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10Aug2017 Market Update: Wall Street's Trump Rally Taking A Breather Or Something Much Worse Than A Simple Correction In The Works

Written by Gary

US stock markets opened sharply lower as expected (SPY -1.0%) with the DOW down triple digits in early afternoon trading. WTI crude has waterfalled down to the 48 handle.


Here is the current market situation from CNN Money

North and South American markets are broadly lower today with shares in Brazil off the most. The Bovespa is down 1.30% while Mexico's IPC is off 1.15% and U.S.'s S&P 500 is lower by 0.98%.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street reels under North Korea tensions, tepid retail earnings

(Reuters) - U.S. stocks fell sharply on Thursday, with the Dow slipping more than 100 points, as lackluster results from retailers Macy's and Kohl's added to investor nervousness over escalating tensions between the United States and North Korea.

U.S. producer prices record biggest drop in 11 months

WASHINGTON (Reuters) - U.S. producer prices unexpectedly fell in July, recording their biggest drop in nearly a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate hike.

Ford says it is cooperating in German diesel investigation

BERLIN (Reuters) - Ford said German motor authorities were investigating a diesel-engined model of its mid-sized Mondeo car, adding that none of its cars was equipped with illegal emissions cheating software.

UK fraud office expects decision on GSK, Rolls-Royce cases next year

LONDON (Reuters) - The UK Serious Fraud Office (SFO) said on Thursday it expects to decide next year whether it will file criminal charges in bribery investigations related to drugs giant GlaxoSmithKline and aero engine company Rolls-Royce .

Citi stock to double in 4-5 years, says Mike Mayo

(Reuters) - Citigroup Inc's stock price is likely to double in the next four to five years, banking analyst Mike Mayo wrote in his first note after joining Wells Fargo Securities.

Toshiba wins unusual auditor sign-off, staves off delisting

TOKYO (Reuters) - Cash-strapped Toshiba Corp has staved off delisting after its accounting won auditor approval, albeit with a stern rebuke, leaving its listed status largely dependent on whether it can complete the stalled sale of its chip business by March.

Macy's, Kohl's sales declines raise turnaround concerns

(Reuters) - Shares of department store chains Macy's Inc and Kohl's Corp tumbled on Thursday as the companies continued to report a drop in quarterly same-store sales, stoking concerns that their turnaround may still be a long way off.

Wells Fargo likely to appoint Duke as chairwoman: WSJ

(Reuters) - Betsy Duke, a former Federal Reserve official and community banker from Virginia, may become chairwoman of the board of Wells Fargo & Co , according to the Wall Street Journal

Buoyant bitcoin stirs crypto-bubble fears

LONDON (Reuters) - Bitcoin and other "cryptocurrencies" are big money, virtually as big as Goldman Sachs and Royal Bank of Scotland combined.

"Subprime Is Contained" (& Other Evidence That "They Really Don't Know What They're Doing")

Authored by Jeffrey Snider via Alhambra Investment Partners,

Ben Bernanke, then Chairman of the Federal Reserve, told Congress in March 2007 that subprime was contained. He will rightfully be remembered in infamy for that, but that wasn't the most egregious example of being wrong. Even putting it in those terms risks understating the problem and why it stubbornly lingers. Being really wrong is claiming that IOER will establish a floor for money market rates, and then finding out it actually doesn't.

No, what policymakers did especially in the early crisis period was altogether worse; they demonstrated conclusively that though they shared this world with the rest of us, they inhabited and continue to inhabit a totally different planet.

Given the anniversary date and our human affinity for round numbers (ten years or a lost decade), there is a desire to revisit some of the worst of the list which happened just before August 9, 2007.

My favorite has always been Bill Dudley, as I recounted last at the ninth anniversary of nothing being done:

As far as the issue of material nonpublic information that shows worse problems than are in the newspapers, I'm not sure exactl ...

Ray Dalio: With Two Potential Crises, Buy Gold In Case "Things Go Badly"

It's been a while, years in fact, but suddenly it's gold's time to shine again.

