Posts Tagged ‘U.S. stock market’

Investors’ New Headache: It’s Getting Harder to Buy or Sell When They Want

April 23, 2018

Worsening liquidity comes as banks have reduced inventory of riskier assets and investors more closely track bond indexes

In the options market, liquidity has deteriorated as new exchanges and more products have diluted trading.
In the options market, liquidity has deteriorated as new exchanges and more products have diluted trading. PHOTO: KIICHIRO SATO/ASSOCIATED PRESS


Investors are having a tougher time trading in a number of financial markets, a development that is weakening their ability to raise cash or to protect against big stock declines.

The capacity to get in or out of an investment, known as liquidity, was rarely tested during the long stretch when stocks and bonds rallied with little volatility. Now as inflation concerns, trade anxiety and tension in Syria roil markets, investors notice it is getting harder to trade as easily.

Chris Retzler, who manages the Needham Small Cap Growth Fund, tried to buy a small-cap tech stock in February, only to find that trading was thin and prices unattractive. Rather than paying up, he decided to wait for a couple of weeks until he found someone offering the stock at a reasonable price.

“There is very little you can do at that point other than be patient and not overpay,” Mr. Retzler said.

The liquidity problem has been worsening for years. Investors say it began nearly a decade ago, when post-financial-crisis regulation prevented banks from trading for themselves, and forced them to hold larger amounts of capital—thereby shrinking their inventory of riskier assets. This, in turn, reduced banks’ ability to serve as intermediaries between buyers and sellers.

“It’s like going into a grocery store and there’s nothing on the shelves,” said Jeffrey Cleveland, who said liquidity is a hot topic among the traders he confers with regularly as chief economist at Los Angeles money manager Payden & Rygel.

There is good reason to worry about how well liquidity will be provided during episodes of market duress.

—Goldman Sachs economist Charles Himmelberg

In the U.S. stock market, half of the more than 8,500 listed companies trade less than 100,000 shares a day—a tiny sliver of what big stocks trade, according to an April 10 report from the Securities and Exchange Commission. The SEC is weighing changes to create more liquidity in small-caps, such as potentially concentrating trading in such stocks to a single exchange.

“Thinly traded securities and their investors deserve a market structure that fits their particular needs,” Brett Redfearn, head of the SEC’s Division of Trading and Markets, said at a conference in New York last week.

Even in the world’s deepest bond market, U.S. government debt, liquidity has worsened as trading activity can’t keep up with booming supply. The Federal Reserve’s network of primary dealers, which are required to bid at government bond auctions, reported $455 billion of daily Treasury debt trades for the seven days ended April 11. That figure has declined since 2007—even though since that time, tradable Treasury debt has more than tripled.

DownsizingThe average size behind buy and sell quotesfor U.S. listed options has shrunk dramaticallythis year amid heightened market volatility.Source: ORATSNote: Data are for options with monthly expirationdates.

The recent spike in market volatility “suggests there is good reason to worry about how well liquidity will be provided during episodes of market duress,” Charles Himmelberg, a Goldman Sachs Group Inc. economist wrote in a recent report. “This could contribute to price declines and possibly prolonged periods of financial instability.”

With less confidence that they can raise cash to make new purchases or meet client redemptions, some investors have sold more than they initially intended for fear that they might not be able to sell at a future time.

“You might as well sell when the liquidity is there” because it might not be there another day, said Marc Bushallow, managing director of fixed income at Manning & Napier.

This year’s volatility has even hampered liquidity in the popular E-mini S&P 500 futures on the Chicago Mercantile Exchange, a derivative product widely used for betting on the stock market’s direction or hedging against market swings. In the most active E-mini contract, the average number of contracts available to be bought or sold at the best price slumped from more than 500 in October to just 96 in March, according to MayStreet LLC, a data-analytics company.

DownfallThe average number of contracts backing buyand sell options quotes for the SPDR S&P 500ETF has dwindled.Source: S3Note: Includes all expiration dates.
.contractsJan. ’17JulyJan. ’1802004006008001,0001,200

In the options market, liquidity has deteriorated as new exchanges and more products have diluted trading, analysts say. Liquidity for options in February was worse than in August 2015, when China’s unexpected devaluation of the yuan sent markets reeling, according to Option Research and Technology Services.

In March, Rohan Gupte, who trades at home, looked to add options on Inc. But when he noticed buy and sell prices further apart than usual, he decided not to pull the trigger. Wider spreads have become more commonplace among big tech stocks and indexes, causing him to back away from the market at times.

“I just avoid doing that,” Mr. Gupte said.

Even one of the most popular contracts has experienced much thinner trading. The number of contracts backing buy and sell options quotes on the SPDR S&P 500 Exchange-Traded Fund Trust, which tracks the S&P 500 index, dropped off dramatically in February and March, falling by more than 30% from last year’s average, data from S3 show.

