13Jun2018 Market Close: Wall Street Closes Lower After Fed Rate Hike, More Rate Increases In 2018, WTI Crude Rises, US Dollar Index Falls

Fed lifts rates amid stronger inflation, drops crisis-era guidance

WASHINGTON (Reuters) – The Federal Reserve raised interest rates on Wednesday, a move that was widely expected but still marked a milestone in the U.S. central bank’s shift from policies used to battle the 2007-2009 financial crisis and recession.

Comcast offers to buy Fox media assets for $65 billion in cash

(Reuters) – Comcast Corp offered $65 billion on Wednesday for Twenty-First Century Fox Inc media assets, emboldened by AT&T Inc prevailing over the Trump administration’s attempt to block a merger with Time Warner Inc .

White House seeks to block Congress from killing ZTE deal: report

WASHINGTON (Reuters) – The White House will try to derail an effort in the U.S. Congress to block the Trump administration’s deal to allow ZTE Corp, China’s No. 2 telecommunications equipment maker, to resume doing business with American suppliers, the Wall Street Journal reported on Wednesday.

Wall Street ends lower in wake of Fed hike

NEW YORK (Reuters) – U.S. stocks ended lower on Wednesday in a choppy session after the Federal Reserve raised interest rates as expected and projected a slightly faster pace of rate hikes in the coming months.

Exclusive: Venezuela eyes first-ever use of foreign oil for contracts – documents

HOUSTON (Reuters) – Venezuela is considering refining foreign crude for the first time to produce fuels like gasoline or diesel, according to internal planning documents seen by Reuters on Wednesday, in the latest sign of the country’s strain to meet obligations to customers despite having the world’s largest crude reserves.

Volkswagen fined one billlion euros by German prosecutors over emissions cheating

BERLIN (Reuters) – Volkswagen was fined one billion euros ($1.18 billion) over diesel emissions cheating in what amounts to one of the highest ever fines imposed by German authorities against a company, public prosecutors said on Wednesday.

Trump, Iran spar over oil prices ahead of OPEC meeting

WASHINGTON/LONDON (Reuters) – U.S. President Donald Trump and Iran exchanged sharp words over oil prices on Wednesday, with Trump blaming OPEC for high oil prices and Tehran accusing him of stoking volatility after he withdrew last month from a global nuclear arms deal with Iran.

Brazil watchdog fines Morgan Stanley, Royal Bank of Canada for forex manipulation

BRASILIA (Reuters) – Brazil’s antitrust watchdog on Wednesday fined Morgan Stanley and Royal Bank of Canada a total of 42.9 million reais ($11.6 million) for meddling with foreign exchange rates charged to clients.

Madoff customers’ recovery tops 75 percent with Merkin settlement

NEW YORK (Reuters) – The court-appointed trustee liquidating Bernard Madoff’s firm on Wednesday announced a $280 million settlement with one of the swindler’s earliest investors, enabling customers to recoup more than 75 percent of the principal they lost.

Powell’s Panic-Relieving Presser Calms Hawkish Havoc But Yield Curve Crumbles

Hawkish havoc was unleashed briefly and then the man of steel stepped up…

The Initial Euphoric/Dysphoric reactions to Powell’s rate-hike and hawkishness (Dollar spike, stocks down, yields higher, yield curve plunge, EM dump), but everything turned around during Powell’s Presser.

In his presser, Powell reminded investors that despite the hawkish interpretation of today’s meeting and his confident view of the economy, the economy is not yet overheating. Powell says “there is no sense in our forecasts” that inflation will take off. “If we thought inflation would take off, we would be showing higher rates.”

Also tomorrow’s ECB meeting now looms and likely takes the shine off some positioning.

But by the close – stocks were back at the lows of the day.

Small Caps clung to unchanged from the FOMC statement, but the broader markets all retreated…

Trump To Slap China With Tens Of Billions In Tariffs As Early As Friday: WSJ

While trading desks are scrambling to goalseek the Fed’s clearly hawkish statement into a dovish speech by Powell, in order to keep the Koolaid flowing at least a bit longer and stem today’s bloodletting, one potential catalyst that could send the dollar even higher is a confirmation from the WSJ of what Politico and we reported earlier today, namely that the Trump administration, deepening its global trade offensive, is set to levy tariffs on tens of billions of dollars of Chinese goods in the coming week, perhaps as early as Friday—a move that is likely to spark heavy retaliation from Beijing.

