01Jun2016 Market Update: Wall Street Out To Lunch, Literally, Crude Floating In The High 48’s, Longer Term Indicators Turning Bearish

Here is the current market situation from CNN Money

North and South American markets are higher today with shares in Mexico leading the region. The IPC is up 0.24% while Brazil’s Bovespa is up 0.18% and U.S.’s S&P 500 is up 0.04%.

U.S. factory activity expands; construction spending tumbles

WASHINGTON (Reuters) – U.S. manufacturing activity expanded for a third straight month in May, but growth in new orders continued to slow as factories grappled with sluggish overseas demand and weak capital spending in the energy sector.

Wall St. pares losses on encouraging U.S. factory data

(Reuters) – U.S. stocks pared losses on Wednesday after encouraging factory data, but remained lower, with falling oil prices weighing on energy companies and financials retreating as chances of a rate hike this month ebbed on weak China data.

World factories stuck in low gear on sluggish demand

LONDON/BEIJING/NEW YORK (Reuters) – Global manufacturing activity remained stuck in a rut last month with factory output from Asia, Europe and the Americas barely improving as producers struggled to bring in new orders, surveys released on Wednesday showed.

Some new cars still include defective Takata airbags: report

WASHINGTON (Reuters) – Toyota Motor Corp , Fiat Chrysler Automobiles NV , Volkswagen AG and Mitsubishi Motors Corp are still selling new vehicles with defective air bags that will eventually have to be recalled, the top Democrat on the U.S. Senate Commerce Committee said in a report Wednesday.

Gulf OPEC members seek to revive global oil output deal

VIENNA (Reuters) – Gulf OPEC members including Saudi Arabia are looking to revive the idea of coordinated oil-output action by major producers when the group meets on Thursday including by establishing a new output ceiling inside the group, OPEC sources said.

JPMorgan exec sees ‘mid-teens’ percentage rise in second-quarter markets revenue

NEW YORK (Reuters) – JPMorgan Chase & Co is on track for a mid-teens percentage increase in markets revenue in the second quarter compared with a weak period a year earlier, a top executive said on Wednesday.

Fed swimming against global tide of easier rates

LONDON (Reuters) – Rarely has the world’s most important and powerful central bank been so isolated.

Las Vegas sports gambler pleads not guilty to insider trading

NEW YORK (Reuters) – A famed Las Vegas sports gambler pleaded not guilty on Wednesday to charges that he engaged in an insider trading scheme that generated more than $40 million and included a tip that benefited star professional golfer Phil Mickelson.

May U.S. auto sales drop for GM, Ford as FCA up slightly

DETROIT (Reuters) – The U.S. auto industry looks set for another record year, even as May new-vehicle sales reported so far on Wednesday showed a decline due to weak demand for sedans and fewer selling days.

The Fed Was Hacked More Than 50 Times Between 2011 And 2015

In the aftermath of the bizarre SWIFT hack that supposedly allowed brazen Asian hackers to steal $81 million from the account of the Bangladesh central bank held at the Fed, attention has predictably shifted to the question of whether there was just “one cockroach.” As it turns out there were at least 50. As Reuters reports, citing Fed records, “the U.S. Federal Reserve detected more than 50 cyber breaches between 2011 and 2015, with several incidents described internally as “espionage.”

The cybersecurity reports, obtained by Reuters through a Freedom of Information Act request, were heavily redacted by Fed officials to keep secret the central bank’s security procedures. Reuters notes that in all, the Fed’s national team of cybersecurity
experts, which operates mostly out of New Jersey, identified 51 cases of
“information disclosure” involving the Fed’s board. Separate reports
showed a local team at the board registered four such incidents.

According to Reuters, the records represent only a slice of all cyber attacks on the Fed because they include only cases involving the Washington-based Board of Governors, a federal agency that is subject to public records laws. Reuters did not have access to reports by local cybersecurity teams at the central bank’s 12 privately owned regional branches. Hacking attempts were cited in 140 of the 310 reports provided by the
Fed’s board. In some reports, the incidents were not classified in any
way.

