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07Aug2017 Market Close: Wall Street Investors Push The Markets Higher, WTI Crude Climbs Back Up Into The 49 Handle, Beneath The Stock-market Records, Darkly Bearish Trends Are Lurking Say Analysts

Written by Gary

US stock markets closed higher (SPY +0.2%) and the DOW closing near its record high for the ninth straight session.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Dow on track for ninth straight record close

(Reuters) - U.S. stocks were slightly higher in afternoon trading on Monday, with the Dow on track to close at a record high for the ninth straight session.

Funds target 'unknown' stocks as Wall Street cuts analyst jobs

NEW YORK (Reuters) - With a nearly 30-percent gain in 2017, shares of industrial products maker Handy & Harman Ltd are outpacing hot stocks like Google-parent Alphabet Inc and Visa Inc. Yet few on Wall Street have ever heard of the $412-million market-cap company, in large part because no sell-side research analysts publish any estimates of its earnings.

Tesla seeks $1.5 billion junk bonds issue to fund Model 3 production

DETROIT (Reuters) - Tesla Inc said on Monday it would raise about $1.5 billion through its first-ever high-yield junk bond offering, as the U.S. luxury electric car maker seeks fresh sources of cash to ramp up production of its new Model 3 sedan.

Samsung scion Lee fights back tears as prosecutors seek 12 years' jail

SEOUL (Reuters) - Samsung Electronics Vice Chairman Jay Y. Lee fought back tears and denied wrongdoing on Monday as prosecutors sought a 12-year jail term on charges that include bribing the former president to help cement control of the South Korean tech giant.

Ackman's Pershing Square to nominate three ADP board directors: sources

(Reuters) - Pershing Square Capital Management LP plans to nominate three directors, including its CEO William Ackman, to sit on the board of human resources outsourcing company Automatic Data Processing Inc, a person familiar with the matter said on Monday.

Tyson posts better-than-expected profit, bets on chicken

(Reuters) - Tyson Foods Inc reported stronger-than-expected quarterly results on Monday, sending its shares up 5 percent, and said it would ramp up chicken production in the face of record demand from U.S. consumers.

Netflix buys comics publisher Millarworld to feed films and TV

(Reuters) - Netflix Inc on Monday said it has bought comics publisher Millarworld, bringing on board renowned comic book writer Mark Millar and a host of character francises it can mine for TV shows and movies.

Toshiba may gain auditor sign-off, reducing delisting risk: media

TOKYO (Reuters) - Toshiba Corp may gain a partial endorsement from its auditor for its annual financial results after disagreements over accounting for the much of the year, Japanese media reported - a step that would lessen, but not remove, the risk of a delisting.

Marriott set to woo Chinese tourists with Alibaba deal

(Reuters) - Marriott International Inc said on Monday it would partner with China's Alibaba Group Holding Ltd to tap into the growing number of Chinese citizens who travel abroad.

Why Blackrock Isn't Worried At All About Record Low Volatility

Yesterday, in an extensive, eloquent essay, One River's Eric Peters described why it's only a matter of time before record low breaks the market's current phase of "metastability" and explodes higher. Below is the punchline:

To sell implied volatility at current levels, investors must imagine tomorrow will be virtually identical to today. They must imagine that bond yields won't rise despite every major central bank looking to hike interest rates and exit QE. They must imagine that economies at or near full employment will not create inflation; that GDP will neither accelerate nor decelerate; that governments will tolerate historic levels of income inequality despite citizens voting for the opposite; that strongly rising global debts will be supported by decelerating global growth. And volatility sellers must imagine that nine years into a bull market, amplified by a proliferation of complex volatility-selling strategies and passive ETFs with liquidity mismatches, that we will dodge a destabilizing shock to market infrastructure. I can imagine a few of those things happening, but neither sustainably nor simultaneously. It is much easier to imagine a tomorrow that looks different from today.

As volatility declined, investors have had to sell even more of it to sustain sufficient profits. This selling reinforces the trend lower, which produces an illusion that legacy volatility shorts are less risky today than yesterday. Lower volatility thus begets lower volatility. And this also ensures that quantitative models reduce overall portfolio risk estimates, which allows (and in many cases forces) investors to buy more assets at prevailing prices. This in turn reduces vo ...

