attention to second-quarter earnings.


Here is the current market situation from CNN Money

North and South American markets are mixed today. The Bovespa is up 0.53% while the S&P 500 gains 0.16%. The IPC is off 0.02%.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street gains as techs rise; focus shifts to earnings

(Reuters) - U.S. stocks posted modest gains in early afternoon trading on Thursday as technology stocks rose, while investors shifted their attention to second-quarter earnings.

Yellen says 3 percent U.S. growth 'quite challenging' in coming years

WASHINGTON (Reuters) - It would be "quite challenging" for the United States to reach the 3 percent growth target set by President Donald Trump, Federal Reserve Chair Janet Yellen told a Senate panel on Thursday in a hearing focused on regulatory reform and a discussion of lagging productivity.

Tale of two factories: hope, anguish ahead of Trump's steel tariff call

GRANITE CITY, Ill. (Reuters) - The blast furnaces and slab casters at United States Steel Corp's Granite City Works have been idle for 18 months, and laid-off workers here are pinning their hopes on President Donald Trump imposing broad new restrictions on imported steel.

Massive copper mine tests Trump's push to slash regulation

SUPERIOR, Arizona (Reuters) - Rio Tinto's proposed Resolution Copper Mine in Arizona would tunnel 7,000 feet underground, where rocks radiate heat from the earth's molten core. It would suck up enough water to supply a city and leave a crater a mile and a half wide and 1,000 feet deep.

Delta's profit tumbles on higher costs; passenger unit revenue rises

(Reuters) - Delta Air Lines Inc on Thursday reported a 21 percent drop in second-quarter profit because of sharply higher operating costs, despite higher passenger unit revenue, sending its shares down about 3 percent.

Energy Secretary Perry says U.S., Mexico prosperity inextricably tied

MEXICO CITY (Reuters) - Promising to promote cross-border electricity trade and investment, U.S. Energy Secretary Rick Perry said on Thursday that "Mexico's prosperity is inextricably intertwined with our prosperity."

Target's upbeat forecast drives retail stocks higher

(Reuters) - Target Corp forecast sales to increase for the first time in five quarters, thanks to improved customer traffic and sales trends, sending its shares up as much as 4.4 percent and pushing retail stocks higher.

Uber and Yandex to combine ride-hailing in Russia and beyond

FRANKFURT/MOSCOW (Reuters) - Uber and Yandex, the "Google of Russia", have agreed to combine their Russian ride-sharing businesses, with Yandex the leading partner in a deal that extends to five nearby markets.

CBS News forms partnership with BBC, replacing Sky

NEW YORK (Reuters) - CBS Corp's CBS News division said on Thursday it has signed a new editorial and newsgathering partnership with BBC News to share video, editorial content and other resources across the globe.

The Only Thing That Matters For Bond Traders, In One Chart

Inflation outlook, rate differentials, projected growth, positioning, quants... there are countless explanations provided daily to explain why bonds trade the way they do. And yet, as Bank of America shows today, as of this moment just over 50% of the global bond market returns can be explained with just one thing: central bank balance sheet changes.

BofA explains:

Central bank assets, most of which are held in fixed income assets, are now equivalent to 31% of the $49tn fixed income universe tracked by the BofA Merrill Lynch Global Fixed Income Markets Index (GFIM); and the percentage of global bond market monthly returns explained by the monthly change in central bank balance sheets has dramatically increased in recent years.

And with more than half of bond returns now driven by central banks, BofA goes so far as to say that "Central banks have become the bond market."

BOfA's evidence:

Note how in the past year, the months in which central bank asset purchases have either declined or been very small have coincided with months of weak performance from global bonds (Table 2). This was particularly the case in the fourth quarter of last year and a similar pattern is emerging this summer.

* * *

Of course, this is a problem because with central bank balance sheet projected to decline for the foreseeable future as

"It's Going To Be A Long Summer" One Trader Warns No One, Not Even The Fed, Believe Their Own Forecasts

It was fun while it lasted. For a few brief months, The Fed appeared to 'hawkish, no matter what' as data-dependent morphed into data-ignorant. Markets relished the confidence-inpiring message from the ivory tower academics... but, as former FX trader Rich Breslow notes, none of that occurred in reality and now, "no one really believes even their own forecasts," adding that, as markets wake up to this reality, "it's going to be a long summer."