The central bank’s staff suspected hackers o …

BP Oil Cargoes In Limbo At Terminal As Venezuela Can’t Pay Its Bills

Submitted by Charles Kennedy via OilPrice.com,

As Venezuela drowns in debt and takes its state-run oil company, PDVSA, down with it, Reuters is reporting that BP has over 2 million barrels of oil stuck at a terminal in the Caribbean over unpaid bills.

The cargo of 2 million barrels of U.S. light sweet crude sold by BP cannot be discharged at the PDVSA terminal in Curacao until it’s paid for, according to the news agency, which is relying on unnamed sources and Thomson Reuters vessel tracking data.

China Oil and BP reportedly have a tender from PDVSA for the shipment of 8 million barrels of WTI crude for the second quarter of 2016.

PDVSA is struggling to pay its bill as the Venezuelan economy crumbles and unrest becomes riotous. Last week, reports emerged that PDVSA was offering service providers a debt-swap deal in exchange for payments.

A subsidiary of PDVSA has reportedly offered service contractors a deal in which US$2.5 billion in debt would be swapped for dollar bonds, according to the Wall Street Journal.

Venezuela is running out of most basic consumer items as the crisis worsens.

According to the New York Times, power shortages are now so severe th …

World’s Largest Asset Manager Downgrades Global Equities To Neutral

With one after another bank issuing downgrade reports on global stocks, including such stalwarts as JPM and, most recently, Goldman, overnight a far more important market entity – the world’s largest asset manager – joined the club when BlackRock downgraded U.S. and European stocks to neutral, citing elevated U.S. valuations and the higher probability of a midyear interest-rate increase by the Federal Reserve.

“We see the odds of a summer Fed rate increase rising if U.S. data this week show solid job gains, rising wages and an inflation pickup,” writes Richard Turnill, BlackRock’s global chief investment strategist in a note Tuesday. The company expects the Fed to raise rates once or twice this year, he says.

Here are the key points:

We have downgraded global stocks. U.S. valuations are elevated and a mid-year Federal Reserve (Fed) rate increase appears more likely.

Rising expectations of a June or July Fed rate increase sent U.S. Treasury yields higher last week.

We see the odds of a summer Fed rate increase rising if U.S. data this week show solid jobs gains, rising wages and an inflation pickup.

And the full note:

We have downgraded global equities to neutral, following a meeting of the BlackRock investors behind our views. The growing likelihood of an imminent Fed rate increase and more elevated U.S. valuations warrant short-term caution.

The chart above shows how U.S. stocks have …

What Happens When Bond Investors Act Like Stock Jockeys

Bonds can be risky in different ways. Investors shouldn’t underestimate interest-rate risk.

Bank Stress Tests: The Bar Keeps Getting Higher

As stress-test results loom, U.S. banks may face barriers to sharply increasing capital returns.

Alibaba Now Faces Two Big Sellers: SoftBank and Yahoo

SoftBank is selling a stake Chinese e-commerce giant Alibaba for the first time. Along with Yahoo, that means two major Alibaba shareholders are looking for at least a partial exit.

May 2016 ISM Manufacturing Survey Insignificantly Improved.

Written by Steven Hansen

The ISM Manufacturing survey remained in expansion for the third month after 5 months in contraction – and marginally improved. The key internals declined. The PMI manufacturing Index, also released today, is also barely in positive territory..

Volkswagen: Ride-hailing will be ‘second pillar’ of our business

Volkswagen Group called out its ride-hailing partnership with Gett as the future of the company.

Surprise burst of activity in corporate bond market is bullish for stocks

Strong credit flows should eventually lead to more stock buybacks and M&A, according to one analyst.

Why GM’s president says you won’t be driving its cars

Dan Ammann discusses ride hailing, driverless technology and electric cars.