27Jun2018 Midday Update: Wall Street Sea-Sawing Near The Unchanged Line, WTI Moves Higher Into The High 72 Handle, US Dollar Index Also Moves Higher, Something Has To Give, BTFD’ers Are Hesitating

Here is the current market situation from CNN Money

North and South American markets are mixed today. The S&P 500 is up 0.26% while the IPC gains 0.02%. The Bovespa is off 0.48%.

Automakers warn U.S. tariffs will cost hundreds of thousands of jobs, hike prices

WASHINGTON (Reuters) – Two major auto trade groups on Wednesday warned the Trump administration that imposing up to 25 percent tariffs on imported vehicles would cost hundreds of thousands of auto jobs, dramatically hike prices on vehicles and threaten industry spending on self-driving cars.

Wall Street gains as trade fears ease, oil prices jump

(Reuters) – U.S. stocks rose on Wednesday after the Trump administration eased its stance on curbing Chinese investments in American technologies and as oil prices surged.

Conagra to buy Pinnacle Foods for $8.1 billion, creating frozen food powerhouse

(Reuters) – Conagra Brands Inc said on Wednesday it would buy Pinnacle Foods Inc for about $8.1 billion, trying to grab a bigger share of the snack and frozen food markets amid fierce competition in the packaged food industry.

U.S. gives Disney-Fox deal antitrust approval

WASHINGTON (Reuters) – Walt Disney Co has won U.S. antitrust approval to buy most of Twenty-First Century Fox Inc’s assets for $71.3 billion on the condition that it sell 22 regional sports networks, the Justice Department said on Wednesday.

Worsening trade row deepens chill felt by Chinese dealmakers seeking to do U.S. takeovers

HONG KONG (Reuters) – The rapidly deteriorating trade and investment relationship between Washington and Beijing is sending a further chill through Chinese dealmakers who have already seen the number of Chinese acquisitions of American assets take a big hit.

Trump administration to use review panel to curb China tech investments

WASHINGTON (Reuters) – U.S. President Donald Trump said on Wednesday he will use a strengthened national security review panel process to deal with potential threats from Chinese acquisition of American technologies, instead of imposing China-specific restrictions.

U.S. business spending on equipment cooling; trade gap narrowing

WASHINGTON (Reuters) – New orders for U.S.-made capital goods and shipments unexpectedly fell in May, but upward revisions to data for the prior month pointed to moderate growth in business spending on equipment in the second quarter.

Exclusive: Ackman makes fresh layoffs at Pershing Square hedge fund

BOSTON (Reuters) – Billionaire hedge fund manager William Ackman, whose investment assets have shrunk by more than half in the last three years, has made a second round of staff cuts and laid off three investor relations team members, two sources familiar with the matter said on Tuesday.

General Mills to cut jobs amid rising costs

(Reuters) – Cheerios cereal maker General Mills Inc said on Wednesday it would cut 625 jobs as it looks to reduce costs in the wake of slowing sales of its Yoplait yogurt, as well as rising commodity and freight expenses.

Make Capital Cheap And Labor Costly, And Guess What Happens?

Authored by Charles Hugh Smith via OfTwoMinds blog,

Employment expands in the Protected cartel-dominated sectors, and declines in every sector exposed to globalization, domestic competition and cheap capital.

If you want to understand why the global economy is failing the many while enriching the few, start with the basics: capital, labor and resources. What happens when central banks drop interest rates to near-zero? Capital becomes dirt-cheap. It becomes ludicrously easy to borrow money to buy whatever cheap capital can buy: stock buybacks, robots, automation tools, interest-sensitive assets such as housing, competitors or potential competitors, high-yield emerging-market bonds, and so on.

What happens when cartels take control of core domestic industries such as banking, defense, higher education and healthcare? Costs soar because competition has been throttled via regulatory capture, and these domestic sectors are largely non-tradable, meaning they can’t be offshored and have little meaningful exposure to globalization.

Labor-intensive cartels such as these can pass on their rising costs for labor, resources and profiteering. Do you really think assistant deans could be pulling down $250,000 annual salaries in higher education if there was any global or domestic competition?

As for healthcare, I’ve often noted that healthcare/sickcare will bankrupt the nation all by itself. When a cartel such as healthcare / sickcare can force higher prices on employers and employees, the cost of labor throughout the economy rises.

Sickcare Will Bankrupt the Nation–And Soon (March 21, 2011)

Trump-Putin Summit Set Up, Details To Be Announced Thursday

Update:

TRUMP-PUTIN MEETING ANNOUNCEMENT WILL COME THURSDAY: BOLTON

PUTIN, TRUMP BOTH CONSIDER MEETING `IMPORTANT,’ BOLTON SAYS

The United States and Russia have reached an agreement on a summit between Donald Trump and Vladimir Putin and will announce the date and other details on Thursday, reports Bloomberg, citing a senior Kremlin official.

