29Jul2016 Market Close: Wall Street Closes Higher, US Dollar Falls, WTI Crude Gains Fractionally Off Session Lows And The DOW Closes Down 24 Points.

Tech shares and flaccid GDP growth push S&P 500 to record

(Reuters) – Wall Street rose on Friday, with the S&P 500 index hitting a record intraday high for the seventh time this month as gains in technology heavyweights Alphabet and Amazon more than made up for losses in energy shares.

Inventory reduction curbs U.S. economic growth; rebound expected

WASHINGTON (Reuters) – U.S. economic growth unexpectedly remained tepid in the second quarter as inventories fell for the first time in nearly five years and business investment weakened further, offsetting robust consumer spending.

SABMiller backs AB InBev offer for biggest-ever consumer takeover

LONDON/BRUSSELS (Reuters) – The board of brewer SABMiller will recommend its shareholders approve a sweetened takeover offer by Anheuser-Busch InBev , the company said on Friday, capping a week of high drama about the fate of the consumer industry’s biggest-ever merger.

Delaware judge proposes October trial over removal of Viacom directors

(Reuters) – A Delaware judge on Friday ruled that Sumner Redstone’s lawyers must defend in a trial his move to oust five directors from Viacom Inc’s board and suggested that he wants to get a better picture of the 93-year-old media mogul’s mental capacity.

Oil rout erodes second-quarter profits for U.S. majors Exxon, Chevron

HOUSTON (Reuters) – Chevron Corp posted its worst quarterly loss since 2001 on Friday and Exxon Mobil Corp reported a 59 percent slide in profit, as the long crude price rout and tumbling refining income inflicted pain across the energy sector.

Alphabet and Amazon wind up stellar quarter for big tech

(Reuters) – Google parent Alphabet Inc and e-commerce giant Amazon.com Inc capped a blockbuster June quarter for the five biggest U.S. tech companies as their dominance in key markets helped them defy the “law of large numbers”.

U.S. extends oversight of Fiat Chrysler safety practices by a year

WASHINGTON (Reuters) – U.S. auto safety regulators said on Friday they were extending oversight of Fiat Chrysler Automobiles NV for an additional year, requiring the Italian-American automaker to submit to monthly meetings and early disclosures of potential vehicle issues.

Fed’s Williams downplays GDP weakness, sees rate hikes

CAMBRIDGE, Mass. (Reuters) – The Federal Reserve could raise interest rates up to two times before year end, a top Fed official said on Friday as he downplayed data that showed the U.S. economy grew far less than expected in the last quarter.

Exclusive: California regulator says testing to begin on Volkswagen diesel fix

(Reuters) – Volkswagen AG and the California Air Resources Board will begin testing hardware and software that could help the German automaker avoid buying back as many as 475,000 diesel cars sold in the United States with improperly designed pollution controls, the head of the board told Reuters.

Stock Pickers Throw In The Towel: “Active Manager Beta Exposure Is The Highest Ever”

Yesterday we quoted from a surprising report by Credit Suisse, according to which after surveying numerous clients, the bank had come across “almost no one who seems to have outperformed or made decent returns this year.” While not quite as extreme, the latest HSBC performance report confirms that the broader market is outperforming the vast majority of hedge funds in 2016.

But more surprising was Credit Suisse’s admission that “we have never had so many client meetings starting with statements such as ‘we are totally lost’.” The main cited reason for the confusion is that “clients are close to being as bearish on equities as we can remember. Clients do not find equity valuations attractive enough to compensate for the macro, political, earnings and business model risks.”

And yet, with everyone “bearish” the market continues to levitate higher to record highs (on ever less volume) most recently today, when it touched a new all time high shortly after the US reported the worst annual growth in GDP since 2010, further confusing traders who as we said yesterday, in a scramble for performance have succumbed to the oldest error in the book: performance paralysis, better known as a herd-chasing panic.

Today we got confirmation of just that, when in a report by BofA’s Savita Subramanian, the strategist asks the following rhetorical question “if everyone is talking about how bearish everyone else is…”

Specifically, she takes on the Credit Suisse allegation of pervasive pessimism and further asks if “Is positioning really that bearish?” This is her answer: < …

The Full List Of Hillary’s Planned Tax Hikes

Submitted by John Kartch and Alexander Hendrie via Americans for Tax Reform,

Hillary Clinton has made clear she intends to dramatically raise taxes on the American people if elected. She has proposed an income tax increase, a business tax increase, a death tax increase, a capital gains tax increase, a tax on stock trading, an “Exit Tax” and more (see below). Her planned net tax increase on the American people is at least $1 trillion over ten years, based on her campaign’s own figures.