In the corporate bond market, investors say they sometimes have to break up orders into smaller pieces in order to complete larger purchases. But since a series of smaller trades takes more time, investors say the market can move against them while they are trying to buy.

Futures in RetreatIn E-mini S&P 500 futures on the ChicagoMercantile Exchange, the number of contractsthat can be bought or sold at the best pricethinned out as volatility picked up this year.Source: MayStreet LLCNote: Chart shows time-weighted average of numberof contracts available at the bid and the ask for themost actively traded E-mini S&P 500 futures expiry.
.contractsOct. ’17Dec.Feb. ’18April0100200300400500600700

“We like certain bonds at a given price, but we’re not even done building our position and they’re five points higher,” said Matt Freund, co-chief investment officer at Calamos Investments.

Some traders believe liquidity issues may not last. With the Trump administration rolling back bank regulation, they hope trading could improve if banks are allowed to hold more assets that the current rules define as risky.

Traders say smaller bond transactions haven’t been much affected. In corporate bonds, bid-ask spreads have been tighter than where they were before the financial crisis. During recent bursts of market volatility—from the 2013 spike in Treasury yields when the Fed started talking about tapering its bond purchases to the February surge in the Cboe Volatility Index—those spreads barely budged.

Another reason for less liquidity: many investors are more closely tracking bond indexes, creating large demand for newly issued bonds but little appetite for older ones.

The problem with investors managing against an index is that “everyone is chasing the same stuff,” Payden & Rygel’s Mr. Cleveland said.

Write to Gunjan Banerji at and Sam Goldfarb at

Appeared in the April 23, 2018, print edition as ‘Investors Find It Harder To Both Buy and Sell.’


U.S. Stocks Rise as Trade Worries Ease

March 26, 2018

Reprieve for stocks comes after the worst week in more than two years

U.S. stocks rebounded Monday as investor jitters over restrictive trade policies around the world moderated.

The Dow Jones Industrial Average gained 283 points, or 1.2%, to 24044. The Nasdaq Composite added 0.8% and S&P 500 rose about 0.9%.

In Europe, the Stoxx Europe 600 fell 0.8% in afternoon trading.

See also:


  (Wall Street Journal)

 (The New York Times)

Morgan Stanley Says Stock Slide Was Appetizer for Real Deal

February 20, 2018

Image result for Morgan Stanley, signage, photos


By Chris Anstey

 Updated on 

The U.S. stock market only had a taste of the potential damage from higher bond yields earlier this year, with the biggest test yet to come, according to Morgan Stanley.

“Appetizer, not the main course,” is how the bank’s strategists led by London-based Andrew Sheets described the correction of late January to early February. Although higher bond yields proved tough for equity investors to digest, the key metric of inflation-adjusted yields didn’t break out of their range for the past five years, they said in a note Monday.

While many have warned that faster inflation could hurt stocks, in theory bigger price gains should be at worst neutral, if they boost earnings along the way. Higher real yields, on the other hand, mean a bigger discount rate to value future earnings. Should they break out of the range over the past five years as investors anticipate greater central bank policy normalization, that could hit stocks harder, according to the Morgan Stanley thinking.

Relatively low real yields were a big support for equity valuations, so a break higher would indicate that stocks will have to rely on earnings — not multiple expansion — to drive them higher, Sheets and his colleagues wrote. And the challenge there is that a slowdown may loom starting in the second quarter, they said.

“It’s when growth softens while inflation is still rising that returns suffer most,” the strategists wrote. “Strong global growth and a good first-quarter reporting season provided an important offset. We remain on watch for ‘tricky hand-off’ in the second quarter, as core inflation rises and activity indicators moderate.”

JPMorgan Chase & Co. strategists have also pointed to real rates as a potential inflection point for markets, though they identified in December the inflation-adjusted cash rate as the one to watch. That measure has a ways to go until their threshold.

Sword of Damocles hangs over Wall Street but may not drop yet

July 20, 2017


The Shiller P/E ratio of Wall Street stocks is exactly where it was on the day of the 1929 crash, but that means nothing without a catalyst CREDIT: BRITANNICA

Global economic expansions do not die of old age. Outside war or violent energy shocks they are invariably murdered by central banks fearing inflation.

The fact that the post-Lehman business cycle in the US is already the third longest since the mid-19th Century tells us little. More relevant is that inflation is nowhere to be seen. The core PCE measure has been falling relentlessly this year and is back to 1.4pc.

The US future inflation gauge published by the Economic Cycle Research Institute has also rolled over and this underlying indicator – based on the seminal work of Geoffrey H. Moore – suggests that it will stay low for a long time. The US has turned Japanese.

Goldilocks growth that is neither too hot nor too cold might well continue for another two years or more, even though the Shiller CAPE price-to-earnings ratio of Wall Street equities has reached a vertiginous 30.12.

