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07Feb2018 Market Update: Wall Street Investors Are Hoping Wild Volatility Is Over, But History Suggests It's Not, WTI Crude Sinks Into The 61 Handle, US Dollar Trends Higher

Written by Gary

US stocks overturned opening losses to trade higher this afternoon (SPY +0.5%). Crude prices tank 2.5% to one-month lows after US crude and fuel stockpiles jump.


Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.56%, while the Bovespa is leading the IPC lower. They are down 0.25% and 0.11% respectively.

Traders Corner - Health of the Market

Looking at the last three columns (below), the first one (Actual), is what was reported this morning. The second column (Forecast) is what analysts had forecast and the third column is the previous report. Full calendar HERE.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street gains as volatility eases

(Reuters) - U.S. stocks overturned early losses to trade higher on Wednesday as some buyers returned to a market still shaking from a record fall for the Dow Jones Industrial Average earlier this week.

Fed's Evans says no rate hikes needed before mid-2018

DES MOINES, Iowa (Reuters) - Sluggish price increases in America give the Federal Reserve room to hold off on interest rate increases until at least mid-2018, Chicago Federal Reserve President Charles Evans said on Wednesday.

Tronc to sell LA Times, other newspapers for $500 million

(Reuters) - Tronc Inc said on Wednesday it agreed to sell the Los Angeles Times, the San Diego Union-Tribune and some other newspapers to billionaire investor Patrick Soon-Shiong for $500 million cash.

EU seeks U.S. compensation for solar panel tariffs: WTO

GENEVA (Reuters) - The European Union has sent the United States a demand for talks on compensation for steep U.S. tariffs imposed on imported solar panels, a World Trade Organization filing showed on Wednesday.

Tesla Inc expected to post a loss of $3.12 a share: summary

(Reuters) - - Tesla Inc is expected to show a rise in quarterly revenue when it reports results.

Google eyes gaming with 'Yeti' streaming service: report

(Reuters) - Alphabet Inc's Google is developing a subscription-based game streaming service that could work either on its Chromecast or a Google-made console, which is still being developed, the Information website reported on Wednesday.

Kalanick returns to court in Waymo-Uber autonomous car secrets trial

SAN FRANCISCO (Reuters) - Former Uber Chief Executive Travis Kalanick's famously competitive nature was the focus of questioning on Wednesday in a trade-secrets trial in which Uber Technologies Inc is accused of stealing self-driving car designs from rival Waymo.

UK watchdog wrestling with rule change to lure Aramco IPO

LONDON (Reuters) - Britain's markets watchdog said it wants a practical compromise on proposed rules that would allow sovereign-controlled companies like oil giant Saudi Aramco to list on the stock market in London.

Snap shares surge after app redesign sparks user growth

(Reuters) - Shares of Snapchat owner Snap Inc surged 35 percent on Wednesday after the company reported its first user growth since going public in 2017, sign that a redesign of its messaging app is taking hold in its battle with Facebook's Instagram.

"Risks Is More Severe Than We Previously Expected": S&P Downgrades Wells Fargo, Full Report

Just days after the Fed slammed Wells Fargo on Janet Yellen's last day, by announcing an unprecedented enforcement action in which it prohibited the bank from "growing", effectively making it into a quasi-utility until it fixes its lacking internal control system and replaces much of its board, moments ago S&P added insult to injury by downgrading the largest US mortgage lender from A to A-, due to "Prolonged Regulatory And Governance Issues" with a Stable Outlook.

The full S&P report is below:

Wells Fargo & Co. Downgraded To 'A-/A-2' From 'A/A-1' On Prolonged Regulatory And Governance Issues; Outlook Is Stable



On Feb. 2, Wells Fargo & Co. ("Wells") became subject to a consent order from the Federal Reserve that caps the company's asset growth until it further enhances its governance and compliance and risk management to the standards required by the regulator.

This unprecedented asset cap on a large bank underscores the continued elevated regulatory risks for Wells, and the ongoing ramifications of its retail sales practices issues, as well as the complexities of improving compliance and operational risk controls throughout its very large organization.

We are lowering our ratings on Wells by one notch to 'A-/A-2', recognizing that the duration and severity of these regulatory, governance, and reputational issues are not commensurate with the previously peer-leading ratings on Wells.

Our stable outlook assumes that the company will meet the requirements of the regulatory consent order while maintaining solid market shares in its major businesses as well as a strong financial profile.


NEW YORK (S&P Global Ratings) Feb. 7, 2018--, S&P Global Ratings today lowered its long-term issuer credit rating o ...

EURUSD Tumbles After ECB Accuses US Of Manipulating Currency

In a shocking moment of frankness, and perhaps desperation, European Central Bank Governing Council member Ewald Nowotny commented in an interview with Wiener Zeitung this morning that: (via Google Translate)

Q. Is US President Donald Trump with his idiosyncratic style of government and his tweets a danger or an uncertain factor for the international financial and economic world?

Ewald Nowotny: Yes, definitely. What surprises us very much are two things.

On the one hand, that the U.S. Treasury purposely pushes down the dollar and wants to keep it low;

and on the other hand, that there has been no one in the vicinity of Donald Trump, where there are a number of sensible people, who has had a positive influence on the President and his politics.

Nowotny's standing as a senior member of The ECB suggests this is worth paying attention to and EURUSD has extended its early losses - now down to near 3-week lows...

Pushing the Dollar Index back above Mnuchin Masscare highs...

"Make Volatility Your Asset", Until You Get A Letter Like This

Yesterday, we introduced readers to the $550 Million LJM Partners: a Chicago-based vol-selling fund, which we learned late on Tuesday had lost over half of its NAV some time on Monday, following the biggest VIX spike in history.

This was a disappointing development to investors in its most popular, LJM Moderately Aggressive Strategy which until last week had AUM of $366MM, and had significantly outperformed the market since inception.

And, as we warned on numerous occasions, just like XIV, this particular vol-selling strategy was set for an ...

Market Plunge Lays Bare the Peril of 'FOMO'

The only thing investors have to fear, Franklin Delano Roosevelt might have said, is the fear of missing out. As investors struggle to grasp the recent sell-off, it is worth taking a look at popular recent advice.

Snapchat's Parent Sharpens Up

Snapchat parent finally pleases investors with accelerating user and revenue growth.

How the Bull Market's Greatest Trade Went Bust

A record increase in volatility blew up a trade that had been among the most lucrative of the entire bull market—betting the market would get calmer and stay calm.

London Markets: FTSE 100 closes higher, rebounding from 10-month low

U.K. stocks advance for the first time in seven sessions, rebounding from a 10-month low as U.S. equity benchmarks also recovered.

Controversial supplement kratom is an opioid, FDA says

Kratom, which is made using an Asian plant, isn't "just a plant," the FDA says — it's an opioid.

The Ratings Game: Gilead stock climbs 5% as investors bet company is in a trough, not a plateau

Wall Street has described 2018 as the company's 'trough' year as other product sales replace falling hepatitis C revenue.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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