Friday, June 16, 2017

FRIDAY 6/16/17; BOJ Rate Decision and Governor Kuroda Press Conference; OpEx Quadruple Witching; Housing Starts; Consumer Sentiment; AMZN Buys WFM; INDU (Dow Jones Industrials) New All-Time Closing High

Euro 1.1145. Dollar/yen 110.93. Pound 1.2755. Aussie dollar 0.7584. Dollar/yuan 6.8078.

US futures are flat. S&P -1. Dow +4. Nasdaq -1. WTIC oil 44.37. Brent oil 46.92. Natural gas 3.05. Gold 1254. Silver 16.75. Copper 2.565.

US Treasury yields are; 2-year 1.35%, 5-year 1.76%, 10-year 2.16%, 30-year 2.79%.

Asia and Aussie indexes are flat to higher in the early going. South Korea’s KOSPI starts out positive but is slipping negative due to sogginess in Samsung Electronics and SK Hynix. Naver, the internet search company, gains +0.8%. Line (a division of Naver) jumps +3% in Japan trading.

The NIKK gains +0.5%. Troubled airbag maker Takata is suspended from trading since bankruptcy may be declared in the days ahead. The BOJ decides to maintain its current monetary policy and huge ongoing stimulus plan as expected. Governor Kuroda will conduct a press conference after the markets close.

WTIC oil 44.57. Brent oil 47.12. The dollar/yen pair moves above 111 to 111.22 reflecting a weaker yen that sends Japanese stocks higher. Pound 1.2772. USD 97.45.

The NIKK ends the session up +0.6% to 19943. The central bankers are the market and the Bank of Japan remains accommodative. The party is in full swing. Australia’s ASX 200 gains +0.2% to 5774. The KOSPI ends dead flat at 2362. The SSEC slips -0.3% to 3123 but remaining comfortably above the 3K level that the PBOC defends since the central bankers are the market. Hong Kong’s Hangs Seng Index ekes out a tiny gain to 25578.

For the week, the Nikkei Index is down 0.3%. The SPASX200 gains +1.7% this week. South Korea’s KOSPI slips -0.8% finally taking a very minor pause after an eight-week parabolic price move higher. China’s SSEC loses -1.1% this week. The HSI sinks -1.8%. Australia is the big winner this week while China and Hong Kong trading lags.

Euro 1.1155. Dollar/yen 111.26. Pound 1.2775. Aussie dollar 0.7585. Dollar/yuan 6.8126.

US futures are buoyant overnight. S&P +3. Dow +30. Nasdaq +14. WTIC 44.56. Brent 47.09. Gold 1254. Silver 16.74. Copper 2.557.

Treasury yields are; 2-year 1.36%, 5-year 1.77%, 10-year 2.17%, 30-year 2.79%. UK gilt 1.06%.

India trading continues with the Nifty up 12 points, +0.1%, to 9590. The BSE Sensex gains 36 points to 31112.

BOJ Governor Kuroda conducts a press conference and says growth is above trend. Kuroda says inflation is not strong enough so the central banker accommodation continues. The central bankers are the market.

European index futures point to strong gains across the board from +0.2% top +0.6%. Car registrations are strong in Europe. European car sales rebound +7.7% last month a surprise which creates a positive mood into the weekend. Daimler reports a +14% increase in sales growth. Japanese auto makers Toyota and Suzuki report sales gains of over +20%. The auto sector stocks will pop.

At 3 AM (8 AM London; 9 AM Frankfurt), European indexes open higher as the futures indicate. DAX +0.5%. CAC +1%. FTSE +0.4%. Tesco rockets +3.7% higher. The broad European Stoxx 600 Index gains +0.4%. The materials and energy sectors each gain +0.6%. Automakers are rallying strongly on the positive auto data. Air Liquide +2.9%. Valeo +2.4%. Metro Bank sinks -1.2%.

UK Chancellor Hammond plans to speak at an Ecofin (Economic and Financial Affairs Council) meeting in Luxembourg. The IMF says the Euro area economy is strengthening but is cautious over subdued inflation expectations.

Greece and creditors reach a bailout deal that will allow the bankrupt island nation to make bond payments in July and keep kicking the can down the road (for many years). The central bankers are the market; they can paper over any problem by printing money and dropping it from helicopters.

S&P +5. Dow +43. Nasdaq +16. Russell +5. VIX 10.50.

Euro 1.1154. Euro/yen 124.09. Dollar/yen 111.25. Pound 1.2771. Euro/pound 0.8734. Mexican peso 18.0486. Canadian dollar 1.3259. Dollar/yuan 6.8129. Indian rupee 64.5338. Aussie dollar 0.7591. USD 97.46. The US dollar index rises from 96.4 to 97.5 after the Fed decision on Wednesday afternoon.