Americans Feel Good About the Economy, Not So Good About Trump

July 17, 2017

By John McCormick

July 17, 2017, 4:00 AM EDT
  • Just 40 percent approve of president’s performance in office
  • Narrow majority expect stock market to be higher by year’s end
Traders pass in front of an American flag displayed outside of the New York Stock Exchange (NYSE) in New York.

 Photographer: Michael Nagle/Bloomberg

Almost six months into Donald Trump’s presidency, Americans are feeling fairly optimistic about their jobs, the strength of the U.S. economy, and their own fortunes. That should be welcome news for the president, except for one thing: The public’s confidence largely appears to be in spite of Trump, not because of him.

The latest Bloomberg National Poll shows 58 percent of Americans believe they’re moving closer to realizing their own career and financial aspirations, tied for the highest recorded in the poll since the question was first asked in February 2013.

A majority expect the U.S. stock market to be higher by the end of this year, while 30 percent anticipate a decline. Yet they don’t necessarily think Trump deserves credit for rising markets and falling unemployment.

Just 40 percent of Americans approve of the job he is doing in the White House, and 55 percent now view him unfavorably, up 12 points since December. Sixty-one percent say the nation is headed down the wrong path, also up 12 points since December.

Trump scored his best numbers on his handling of the economy, but even there the news for him isn’t great. Less than half of Americans — 46 percent — approve of Trump’s performance on the economy; 44 percent disapprove. He gets slightly better marks for job creation, with 47 percent approving.

“If you take the president’s scores out of this poll, you see a nation increasingly happy about the economy,” said pollster J. Ann Selzer, who oversaw the survey. “When Trump’s name is mentioned, the clouds gather.”

In nearly every measure of his performance, the poll indicates that Trump’s tumultuous presidency is not wearing well with the public. A 56 percent majority say they’re more pessimistic about Trump because of his statements and actions since the election. That’s a huge swing since December when 55 percent said his statements and actions made them more optimistic about him.

Read the poll questions and methodology here.

The public has grown more skeptical that Trump will deliver on some of his most ambitious campaign promises. Two-thirds don’t think he’ll succeed in building a wall along the Mexican border during his first term. More than half say he won’t be able to revive the coal industry.

A majority — 54 percent — believe Trump will manage to create trade deals more beneficial to the U.S., but that’s down from 66 percent in December. There’s division on whether he’ll be able to bring a substantial number of jobs back to America, or significantly reform the tax code.

And despite his assurances that he and congressional Republicans will repeal Obamacare and replace it with a “beautiful” new health care bill, 64 percent of Americans say they disapprove of his handling of the issue. That’s especially significant because health care topped unemployment, terrorism and immigration as the issue poll respondents chose as the most important challenge facing the nation right now.

There are at least two areas where Americans say they believe Trump will deliver: Almost two-thirds say he will make significant cuts in government regulation, though it’s not clear whether most think that’s a good or bad thing. Likewise, 53 percent believe he will succeed in deporting millions of immigrants living in the U.S. illegally.

The public is also skeptical about Trump’s abilities as a world leader, with 58 percent saying they disapprove of the way he handles relations with other countries and 46 percent disappointed in his actions on trade agreements.

Americans are more pessimistic about foreign policy than they were in December. Fifty-five percent now say they expect dealings with Germany to get worse during the next four years, up 22 points. The share of poll respondents who anticipate worsening relations with the U.K., Mexico, Cuba and Russia also increased by double digits.

The public is also wary of Trump’s motives in his negotiations with other countries. Just 24 percent said they were “very confident” that Trump puts the nation’s interests ahead of his businesses or family when dealing with foreign leaders.

Americans have plenty of other worries about the world. Majorities believe it’s realistic that terrorists will launch a major attack on U.S. soil (68 percent) and that North Korea will launch a nuclear weapon aimed at the U.S. (55 percent).

Trump has called the expanding investigations into possible connections between his presidential campaign and Russia a “witch hunt.” But the public isn’t necessarily taking his side. Since the president’s decision to oust former FBI Director James Comey, the Federal Bureau of Investigation’s standing has improved. It’s now viewed favorably by 68 percent, up 10 points since December. Comey is viewed positively by 43 percent, while 36 percent see him negatively.

Meanwhile, most Americans don’t share the president’s apparent soft spot for Vladimir Putin: 65 percent view the Russian president negatively — and 53 percent say it’s realistic to think Russian hacking will disrupt future U.S. elections.

There is one notable bright spot for Trump. Though views of the White House as an institution are at the lowest level ever recorded by the poll — with 48 percent now viewing it unfavorably, up 21 points since December — Trump’s voters are still sticking with him. Among those who cast ballots for him, 89 percent still say he’s doing a good job.

