Thursday, July 7, 2016
FRIDAY 7/8/16; Texas Race Riots Result in Five Police Officers Dead; NATO Summit; US Monthly Jobs Report a Robust 287K Jobs but No Wage Growth; SPX Ends 1-Point from All-Time Closing High at 2130
Traders in Australia and Asia rise from slumber and prepare for the last day of trading this week. President Obama lands in Warsaw, Poland, for a NATO Summit tomorrow.
ASX 200 Index futures are down -0.4%. Aussie banks will begin the day weaker after a handful of banks receive credit downgrades and are placed on negative watch. Aussie banks are down from -10% to -25% this year. Aussie and Asia stocks may trade quietly today in a holding pattern since the US jobs report is on tap.
US futures are flat to negative. S&P -1. Dow -12. Nasdaq -2. WTIC oil 45.30. Brent oil 46.40. Natural gas 2.76. Gold 1361. Silver 19.77. Copper 2.123.
Euro 1.1062. Euro/yen 111.48. Dollar/yen 100.78. Pound 1.2903. Euro/pound 0.8573. Mexican peso 18.848. Canadian dollar 1.3005. Dollar/yuan 6.6820. Aussie dollar 0.7484. USD 96.25.
US Treasury yields are; 2-year 0.59%, 5-year 0.96%, 10-year 1.39%, 30-year 2.14%. German bund -0.169%. Japan 10-year yield -0.273%. Nikkei Index futures point to a flat open.
Asia stocks are flat to begin the session. The NIKK bounces +0.7%. ASX 200 flat. KOSPI flat. S&P +1. Dow +8. Nasdaq +4. Euro 1.1073. The dollar/yen pair bumps higher to 100.89 which represents a weakening yen which sends Japanese stocks higher. Pound 1.2935. Aussie dollar 0.7504. WTIC oil 45.56. Brent oil 46.93. Natty 2.75. Gold 1356. Silver 19.73. Copper 2.13.
At 9:50 AM Tokyo time (8:50 AM Hong Kong; 8:50 PM EST Thursday evening; 7:50 PM CST Dallas, Texas, time Thursday evening), shots are fired in Dallas, Texas, USA. Police officers are hit and killed by sniper/s. An evening of peaceful protests demonstrating against the shootings of two black suspects by white police officers in Louisiana and Minnesota, turns tragic.
Murder and mayhem occurs on Dallas streets at the Belo Garden Park where the peaceful demonstrators protesting racism were ending their march. A sniper/s are at elevated positions in buildings shooting police officers. Two police are laying on the sidewalk and not moving; likely dead. Dallas is in chaos. As the situation unfolds, four suspects are identified; they planned a coordinated attack positioning themselves in different buildings to create a kill zone on Dallas streets. No details are released on the murderers.
The Dallas shooting situation grows more dire. Five police officers are dead and six wounded. Police are negotiating with one suspect that proclaims, “The end is coming.” This suspect commits suicide and three other suspects, including a woman, are arrested. The race riots are increasing in America and will likely spill over into violence at the republican and democrat conventions that will run from late July into early August.
President Obama ignores the daily murders and black on black violence in the major cities such as Chicago, Los Angeles and New York City and instead chooses to tout his radical anti-gun legislation when a mass murder occurs. The world and United States has grown far more violent and dangerous during the president’s eight years in office damaging his legacy. The Dallas situation continues with a few city blocks now an unfolding crime scene. The riots and violence in the United States is reminiscent of the unrest in the 1960’s.
China car sales are accelerating driven higher by SUV’s and electric cars. The Orient Securities IPO is successfully launched today in Hong Kong. Before the lunch break in Japan, the Nikkei Index rolls over the negative side and Asia stocks leak lower into the closing bells. The dollar/yen pair drops indicating a strengthening yen so Japanese stocks give up their early gains.
Asia stocks end the session lower and will wait until Monday to respond to the US Monthly Jobs Report. WTIC oil 45.33. Brent 46.67. Nintendo gains +9% on excitement surrounding a new Pokemon mobile game. LG Electronics drops -0.4% despite reporting encouraging earnings.
The NIKK ends the session down -1.1% to 15107. Japanese JGB bond yields continue to print new lows. The Japan 10-year yield is at -0.294% on the verge of a -0.3% handle. What has the BOJ, Fed, ECB and other central banker madmen done to the world’s financial markets? The central bankers are creating a situation that may only resolve violently in the weeks, months and perhaps year or three ahead.
