Monday, July 10, 2017

TUESDAY 7/11/17; Amazon Prime Day; PEP; JOLTS Report; Wholesale Trade; Oil Pops on Inventory Data

Euro 1.1397. Dollar/yen 114.08. Pound 1.2879. Dollar/yuan 6.8036. Aussie dollar 6.8036. USD 96.07.

US futures are flat. S&P -1. Dow flat. Nasdaq -1. WTIC oil 44.52. Brent oil 46.88. Natural gas 2.93. Gold 1214. Silver 15.65. Copper 2.649.

Treasury yields are; 2-year 1.38%, 5-year 1.93%, 10-year 2.37%, 30-year 2.93%. The 2-10 spread is 99 bips. Japan Nikkei futures point to a drop of -0.5% at the opening bell.

Aussie and Asia stocks begin trading mixed. The NIKK is up +0.2% to 20122. Topix +0.3%. Suzuki Motor rides -3.1% lower on emission testing troubles.

The ASX 200 is down -0.2% down four of the last five days. Iron ore is up +1.1%. Materials lead higher in Australia. KOSPI +0.2%. Trading volume is light as the session continues.

S&P +1. Dow +9. Nasdaq +4. WTIC oil 44.58. Brent oil 47.06.

Treasury yields are; 2-year 1.39%, 5-year 1.94%, 10-year 2.38%, 30-year 2.93%. German bund 0.54%. Japan 10-year yield 0.094%. The BOJ will have to step up to keep defending the 0.10% level. UK gilt 1.28%. France 10-year yield 0.91%.

The ASX 200 recovers off the lows and jumps into positive territory up +0.3% with Asia stocks green across the board.

Amazon Prime Day begins at 9 PM EST Monday evening (10 AM Tokyo this morning) with CEO Bezos and management boasting that this year’s shopping day will be larger than Black Friday (the day after Thanksgiving which is one of the largest shopping days of the year). For the next 30 hours, thousands of deals will be provided on the Amazon shopping site for the Amazon Prime subscribers that pay a $99 per year subscription fee. Prior Amazon Prime days were 7/15/05 and 7/12/06.

The dollar/yen pair moves to 114.38 representing a weaker yen so Japanese stocks rally. NIKK +0.5%. The dollar/yen pair is at levels not seen in four months. The Fed and other central banks such as the ECB, BOE and BOC, are colluding and hinting that rate hikes are coming. The BOJ is not joining that party and instead plans to continue goosing its economy with easy money.

Chinese stocks are on line with the mainland trading a touch lower while Hong Kong’s Hang Seng Index moving higher. Gambling stocks are winners on robust Macau gaming revenues. Sands China +0.7%. Galaxy Entertainment +0.5%. Wynn Macau +0.7%.

Fed’s Williams is speaking in Sydney, Australia. Williams says another rate hike by the Federal Reserve is on the table as well as a start to the winding down of the massive balance sheet. The euro remains below 1.14. Aussie dollar 0.7623. USD 96.15.

WTIC oil 44.67. Brent oil 47.14. The Asia trading session is quiet. Global investors are waiting on Fed Chair Yellen’s testimony before the House tomorrow and Senate on Thursday.

The NIKK ends the session up +0.6% to 20195. The ASX 200 gains +0.1% to 5729. The KOSPI finishes +0.6% higher to 2396. The SSEC ends down -0.3% to 3203. The HSI gains a big +1.5% to 25878. The Nifty is up 54 points, +0.6%, to 9825 as the India session continues.

US soldier Sergeant 1st Class Ikaika Kang is arrested in Hawaii for providing military documents and a drone to the ISIS Islamic militants. Kang pledged allegiance and loyalty (bayat) to the Islamic State and has stated that he wants to use his rifle to “kill a bunch of people” and that he believes in “the mass killing of Jews.” The FBI has been investigating Kang for the last year suspecting that he was becoming radicalized. The Quran instructs believers to adopt Western ways and pretend to assimilate in other societies as long as the end goal and result is to kill the infidel.

Sporadic skirmishes and fighting continues in Mosul, Iraq, despite the proclamation from the Iraqi army and coalition forces that the ISIS Islamic radicals have been driven from the city.