WTIC oil 44.55. Brent oil 47.10. Natty 3.06. Gold 1254. Silver 16.74. Copper 2.558.

Treasury yields are; 2-year 1.36%, 5-year 1.77%, 10-year 2.17%, 30-year 2.79%. German bund 0.31%. Japan 10-year yield 0.06%. UK gilt 1.06%. France 10-year yield 0.65%.

S&P +3. Dow +32. Nasdaq +12. Russell +4. VIX 10.67.

Equity indexes are rising into the weekend. DAX +0.4%. CAC +0.9%. FTSE +0.3%. MIB +0.6%. IBEX +0.7%. PSI +0.6%. Retailer Tesco loses its early gains trading down -0.4%. Nestle +1.8%.

Wealth inequality is a major topic at UK water coolers after the tragic Grenfell Tower fire. 17 people are confirmed dead from the massive blaze with the death count expected to exceed 100 souls. Common people are angry that they are ignored in society. Authorities may have ignored infrastructure problems at Grenfell which led to the fire. Any buildings that the wealthy live or work in are kept in top shape and up to code; not so for the average person. The huddled masses will rise up against the wealthy elite class as the months and years play out.

In the United States, the gap between rich and poor is the widest in five decades. This sickening situation can be laid directly at the feet of the Federal Reserve. The FOMC and other central bankers have printed money like madmen rewarding the privileged class with huge stock market gains over the last 8-1/2 years.

The wealthy could not care less about the common people; the privileged elite class only lusts for greed, money and power. The wealthy elite class, investment bankers, central bankers and politicians collude each day to guarantee more riches for themselves. This incestuous crony capitalism system is so financially obscene and pornographic that even Caligula would blush at the modern-day nefarious comingling.

America will likely become a very ugly place going forward as the split between rich and poor increases even wider. Social unrest will begin and accelerate when the recession hits in the weeks and months ahead.

Russia proclaims that Islamic State leader al-Baghdadi has been killed in a Raqqa, Syria, bombing raid on 5/28/17 about three weeks ago.

At 4:30 AM EST (10:30 AM London), European indexes and US futures are steady and positive. S&P +3. DAX +0.4%. Euro 1.1170. Dollar/yen 111.32. Pound 1.2768.

At 5 AM EST, S&P +2. Dow +26. Nasdaq +2. Russell +3. VIX 10.71. Mexican peso 17.9793. The peso strengthens sending the currency pair from 18 to 17. USD 97.32.

DAX +0.5%. CAC +1.1%. FTSE +0.4%. MIB +0.7%. SMI +0.9%. OMX +0.7%. The Nifty is down 10 points at 9567.

DAX +0.3%. CAC +0.666%. FTSE +0.666%. The Russia central bank lowers its key rate to 9% as expected. Russian ruble 57.64.

S&P +4. Dow +26. Nasdaq +10. Russell +3. VIX 10.63.

WTIC oil 44.67. Brent 47.29. Natty 3.04. Gold 1256. Silver 16.78. Copper 2.57.

Treasury yields are steady; 2-year 1.36%, 5-year 1.77%, 10-year 2.17%, 30-year 2.79%. The 2-10 spread is at 81 bips after spending much of yesterday under 80 bips.

India’s Nifty finishes the session up 10 points, +0.1%, to 958. The BSE finishes the day down -0.1% to 31056. For the week, the BSE Sensex loss -0.7%. Since last December, the Sensex is up 17 of 25 weeks rallying from 25.8K to 31.5K, a huge +22% move in only six months. PM Modi is walking around like a proud peacock with his chest puffed out.

The Dow Chemical and DuPont receives merger approval from the Justice Department. DOW +0.9%. DD +0.7%. AMZN rallies +3%.

In blockbuster news, Amazon buys Whole Foods, comically called Whole Paycheck (since the organic and natural foods are expensive), for 42/share compated to yesterday’s closing price at 33. AMZN pops +3% while WFM is halted from trading as the news hits the wires. Amazon wants to take advantage of Whole Foods existing network and distribution channels especially among the high-wage earners that spend a lot of money shopping. It is a sea change for Amazon now branching out into bricks and mortar stores. What is old becomes new again.

At 8:30 AM, the critically-important Housing Starts are down -5.5% to 1.09 million units missing the 1.22 million expected and below the prior revised-lower 1.16 million units. Single-family home starts are down -3.9%. Multi-family starts collapse -9.7%. Permits lose -4.9% to 1.17 million units below the 1.25 million consensus and prior 1.23 million units. The housing data is notably weaker.