The ASX 200 finishes up +0.1% to 5231 the lone bright spot. The Australia vote counting continues from the weekend election with Turnbull gaining seats. The Aussie government may look a lot like it did before the election.
The KOSPI ends the session down -0.6% to 1963. The SSEC loses -0.9% to 2989. The HSI drops -0.7% to 20564.
For the week, the Nikkei Index mini-crashes -3.7%. The SPASX200 is down a marginal -0.3% this week. The KOSPI ends the week down -1.3%. The Shanghai Index is a big winner up +2% propped up by PBOC shenanigans. The Hang Seng Index loses -1.1% this week.
At 3 AM EST (8 AM London), European indexes begin Friday trading flat to marginally higher. DAX +0.2%. CAC and FTSE +0.1%. US futures are flat overnight. S&P +2. Dow +10. Nasdaq +4.
Euro 1.1077. Euro/yen 111.43. Dollar/yen 100.60. Pound 1.2921. Euro/pound 0.8573. Mexican peso 18.7855. Canadian dollar 1.3014. Dollar/yuan 6.6878. Aussie dollar 0.7493.
Miners and auto stocks are leading European indexes higher. BP trades higher on upgrades from JPM and GS. Glencore and Rio Tinto trade higher on RBC upgrades. Air France nosedives -2.1% on disappointing passenger traffic. Altice is downgraded by JPM.
The peripheral banks are trading positively. Italian banks are up from +1% to +3%. A $10 billion bailout deal is on the table and slated for approval next week for Monte dei Paschi bank. Banco Popolare claims that internal stress tests verify that the bank is properly capitalized and can handle external shocks. Pause for laughter since this is not true; these banks are very sick.
The Spanish and Portuguese banks are becoming a bigger worry in addition to the Italian banks. The European Union is unhappy with the activity in the peripheral banks over the last couple years and threatens to levy fines. This is crazy talk. If the EU imposes fines against the peripheral banks, this action would only increase the dissatisfaction and hatred for the European Union. RBS bank trades lower on a GS downgrade. Europe needs to get a handle on the banks before global contagion occurs a la the 2008-2009 financial crisis.
The two final candidates for UK prime minister are Theresa May and Andrea Leadsom. Michael Gove, who stabbed his friend Boris Johnson in the back, is voted down opening the door to a future female UK prime minister. The voting by lawmakers to decide the new PM will take place over the coming weeks.
US Treasury yields are; 2-year 0.60%, 5-year 0.96%, 10-year 1.38%, 30-year 2.13%. German 10-year bund yield -0.17%. UK gilt 0.77%. Portugal 10-year yield 3.06%. Italy 10-year 1.23%. Spain 10-year yield 1.17%.
The US 2-10 yield spread, a measure of the yield curve, is 78 basis points favoring the direction of flattening which is a warning sign for the economy. The US 5-30 spread is 117 bips. The US-German 10-year yield spread is 155 bips. The German-Italy 10-year spread, a useful gauge of the stability of Europe, remains wide at 140 basis points. Trouble increases in Europe as this spread rises and fear may subside if the spread tightens. The peripheral (Italy, Spain, Portugal, Greece) banks remain a major worry.
About one hour into European trading, DAX +0.6%. CAC +0.2%. FTSE +0.1%. S&P +3. Dow +27. Nasdaq +9. WTIC oil 45.59. Brent 46.90.
US Treasury yields are; 2-year 0.61%, 5-year 0.96%, 10-year 1.38%, 30-year 2.12%. The 2-10 spread is 77 bips.
Eurogroup President Dijsselbloem says, “Italy will respect EU law” in respect to any bank bailouts. Dijsselbloem proclaims, “Italian banks are not in a crisis.” When officials tell you not to worry, that is when you should worry. UK consumer confidence data is at a 21-year low collapsing after the Brexit vote.
At 5 AM EST, S&P futures are flat. Dow +4. Nasdaq -4. DAX +0.6%. CAC +0.3%. FTSE -0.2%. SMI -0.3%. Euro 1.1071. Dollar/yen 100.60. Pound 1.3931. Aussie dollar 0.7500.
WTIC oil is up +0.6% to 45.39. Brent oil is up +0.5% to 46.64. Natural gas 2.78. Gold 1357. Silver 19.75. Copper 2.13.