At 3:00 AM EST (8 AM London; 9 AM Frankfurt), European indexes are mixed in the early going. DAX +0.666%. CAC +0.3%. FTSE -0.1%. SMI -0.1%. OMX +0.2%. UK financial and insurance companies are feeling less optimistic according to a recent poll. UK PM May has a problem trying to build a consensus to take the Brexit process forward.

Steel king Thyssenkrupp announces plans to cut employees so the stock jumps nearly +3% higher. Firings are typically bullish for stock prices since the remaining employees will have to pick up the slack increasing productivity and earnings. Retailer Marks & Spencer loses -1.6% on weak food sales. Randstad drops -1.8% on a DB downgrade.

S&P +2. Dow +22. Nasdaq +5. Russell +2. VIX 10.71. Market bears do not have any hope with the central bankers maintaining their jack boots on the throat of volatility.

Euro 1.1394. Euro/yen 130.37. Dollar/yen 114.42. Pound 1.2893. Euro/pound 0.8838. Mexican peso 18.0146. Canadian dollar 1.2903. Dollar/yuan 6.8063. Indian rupee 64.52. Aussie dollar 0.7623.

WTIC oil is up +0.7% at 44.71. Brent oil is up +0.6% to 47.14. Natty 2.93. Gold is down 4 dollars to 1210. Silver slips -0.9% to 15.49. Copper 2.6575.

Treasury yields are; 2-year 1.39%, 5-year 1.95%, 10-year 2.39%, 30-year 2.94%. The 2-10 spread widens to 100 basis points with the yield curve becoming incrementally steeper each day.

At 3:47 AM EST, S&P +1. Dow +15. Nasdaq +2. Russell +1. VIX 10.79. Energy stocks weaken as oil prices slip away to the downside.

WTIC oil drops -0.3% to 44.30. Brent oil is down -0.4% at 46.75. Goldman Sachs warns that oil prices can fall under 40 unless OPEC delivers a ‘shock and awe’ approach to try and pump prices higher.

S&P -1. Dow +4. Nasdaq -2. Russell -1. VIX 10.84. The Nifty is up 45 points, +0.5%, to 9816.

DAX +0.2%. CAC flat. FTSE -0.5%. MIB -0.4%. IBEX -0.3%. PSI +0.1%. Germany and Portugal lead Europe higher. Euro 1.1396. Dollar/yen 114.30. Pound 1.2904. Dollar/yuan 6.7996. Aussie dollar 0.7621. US dollar index 96.11.

Treasury yields are; 2-year 1.395%, 5-year 1.95%, 10-year 2.39%, 30-year 2.94%. A 3-year auction is on tap at 1 PM EST today.

The Amazon Prime day is in full swing. Amazon is pushing television deals reducing prices by about -26%. Time will tell how American shoppers respond to the discounts offered today.

At 5:21 AM, S&P -1. Dow +6. Nasdaq -3. Russell -1. VIX 10.85. The Nifty gains 19 points, +0.2%, to 9790.

Italy’s MIB moves radically from a -0.4% loss to a +0.4% gain over the last hour. DAX +0.2%. CAC flat. FTSE -0.60%. WTIC 44.28. Brent oil 46.76. Gold 1211. Copper 2.66.

The morning is relatively quiet so the Donald Trump, Jr, emails and information released last evening receives a lot of attention. The democrats say that Donald Trump, Jr, was colluding with the Russia government to help his dad get elected and claim to have proof as presented by a former British tabloid journalist Rob Goldstone. The story is twisted and difficult to follow. It does not appear that Donald Trump, Jr, did anything illegal but the facts will have to be sorted out over time.

S&P -2. Dow -7. Nasdaq -6. Russell -3. VIX 10.95. The  Nifty finishes up 15 points at 9786. The BSE Sensex finishes up +0.1% to 31747.

UK Prime Minister May is speaking asking rival parties to contribute to the Brexit process rather than criticize. May looks like a beaten-down leader ever since the repudiation of her leadership in the recent election. Receiving the understatement of the year award, May says, “The May election results are not what I wanted.” May does not appear enthusiastic about the path for Britain ahead.

UK retail sales are the most robust since 2013. It is a typical gloomy rainy day in London today but the extra sunny days over the last few months have increased consumer spending and retail sales.

The NFIB Small Business Optimism Index falls to 103.6 the lowest reading for this year missing the prior and expected 104.5. Businesses are becoming disappointed in the political bickering and lack of any substantive progress on healthcare and tax reform. Expectations are lowered for the economy and sales. Hiring plans are reduced. The typically optimistic optimism index is pessimistic.