Today is OpEx so trading volume will be more robust at the opening and closing bells. Quadruple Witching is the simultaneous expiration of stock index futures, stock index options, stock options and single stock futures. The price action in the stock market may be volatile today especially in the last hour of trading; the quadruple witching hour.

The second round of the prestigious US Open Championship begins in Erin Hills, Erin, Wisconsin, USA. Rickie Fowler is leading the golf tournament after the first round. England’s Paul Casey is one shot off the lead. The US Open is the second major golf tournament of the year. Sponsors are cheering for their golfers since the company logos will appear on television all weekend long. The fourth and final round of golf for the US Open is played on Sunday.

S&P -1. Dow +4. Nasdaq -15. Russell -2. VIX 10.73. DAX +0.2%. CAC +0.6%. FTSE +0.5%. WTIC 44.73. Brent 47.31. Natty 3.06. Gold 1256. Silver 16.70. Copper 2.567.

Treasury yields are; 2-year 1.33%, 5-year 1.75%, 10-year 2.16%, 30-year 2.78%.

Energy stocks rally in the pre-market with oil prices rising +0.6% and more. CHK +1.4%. WLL +2%. HES +3.5%. SNAP is up +1.1% in early trading snapping back from recent losses. SQ -1.2%. FB, AMZN, NFLX and GOOGL are trading from -0.2% to -0.8% lower.

At 9:30 AM EST (2:30 PM London), stocks begin trading flat to lower. The S&P 500 is flat at 2432. The Dow drops 19 points to 21341. The Nasdaq composite drops 13 points to 6153. The Russell 2000 loses 9 points, -0.666%, to 1400. VIX 10.77. Market bears got nothing with the VIX remaining subdued under 11.

WFM is trading and rocket launches +27% higher. AMZN +3%. Other companies in the food arena collapse because once Amazon becomes involved in an industry niche or business, the companies in that space collapse unable to compete with the Bezos behemoth. MDLZ -1.4%. K -1.666%. KR crashes -10%. GIS -3%. SVU crashes -14.4%. HAIN -4%. SPTN -6%. COST retreats a costly -7.7%. KHC is squeezed -2.5% lower. SFM, a competitor to WFM in the organic and natural food space, crashes -8.1%. UNFI crashes -12%. It is an ugly morning for food makers and grocers sans Whole Foods and Amazon.

WTIC oil is up +0.7% to 44.81. USD 97.35. 10-year Treasury yield 2.16%.

At 10 AM, Consumer Sentiment is down sharply to 94.5 missing the expected and prior 97.1. There is less confidence in the jobs outlook. President Trump’s agenda is moving forward (lower taxes, less regulation and huge infrastructure spending) at a far slower pace than expected.

On Twitter, President Trump admits in a tweet that he is under investigation by the FBI for obstruction of justice. There remains no proof that the president did anything wrong but the democrat-leaning media keeps pushing this narrative to damage Trump. The orange-headed carnival barker proclaims that there is no bigger witch hunt in American history (humorously, does he include the Salem witch trial period?). The people that support the president will continue supporting him and those that dislike the president will continue disliking him.

The baby games continue between democrats and republicans while the people’s business is always placed on the back burner. Politicians take the general public for granted. In the near future, when the recession hits and American families are thrust into more hard times after never recovering from the 2007-2009 financial crisis, there will be Hell to pay. The huddled masses continue stockpiling pitchforks and torches in their garages as they declare a pox on both the demopublican and replocrat houses.

The SPX is down 7 points to 2425 so the bear’s are pushing stocks lower. The Dow is down 34 points to 21346. The Nasdaq Composite sinks 26 points to 6139. The Russell 2000 drops 8 points to 1402. VIX 11.18. AMZN +3%. WFM +28%.

DAX +0.3%. CAC +0.5%. FTSE +0.4%.

Euro 1.1191. Euro/yen 123.98. Dollar/yen 110.78. Pound 1.2794. Euro/pound 0.8748. Indian rupee 64.4275. Mexican peso 17.9534. Canadian dollar 1.3254. Dollar/yuan 6.8108.

WTIC oil is up +0.4% at 44.63. Brent oil 47.22. Natty 3.06. Gold 1256. Silver 16.66. Copper 2.5625.
European indexes end the session higher. The DAX gains +0.5% to 12753. The CAC gains +0.9% to 5263 sitting on its 0-day MA at 5265 so price will bounce or die from this level early next week. The FTSE gains +0.6% to 7464. The MIB finishes up +0.5% to 20941 between its 20-day MA resistance at 21036 and 50-day MA support at 20841. Italy bulls win big above 21035 while bears win big below 20841; the middle range is noise.