At 5:20 AM EST (11:20 AM Warsaw, Poland), President Obama conducts a joint news conference at the NATO Summit with European Commission President Juncker and European Council President Tusk. The NATO Summit is the most important meeting since the Fall of the Berlin Wall. Three major negative themes plague the world and global markets; the rise of populism, the rise of terrorism/war and the Brexit drama. Leaders proclaim that the Brexit will not change the UK’s position in NATO. Concern would increase, however, if the UK splits (Scotland from Britain).
President Obama cannot help himself and shamefully, without yet knowing the details of the Dallas shooting, takes time to tout his anti-gun agenda as the Dallas police officer’s lifeless bodies are still warm. President Obama’s misguided idea to reduce violence in the United States is to take away guns from law-abiding citizens. As evidenced in cities such as Chicago that have strict anti-gun laws, murders and violence are increasing each year. If you take away guns, only the criminals have guns. This is also clearly evident in the Paris and Brussels terrorist events where citizens only serve as sitting ducks in gun-free zones sitting and waiting to die.
A future concern that leaders, such as President Obama, do not yet understand is the manufacture of homemade guns especially with 3-D printers. Anti-gun cities such as Paris and London will face increased mayhem in the months and years ahead as they prevent citizens from defending themselves while criminals and Islamist radicals will be well supplied with weapons.
Juncker says, “The Brexit consequences may be very serious.” Juncker says the world is becoming “more uncertain and complex.” Tusk says, “There will be no sequel to Brexit in the EU.” In other words, Tusk makes the bold statement that other nations will not conduct referendum votes to leave the European Union like Britain. If a country such as Scotland or France decides to hold a referendum vote to leave the EU, that would spell trouble for the organization and question its future viability.
Markets are steady and in a holding pattern with the jobs report less than three hours away. S&P +2. Dow +17. Nasdaq +1. DAX +0.8%. CAC +0.6%.
Fed Funds futures indicate that market participants do not believe a rate hike is on the table anytime soon. There is only a 10% chance that a hike will occur this year and 30% chance of a Fed rate hike in September 2017! Investors and analysts do not expect the FOMC to hike the key rate until 2018. Fed Chair Yellen, however, continues to hint at a rate hike this year. The disconnect continues between the central banker’s forecasts and the market response.
At 6 AM EST, S&P +3. Dow +24. Nasdaq +3. VIX 14.54. The DAX and CAC are at the highs of the session up +1% and +0.8%, respectively. Oil moves higher. WTIC 45.46. Brent 46.68. Natty gains +0.7% to 2.80. US 10-year yield 1.39%. German bund -0.18%.
GS says, “The BOE is expected to implement credit easing in August.” Goldman states the obvious since BOE Governor Carney said last week that more stimulus would be provided in August. Goldman must have been sleeping during that press conference.
At 7:22 AM EST, US futures and European stocks float higher. S&P +6. Dow +50. Nasdaq +9. Chip maker AMD drops -4.2% on a downgrade.
DAX +1.4%. CAC +1.1%. FTSE +0.1%. Italy and Spain lead higher on potential bank bailout news. MIB +2%. IBEX +1.3%. European auto makers are rallying. BMW +3.1%. VW +2.8%. Daimler +3%.
The all-important Monthly Jobs Report is on tap shortly. The consensus is for 180K jobs and the revision to last month’s 38K jobs disappointment will be important. The unemployment rate is expected to bump up a touch to 4.8% from last month’s 4.7%. Counter intuitively, when people begin looking for work again due to a growing economy, the unemployment rate typically moves higher. This is because people that were frustrated and not looking for work are once again counted as looking for work and this sends the percentage higher. The private payrolls are expected to come in at 170K jobs versus the prior 25K jobs.
Average Hourly Earnings are expected at +0.2% month-on-month versus the +0.2% consensus and +0.2% last month. Wages are arguably more important than the headline jobs number and unemployment rate. The Federal Reserve has been printing money and implementing Keynesian monetary policies for nearly eight years straight trying to create inflation. The FOMC has the +2% inflation goal. Inflation cannot exist without wage inflation occurring. When was the last time you received a raise? If so, was it only enough to buy a hotdog and a Coke?