PEP fizzles -1.1% despite beating on earnings. RCII is up over +10% on a takeover offer. AMZN is down -0.6% with Amazon Prime Day well underway. XOM rises +0.1% on a BCS upgrade. COH loses -0.2% and KORS -1.5% on a buy and a sell rating, respectively, from MKM. After last evening’s earnings, CUDA drops -3.9%. CTXS -2.2%. ARNA rocket launches +44%.

SNAP sinks -3.9% adding to yesterday’s losses. Morgan Stanley, a market maker in Snap, turns its back on the fledgling IPO cutting its rating on the stock. Facebook’s advantage with customers is hurting Snap.

At 9:30 AM EST, US stocks begin trading marginally lower call it flat. SPX 2426. INDU 21414. COMPQ 6172. Homebuilders are punched in the face on an analyst downgrade. The bell tolls for TOL dropping -2%. LEN -1.5%. PHM -1.2%.

Euro 1.1405. Euro/yen 130.33. Dollar/yen 114.28. Pound 1.2867. Euro/pound 0.8863. Indian rupee 64.5925. Mexican peso 17.9885. Canadian dollar 1.2918. Dollar/yuan 6.8025.

Oil is down -0.4%. WTIC 44.22. Brent 46.66. Natty 2.99. Gold 1212. Silver 15.65. Copper 2.66.

SPX 2425. INDU 21413. COMPQ 6167. RUT 1407. VIX 11.23. DAX +0.1%. CAC -0.3%. FTSE -0.5%.

SNAP crashes -9%. KORS becomes a bag lady after dropping -7.4%. The women’s handbags with the ‘MK’ logo are not selling as well.

At 10 AM, Wholesale Trade is a beat up +0.4% above the +0.3% expected and prior revised-higher -0.4%.

The JOLTS report is down -5% to 5.666 million job openings missing the 5.975 million expected and below the prior 6.044 million. Hiring increases +8.3%. The Quits Rate, a favorite economic indicator of Federal Reserve Chair Yellen, is up a tiny 0.1% to 2.2%. A higher quits rate is encouraging for the economy since it indicates that workers are comfortable knowing they will get another job. Others are willing to confidently quit their job to start a new business. The JOLTS report is disappointing but Yellen will clutch on to that Quits Rate and claim a very minor victory.

At 11:09 AM EST, Donald Trump, Jr, releases an email chain of documents concerning the meeting with the Russian lady during the election campaign last summer. Trump, Jr, is hoping to get out in front of the story. The problem is that President Trump, his family and staff keep saying they never met with Russian officials but over time meetings are exposed with the Ruskies.

As a rule, anyone involved in an election campaign should automatically avoid contact with a foreign government entity wanting to become involved in the US political race. Trump, Jr, shows a lack of good judgment. Traders fear that the documents may be a smoking gun that lead to major problems for President Trump. Traders sell first and ask questions later.

Stocks plummet. The SPX drops from 2428 to 2413 from 11:09 AM to 11:26 AM.

The SPX is down 13 points, -0.5%, to 2414. The Dow drops 122 points, -0.6%, to 21289. The Nasdaq Composite loses 19 points, -0.3%, to 6158. Financials are beaten. XLF -0.7%. Equities are falling like a rock.

The VIX tags 12.01. Euro 1.1428. Dollar/yen 114.04. Pound 1.2843. US 10-year yield 2.37%. Oil is up +0.5% reversing earlier losses. WTIC 44.64. Brent 47.13. European indexes drop into the close.

European indexes end the session generally lower smacked in the face with the Trump, Jr, email confusion. The DAX loses -0.1% to 12437. France’s CAC finishes down -0.5% to 5141. The FTSE ends down -0.6% to 7330. The MIB drops -0.4% to 21112. The IBEX drops -0.6% to 10449 printing at lows not seen since April. Portugal’s PSI bucks the negativity finishing up +0.1% to 5175. UK publisher Pearson sinks -5.1%. Marks & Spencer -4.7%.

SPX 2418. INDU 21320. COMPQ 6164. RUT 1403. VIX 11.69.

Euro 1.1431. Euro/yen 130.41. Dollar/yen 114.08. Pound 1.2849. Euro/pound 0.8898. Mexican peso 17.9657. Canadian dollar 1.2935.