The IBEX ends up +0.6% to 10759 parked at its 50-day MA at 10770 so price will make a bounce or die decision from this level early next week. The PSI gains +0.2% to 5274 parked on its 20-day MA at 5267 so price will make a bounce or die decision from this level early next week.

BCS gains +0.4% after Barclay’s pleads guilty to a fraud charge concerning a Qatari financial transaction years ago. The banks typically trade higher on settlement news, regardless of whether the news is good or bad, since an unknown is eliminated and legal fees will decrease.

For the week, the major European indexes end lower. Germany’s DAX loses -0.5%. France’s CAC sinks -0.7% this week. FTSE -0.9%. Italy’s MIB drops -0.9% this week. Spain’s IBEX loses -2% this week. Portugal’s PSI drops -0.5% this week. Spain is ill as global traders monitor the sick banks.

Former German Chancellor Helmut Kohl dies at 87 years old. Kohl’s name is synonymous with Germany’s Reunification in 1990. Kohl was supportive and instrumental in creating the euro currency.
At noon, SPX 2428. INDU 21352. COMPQ 6142. The RUT is down 9 points, -0.666%, to 1401. VIX 10.73.

Euro 1.1189. Euro/yen 124.04. Dollar/yen 110.86. Pound 1.2778. Euro/pound 0.8758. Indian rupee 64.4275. Mexican peso 17.9193. Canadian dollar 1.3237. Dollar/yuan 6.8105.

WTIC 44.66. Brent 47.21. Natural gas 3.04. Gold 1254. Silver 16.66. Copper 2.5625.

Treasury yields are; 2-year 1.32%, 5-year 1.74%, 10-year 2.14%, 30-year 2.77%.

Fed’s Kaplan is slightly less confident about the economy and is cautious concerning future rate hikes. Kaplan wants to encourage more economic growth by reforming immigration laws. Kaplan wants to see trade with Mexico to continue without interruption.

At 1 PM, the BHI Oil Rig count is up for the 22nd consecutive week climbing 6 rigs to 747 rigs. The total US oil and gas rigs are up 6 rigs to 933 rigs. Oil prices do not react to the data taking it in stride today.
SPX 2428. INDU 21356. COMPQ 6145. RUT 1402. VIX 10.82. Markets move sideways all session long and ramp up through the quadruple witching hour into the closing bell.

President Trump speaks about his slightly different US policy towards Cuba. The president touts the plan as a major roll back and reversal of former President Obama’s strategy towards Cuba but in reality is only a minor dial-back of the guidelines in dealing with the commie nation. The event goes unnoticed by many traders since the liberal-leaning media is broadcasting the Russia investigation story 24/7 sucking all the oxygen out of the room.

Dow Industrials components run higher led by the integrated oils. CVX +1.9%. XOM +1.5%. CAT +1.1%. JNJ +1%. AXP +0.9%. There are three notable losers in the Dirty Thirty. WMT mini-crashes -4.7% on the Whole Foods and Amazon deal. Wal-Mart tumbles lower and yet the Dow may close at an all-time high. Nike trips in its oversized and overpriced sneakers with NKE tumbling -3.4%. AAPL loses -1.4%. The banks are slapped. GS -0.6%. JPM -0.5%.

WFM catapults +29.1% higher. Energy stocks feel love. XLE +1.6%. MUR +4.2%. APA +3.6%. OKE +4.1%. AMZN +2.4%. CTAS +2.1%. ISRG +1.8%. FAST +1.7%. LBTYA +1.7%. XRX +2.7%. SLB +1.9%. TER +1.8%. VSLR +10%. ARAY +6.1%.

KR -9.2%. COST -7.2%. Auto parts companies are smacked silly. AN -5.7%. BWA -5.4%. AZO -3.1%. DLPH -1.1%. KIM -5.4%. WBA -5%. DLTR -3.7%. ALXN -3.4%. TGT -5.1%. NKE -3.4%. GIS -3%. LVLT -2.8%. MU -2.3%.

US stocks end the day mixed with the Dow printing a new all-time closing high at the bell. The SPX finishes 1 point higher at 2433 bouncing off the 20-day MA support at 2422. The Dow Industrials gain 24 points, +0.1%, to 21384.28 a new all-time closing high but not a new all-time high.

The Nazzy Composite drops 14 points, -0.2%, to 6152. The Russell 2000 finishes the day down 3 points, well off the lows, -0.2%, to 1407.