If wages meet the +0.2% expectation, that would put the annual wage number at about +2.7%, respectable, the highest since 2009, but still far short of what is needed to convincingly bring about inflation. As a rule of thumb, an annual wage rate of +4.5% will guarantee inflation and a robust economy. Let’s be generous and say the +4.0% to +4.5% annual wage range would be sufficient to bless an inflation path ahead. The +2.7% remains far short of this goal. If the wages come in below the +0.2% month-on-month expected, that would be a dire commentary on the Fed’s obscene eight-year financial experiment. If wages are +0.3% or +0.4% or more, that would place the rate hike talk back on the table. The wage component is key and directly impacts the Fed’s rate hike, or cut, path ahead.
Average Hourly Workweek is expected to remain steady at 34.4 hours. Last month’s Labor Participation rate is 62.6% remaining at multi-decade lows. The common people in America hope for jobs while the wealthy become filthy rich as the Federal Reserve pumps stock prices higher with easy money. The jobs stage is set. The tension increases.
Before the jobs data, S&P futures are up +6. Dow +50. Nasdaq +7. Euro 1.1065. Euro/yen 111.11. Dollar/yen 100.42. Pound 1.2974. Canadian dollar 1.2999. Aussie dollar 0.7517. WTIC oil 45.60. Brent oil 46.86. Gold 1356. Silver 19.79. Natural gas 2.13.
At 8:30 AM, the Monthly Jobs Report is a huge 287K jobs with a 4.9% unemployment rate. The average hourly earnings are up a tiny +0.1%. The headline number is a shocker after last month’s paltry 38K jobs. April jobs are revised 21K higher and May jobs 27K lower for a net -6K drop for revisions over the last two months. The three-month average is 147K jobs nothing to write home about.
Just as the headline 287K jobs is a shocker so is the hourly wages. US futures catapult higher on the report not because of the headline number but instead because of the low wages. S&P +11. The disinflationary and deflationary funk continues. With non-existent rises in wages, inflation will not increase and the Fed will not hike rates as per the discussion above. The central bankers will maintain easy money policies so stocks rally strongly. All Hail the central bankers! The day takes on a party atmosphere. Private sector job gains are up 265K.
The bump higher in the unemployment rate to 4.9% is not too surprising since, as described above, more people may be entering the job market more actively looking for work. Leisure and hospitality jobs are the top gainer up 59K jobs (lower-paying jobs) and healthcare jobs gain 58K. Information systems gain 44K jobs which is the VZ workers going back to work (this may have bumped the jobs numbers by 30K or more). The U-6 rate is down to 9.6% from 9.7%. The Labor Participation Rate is 62.7% compared to 62.6% last month. Average hours worked are steady at 34.4 hours for the last five months.
Pandemonium breaks out in markets. S&P futures rocket launch higher up +13. Dow +102. Nasdaq +20. Russell 2000 Index futures +11. European stocks move higher. DAX +1.9%. CAC +1.6%.
US Treasury yields are; 2-year 0.65%, 5-year 1.02%, 10-year 1.43%, 30-year 2.16%.
Euro 1.1038. Euro/yen 111.30. Dollar/yen 100.82. Pound 1.2949. Euro/pound 0.8523. Mexican peso 18.7782. Canadian dollar 1.3045. Dollar/yuan 6.6906. Aussie dollar 0.7508.
WTIC 45.54. Brent 46.84. Natty 2.77. Gold 1344. Silver 19.47. Copper 2.13.
US Treasury yields are; 2-year 0.63%, 5-year 0.99%, 10-year 1.41%, 30-year 2.14%. German bund -0.17%. Japan 10-year yield -0.29%.
DAX +2.1%. CAC +1.8%. FTSE +0.6%. Euro 1.1018. Dollar/yen 101.04. Pound 1.2929. Canadian dollar 1.3049. Aussie dollar 0.7527. WTIC 45.49. Gold 1344.
At 8:45 AM EST, it’s a bull party! S&P +18. Dow +135. Nasdaq +30. Wage growth is nil so the Keynesian money printing will continue forever! All Hail the central bankers! US futures and European stocks rejoice! DAX +2.4%. CAC +2.2%. FTSE +0.7%. MIB +2.8%. IBEX +2.4%. PSI +1.3%.
At 9:06 AM, S&P +15. Dow +111. Nasdaq +21. WTIC oil 45.81. Brent oil 47.07. USD 96.22.