The telephone poll of 1,001 American adults has a margin of error of plus or minus 3.1 percentage points, higher among subgroups. It was conducted July 8-12 by Iowa-based Selzer & Co.

U.S. Stock Futures Signal More Losses After 2016 Gains Wiped Out

June 27, 2016


By  Joseph Ciolli and Anna-Louise Jackson
Bloomberg News
Updated on June 27, 2016 — 2:00 AM EDT

American stocks were poised to continue their declines on Monday after investors suffered the worst day since August following the U.K. referendum.

Index futures on the S&P 500 Index fell 0.3 percent to 2,012.75 as of 1:57 a.m. in New York, after the underlying gauge dropped 3.6 percent Friday and erased its advance for the year. U.S. futures pared declines of as much as 0.8 percent after equities in Shanghai and Tokyo rebounded in Asian trading.

Risk assets have been under pressure since Britons voted to secede from the European Union, raising concerns that an already-fragile global economic recovery will falter as trade snarls in one of the world’s biggest consumer blocs. Losses last week wiped out gains in U.S. equities for the year and pushed the benchmark volatility gauge up 49 percent.

“You’re going to continue to see selling pressure in the equity futures market and all risk markets as the British pound continues to sell off,” Chad Morganlander, a Florham Park, New Jersey-based money manager at Stifel, Nicolaus & Co., which oversees about $170 billion, said by phone. “The political uncertainty in England is going to bleed into the global economy. This issue could continue to plague the market for the next several weeks as investors become a increasingly jittery.”

The next days and weeks will likely be key for central banks as they seek to minimize the damage in trading from Asia to the U.S. As the vote tally came in on Friday — surprising many investors who had bought risk assets in the lead-up amid optimism the “Remain” camp would prevail — Governor Mark Carney said the Bank of England could pump billions of pounds into the financial system. The European Central Bank said it will give lenders all the funding they require, while in the U.S. Federal Reserve said it was “carefully monitoring” financial markets.

Japanese shares rebounded Monday from their worst drop since the aftermath of the 2011 earthquake as Prime Minister Shinzo Abe issued instructions to calm markets.


Mainland Chinese stocks advanced the most among emerging markets in Asia, with energy and materials companies pacing gains after policy makers said they will reduce overcapacity in the coal and steel industries.

The S&P 500 ended last week down 1.6 percent thanks to gains in the lead-up to the Brexit decision. Futures plunged 5 percent and triggered exchange curbs in the vote’s aftermath and the S&P 500 spent most of the session down about 2.5 percent.

U.K. Prime Minister David Cameron will address Parliament Monday after a weekend of political turmoil that left Britain looking rudderless following the vote. German Chancellor Angela Merkel’s chief of staff urged a time-out in Britain’s exit from the EU, saying U.K. leaders should pause to consider the implications.

Britain’s departure will unleash as much as $300 billion of selling by automated quant programs in the already-battered U.S. stock market, Marko Kolanovic, the JPMorgan Chase & Co. derivatives strategist, wrote in a note late Friday. Equity investors in the U.S. would be wise to stay away until quant managers finish the rebalancing that was forced on them by the day’s volatility, he said.

Another JPMorgan strategist, Nikolaos Panigirtzoglou, said investors globally currently sit with an allocation to equities that is about 3 percentage points higher than during the European sovereign debt crisis of four years ago. In a worst case scenario, he wrote, that would require a 10 percent drop in stocks to align with levels in 2010-2012.

“Admittedly, that period was characterized by an acute sovereign debt crisis which triggered a banking crisis in Europe, something that has low probability of happening in the current conjuncture,” he wrote. “As such, investor positioning during the euro debt crisis can be thought of as the worst case for markets in the current conjuncture, in a very adverse scenario where Brexit ends up causing a lot of economic disturbance in terms of trade, people and financial flows as well as business confidence in Europe.”

U.S. Stocks Extend Losses as Tech Sector Slumps — Disappointing quarterly results from high-profile tech companies including Microsoft, Apple

April 29, 2016

Declines in technology companies’ stocks all but wipe out monthly gains for major indexes

The Wall Street Journal
Updated April 29, 2016 2:40 p.m. ET
U.S. stocks fell Friday, as deepening technology-sector declines threatened to wipe out monthly gains for major indexes.

The selloff in tech drove stocks toward their worst weekly loss since early February, leading some analysts and traders to question whether sentiment for the overall market could be shifting.

The tech sector, which has the largest sector weighting in the S&P 500, is on track for its second consecutive week of sharp losses. A string of disappointing quarterly results from high-profile tech companies—including Microsoft and Apple—has led to persistent selling in the group in recent sessions, making it the worst-performing sector year to date.

The tech-led declines have all but wiped out monthly gains for major indexes. As recently as April 20, the S&P 500 was up 2.1% for the month and the Nasdaq Composite was up 1.6%. The S&P 500 is now on track for a flat finish, while the Nasdaq Composite is on pace for a 2.4% decline.