The yellow metal - insurance against systemic collapse, hyperinflation and infinite political stupidity - which in recent years has seen its popularity fade as the younger generation has gravitated toward the far faster moving crypto currencies - is once again back in the spotlight.

As UBS' strategist Joni Teves, who has been recommending the precious metal for a long time despite the BOJ's relentless suppression, writes "gold bounces from recent lows in line with other safe havens amid risk-off sentiment across markets following geopolitical headlines over the past 24 hours." Below are the key considerations from today's UBS note:

Key technical levels come into focus for gold, triggering some decent market activity in the middle of this typically quieter summer period. Geopolitical risks tend to have quite a volatile influence on prices and the immediate risk here is that $20 move from yesterday is quickly faded. Gold is holding well so far. We think the risks are somewhat skewed to the upside here, with a break of $1280 likely to attract further attention. Although speculative positions on Comex have increased in the past couple of weeks, overall levels remain lean. Subdued participation this year and lean positioning suggests that market participants would have to play catch-up on a break higher. On the flip side, this also suggests that a pullback is likely to be relatively contained. Additionally, we had previously argued that uncertainty on Fed policy expectations is likely to keep gold broadly supported, especially given downside risks to inflation. US CPI data on Friday should offer some insights; the next important signpost would be the Fed's Economic Symposium at Jackson Hole, for further guidance on policy.

Tesla Cars Aren't As Carbon (And Taxpayer) Friendly As You Think

Authored by Duane Norman via Free Market Shooter,

Tesla proponents love to remind people how their vehicles are "carbon free" (in spite of Tesla CEO Elon Musk's own carbon profligate lifestyle):

Fact: the Tesla Model S is an environmentally friendly, zero emissions electric vehicle that won't pollute the air like gas-powered cars. Carbon emissions from a gas car's tailpipe has a dangerous impact on global warming.... In addition, Tesla CEO Elon Musk explains that, "combustion cars emit toxic gases. According to an MIT study, there are 53,000 deaths per year in the U.S. alone from auto emissions."

But in reminding people about how they don't burn fossil fuels, they make sure to omit and/or obfuscate all the other emissions-laden factors that go into production of Tesla automobiles, including the oft-unspoken costs of the vehicles to the taxpayer and to other auto manufacturers.

Start with the power source for the Tesla; their electric power plant uses lithium-ion batteries to store the electricity required to run the car. And while a good amount of lithium is produced at salt lake brines that use chemical processes to extract the requisite lithium...

Nasdaq Tumbles Below Key Technical Support

The brief respite bounce after Europe closed has failed and US equity markets are tumbling once again.

Nasdaq is leading the drop...

With FANG Stocks erasing all the post-NFLX earnings gains...

S&P is near its 50-day moving average and Nasdaq just broke below its 50-day moving-average for the first time in over a month...

And Nasdaq VIX is back above 18.

Altice-Charter Chatter May Be Just Talk

How would European cable billionaire Patrick Drahi fund a bid for Charter Communications? It's the obvious question -- but perhaps it misses the point.

Glencore Bets Heavy on an Electric Car Future

Glencore is betting that being in the "right" commodities for a battery and electric car dominated future is more important than big cash payouts now.

Chipotle Is a Recipe for Trouble

To justify its high stock price, Chipotle needs to keep growing like crazy while simultaneously regaining customers' trust. That will be difficult to pull off

Market Snapshot: Dow, S&P 500, Nasdaq threaten to all log 3rd straight loss for first time since April

All three major equity benchmarks stumble firmly lower on Thursday, with the trifecta of indexes on track to fall in three consecutive sessions in unison for the first time since mid April amid a persistent war of words between the U.S. and North Korea.

The Wall Street Journal: Discovery of new hacking method shows malware stored in synthetic DNA can take over a PC

Researchers stored malware in synthetic DNA and demonstrated how that code can compromise a computer analyzing the DNA after it has been run through a gene-sequencing machine.

Market Extra: Wall Street's 'fear gauge' nears 3-month high as 'fire and fury' sparked stock-market slump

A popular gauge of fear and volatility on Wall Street surged on Thursday and nearing its highest level since mid May.

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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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