Indexes on Wall Street ended Wednesday’s session mixed after the US Bureau of Economic Analysis said that the American economy contracted by 1.6% in the first quarter of 2022. Investors also digested comments from Federal Reserve Chair Jerome Powell on inflation. The Dow Jones gained 0.26% with McDonald’s, up 2.02%, leading the games. The Nasdaq 100 added 0.18%. Monster Beverage Corp. was the best performer as its shares rose 2.80%. The S&P 500 lost 0.07%. The euro slid 0.74% against the dollar to sell for 1.04414 at 3:58 pm ET. NN: The PCE data tomorrow could put the FED on hold. Like a condemned mans stay of execution is not to be confused with a pardon….
Wild ride tomorrow on PCE Inflation Report
Tomorrow coulkd be a key day for the stock market. We get Initial Jobless Claims, PCE inflation, and Chicago PMI data. The short term tend of the markets could fall into sharper focus as a result. The Federal Reserve is known to look at the Michigan and Conference Board surveys for insights, but PCE inflation in particular is seen as the Fed’s favorite inflation metric—and investors and the Fed still want to know if inflation has reached a peak. The Conference Board said that in the past month, purchasing intentions for cars, homes, and major appliances held “relatively steady—but intentions have cooled since the start of the year.” The report’s morning release turned the market around on the dime, reversing all major indexes that were up at least 1% after the open. Other analysts speculated that market liquidity has been low for some time now, and many investors are simply not looking to take on risk until conditions become clearer. We also have S&P500 portfolio rebalancing wrapping up for June and the second quarter on Thursday, that may introduce another level of volatility tomorrow. NN: i sure as hell do not want to be short the market tomorrow. Portfolio rebalancing is the old trick. Where the popular indexes simply throw out the losers and put in a new crop of winners. That is the reason they can tell the suckers the market always comes back after a sell off. Unfortunately the poor bastard whose IRA, 10k and retirement funds can not do that. They have to book the loses. That is why retirement funds are down as much as 50%. But for traders rebalancing is usually a market positive event. Because index funds have to buy the share of stocks entering the indexes they are suppose to track. As far as the PCE index its the Feds favorite way to look at inflation. My sniff is it will moderate giving hope to the markets that the FED will not beat them up to badly with massive future rate hikes. And as far as the Michigan consumer index, i feel that report will indicate the spending happy American consumer will continue spending, traveling and eating themselves into oblivion. At least for now.
Coronavirus tally: Daily Hospitalizations and deaths rise to multi-month highs
Just as COVID-19-related hospitalizations and deaths are starting to break out to new multi-month highs, the U.S. Food and Drug Administration recommended on Tuesday that the U.S. should pursue a booster strategy had better protects against newer more dominant strains, like omicron. The FDA indicated that a new generation of COVID-19 boosters could be ready for rollout as soon as late summer or early fall. Meanwhile, the seven-day average of new COVID cases rose 3% from two weeks ago to 108,963 on Tuesday, and has held relatively steady for the past two months, according to a New York Times tracker. But the daily average of hospitalizations have increased every day since mid-April, and rose 7% from two weeks ago to a 3 1/2-month high of 32,148 on Tuesday. The daily average for deaths was 377 on Tuesday, up 17% from two weeks ago and the highest number since April 20. The number of Americans who have received a first booster shot was 105.09 million, or 47.3% of the population, according to data provided by the Centers for Disease Control and Prevention. NN: I hope a booster shot against the BA.2 strain of Omicron is still the most dominant. But the deadlier BA.4 or BA.5 strain are starting to show up. And the idiots that are YOUR leaders have held up the funding foe new vaccines. Millions will die. I hope the updated vaccines make it before covid plague season starting this fall
Shell CEO says spare capacity is running ‘very low’
SINGAPORE, June 29 (Reuters) – Uncertainty in global oil and gas markets could stay for some time to come as spare capacity is very low while demand is still recovering, Shell (SHEL.L) Chief Executive Officer Ben van Beurden said on Wednesday.