BREAKING: Trump and Putin plan to meet. US and Russia will announce details on Thursday on summit.

— Jennifer Jacobs (@JenniferJJacobs) June 27, 2018

U.S. officials have said the meeting — the third between the two men — could take place at the end of Trump’s visit to Europe in mid-July. Finnish President Sauli Niinisto said his Nordic nation is ready to host the summit after Politico reported that the White House is eyeing Helsinki as the preferred option. Bolton discussed details of the planning at a working lunch with R …

Trump Jr Slams “Experts”, Quoting Atlanta Fed’s 4.5% GDP Forecast

The Atlanta Fed’s GDPNOW model is out with its latest forecast and it is very optimistic.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2018 is 4.5 percent on June 27, down from 4.7 percent on June 19. The nowcast of real residential investment growth declined from 2.9 percent to 0.6 percent after the existing-home sales release from the National Association of Realtors on Wednesday, June 20, and the U.S. Census Bureau’s releases on new-home sales and costs on Monday, June 25. After this morning’s advance releases on durable manufacturing, inventories, and international trade in goods from the Census Bureau, the nowcasts of the contributions of inventory investment and net exports to second-quarter real GDP growth changed from 0.87 percentage points and 0.39 percentage points, respectively, to 0.46 percentage points and 0.66 percentage points, respectively.

Still notably above consensus…

And this has prompted the Trump administration and Trump family to gloat. Treasury Secretary Mnuchin was quick to mention it on CNBC …

Musk Says Goldman “In For A Rude Awakening” After Bearish Report

Overnight, Goldman analyst David Tamberrino – who has a Sell rating on Tesla and a $195 price target – published a note that will guarantee he won’t be invited to the Tesla holiday tent party, in which he wrote that he believes “the company is tracking below its 2018 Model S/X guidance of approx. 100k units” and that “Model 3 deliveries are tracking below consensus” adding that consensus expectations for the 2Q18 production rate appear elevated.

On the sensitive issue of Model 3 deliveries, the Goldman analyst said that he expects 22,000 deliveries, “below the consensus expectations of 28,000.”

We believe that investors are continuing to track Model 3 VIN registrations (i.e., sequential vehicle identification numbers) as a proxy for the company’s production rate. Based on the ratio of registered VINs to the company’s 3Q17, 4Q17, and 1Q18 Model 3 production cadence, we believe that Model 3 VINs (highest VIN was 54,003 as of June 21) imply QTD 2Q18 production was at approx. 22,000 at the end of last week. Further, this is in-line with Business Insider which reported that YTD 2018 Model 3 production only totaled 30,000 vehicles (as of 6/19), implying 2Q18 production of approx. 20,000. Assuming the last few weeks in June ramp somewhat from the over 3,000/week production rate, we see total 2Q18 Model 3 production of approx. 28,000 vehicles.

As for deliveries, current data points suggest approx. 10,425 Model 3 vehicles were delivered in April and May (to US and Canada customers). As such, we increase our Model 3 delivery estimate to 22,000 (from 19,000 previously), although we remain below the consensus expectations of 28,000.

He also had some harsh words about Musk’s strategy to extrapolate the quarter-end production burst (inside a tent) into the future:

Lastly, investor conversations on the stock have moved past the 5,000/week run-ra …

Banks Are Playing Chicken With Brexit

Banks are running out of time to prepare for a sudden break in relations between the U.K. and Europe.

Tariff Talk Has Slammed the IPO Window Shut for Car Makers

Luxury car makers are in the eye of the trade storm unleashed by President Trump. One consequence: Hoped-for IPOs of Aston Martin, Volvo Cars and possibly Jaguar Land Rover are looking unlikely, even though most brands are reporting record sales.

Memory Unlikely to Fade Fast for Chips

Consolidation and growing demand for cloud and AI servers have kept chip prices stable—and high.

We’re probably at peak housing. Here’s what that means.

It’s 10 years after the housing crisis, and economists think the housing market is likely running out of steam. Sales will probably start to flatline soon, and prices may start rising at a slower pace.

The Fed: Fed’s Quarles defends Swiss-based Financial Stability Board

Fed Vice Chairman for Supervision Randal Quarles on Wednesday defends the Financial Stability Board

Metals Stocks: Gold eyes third straight decline, poised to log another 6-month low

Gold futures eye a third decline in a row on Wednesday, poised to log another settlement at the lowest in more than six months as the U.S. dollar’s strength weighs on the precious metal.