US Credit Card Debt Surpasses Financial Crisis Record, As Student And Auto Loans Hit New All Time High

Who would have expected that today's otherwise boring monthly consumer credit report would be the day's most exciting event. Well, moments ago the monthly update from the Federal Reserve confirmed that as of the end of June, total revolving (i.e. credit card) credit rose to $1,021.7 billion, an increase of $4.1 billion on the month, and a new all time high, taking out the previous record high set during the summer of 2008.

Coupled with the monthly $8.3 billion increase in non-revolving credit, which also rose to an all time high of $2,834.1 billion...

... means that total consumer credit in June increased by $12.4 billion, slightly less than the $13.9 billion expected and modestly less than the $18.4 billion increase in May, to $3,855.8 billion, also a record high.

Taking a closer look at the quarterly update in non-revolving debt, we find that for another consecutive quarter, both student and auto loans hit record highs, of $1.450 trillion and $1.131 trillion respectively, although there does appears to be a modes ...

US Equities Are Now 'Safer' Than Foreign Exchange

While Draghi shook things up in late June, it appears to be Janet Yellen's flip-flop that has sparked the latest regime shift in global capital markets.

Since then, traders' expectations for foreign exchange uncertainty has surged, while the outlook for equity, rate, and oil uncertainty has tumbled.

This has left the market now seeing equities as safer than currencies...

When are equities safer than currencies? As Bloomberg notes - almost never, at least until now.

The one-month implied volatility of the S&P 500 Index is more than a full percentage point below Deutsche Bank's measure of G-7 currency volatility over the same period, a rare event caused by the combination of a falling dollar and rising U.S. equities. It appears that investors have decided that low-yielding currency returns are riskier than equities, inverting the typical risk/reward relationship.

Not All Capital Is Equal; Some Is Destructive

Authored by Charles Hugh Smith via OfTwoMinds blog,

Financialization incentivizes hot money capital flooding into speculative credit-asset bubbles.

When we speak of capital investments and capital flows, it's presumed all the capital being referenced is equal: a dollar is a dollar, wherever and whenever it's put to use.

But not all capital is equal, and that is one reason why the global financial system is far more fragile than the mainstream media lets on. Metrics such GDP (gross domestic product) don't reflect the differences in the capital sloshing around the global economy.

In the "happy story" of classical capitalism, capital flows to productive investments: the construction of needed homes, assembly of new factories, etc.--activity that returns a profit to the owners of capital and generates value and employment by filling scarcities or by increasing productivity and thus wealth.

In this "happy story" of classical capitalism, banks (and those with savings) distribute credit and saved capital to those with the most attractive creditworthiness for the lowest-risk, highest-return ventures--ventures that are presumed to be productive for end users and society at large.

Compare that "happy story" of capital seamlessly distributed to productive uses to "hot money" capital flooding into real estate in desirable cities such as Vancouver, Toronto, New York, San Francisco, Seattle, Paris, etc. This hot-money capital isn't seeking productive investments; it's seeking a safe place to park capital and a speculative gain from participating in a credit-asset bubble.

When the owner of capital buys a luxury flat in Paris, NYC, San Francisco, ...

Cash-Hungry Tesla's Missed Opportunity

Tesla chief Elon Musk's choice of debt to finance his Model 3, while the company's share price is so strong, may turn out to be a mistake.

China Gives Up Global Role for a Stronger Yuan

Rebounding trade and tighter capital controls have shored up China's currency against the dollar and replenished the nation's foreign exchange coffers. But the yuan's internationalization has stalled.

NXP Investors Can Expect More Qualcomm Love

Qualcomm looks like it will have to up its $38 billion bid for Dutch car-chip giant NXP if it wants achieve its goal of getting a slice of the automotive future.

June 2017 Headline Consumer Credit Growth Slows

Written by Steven Hansen

The headlines say consumer credit rate of annual growth declined from last month. Our analysis agrees - and most of the slowing was due to credit card non-use

The Tell: Dollar to finish year stronger on better inflation, Wells Fargo says

The U.S. dollar has not had a great year so far on the back of uncertainty over Washington's policies and weak economic data. But the greenback still has time to turn things around and finish 2017 strong, Sameer Samana, global quantitative strategist for Wells Fargo said in a note today.

Key Words: Steve Forbes says nobody cares if Bill Gates gets richer because of tax cuts

Steve Forbes shares his thoughts on increasing taxes on the wealthy.

Fannie and Freddie could need $100 billion bailout in next crisis, stress test finds

The stress tests mandated by Dodd-Frank Act show some improvement for the mortgage providers compared to last year.

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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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