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26Jul2017 Market Update: Wall Street Makes New Record Highs Again, But Can't Hold Them, New US Single-family Home Sales Increased In June, WTI Crude Remains In The High 48 Handle

Written by Gary

US stock markets opened higher with the three major indexes scoring new historic highs (SPY +0.04%) ...


Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.05%, while the Bovespa is leading the IPC lower. They are down 0.87% and 0.19% respectively.

... and then sliding fractionally. Wall Street got a big boost from strong corporate earnings while investors awaited the outcome of a two-day Federal Reserve meeting. WTI crude and the US dollar showed some strength by fractionally climbing higher.

What Is Moving the Markets

Here are the headlines moving the markets.

Strong earnings power Wall Street to record; Fed awaited

(Reuters) - Wall Street got a big boost from strong corporate earnings on Wednesday, with all three major indexes hitting record highs, while investors awaited the outcome of a two-day Federal Reserve meeting.

U.S. new home sales rise in June, but trend softening

WASHINGTON (Reuters) - New U.S. single-family home sales increased in June as purchases in the West surged to a near 10-year high, but downward revisions to the sales pace for the prior three months pointed to a housing market that is struggling to gain momentum.

Foxconn to announce new U.S. manufacturing plant: source

(Reuters) - Electronics manufacturer Foxconn will announce plans to build a multi-billion dollar flat panel screen plant in Wisconsin at a White House event later on Wednesday, a source briefed on the matter said.

Boeing shares hit record after cost cuts lift second-quarter profit

NEW YORK (Reuters) - Boeing Co shares soared almost 8 percent to a record high on Wednesday after the world's biggest plane maker posted second-quarter profit and cash flow well ahead of Wall Street estimates and lifted its full-year forecasts, helped by aggressive cost cutting.

Ford results foreshadow tougher times for Detroit automakers

DETROIT (Reuters) - Ford Motor Co on Wednesday joined rival General Motors Co in reporting higher-than-expected second-quarter profits, and in the next breath warning of a rougher ride for the rest of the year.

Wal-Mart proposes policy actions to boost U.S. manufacturing

CHICAGO (Reuters) - Wal-Mart Stores Inc on Wednesday proposed 10 policy actions to boost U.S. manufacturing that the retailer said could help recapture $300 billion of the $650 billion worth of consumer goods that are currently imported.

Oil jumps to near eight-week high after big draw in U.S. crude stocks

NEW YORK (Reuters) - Oil prices rose to near eight-week highs on Wednesday, with Brent crude futures at over $50 a barrel, as a fall in U.S. inventories bolstered expectations that the long-oversupplied market was moving toward balance.

Coca-Cola profit beats on demand for juices, low-sugar sodas

(Reuters) - Coca-Cola Co's profit, in its first quarter under new Chief Executive James Quincey, beat analysts' estimates on higher-than-expected demand for its healthier non-carbonated beverages as well as low and no-sugar versions of its sodas.

Fed expected to leave rates unchanged; balance sheet in focus

WASHINGTON (Reuters) - The Federal Reserve is expected to hold interest rates unchanged on Wednesday and possibly hint that it will start winding down its massive holdings of bonds as soon as September in what would be a vote of confidence in the U.S. economy.

Howard Marks Sounds The Alarm On ETFs And Passive Investing, Again

Back in March 2015, Howard Marks was among the first to sound the alarm on the encroaching danger posed by both ETFs in particular, and passive investing in general, when he memorably asked (rhetorically, for now), "what would happen, for example, if a large number of holders decided to sell a high yield bond ETF all at once?" and answered his own question:

"in theory, the ETF can always be sold. Buyers may be scarce, but there should be some price at which one will materialize. Of course, the price that buyer will pay might represent a discount from the NAV of the underlying bonds. In that case, a bank should be willing to buy the creation units at that discount from NAV and short the underlying bonds at the prices used to calculate the NAV, earning an arbitrage profit and causing the gap to close. But then we're back to wondering about whether there will be a buyer for the bonds the bank wants to short, and at what price. Thus we can't get away from depending on the liquidity of the underlying high yield bonds. The ETF can't be more liquid than the underlying, and we know the underlying can become highly illiquid."

Not to make a too fine a point of it, Marks underscored just how profound the role of liquidity can be at a time when everyone needs it, and none is available:

In September 2008, AIG experienced serious liquidity issues (despite its $1 trillion balance sheet) when it couldn't post $20-25 billion of liquid collateral related to credit default swap contracts written by one of its subsidiaries. The U.S. government stepped in as a result, lending support that ...

Is The Fed Poised To Ignite A Violent Dollar Rally?

As ther world waits with bated breath for Janet Yellen's statement this afternoon - whiche is uniformly expected to be a nothing-burger, some are wondering if the recent flip-floppery by Yellen, Draghi (and even Kuroda with his 'actual' tapering while lowering inflation expectations) does not leave today open to another modst shift back in The Fed's 'hawkishness'. As Bloomberg's macro strategist warns, this sets the market up for a surprise and as he warns: "Dollar risks are starting to seem skewed all one way: toward an immediate rally."

There's extremely bearish positioning, that's failed to adapt to changing circumstances, into event risk that's structured to surprise in the opposite direction. That's an explosive mix.

When something seems so obvious, your immediate instinct should be to ask, "what's the catch?" My problem is that this time, I just can't see one.

The dollar is poised like a coiled spring against so many other currencies. Some of them have started to retrace on their own -- AUD, JPY and KRW as some examples -- but the FOMC can trigger all the rest at once today.

Scaramucci Singles Out Obama's "Political Holdovers" As White House Leakers

Having 'terminated' his first White House leaker yesterday, President Trump's newly-minted comms director has wasted no time in making many feel uncomfortable in the their roles (and rightly so).

Watch the latest video at video.foxnews.comSpeaking on Fox News, The Hill reports that Scaramucci said that "political holdovers" from the Obama White House "aren't helping," and hinted that more staff changes could be on the way.

"Listen, we have to crack down on leaks on a number of different fronts," Scaramucci told "Fox and Friends."

"There seems to be some holdovers, political holdovers from the Obama administration that are not helping," he added.

"I certainly have the full responsibility in the comms shop, which I do believe will be corrected shortly."

Scaramucci cautioned viewers to remember that it's impossible for him to reach a point of absolutely no leaks, but pledged to clean up the White House press office.

"People are suggesting I'm going to try to get the leaks down to zero, that is absolutely impossible in Washington, I'm learning a little about this town, but what I do want to have happen is people who report to me, if there are senior people in the administration trying to get them to leak information on each other, we're getting that to stop r ...

U.S. Shale Threatens Chemical Element of Aramco's IPO

An expected surge in U.S. petrochemicals output challenges one of the main pillars of the energy giant's plans to list.

A Hot Investment Too Popular for Its Own Good

It has proved startlingly easy for companies to cut the rates on their leveraged loans. Loan investors have little choice but to go along.

GM and PSA Geared Up for Auto Industry Tougher Times

The car makers' unwavering focus on costs and margins will offer protection in the coming downturn.

Earnings Outlook: Twitter earnings: Analysts fear that last quarter's user increase won't be repeated

Twitter reports second-quarter earnings before the market opens Thursday and analysts are not optimistic about its user growth.

U.S. Steel surges 7% as better-than-expected earnings offset Trump comments

Stock bucks the negative trend in the sector Wednesday, after President Donald Trump signaled a possible change of heart on tariffs and import restrictions.

Michael Kors gets a toehold in men's shoes with Jimmy Choo purchase

Michael Kors says Jimmy Choo is "adding a twist to classic shapes" in men's evening shoes.

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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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