Treasury yields are; 2-year 1.38%, 5-year 1.93%, 10-year 2.37%, 30-year 2.92%.

APRN crashes -8% to 7.58 way below its initial IPO price at 10. Quick, order an underwhelming overpriced meal delivery from Blue Apron to help them out. SNAP snaps like a twig losing -7% to 15.92 below its IPO price.

Chancellor Merkel says, “We are not where we want to be regarding ECB policy.” Merkel says European countries continue to recover economically.

Fed’s Brainard says the balance sheet runoff can begin if the economy firms. Brainard is cryptic saying she wants to “assess the inflation process.” Brainard proclaims, “The global economy is experiencing synchronous growth.” She remains cautious on further rate hikes. The stock market is encouraged by Brainard’s dovish talk. The SPX is off the lows at 2420 and rising.

At 1 PM, the 3-Year Note Auction goes off at 1.573% under moderate demand. The stock market stabilizes after the Donald Trump, Jr, excitement. The SPX is in a steady uptrend during the session after the lows printed at 11:30 AM.

Fed’s Kashkari, a dove, says the economy is not overheating since wage growth is slow. He says wages will rise after a scarcity in labor develops. Kashkari is harping on the lack of wage growth.

President Trump responds to his son releasing the email information concerning a Russia meeting from last summer. The president says, “My son is a high quality person and I applaud his transparency.” The story with Donald, Jr, may damage the president over the coming days.

US authorities are working to secure proof that the ISIS leader Abu Bakr al-Baghdadi is dead. The ISIS Islamic radical movement is reduced to an area in Raqqa, Syria, and their leader may be dead. The sad part is that even though the Muslim radicals will be wiped out, new terrorist organizations will develop.

Generations of children grow up in the Middle East seeing their parents and other family members killed because of conflicts with the West so an engrained hatred exists in their minds for the United States from a very young age. It is difficult to reshape these young minds. War and violence creates more war and violence. The Middle East and northern Africa is a mess.

Stocks continue recovering in the afternoon making up all the losses from the Donald, Jr, drama by 2 PM.

Oil catches a strong bid. WTIC oil is up +1.4% to 45.03. Brent oil is up +1.3% at 47.49. Natty gas rallies nearly +4% to 3.04. VIX 11.40.

Euro 1.1470. Euro/yen 130.52. Dollar/yen 113.79 under 114. Pound 1.2857. Euro/pound 0.8922. Gold 1216. Silver 15.77. Copper 2.672.

Treasury yields are; 2-year 1.37%, 5-year 1.91%, 10-year 2.36%, 30-year 2.92%.

The US Senate leadership cancels the first two weeks of the August recess to work on the healthcare bill and other pressing issues. The politicians did not cancel the recess only delayed it. Rest assured the liars will extend their vacation on the back side. They always put themselves first before the common people. If they were serious, they would cancel the entire recess and stay in Washington, DC, to perform the people’s business. Politicians are only concerned about perceptions and not what is actual reality.

Chip darling MU gains +2.9%. NVDA +1.4%. WDC +2.8%. AMAT +2.7%. Biotechs catch a  bid. MNK +2.8%. VRTX remains a hot stock  up +2.7%. TSLA rides +3.5% higher. Beaten down GE rises +1.3%.

KORS -7.4%. ULTA -4.8%. CMG -2.8%. Quick, run out and buy a burrito for lunch to help Chipotle out. FMC -2.2%. AAL -2%. ADP -1.8%. Banks are weak. C -1.2%. BAC -1.2%. CLX -1.3%. SEE -1%. FOSL -5.3%.

US stocks finish the session mixed. The SPX ends down 2 points at 2425. The Dow is up a tiny fraction at 21409. The COMPQ finishes up 17 points, +0.3, to 6193. The RUT gains 5 points, +0.3%, to 1413. Tech, biotech and small caps carry the day higher. VIX 10.89. The bulls rule with the VIX under 11.

The API Oil Inventories are a huge 8.1 million barrel draw down a far bigger loss of supply than the 3.0 million draw down expected. Oil prices are going to rally. Gasoline Inventories are lower while Distillates are higher. WTIC oil rallies +3.1% to 45.76. Brent oil rallies +2.7% to 48.16.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.