“Tech is such a vibrant area everyone looks to,” said Dan Morgan, senior portfolio manager at Synovus Trust Co. whose fund owns shares of multiple tech companies including Apple. “The fact that earnings weren’t as good as everyone hoped, I wonder if that changes the sentiment in the market.”

He said he was pleased that the week ended with encouraging earnings from Facebook and However, he said he’s not sure if it will be enough to stem the bleeding in either the tech sector or the overall market.

“Overall, tech was a tough cycle this quarter,” he said. “We started off this week getting a bloody nose with Apple and Twitter and last week was a tough slide.”

On Friday, the Dow Jones Industrial Average fell 152 points, or 0.9%, to 17679. The tech-heavy Nasdaq Composite lost 1.1%.

The S&P 500 slumped 1.1%, weighed down by tech companies. Friday’s decline put the tech sector on pace for a weekly loss of 3.9%.

Biotechnology stocks also posted big declines. The Nasdaq Biotechnology Index fell 3%, putting its yearly drop at 19%. Gilead Sciences, one of the index’s worst performers, fell 8.8% after the company said late Thursday that revenue from its hepatitis C drugs fell in the first quarter. was a rare bright spot Friday, as shares gained 8.8% after it reported its most profitable quarter ever late Thursday.

The Stoxx Europe 600 declined 2.1%, following a weak session in Asia.

Haven assets extended gains Friday. Gold rose 1.9% to $1,289.20 an ounce.

U.S.-traded crude oil fell 1.5% at $45.38 a barrel, after settling at a fresh high for the year on Thursday.

The personal-consumption expenditures price index, the Federal Reserve’s preferred inflation measure, rose 0.1% in March from the prior month, data showed Friday, after Thursday’s GDP report missed expectations.

In currencies, the dollar continued to fall against its developed and emerging-market peers Friday as soft economic data eroded expectations for a U.S. interest-rate increase in June.

The yen hit an 18-month high against the dollar, weighed down by disappointment over the Bank of Japan’s decision to leave its monetary policy unchanged on Thursday.

Shares of Gilead Sciences declined after the company said that revenue from its hepatitis C drugs fell in the first quarter. Above, the company’s headquarters in Foster City, Calif. PHOTO: ASSOCIATED PRESS

The euro rose 0.8% to $1.1444, following four consecutive sessions of gains. The euro was bolstered Friday after data showed growth in the eurozone picked up in the first quarter.

The Chinese yuan was more than half a percent higher against the dollar, its biggest daily increase since it was de-pegged from the U.S. currency in 2005.

Stocks in Europe are up solidly for the month, while stocks in the U.S. are on track to eke out slight monthly gains. Still, markets have struggled to keep the momentum going in recent sessions, as economic and corporate readings have painted a mixed picture.

“The fundamental question dividing the market now is whether we’re rallying off the bottom, or if we are two-thirds of the way down with more losses to come,” said Neil Passmore, CEO of Hannam and Partners.

Stock markets in Hong Kong and Shanghai also fell Friday, while markets in Japan were closed for a holiday. For the month, the Hang Seng Index rose 1.4% while the Shanghai Composite fell 2.2%.

Shares in Australia, however, eked out small gains Fridays, buoyed by rising commodity prices.

Write to Corrie Driebusch at and Riva Gold at


APRIL 29, 2016

NEW YORK — U.S. stocks are skidding Friday as technology companies absorb big losses for the second day in a row. Health care companies are falling after weak first-quarter reports from drug and health insurance companies. Markets in Europe also took hefty losses.

KEEPING SCORE: The Dow Jones industrial average dropped 148 points, or 0.8 percent, to 17,682 as of 2:12 p.m. Eastern time. The Standard & Poor’s 500 index fell 22 points, or 1.1 percent, to 2,053. The Nasdaq composite index lost 52 points, or 1.1 percent, to 4,753. Losses over the last two days have wiped out the Dow and S&P 500’s gains from earlier this month. The Nasdaq is set to fall for the seventh day in a row.

TAKEN ILL: Health care companies fell after a bout of weak earnings reports. Biotech drugmaker Gilead Sciences said its results were hurt by big discounts and rebates on its costly hepatitis C medicines, and its stock lost $8.52, or 8.8 percent, to $88.48. Rival biotech giant Amgen reported relatively solid results, but fell $3.05, or 1.9 percent, to $157.51.

Health insurer Molina Healthcare slashed its full-year guidance because of higher medical care costs in Ohio and Texas, expenses related to recent acquisitions, and pharmacy costs, especially in Puerto Rico. It plunged $12.87, or 20 percent, to $51.35.

Molecular diagnostics company Cepheid shed $7, or 19.8 percent, to $28.40 as analysts were disappointed with its revenue projections for the second quarter.