Elizabeth Holmes, beleaguered leader of the troubled Theranos, the company that claimed it had technology to carry out many medical tests with only one drop of blood, is banned from the medical industry for two years. Holmes, in her signature black turtleneck, was called the next Steve Jobs; now she hangs her head in shame. Will the smart and pretty Holmes redeem herself in coming years? Time will tell.
CUDA +16%. Barracuda may send other cybersecurity companies such as PANW, FEYE and SYMC higher. JUNO -25%.
S&P +12. Dow +94. Nasdaq +18. DAX +1.6%. WTIC 45.59. Brent 46.83. Gold 1362. Silver tags 20.00. Copper 2.13.
Treasury yields retreat; 2-year 0.60%, 5-year 0.97%, 10-year 1.37%, 30-year 2.11%. The 2-10 spread is 77 bips. The long duration yields fall so the preference is to buy the long end. The 2-year yield is somewhat anchored so no one expects an increased chance of a Fed rate hike anytime soon. A hike is not on the table especially due to the lack of wage growth which will prevent inflation from occurring. Stocks rally since central banker easy money continues forever.
At 9:20 AM, the NYSE observes a moment of silence to honor the five murdered police officers in Dallas, Texas, overnight.
The US Capitol in Washington, DC, is on lockdown after a staff member attempts to enter buildings brandishing a gun. Authorities are searching for the man. The world becomes nuttier each day. Stocks are set for a positive start.
US stocks begin trading by gapping higher as the futures indicate. The S&P 500 launches 15 points, +0.7%, to 2113. The Dow Industrials are up 129 points, +0.7%, to 18026 above the 18K level. The Nasdaq Composite is up 30 points, +0.6%, to 4906. The Russell 2000 small caps gain 10 points, +0.9%, to 1160.
The VIX drops like a rock to 13.75 providing bull fuel for stocks. Market bears are toast with the VIX under 14. Short-sellers are running for the exits creating more short-covering fuel for higher stock prices.
GPS +5.5%. CUDA +15%. HUM -1.4%. ANTM +0.7%. Energy, basic materials, industrials, chips and banks send equities higher. XLE +1.1%. XLB +1.3%. XLI +1.1%. SOX +1.1%. XLF +1.5%. BAC +1.8%. C +1.2%. GS +1.3%. KRE +1.6%. Banks celebrate. Utilities and telecoms are sold. XLU -0.6%. T -0.7%. VZ -0.2%.
The financials and industrials lead in the Dow Industrials index while healthcare, telecom and big box retail lags. AXP +2.5%. JPM +2.2%. CAT +2.0%. JNJ, UNH, VZ and WMT are each flat or negative.
The Dallas murders are the deadliest attack against US law enforcement officials since 9-11. One of the attackers in the Dallas killings is Micah Xavier Johnson form Texas. Micah is a prophet’s name from the Old Testament. Interestingly, law enforcement says Johnson hated white cops; the police are pushing a racism narrative. Officials conveniently fail to repeat the report from hours ago that say the nutcase was yelling, “The end is near” as he shot people. These statements appear to conflict.
Was the Dallas murderer perhaps a religious zealot believing the end of the world is near or was he a racist targeting cops? The other three suspects may provide answers. The news flow is fishy; you cannot trust what you are told from the main stream media, law enforcement and other outlets these days since words and statements are chosen that weave a narrative to promote a particular political agenda. Technology has greatly changed the world.
Gun makers SWHC gain +4.1% and RGR +3.5% after President Obama touts more anti-gun rhetoric this morning. The president is the single best marketing force behind the strong guns and ammunition sales over the last few years and big profits in Smith & Wesson and Sturm Ruger stock prices. Every time President Obama threatens to take away Second Amendment rights from law-abiding American citizens, gun sales go through the roof.
Treasury yields are; 2-year 0.62%, 5-year 0.99%, 10-year 1.39%, 30-year 2.13%.
DAX +2.1%. CAC +1.7%. The SPX and INDU are each up +1%. COMPQ +1.1%. The RUT is up 16 points, +1.4%, to 1166. Euro 1.1049. Dollar/yen 100.76. Pound 1.949. Canadian dollar 1.3053.
WTIC oil 45.27. Brent 46.61. Gold 1355. Silver 19.92. Copper 2.13.
