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17Aug2017 Market Update: Wall Street Takes Time-off For A Minor Correction, Small Caps Off 1.4 Percent, DOW Down Triple Digits, WTI Crude Climbs Back Up To The Low 47 Handle

Written by Gary

US stock markets are on a steep 1.0% decline (SPY -1.0%) on rumors that Gary Cohn is resigning as director of the National Economic Council and it's time for a Trump Rally breather.


Here is the current market situation from CNN Money

North and South American markets are lower today with shares in U.S. off the most. The S&P 500 is down 1.00% while Brazil's Bovespa is off 0.71% and Mexico's IPC is lower by 0.32%.

Traders Corner - Health of the Market

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street pares losses after Cohn resignation rumor knock-down

NEW YORK (Reuters) - U.S. stocks pared losses in choppy, late-morning trading Thursday as rumors circulating that Gary Cohn is resigning as director of the National Economic Council were called "100 (percent) false" by an Axios reporter on Twitter.

U.S. labor market tightening; autos weigh on manufacturing

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits fell to near a six-month low last week, pointing to a further tightening in the labor market that could encourage the Federal Reserve to lay out a plan to start unwinding its massive bond portfolio.

Uber wins reversal in lawsuit over price-fixing, arbitration

NEW YORK (Reuters) - Uber Technologies Inc [UBER.UL] on Thursday won a victory in its effort to keep unhappy customers from suing in court, persuading a federal appeals court to send a Connecticut passenger's price-fixing case into arbitration.

GM creditor trust drops settlement with ignition switch plaintiffs

NEW YORK (Reuters) - In a blow to people suing General Motors Co over faulty ignition switches and other alleged vehicle defects, a trust that holds many GM liabilities from before its 2009 bankruptcy has canceled a settlement that sought to force the automaker to pay $1 billion in shares to resolve millions of claims.

Germany's Lufthansa gets first say on Air Berlin asset sale: union

BERLIN/FRANKFURT (Reuters) - A first round of formal talks for the sale of insolvent German airline Air Berlin's assets will be held with its bigger local rival Lufthansa on Friday, ahead of other prospective bidders, a senior labour union official said.

Wisconsin lawmakers debate billions in incentives for Foxconn plant

(Reuters) - The Wisconsin State Assembly on Thursday will consider a $3 billion incentive package for a proposed liquid-crystal display factory by Taiwan's Foxconn, the first vote on the deal by a chamber of the state's Republican-controlled legislature.

Wal-Mart's profit margins fall; quarterly outlook disappoints

CHICAGO (Reuters) - Wal-Mart Stores Inc warned on Thursday that this quarter's earnings could miss Wall Street's estimates as the world's biggest retailer struggles with falling margins due to price-cutting and heavy spending on its e-commerce operations.

Mylan, U.S. finalize $465 million EpiPen settlement

BOSTON (Reuters) - Mylan NV has finalized a $465 million settlement with the U.S. Justice Department, resolving claims it overcharged the government for its EpiPen emergency allergy treatment, which became the center of a firestorm over price increases.

Alibaba beats on earnings as e-commerce remains core revenue driver

BEIJING (Reuters) - Alibaba, China's top e-commerce firm, beat analyst estimates with a 56 percent rise in first-quarter revenue, driven by strong online sales.

Tech Rally Internals Tank: Nasdaq Ratio Crashes To Record Low

Via Dana Lyons' Tumblr,

On an equal-weight basis, the Nasdaq 100 just dropped to a relative all-time low.

There are countless ways to measure the level of participation in a stock market rally. By "participation", we are referring to the number of stocks that are taking part in the rally. One way is to look at the market's "internals", e.g., advances vs. declines, new highs vs. new lows, etc. As an indication of good quality participation, we like to see a high number of each of the former vs. each of the latter. When that is not occurring, even as the indices hold up well, we say that the rally is "thinning", or seeing a decreasing level of participation. We've published multiple examples of this internal weakness in recent weeks.