“I do believe that we’re going to be facing quite a bit of uncertainty in markets for some time to come,” he told reporters. “Spare capacity is running very, very low,” he said, adding that despite economic and COVID-19 challenges, global oil and gas demand is still recovering. Global oil and gas prices have surged this year as Western sanctions on Russia kept supplies from one of the world’s top producers out of reach from most buyers. At the same time, the world’s oil refining system is running flat out, van Beurden said, driving up refining margins and prices of gasoline and diesel. Some companies, including Shell, have permanently shut or converted units while exports of Russia’s refined products are restricted because of sanctions, he added. Also, “we have China who deliberately or for domestic reasons do not export”, van Beurden said.In Europe, Russian pipeline gas supplies have fallen because of maintenance at Nord Stream 1, forcing European buyers to turn to liquefied natural gas (LNG) imports and sparking concerns about supplies ahead of peak demand this winter.
“I think it will be impossible to cover the entire pipeline gas capacity out of Russia with LNG,” van Beurden said.
“If we are not going to take significant measures, like for instance energy savings, maybe a certain degree of rationing, it will be problematic.” NN: Prepare yourself rationing is coming. Their is no replacement for the sanctions driven by Russian supplies that are being imported into the US and Europe.
Fed’s Mester favors 75 bp hike under current conditions
On April 22 this BITCH with her fellow Fed Reserve ASSHOLES where blowing blue sky up our asses. As you can see at that time she said a 75 bases point increase in Fed Funds were not necessary…. AND at the last FED meting she voted for a FED FUNDS increase of 75 bases points. NOW on June 29 she thinks another 75 bases point rate hike IS necessary. See the video below
President of the Federal Reserve Bank of Cleveland, Loretta Mester, noted on Wednesday that she would vote for an interest rate increase of 75 basis points in July if the current economic conditions remain unchanged next month. “If conditions were exactly the way they were today going into that meeting – if the meeting were today – I would be advocating for 75 because I haven’t seen the kind of numbers on the inflation side that I need to see to think that we can go back to a 50 increase,” Mester told CNBC. The Fed already decided to increase rates by 75 basis points earlier this month in response to record inflation in the United States. The next meeting of the Federal Open Market Committee is scheduled for July 27, after which a new rate decision will be announced. NN: obviously since endless easing and “transient” inflation the FED and their Doctoral Einsteins have wandered off the reservation….. AGAIN.
We need to see capitulation and panic before the bear market is over
U.S. stocks haven’t yet seen the extreme investor capitulation that’s typical of market bottoms.
Johnson fears Ukraine will have to take ‘bad’ peace deal
https://youtu.be/RpyG4XE_zj4
KIGALI (Reuters) – British Prime Minister Boris Johnson said on Saturday that he feared Ukraine could face pressure to agree a peace deal with Russia that was not in its interests, due to the economic consequences of the war in Europe. “Too many countries are saying this is a European war that is unnecessary … and so the pressure will grow to encourage – coerce, maybe – the Ukrainians to a bad peace,” he told broadcasters in the Rwandan capital Kigali, where he is attending a Commonwealth summit. Johnson said the consequences of Russian President Vladimir Putin being able to get his way in Ukraine would be dangerous to international security and “a long-term economic disaster”. NN: Ukraine lost the war the minute NATO refused to provide air cover and or troops. As we speak the G7 is arranging a continuation of buying Russia oil and gas by trickery. Remember the agreement was to halt all buying of Russian gas and oil by year end. That will never happen. Putin has won. He will get what he wants…… And he will be back for more after he consolidates these recent gains
Most Expensive, Manic Minutes of the Trading Year…. will the LI effect make us money?