Via Bloomberg,

It's hard to keep a good conspiracy theory in play if you don't make sure all the main actors are following the story line. Clearly, the two principal Fed speakers this week, Governor Brainard and Chair Yellen decided the game had gone on long enough. Or, more probably, opted for a pause to assess how the latest experiment in message manipulation had gone.

It was interesting, indeed encouraging, to believe that central bankers around the globe saw enough distance between current economic conditions and the financial crisis to orchestrate a move toward higher rates.

But they seem to cling to the notion that they must do so without any knock-on effects to the broader category of assets. They do so love the calming sounds from the trickle-down effect.

So what have we really learned beyond the fact that no one really believes even their own forecasts?

Tailing, Mediocre 30Y Auction Caps Week's Treasury Offerings

One day after a mediocre, tailing 10Y reopening, the Treasury held its last Treasury auction for the week, selling $12 billion in 30Y bonds at a yield of 2.936%, above May's 2.87% and the highest since 3.050% in May, tailing the When Issued of 2.926% by 1 basis point. This was the 4th tailing 30Y auction in the past 5.

The internals were unremarkable: the bid-to-cover of 2.31 was virtually unchanged from last month's 2.32, but above the 6 month average of 2.27%. Total bids of $27.9b for $12.3b in bonds sold vs $27.8b in bids for $12.0b in bonds sold at the previous auction

The buyside demand was stable with indirect bidders awarded 61.7% vs previous auction's 63.7%, and modestly below the MMA of 63.6%. Direct bidders were awarded 6.4% vs 6.7% in June, leaving Primary Dealers with 31.9% of the final aware, just higher than last auction's 29.6%.

In retrospect, considering the recent volatility in the TSY market coupled with today's surprise Jackson Hole, end-of-QE "trial balloon" by the ECB, it is perhaps more notable that this week's three auctions were not more disappointing.

Visa Begins Bribing Merchants To Stop Taking Cash

Authored by Yves Smith via Naked Capitalism blog,

The war on cash is escalating. A big driver isn't central banks who want to be able to inflict negative interest rates on savers, or Treasuries who see cash transactions as hiding revenues from their tax collectors, but the payment networks that want to kill cash (and checks!) as competitors to their oh so terrific (and fee-gouging) credit and debit cards.

However, one bit of good news is there doesn't appear to be much enthusiasm on the buyer, as in merchant, end.

First, the overview from the Wall Street Journal:

Visa Inc. has a new offer for small merchants: take thousands of dollars from the card giant to upgrade their payment technology. In return, the businesses must stop accepting cash.

The company unveiled the initiative on Wednesday as part of a broader effort to steer Americans away from using old-fashioned paper money. Visa says it is planning to give $10,000 apiece to up to 50 restaurants and food vendors to pay for their technology and marketing costs, as long as the businesses pledge to start what Visa executive Jack Forestell calls a "journey to cashless."

There are good reasons to think this initiative won't get far.

Customer resistance. Food vendors, and in particular restaurants, are low margin businesses with f ...

London's Latest Ploy to Attract World's Biggest IPO

U.K. authorities are proposing a special stock market listing category that appears tailor-made for super giant state-owned Saudi Aramco.

You Can't Build a Low-Cost Airline Without Low Costs

Norwegian Air wants to upend the market for travel between the U.S. and Europe. But rapid expansion has come at a cost.

Intel: Lonely At The Top

Intel's dominance in key chip makers has created a unique vulnerability. As challengers emerge in PCs and servers, Intel seems to have nowhere to go but down.

The Tell: 3 life pro tips for the teen cryptocurrency trader who's already made thousands

Navigating the treacherous cryptocurrency is not for the faint of heart. While the gains over the past year have been spectacular, the recent whipsaw reversal is a reminder of how wrenching it can be. What's a trader to do? And in this case, what's a 13-year-old who's already turned $2,200 in profits dabbling in the crypto market to do?

Donald Trump Jr.'s email scandal is a cautionary tale for all American workers

Why you should be very careful each time you press 'send.'

Coffee drinkers may live longer — even those ordering decaf

New studies find a link between caffeine and mortality rates.

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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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