Hillary has endorsed several tax increases on middle income Americans, despite her pledge not to raise taxes on any American making less than $250,000. She has said she would be fine with a payroll tax hike on all Americans, she has endorsed a steep soda tax, endorsed a 25% national gun tax, and most recently, her campaign manager John Podesta said she would be open to a carbon tax. It’s no wonder that when asked by ABC’s George Stephanopoulos if her pledge was a “rock-solid” promise, she slipped and said the pledge was merely a “goal.” In other words, she’s going to raise taxes on middle income Americans.

Hillary’s formally propos …

European Bank Stress Test Preview: What To Expect And How To Trade It

While the main event in today’s European bank stress test was leaked moments ago, when Monte Paschi board member Turicchi said that the bank has finalized a bank consortium for a critical capital hike, suggesting that contrary to last minute jitters the bank has found the needed number of willing banks to provide 5 billion in fresh capital it needs resulting in the bank’s 3rd bailout in the past 2 years – this one courtesy of the private sector – there may still be some surprises.

The following preview explains what are the main things to watch for in today’s release.

The latest round of European banks’ stress test results today may highlight vulnerability of some of the largest banks but could also act as a trigger for much-needed reforms, analysts say.

The results, due at 9pm London time, may remind investors of Italy’s difficult banking situation, and pose downside risks for the euro, say FX strategists; Monte dei Paschi di Siena (BMPS), the ailing lender that was tested, will publish 2Q numbers after European markets close Barclays says any sign there’s progress toward fixing issues in Italy’s banks could trigger a modest euro relief rally.

ABN Amro analysts say the test is a “missed opportunity” to do a fuller and deeper health check of the banking system in Europe

WHAT’S HAPPENING?

Just 51 banks with at least EU30b in assets have been tested; that’s down from 123 banks in the previous exercise in 2014; represents ~70% of total EU bank assets

No bank from Portugal, Cyprus or Greece is included

ABN Amro analyst Nick Kounis says the exclusion of 72 smaller banks will significantly reduce the test’s coverage and impact, especially as the smaller banks are the least sound in some countri …

Hedge Funds Badly Lag The S&P500: July’s Top 20 Winners And Losers

July may have been a good month for the S&P 500, which is up over 3.5%, generating more than half of the S&P’s entire YTD 2016 return (6.4%) in just one month, but it was another painful month for the active investing “smart money” – of the roughly 40 (rotating) marquee names in our hedge fund tracking universe, only one is beating the broader market this month. This is a problem because as the recent surge in redemptions has shown, LPs no longer care about “beating the benchmark”, and instead are mostly focused on out (or rather under) performing the S&P 500.

The list below, sourced from HSBC, shows just how difficult it has been for most hedge funds to generate respectable performance in the month of July.

For the full year, things are slightly better, with about a dozen names outperforming the S&P500 YTD, and posting respectable double digit returns. Curiously, we find that the worst performing hedge fund of 2014, the Russian Prosperity Fund, is one of the best performers of 2016.

Finally, here is the breakdown of the Top 20 best and worst hedge funds for 2016: at the top we find the relatively unknown, smallish $115 million Dorset Energy Fund, which was also the worst performing of 2015. The worst performer according to HSBC in 2016: Odey, who as we noted earlier this week, has had a very tumultuous 2016 so far.

The Divide Between GDP and Jobs

The economy is growing slowly even as the labor market remains strong. It’s an unusual situation that could continue.

Exxon’s Tank Still Fuller Than Peers

Exxon Mobil is the best of a faltering bunch among supermajors unable to finance both investments and payouts to shareholders while maintaining investments necessary to avoid shrinking.

Why Bank of Japan Dipped Into Bag of Small Tricks

The Bank of Japan underwhelmed overexcited expectations for yet another big bang of monetary stimulus. But the BOJ did promise some needed introspection.

Futures Movers: Oil futures drop 14% in July, largest monthly loss in a year

Lingering concerns about oversupply and a deluge of refined products weigh on crude oil, send WTI prices lower for the month.

The Fed: Weak GDP closes the door on Fed interest-rate hike in September

The weak economic picture painted by the second-quarter GDP data eliminates the chances of Federal Reserve interest-rate hike in September, analysts said.