TECH TURMOIL: Tech stocks continued to slide. Electronic storage company Seagate Technology lost $5.04, or 18.7 percent, to $21.86 after its profit fell short of estimates. Hard drive maker Western Digital dropped $6.20, or 13.5 percent, to $39.86. Apple, which is in a deep two-week slide, fell another $1.60, or 1.7 percent, to $93.23. The world’s most valuable public company is close to its lowest price of 2016.

THE QUOTE: Tech stocks are now the worst-performing group of stocks on the market this year. Dan Suzuki, senior U.S. equities strategist at Bank of America, said investors don’t like what they’re seeing in tech company results.

“A lot of investors have been disappointed by results from tech this earnings season,” he said. So they are turning to bond-like stocks such as phone and utility companies, as well as small- and mid-cap stocks, which struggled in 2015.

“Everything that was working through last year has been an underperformer this year, and vice versa,” he said.

AMAZON STRONG: E-commerce giant Amazon rose $52.83, or 8.8 percent, to $654.83. The company said revenue jumped 28 percent in the first quarter, and the company turned a far bigger profit than analysts expected. Cloud-based Amazon Web Services performed well.

Despite the broad losses, consumer stocks were trading a bit higher on the strength of Amazon stock.

BOOKED: Online travel company Expedia reported a bigger adjusted profit and greater sales than expected. Its stock added $8.24, or 7.7 percent, to $115.23.

CHANNEL CHANGER: Digital TV listing company Rovi will buy digital video recording company TiVo for about $1.1 billion in cash and stock. TiVo stock gained 54 cents, or 5.7 percent, to $9.96 and Rovi was unchanged at $17.35.

OVERSEAS: Stocks in Europe took big losses. Official data showed the eurozone economy rose by a surprising 0.6 percent in the first quarter, but investors were concerned that inflation slipped in April. France’s CAC 40 fell 2.8 percent and Germany’s DAX lost 2.7 percent. Britain’s FTSE 100 shed 1.3 percent.

Japanese markets were closed for a holiday. They plunged Thursday after the Bank of Japan held off on implementing any new economic stimulus measures. The yen strengthened, and that trend continued on Friday as the dollar fell to 106.76 yen from 108.09 yen. Hong Kong’s Hang Seng index fell 1.5 percent and Seoul’s Kospi gave up 0.3 percent.

CONSUMERS CAREFUL: Consumer spending edged 0.1 percent higher in March. Consumers spent more on clothing and less on long-lasting items like cars. Consumer spending has been weak this year, but employers keep hiring.

NO DEAL: Groupon sank 62 cents, or 14.1 percent, to $3.81. The daily deals site reported strong results but left its guidance unchanged.

DRINK UP: Monster Beverage gained $15.94, or 12.5 percent, to $143.79. The energy drink company’s results surpassed analyst estimates. Monster Beverage also said it will buy back $2 billion of its own stock.

METALS: Metals prices continued to rise. Gold advanced $24.10, or 1.9 percent, to $1,290.50 an ounce and silver rose 23 cents, or 1.3 percent, to $17.82 an ounce. Gold is trading at 15-month highs. Copper picked up 5 cents, or 2.3 percent, to $2.28 a pound.

ENERGY: Benchmark U.S. crude lost 63 cents, or 1.4 percent, to $45.40 per barrel in New York. Brent crude, used to price international oils, slid 81 cents, or 1.7 percent, to $46.96 a barrel in London.

BONDS, CURRENCY: Bond prices barely budged. The yield on the 10-year U.S. Treasury note held steady at 1.83 percent. The euro rose to $1.1445 from $1.1351.


AP Markets Writer Marley Jay can be reached at His work can be found at


  (This is from October 2014 but many still feel like they did then)

Federal Reserve Chair Janet Yellen has described the “stagnant living standards for the majority.”

The ripple effect of the president’s tax hikes is swamping take-home pay


MIT economist Jonathan Gruber testifies on Capitol Hill in Washington, Tuesday, Dec. 9, 2014, before the House Oversight Committee health care hearing. Congressional Democrats charged Tuesday that Republicans are seizing on a health adviser’s self-described “thoughtless” and misleading remarks to attack President Barack Obama’s signature health care law. (AP Photo/Molly Riley)

ACA Architect: ‘The Stupidity Of The American Voter’ Led Us To Hide Obamacare’s True Costs From The Public

No Economic Good News? US durable goods orders down in December — second consecutive month

January 28, 2016

WASHINGTON (AFP) – New orders for manufactured durable goods slumped for a second consecutive month in December, the US Commerce Department reported Thursday.

Orders for goods that typically last three years or more dropped a hefty 5.1 percent in December following a revised 0.5 percent fall in November.

Excluding transportation orders, which tend to be volatile month-on-month, new orders fell 1.2 percent. In November they were down 0.5 percent.