At 10:57 AM EST, stocks are at the highs. The SPX is up 24 points, +1.1% to 2121. The Dow is up 171 points to 18066. The Nasdaq gains 64 points and RUT is up 22 points. VIX 13.55. TRAN +1.7%. Semiconductors run higher fueling big gains for the broad indexes. SOX +2.5%. NXPI +2.5%. AVGO +2.1%. MU +3.6%.
European indexes end the session in a sea of green. The pubs will be joyous this evening. The DAX leaps 213 points, +2.3%, to 9633. The CAC jumps 69 points, +1.7%, to 4187. The FTSE gains +0.9% to 6592. Italy’s MIB explodes +4.1% higher to 16062 fueled by bank bailout news. Spain’s IBEX jumps +2.2% to 8188. Portugal’s PSI is up +1.4% to 4451.
The Italian banks explode limit up on bailout news. The central bankers will save the troubled European banks. Intesa Sanpaolo catapults +10.4%. Banco Popolare is very popular launching +18.4%. Monte dei Paschi gains +4.6%. Traders celebrate central banker bailouts. The central bankers are the market.
Auto makers are joyous. BMW +4.3%. Porsche +5.1%. Peugeot +5.3%. GS downgrades the UK banks but they print strong gains. RBS +6.66%. BCS +3.6%. Lloyds +5.9%.
For the week, the DAX is down -1.4% not even the huge Friday rally could turn the week positive. The CAC ends down -2% this week. The FTSE ends the week +0.3% higher bucking the negative trend. The MIB loses -1.4% this week despite today’s joy. The IBEX is down -1%. PSI loses -2.3%. Portugal and France lead lower.
The bull party is in full swing into lunchtime with the SPX up 21 points to 2124. The Dow is up 201 points at 18097 ready to take 18.1K. The shorts are running for their lives. Stocks are melting-up with traders looking for new all-time highs. The lack of wage growth in the jobs report, which verifies that inflation will not appear anytime soon, opens the door to perpetual central banker easy money which pumps stock prices higher and makes the wealthy filthy rich.
Attorney General Lynch, fresh off her incestuous meeting and collusion with the Clinton’s, President Obama and FBI Director Comey to sweep the Hillary Clinton email scandal under the rug, conducts a press conference on the Dallas shooting. What do you think the chances are that she will blame guns for the murders?
Lynch does not provide any new material information on the shootings and attackers and instead, right on cue, she touts the Whitehouse anti-gun agenda. She is filling in for President Obama who would be giving the same anti-gun and anti-Second Amendment speech if he was stateside (the president is in Warsaw for the NATO Summit). These folks are very predictable. As Lynch talks, SWHC is up +3.2% and RGR shoots +4.1% higher.
AMZN is up +1.3% printing a new all-time record high at 746.10. Amazon is up +73% over the last year. CEO Jeff Bezos sleeps on bags of money. Amazon is a retail giant. Twitter is making deals to stream sporting events the news sending TWTR up +4%. Retailer GPS remains joyous since last evening gaining +5.3% today. INTC gains +2.1% ona Bernstein upgrade which lifts the entire chip sector.
At 1 PM, the BHI Oil Rig count is up 10 rigs to 351. Oil rigs have increased five of the last six weeks. Oil prices begin trailing lower after the rig count. WTIC oil 45.45. Brent oil 46.73.
At 2:33 PM EST, WTIC oil is up +0.5% to 45.35. Brent oil gains +0.7% to 46.31. Prices are dropping. Natty 2.80. Gold 1360. Silver is up +1.7% to 20.17. Virtually every asset class is higher today including bonds (lower yields) except copper that sits at the flat line at 2.12.
The SPX is up 37 points, +1.5%, to 2129 only a point away from the all-time closing high from May 2015. The Dow is up 258 points, +1.4%, to 18153. The Nasdaq leaps 80 points, +1.6%, to 4957. The Russell 2000 small caps catapult 27 points higher, +2.3%, to 1176. VIX 13.36. The bull’s are partying like its 1999.
Euro 1.1043. Euro/yen 111.07. Dollar/yen 100.58. Pound 1.2947. Euro/pound 0.8530. Mexican peso 18.4599. Pound 1.3047. Dollar/yuan 6.6908.
At 2:36 PM EST, the SPX prints above the all-time closing high at 2130.82 from 5/21/15 over 13 months ago. The SPX all-time intraday high is 2134.72 from 5/20/15. The S&P 500 is above 2130.82 for two minutes and then retreats lower.