Exactly at the NY open Friday the stock market bases the NASDAQ 100 soared from 11,700 to 12,000 by 10:00 am. To a lot of traders this was a surprise since fund rebalancing usually occurs on the close. In the overnights we got a sniff of movement and spread our positions. When the zoom zoom started we went long and then went flat. In the last few minutes of trading on Friday, equity volumes exploded as funds managing trillions finished up adjusting for the annual reconstitution of the FTSE Russell indexes, instantly making this one of the busiest days of 2022. But on the close (since most of the trades were made on the open) the NASDAQ100 only was up around 200 point.. From 11950 to a high of 12100. We took advantage of the final hurrah to turn our spread bet to a bias to the short side.
We are fundamentally negative on stocks overall. But our Fridays action was taking advantage of what i call the Li effect. In it, Li — then a PhD student at the University of Illinois Urbana-Champaign — crunched data through 2020 to show that a share rises 67 basis points on average in the five days before it’s bought by a transparent U.S. equity exchange-traded fund and slips 20 basis points in the subsequent 20 days. The 67 basis-point “execution shortfall” he found compares to 24 basis points for other institutions, according to an earlier research paper.
The idea is that passive vehicles are hitched to the public rebalance schedules of indexes like the S&P 500 and Russel 2000, so when stocks are added to the gauge, the trillions tracking it have to snap them up typically on the same day. That bombards the market with such massive and predictable orders that the funds end up paying a premium. Other academics and researchers have fretted over these kinds of distortions for years. In fact, last July FTSE Russell itself announced an internal review of its rebalance frequency. Turnover during the 2021 reconstitution jumped 45% from a year earlier, the firm said after the event. It noted that “a record 2.37 billion shares representing $80.8 billion were executed in the Nasdaq Closing Cross in 1.97 seconds, while 2.1 billion shares were traded on NYSE — their fifth largest NYSE Closing Auction ever, with $105.1 billion in notional value traded.” Li’s claim that arbitrageurs are pushing up trading costs is a contentious one. To Antti Petajisto, who documented the so-called index effect — where stocks enjoy a bump in performance after being added to an index — as a finance professor at New York University in 2010, Li’s results show there’s a case for spreading rebalancing trades across the day or even a few days. But he stresses transparency is actually a win-win for both arbitrageurs and ETF providers.
Fridays trading represented represented the biggest stock market trading gain since May 2020. With the DOW up 0ver 800 points. The S&P500 up 116 points and the NASDAQ100 up over 400 points. Of course the know everything Know nothing Wall Street talking heads called Friday a market reversal since the FEAD will not raise rates as mush as the market previously priced in. Al i can say is BULLSHIT!
Significant downside risks to US economic outlook – IMF’s Georgieva
Experts of the International Monetary Fund (IMF) think that there are significant downside risks for the US economy this year and especially next year, IMF Managing Director Kristalina Georgieva said presenting the annual report on the state of the American economy in Washington. “We see very significant downside risks [in the US economy] this year and especially next year,” she said. Georgieva noted that, according to the baseline scenario, which is being considered by the IMF, the US economy is unlikely to avoid a recession. High energy prices pose risks to the global economy and also affect the pace of its development, Georgieva told. “Where we see the snaring path ahead it and what are the biggest risks any of course, high energy prices. This is a risk for US economy and for the world economy as a whole. Not only because it affects inflation, but because it has a broader consequences for growth prospects. When we look at the potential for some withdrawal of oil supply, that of course, could create an it does create further pressure on oil prices,” the head of IMF said. According to her, the IMF assessed “what could that result into.” “We do see the need for a policy that would prevent further upward pressure on oil prices,” she said. Georgieva added that many developing countries were in a very difficult situation under the current circumstances. Georgieva said she had discussed with US Treasury Secretary Janet Yellen the importance of implementing policies that help keep this upward pressure on oil prices under control as much as possible. The Fund’s Managing Director also stressed that the situation around food in the world next year could become worse than this year, not only because of what is happening in Ukraine, but also because of crop failures in a number of countries. IMF finds it important to fight inflation in the US to bolster growth prospects for the future, but the necessary government action can affect US consumers in the short term, Georgieva told. “I want to say something that sometimes is left unthought and it is the importance to fight inflation today. This is a top priority for a reason because if we don’t secure price stability, it would be negative for growth and it will be negative for incomes will affect people. It will affect families dramatically. So, it is an important step to be taken and success. Over time will be beneficial for global growth. But some pain to get to that success can be a necessary price to pay,” she said. On Friday, the IMF cut its 2022 growth forecast for the US economy by 0.8 percentage points to 2.9%. For 2023, the IMF lowered its forecast from 2.3% to 1.7% and now expects growth of 0.8% in 2024. In October last year, the similar forecast of the fund for the current year was 5.2%. NN: This economic crises is far far from over. In fact the earth shattering depression has started as you are seeing… This is a ten year event. I am here for you.