The November numbers were previously reported as flat.

The slump in the data was worse than analysts expected, with overall December new orders estimated as being down 0.5 percent and ex-transportation off 0.1 percent.

It underlined the long-running weakness in the industry, as manufacturers continue to be hit by a strong dollar that hampers exports and slowing US and global economies.

The Commerce Department is scheduled to report its first estimate of 2015 fourth-quarter economic growth on Friday.

Analysts on average expect that growth in the October-December period slowed to an annual rate of 0.9 percent from 2.0 percent in the third quarter.

America’s Uncertain Economic Future: Election is much about U.S. economy and the battle of competing visions of the role of government in Americans’ lives

January 17, 2016


In this Thursday, June 18, 2015 file photo, from left, Sgt. Garret Baganz, Spc. Tyler Sonsoucie and Spc. Ian Sokol work on a ecotech engine during an automotive skills class at Fort Hood, Texas. The men are participants in Shifting Gears, a program sponsored by General Motors that teaches automotive skills and tries to match participants with dealerships around the country. The Labor Department releases employment data for July on Friday, Aug. 7, 2015. (Deborah Cannon/Austin American-Statesman via AP, File)

By Irwin M. Stelzer
The Weekly Standard

The final State of the Union address of any president evokes thoughts that vary with his success while in office. For the successful, such as Dwight Eisenhower, Ronald Reagan and Bill Clinton, it is a moment on which to look back with some satisfaction. For President Obama, with only 27 percent of his countrymen believing he leaves a nation that is on the right track, last week’s must evoke in his supporters thoughts of what might have been, if only….

For both the successful and less so it is goodbye to the walk down the aisle to the podium, shaking hands and air kissing admirers, hello to irrelevance as the lame duck president lays out his vision of a future about which he will have little to say. Example: President Obama received the usual numerous standing ovations from members of his party, but when he extolled the virtues of the Trans-Pacific Partnership he hopes will free up trade and set the rules of international commerce for generations to come, only the members of his cabinet rose to their feet in enthusiastic approval, while Democrats sat on their hands, indicating that TPP is unlikely to be approved during his remaining months in office.

That is not to say that Obama lacks privilege or power in this, his final year in office. Air Force One remains at his disposal; he can and will issue executive orders, by-passing congress and stretching the constitution to or beyond its limits; he can use his continued popularity with black voters to campaign for congressional candidates who share his vision of more government – building infrastructure with funds from higher taxes on families with annual incomes in excess of $250,000, providing free tuition at community colleges, consigning fossil fuels to the ash can of history, replaced by renewable energy, raising the minimum wage, tightening controls on gun purchases, supporting “collective bargaining”, by which he meant trade unions, even though they are the bitterest opponents of his trade policies.
Most Republican candidates are offering what their party once called “a choice, not an echo”: cuts in taxes on corporations to discourage them from pulling up sticks and heading to greener lands such as Ireland, where taxes are lower and regulations lighter; repeal of regulations, including those promulgated as part of Obama’s “war on coal”; a shift from taxing incomes to taxing consumption, which can be more regressive; less reliance on entitlements and more on incentives to get “discouraged” and merely work-shy workers back into the work force. In short, it will be a battle of competing visions of the role of government in Americans’ lives, with the result having a profound effect on the U.S. economy.

These doctrinal differences will play out in an economy that seems to be weakening rapidly. Retail sales and industrial production both fell in December. Pessimists (17% percent of economists surveyed by the Wall Street Journal, the highest percentage in three years) foresee an impending recession as the current recovery grows long in the tooth. Optimists say growth will struggle to reach a flaccid 2 percent rate this year, which makes them optimists only be comparison with their gloomier colleagues. All agree that manufacturing, already in recession, will be hard hit by a strong dollar, kept aloft by its safe-haven status and efforts by the European Central Bank to weaken the euro, and the Chinese regime to steer the yuan down even more – it is down 3 percent against the dollar since early December — without causing capital flight, a tricky business at best: capital outflows from China set an all-time monthly record in December. Many are predicting something like a 5 percent decline in corporate profits, a continuation of a downtrend from their peak in the third quarter of 2014; continued weakness in share prices, now searching wildly for a bottom; a tough road ahead for railroads as the collapse of commodity markets reduces traffic; and trouble for banks that have been generous lenders to an oil industry that has seen the price of its product fall by two-thirds, with no relief in sight.

The age of zero interest rates is over, which means it will be more expensive for businesses, the government, and potential home and car buyers to borrow money, and that junk bond funds will continue to scramble to sell highly illiquid assets to meet cash demands of investors.