Another way of measuring participation within a rally is by looking at indices on an equally-weighted basis instead of a cap-weighted basis. In the latter, an index may remain propped up by a relatively few number of stocks, if they are among the largest and most heavily weighted in the index. When that is the case, the market may be susceptible to weakness since it is being supported by just a relatively small number of issues. A couple of them go by the wayside, and the market does not have that broad support to compensate. One of the current rally leaders may be falling into such a predicament now.

There is no doubt that tech stocks and l ...

Analyst Lays Out China's "Doomsday" Scenario

The first time we laid out the dire calculations about what is perhaps the biggest mystery inside China's financial system, namely the total amount of its non-performing loans, by former Fitch analyst Charlene Chu we called it a "neutron bomb" scenario, because unlike virtually every other rosy forecast the most dire of which topped out at around 8%, Chu argued that the amount of bad debt in China was no less than a whopping 21% of total loans.

Corporate investigator Violet Ho never put a lot of faith in the bad loan numbers reported by China's banks: crisscrossing provinces from Shandong to Xinjiang, she's seen too much - from the shell game of moving assets between affiliated companies to disguise the true state of their finances to cover-ups by bankers loath to admit that loans they made won't be recovered. The amount of bad debt piling up in China is at the center of a debate about whether the country will continue as a locomotive of global growth or sink into decades of stagnation like Japan after its credit bubble burst. Bank of China Ltd. reported on Thursday its biggest quarterly bad-loan provisions since going public in 2006.

Charlene Chu, who made her name at Fitch Ratings making bearish assessments of the risks from China's credit explosion since 2008, is among those crunching the numbers. While corporate investigator Ho relies on her observations from hitting the road, Chu and her colleagues at Autonomous Research in Hong Kong take a top-down approach. They estimate how much money is being wasted after the nation began getting smaller and smaller economic returns on its credit from 2008. Their assessment is informed by data from economies such as Japan that ha ...

The Single Biggest Bullish Catalyst For Oil

Authored by Nick Cunningham via OilPrice.com,

One of the key objectives for OPEC is to bring down inventories, a goal that has been elusive this year. But if the oil futures curve is anything to go by, the oil market is showing signs of tightening.

Brent futures have recently begun to exhibit a state of backwardation, which is when near-term oil futures trade at a premium to contracts dated further off into the future. This is the first time in years that backwardation has occurred, and most analysts are taking it as a sign that the oil market finally could be getting closer to rebalancing. In the past, backwardations have accompanied a rebound in the oil market after a bust, while a contango (the opposite of backwardation) tends to occur when the market crashes because of a supply glut.

There are several reasons why backwardation is bullish, which has been discussed in previous articles. A declining futures curve makes it uneconomical to store oil, so backwardation could accelerate the drawdown in inventories. It also complicates the hedging strategies of shale producers, which could hold back expansion plans. It also is a symptom of tightening near-term supplies, although, to be sure, the flip side of that argument is that it could merely be a reflection of expectations that the supp ...

OPEC's Sick Man, Venezuela Could Jolt Oil Market

Venezuela's already falling oil production will get worse before it gets better, potentially roiling global energy markets.

Cisco's Long, Slow Decline

Investors had low expectations for Cisco Systems ahead of its fiscal fourth-quarter results posted Wednesday.

Alibaba Cashes In on Data Trove

Alibaba earnings are strong and shares are up 90% this year as the Chinese e-commerce giant leverages its trove of data to boost growth

July 2017 Leading Economic Index: Suggests Improvement In Economic Growth

Written by Steven Hansen

The Conference Board Leading Economic Index (LEI) for the U.S again improved this month - and the authors suggest that the "U.S. economy may experience further improvements in economic activity in the second half of the year".

July 2017 Headline Industrial Production Improves

Written by Steven Hansen

The headlines say seasonally adjusted Industrial Production (IP) was up. The manufacturing segment of industrial production declined.

Raising the minimum wage leads workers in these industries to be replaced by robots

Some workers are more likely to be replaced by robots than others.

Millennials are financing everything from bed sheets to concert tickets

You can now finance every small item for your home and social life — but should you?

One major way U.S. credit card debt is getting worse

American debt continues to rise, according to the New York Federal Reserve

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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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