At 2:54 PM, the SPX makes a second run at the all-time closing high printing a HOD at 2132, but again, price retreats after a couple minutes. The SPX does not move above 2030.82 for the remainder of the day.
At 3 PM Consumer Credit data reports a strong $18.6 billion increase in credit especially credit cards, student debt and auto loans. The prior month was $13.4 billion. Consumer debt is at a record $3.6 trillion.
Bulls remain in charge all day long with low volatility. VIX 13.32. Banks remain strong. BAC +1.2%. JPM +2%. C +1.6%. GS +2.2%. WTIC 45.23. Brent 46.63. Euro 1.1053. Dollar/yen 100.44. Pound 1.2955. Euro/pound 0.8532.
KITE tumbles -7%. JUNO -31%. Cancer drug companies are smacked but CELG is up +0.6% and AMGN +3%. IBB +1.2%. The semiconductors lead higher. SOX +2.8%. Nvidia is at a new all-time high with NVDA up +4%. NXPI +3.6%. INTC +2.4%. Amazon is at new all-time record highs with AMZN up +1.2%.
Retail, basic materials, industrials and banks lead the bullish parade. XRT +2.5%. XLB +2.5%. XLI +1.9%. XLF +1.8%. The sector leaders over the last month are utilities, telecom, consumer staples, consumer discretionary and healthcare. A few stocks on the new high list include UPS up +1.6%, MMM +1.2%, GE +1.2%, NUE +3.3% and VMC +1.5%.
Treasury yields are; 2-year 0.62%, 5-year +0.96%, 10-year 1.37%, 30-year 2.10%.
US stocks end the session in a joyous upside celebration. 95% of stocks on NYSE are higher. This morning’s jobs report shows flat wage growth so inflation will not appear anytime soon. With disinflation and deflation continuing to run the US and global show, the Fed will maintain easy money policies indefinitely. Market participants do not expect the Fed to hike the key rate until 2018. Stocks rally strongly driven by perpetual central banker easy money.
A disturbing development this week is that the SNB (Swiss National Bank) reveals $500 billion in holdings in stocks such as AAPL and JNJ. Say what? The central bankers are madmen. BOJ Governor Kuroda is buying stocks and ETF’s as part of Japan’s monetary policy. It is very sick. The central bankers are printing money that is sending asset prices higher as they keep buying those assets with more and more easy money. These are derivatives on top of derivatives. Price discovery is lost due to the near-eight years of Keynesian money printing. It will be a spectacular event when it all falls apart.
For the robust session, the SPX jumps 32 big points, +1.5%, to 2130 falling one point short of a new all-time closing high. You would think after it made it all that way it would have closed above. The HOD is 2132. The all-time closing high is 2131 and all-time intraday high, the highest number the S&P 500 has ever printed in history, is 2135. The weekend newspaper and internet headline writer’s are disappointed that they cannot tout a new all-time record. The S&P 500 bounced off the 200-day MA at 2025 eight trading days ago and is now over 100 handles higher.
The Dow gains 251 points, +1.4%, to 18147. The market bears are running for cover creating upside market fuel. The INDU bounced off the 200-day MA at 17293 eight trading days ago and never looked back now above 18.1K. The COMPQ gains 80 points, +1.6%, to 4957. The RUT is up a huge 28 points, +2.4%, to 1177. Bullish traders wree buying small caps with reckless abandon unconcerned about price.
Volatility sinks creating a happy session for bulls. The VIX is at 13.20 sown at the lows for the year. The VIX has dropped from near 27 down to 13 in only 10 days the largest and fastest drop ever; -52%. Traders are fearless. Low volatility indicates a complete lack of fear in the markets and this jives with traders believing in the central bankers continuing their easy money policies.
The CPC put/call drops to 0.73 which indicates complacency in markets. The CPCE put/call drops to 0.52 also indicating complacency and lack of fear. The NYMO spikes to 49 starting into the elevated area where market tops are placed. The VIX, CPC, CPCE and NYMO all hint that a significant near-term top is at hand likely next week. Traders are drinking Fed wine, BOE champagne and ECB brandy without a care in the world fully believing in the power of the central bankers. What have we become?