The big story is the Amazon takeover of Whole Foods. Analysts far and wide proclaim that a new long-term disruption in the grocery and food space has started. WFM +29.1%. AMZN +2.4%. UNFI -11%. SFM -6.3%. Today is a food fight in the pits and the only two winners are Whole Foods and Amazon.

For the week, the S&P 500 is up a hair +0.1%. INDU +0.5%. COMPQ -0.9%. The RUT loses -1.1% this week. Tech and small caps are slapped around.

TRAN gains +0.9% this week at highs not seen since February. The market bulls are pushing the trannies higher trying to overcome the all-time high from February and confirm the broad stock market rally from a Dow Theory perspective.

The fabulous Fab 17 stocks that have driven the broad stock indexes higher the last three years are in retreat. AAPL collapses -4.5%. AMZN +1%. CRM -1.5%. FB +0.7%. GE +4.666%. General Electric pops this week after trending lower since last December. GOOGL -0.2%. HD -0.1%. MA -0.9%. MSFT -0.5%. NFLX -3.6%. NKE -4.4%. NVDA +1.4%. PCLN -2.1%. SBUX -3.3%. ULTA -3.9%. UAA -4.1%. V -0.4%. Apple, Netflix, Nike, Starbucks, Ulta Beauty and Under Armour collapse lower.

The sectors are mixed on the week. Utilities and industrials are winners. Comically, the stock market is printing record highs as the utilities print record numbers. XLU +1.6%. XLI +1.6%. XLV +0.6%. XLE +0.5%. XLY +0.1%. XLF +0.4%. XLP -0.5%. IBB -0.5%. XLB -0.7%. XLK -1%. SOX -2.1%. Tech and semiconductors are smacked around during the week. Retail stocks are slapped hard with Wal-Mart, food producers and grocers mini-crashing today. XRT -2.1%.

WTIC oil drops -1.9% to 44.97 closing the week with a 44-handle. Brent oil loses -1.6% to 47.37 ending the week with a 47-handle. NATGAS finishes the week down -0.1%, call it flat, at 3.04. Gold is down -1.2% this week. Silver is down -3.3% on the week. Copper loses -3.2% this week. Commodities are lower across the board which is disinflationary and deflationary behavior.

Treasury yields are; 2-year 1.32%, 5-yea 1.74%, 10-year 2.15%, 30-year 2.78%. TNX moves through 2.10%-2.23% during the week; the low 2.103% yield is the lowest since the November election. The 2-10 spread is at 83 bips after dipping sub 80 during the week.

The consensus on Wall Street is all-in long with the banks with money managers and analysts guaranteeing that the yield curve will steepen and financial stocks will print big gains over the next couple years. However, over the last few weeks, the bank bulls are looking at each other with worried faces and beads of sweat forming on their foreheads. The yield curve is flattening.

After the bell, President Trump’s lawyers are clarifying a tweet from this morning saying that the president is not under investigation for obstruction of justice. The average American does not understand or follow the daily political games and drama and most are tuning-out the confusing noise.

The Public Theater in New York creates controversy performing a play that figuratively depicts the assassination of President Trump. The stage play is an adaptation of Shakespeare’s “Julius Caesar” and depicts the death of an actor with an orange head and hair dressed in a business suit (representing the president) playing the role of Julius Caesar who is stabbed to death.  Trump supporters and the republican media such as Fox News, Breitbart and Drudge Report complain about the sick content of the play. Trump detractors including the liberal-leaning media such as CNN  and MSNBC, and broadcast television channels ABC, CBS and NBC, and the New York Times, praise the freedom-of-speech theater production.

70% of the US media provides the news with a democratic slant while 30% of the news is provided with a republican slant. Unbiased neutral news in the US went out with the penny loafer decades ago. The democrats control broadcast television where a majority of Americans receive their daily news so Trump is at a serious disadvantage. The president is beaten relentlessly each day by the progressive press trying to destroy his presidency (and they may be starting to succeed).

Former President Obama had an easy ride with the media during his eight years in the Whitehouse since the liberal and progressive press treated all his ideas as the greatest things since sliced bread. 70% of the press including the most-watched television channels cheered Obama’s ideas regardless of whether the programs were good or bad for America.

The shoe is now on the other foot with 70% of the US media denigrating President Trump and all his ideas daily. This negativity is beginning to hurt Trump’s presidency as loyal supporters are now scratching their heads as to why the country remains in a confusing funk and mess one-half year after the president has taken office. The economy is not getting any better for common people and the daily negative mantra against Trump is impacting American minds.

After the second round of the US Open golf tournament, Ricky Fowler remains in the hunt but the leader board is becoming more crowded at the top. The third round is tomorrow and the final fourth round on Sunday.

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