Dow jumps more than 800 points as U.S. stocks snap three weeks of losses
All three major U.S. stock benchmarks closed sharply higher Friday, with the technology-heavy Nasdaq Composite surging more than 3%, as investors reassessed the expected path of Federal Reserve interest-rate hikes. The Dow Jones Industrial Average, S&P 500 and Nasdaq each scored weekly gains, snapping three straight weeks of losses.
- The Dow Jones Industrial Average DJIA, +2.68% gained 823.32 points, or 2.7%, to close at 31,500.68, its largest daily percentage gain since May 4.
- The S&P 500 SPX jumped 116.01 points, or 3.1%, to finish at 3,911.74, its biggest daily percentage gain since May 18, 2020.
- The Nasdaq Composite COMP, 3.34% surged 375.43 points, or 3.3%, to end at 11,607.62, its largest daily percentage gain since May 13.
For the week, the Dow booked a 5.4% gain, while the S&P 500 climbed 6.5% and the Nasdaq jumped 7.5%, according to Dow Jones Market Data. The Dow and S&P 500 each saw their biggest weekly gain since late May, while the Nasdaq had its best week since March.
The market now seems to be interpreting recent signs of slowing growth as a reason for the Federal Reserve to potentially have “a lighter touch” in its battle with inflation, said Dave Grecsek, managing director for investment strategy and research at Aspiriant, in a phone interview Friday. The thinking seems to be that maybe “we really can avoid a recession,” he said, with the Fed potentially needing to become less aggressive in hiking rates to bring down inflation as the economy slows. Commodity prices have been falling recently, and judging by Fed funds futures, investors now see a lower peak in the path of the Fed’s benchmark interest-rate target. “We’ve seen a two-week drop in commodity prices and now we are seeing Fed funds futures pricing in rate cuts out in 2023. The thing holding back the market was endless rate hikes, if we’ve found the terminal rate then stocks can make headway here,” said Mike Antonelli, a market strategist at Baird. “Hopes that inflation is peaking and that the economy is still on solid footing has some investors confidently buying up heavily discounted stocks,” said Edward Moya, senior market analyst for the Americas at OANDA, in an emailed note Friday.San Francisco Fed President Mary Daly on Friday joined others in signaling support for another big rate increase in July to slow inflation. Some market strategists also attributed the bounce in stocks this week to technical factors after the main benchmarks tumbled last week. Meanwhile, the rebalancing of the Russell U.S. equity indexes after the market’s close Friday resulting in a surge of trading volume and price upwards as we headed toward the closing bell.
Don’t trust the stock-market bounce until S&P 500 is back above 3,800
The market is being driven by “this push and pull between inflation risk, recession risk and the Fed’s ability to navigate a path forward in terms of rate policy,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors, in a phone interview Friday. Investors are trying to work out “how quickly and how far” the Fed will need to go — or will “be able to go” — in terms of further tightening amid evidence the U.S. economy is slowing, he said. NN: the POP in the stock markets were little more then a dead cat balance. In part driven by the old Wall Street trick, throw the losers and add the current crop of winners. This time it was the Russel 2000 “rebalancing”. For the record we shorted into the close…….