For the week, the SPX is up +1.3%. The Dow gains +1.1% and the Nasdaq Composite is up +1.9%. The Russell 2000 small caps gain +1.8% this week. WTIC oil is slapped -8.4% lower this week to 45.12. Brent oil drops -8.1% to 46.55. Natty gas loses -6% to 2.82. Gold gains +1.7% this week to 1367. Silver is up +2.5% to 20.35. Copper tanks -4.4% this week dropping while no one was looking. The US 10-year yield travels through 1.31% to 1.44% this week settling at 1.37%.
Energy is a loser this week with XLE down -1.3%. Financials print gains with XLF up +0.8% and bank earnings on tap beginning next week. Basic materials are a big winner this week up +1.3%. Ditto industrials; XLI +1.9%. Healthcare stocks are winners. XLV +2.1%. Biotech is up big. IBB +3.2%. Retail stocks jump higher. XRT +2.5%. Chips were joyous driving the broad indexes higher. SOX +2.3%. NXPI +1.5%. INTC explodes +3.8% higher this week.
Amazon prints a new all-time record high gaining +2.8% this week. General Electric, an industrial, gains +2.3% and CAT is up +1.2% this week. IR +2.7%. Infrastructure plays are receiving bids ahead of the presidential election. FLR +4.7%. The shippers feel a little bit of love this week. UPS +1.1%. FDX +1.6%.
After the bell, two permabulls, Fundstrat strategist Tom Lee and Wells Capital James Paulsen, appear on CNBC television. Are two prominent bulls appearing on television at the same time after all-time market highs are teased a sign of a top? All bullish prognosticators have been correct to hold on to long trades with record market highs at hand (although many individual stocks remain badly beaten down and are losses for investors). Lee says PE’s for the broad sectors have room to run higher which should take the SPX to 2400. Yesterday, Paulsen was touting a SPX 2200 and higher target.
Notable stories this week include the UK property fund failures, the UK prime minister race with May in the lead and the Italian bank trouble. The US 10-year drops to a 1.31%-handle this week and 30-year yield down to 2.10%. The pound was pounded down to a 1.27-handle on Wednesday.
US traders are tripping over each other to buy interest rate sensitive and perceived safety stocks such as utilities, telecom, dividend stocks and REIT’s. This will not end well. Buying a stock to receive a 3or 4% yield thinking you are safe in a market downturn is a stupid idea when the underlying stock may drop from -20% to -50% or more. That will take a lot of dividend years to get back to even.
Protestors begin to assemble in different major cities across the US for another night of race demonstrations. The Baton Rouge, Louisiana, police push back demonstrators from roadways but everyone remains calm. Dallas killer Micah Xavier Johnson was an Army Reserve veteran that served in Afghanistan. He was a black man that was apparently racist towards whites especially white cops. The police say that Johnson was the only shooter which differs from earlier reports.
A candlelight vigil occurs in Dallas in the evening to honor the five dead police officers. Officers are targeted and injured by gunmen in Missouri, Tennessee and in Georgia. The violence is spinning out of control and a hot and humid evening, a Friday night with a weekend at hand and the sun going down creates concern that more madman may surface overnight tonight. Will the protests demonstrating against police racism remain calm? Will the police remain calm?
Much of the distrust against police started after the government decided to militarize the forces making cops look like jack-booted enforcers. The friendly beat cop from a few decades ago is now dressed in black shouting commands like an SS officer. Relations between the public and cops deteriorate. A cop in military-style gear is not approachable for a common person. When people and groups stop talking or do not talk to each other, divides grow larger.
The Dallas shooter was killed by police using a robot with an explosive charge. This sets a new and dangerous precedent in America where the police, now militarized, are judge and jury implementing street justice killing suspects with robots. The United States begins sliding down a slippery slope.
Hillary Clinton has been quiet as a mouse after the FBI announcement this week that does not indict the democrat presidential nominee. Since the week has ended and folks are at happy hour, Clinton finally comments on the FBI decision under the cover of the weekend. Clinton pushes back against Comey’s comments that she mishandled classified information. Clinton will perform damage control this weekend and seek to push the email scandal off the radar screen. Republicans, however, plan to keep pounding Clinton on the lies and discrepancies with her past testimony compared to the FBI results. Republican POTUS candidate Trump is taking advice from his handlers and trying to look more presidential.
A Salt Lake City resident that had contracted the Zika virus dies. Authorities are determining what role the Zika virus played in the death.