What the WSJ adds to what we already knew, is that Trump’s mind was already made up last week:

Senior trade officials in the White House, Commerce and Treasury departments, and the U.S. Trade Representative’s office met on the issue before President Donald Trump went to a summit of the Group of Seven industrialized nations in Canada on Friday, and agreed that the U.S. should move ahead with tariffs, said U.S. officials and others briefed on the talks.

While the odds are minimal, there is a chance that Trump will nix an escalation in the trade war: as the WSJ notes, “Trump still hasn’t given his final approval and could have second-thoughts about applying heavy pressure on China”, perhaps because “the U.S. wants Beijing’s cooperation in its efforts to get North Korea to give up its nuclear weapons.”

We doubt it. As we said earlier, “China was seen as playing a key role in getting North Korean leader Kim Jong Un to the table with Trump, who has consistently linked his trade demands to Beijing� …

FOMC Hikes Rates As Expected, Signals Two More Rate Hikes In 2018

Having signaled a rate-hike ‘no matter what’, The Fed delivered 25bps (as the market 100% expected), cut its reference to “rate below long-run levels for some time,” and signaled its expectations for two more rate-hikes in 2018.

Key takeaways from FOMC decision:

Fed raises rates as expected, 8-0 vote

In the latest dots, the rate hike path steepens a little this year, still aiming at 3.4% end-2020; longer-run neutral rate still seen at 2.9%

FOMC statement says economy growing at “solid rate,” job gains have been “strong,” consumer spending has picked up and investment continued to grow “strongly”

The Fed removed the low inflation line: “Market-based measures of inflation compensation remain low”

Language about the economy upgraded, line about rates remaining below long-run levels “for some time” was removed

The sentence got tweaked: “The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term.”

IOER rate raised 20bps to 1.95% as of June 14; discount rate goes up to 2.5%

The median ‘dot’ for the end of 2018 has been 2.125% since Dec 2016 and today’s dot plot shifted higher to 2.375% confirming The Fed’s expectation for two more rate hikes this year, while the 2019 dot rose from 2.9% to 3.1%, suggesting the hiking carries through.

Here is the full breakdown of the median dots:

2018 is 2.375% vs 2.125% in March;

2019 is 3.125% vs 2.875% in March.

2020 and longer-run medians are unchanged at 3.375% and 2.875% respectively

Shake Shack Launches Order Kiosks To Eliminate Minimum Wage Workers

Fast food workers who enthusiastically joined the “fight for $15” are about to get the latest lesson in life’s numerous ironies: Shake Shack has become the latest fast food purveyor to launch with order kiosks, which the company said will help it minimize its “largest P&L headwind”: People.

In an investor presentation released Wednesday, Shake Shack touted its first “cashless shack” – located at the company’s Astor Place location – which opened in New York back in October. As we pointed out last year, self-order kiosks have already become a staple at thousands of McDonald’s restaurants, and Shake Shack is rapidly catching up. As a result, the company says it has been testing the sleek-looking kiosks at six restaurants.

And here things got confusing: people are Shake Shack’s “most valuable asset” – the crucial component to the company’s theory of “enlightened hospitality,” it said in its presentation. And yet, by “valuable” it turns out the company actually meant “expensive” thanks t …

AT&T-Time Warner Judge Fires Starting Gun in the Battle Against Tech

Approval of the deal pushes government to the sidelines and encourages media, tech and telecom companies to find partners to compete against Silicon Valley.

U.S. Politics Is the ABC for ZTE

China’s ZTE has narrowly escaped death, only to become living proof of the way political risk can dominate a stock’s fortunes. The Hong Kong-listed shares of the Chinese telecom-equipment maker dropped about 40% Wednesday.

Grocery Chains Are Being Squeezed From All Sides

Pressure from rapidly changing consumer tastes, European discounters and Whole Foods will hurt smaller grocery chains most but the big players like Kroger will struggle to grow.

North Face taps into growing market for used clothes with ‘Renewed’ site

North Face Renewed is a pilot program that joins other brands and retailers catering to the growing market for secondhand and refurbished clothing.

What happens when you Google for suicide methods

These tools are designed to reach people in their most vulnerable moments.

BookWatch: Xiaomi needs to destroy another industry, not just conquer phones, to be worth its $100 billion IPO price tag

Apple rival Xiaomi is seeking a valuation of up to $100 billion through its Hong Kong IPO.