Add strong headwinds from overseas, especially from China, struggling to move from an economy based on exports and huge infrastructure spending to one relying on growth in domestic demand. America is not quite so independent of the world economy as it proved to be during the 1997-1998 Asian financial crisis. Morgan Stanley’s Ruchir Sharma reckons that the share of foreign trade in the U.S. economy has risen from 18 percent to 23 percent since the Asian crisis, and the share of profits earned by American companies from overseas operations has jumped from 17 percent to 27 percent in that time. America is still the best house in a bad neighborhood, but the encroaching blight can no longer be completely ignored. The Fed might want to do something to stimulate growth and weaken the dollar, but it is moving in the opposite direction, with further interest-rate increases scheduled during the year, unless signals of trouble including continued drops in production, sales and inflation, force a pause. That possibility was raised this week when James Bullard, president of the Federal Reserve Bank of St. Louis suggested that low oil prices might restrain inflation more than had previously been thought, preventing it from reaching the 2 percent Fed target. And fellow-monetary-policy-committee member Eric Rosengren, president of the Boston Fed, said “While monetary policy should not overreact to short-term, temporary fluctuations in financial markets, policy makers should take seriously the potential downside risks to their economic forecasts”. Given that Fed forecasts have tended to err on the optimistic side, and that 80 percent of the economists surveyed by the Wall Street Journal see just such risks lurking, a well-aimed warning. So we are in for another year of Yellen-watching as she and her colleagues continue their data-watching.

If the bleak economic forecasts prove correct, the politics of this election year will be seriously affected. Hillary Clinton, the certain Democratic nominee barring an indictment for her misuse of her e-mail server or for merging the national interest with those of the Clinton Foundation while Secretary of State, will have to move further left to appease an even angrier Main Street. That will require stepped-up attacks on the left’s traditional piñata, Wall Street, and more promises to reduce inequality by taxing the rich and increasing income transfers to the unrich. On the Republican side, voters will be more convinced than they now are that the system is rigged against them, providing the meat on which anti-establishment candidates in the Republican primaries feed and encouraging the right to join the left in more strident banker bashing. That would be a plus for Donald Trump and Texas senator Ted Cruz, more bad news for Jeb Bush, his candidacy already on life support, and result in calls for massive tax cuts on upper income entrepreneurs to stimulate investment, a paradoxical position since lower-income workers dominate the Trump camp. Whether Democrats get to increase infrastructure spending, or Republicans to push through tax cuts, the existing $18 trillion national debt, which has doubled as a percent of GDP to 73 percent since 2007 and is projected to increase as spending caps are relaxed and boomers age, will balloon.

Possible? Yes. Inevitable, no. The American economy might just prove to be the engine that can pull the global economy forward. Auto sales remain buoyant and automakers bullish, the labor market is in passable shape, commercial rents are on the upswing as service-sector firms demand more space, consumer balance sheets are strong. And in twelve months the presidential succession will be completed, eliminating uncertainty and, with luck, reducing the verbal pollution that has made the American air almost unbreathable.

Shanghai at one point flirted with bear market, then recovered — But global stock markets are very worried

January 14, 2016

Market Watch

China shares flirted with bear-market territory but regained their footing Thursday, in a volatile session that deepened losses across the region.

The Shanghai Composite Index SHCOMP, +1.97% rose 2% to 3,007.65 after falling as much as 2.8% in earlier trading, when the benchmark breached its lows from last summer’s crash.

China’s main stock index also briefly fell more than 20% from its recent high on Dec. 22, putting the market dangerously near closing in bear market territory, before shares recovered in the afternoon.
Elsewhere in Asia, markets were down sharply following a broad selloff in stocks that accelerated Wednesday in the U.S.

Japan’s Nikkei Stock Average NIK, -2.68% fell 2.7% as the yen strengthened earlier in the day.

Australia’s S&P/ASX 200 XJO, -1.56% was down 1.6%, Hong Kong’s Hang Seng HSI, -0.56% Index fell 0.4% and South Korea’s Kospi SEU, -0.85% lost 0.9%.

China’s yuan fell sharply in early trade in the offshore market Thursday, cutting into some of the gains the currency made earlier this week when the Chinese central bank intervened to prop up its value. It fell as much as 0.7% to 6.6128 to one U.S. dollar Thursday in the offshore market even after the central bank set the rate at which it trades in the domestic market stronger against the U.S. dollar.

Multiple explosions and gunfire hit Jakarta(1:49)
Witnesses said they saw at least six explosions, including blasts at a police station and on a corner next to a Starbucks cafe.

The moves in the freely traded offshore yuan highlight Beijing’s continued struggles to tame the currency and guide investor expectations on how far the yuan could fall. In recent weeks analysts have lowered their forecasts for where they think the yuan will trade against the U.S. dollar this year.

The gap between the offshore and onshore yuan is a sore point for Beijing as it seeks to promote the yuan as a stable currency with international stature.

“The [Chinese] currency is causing tension in the whole world,” said Stephen Ma, head of greater China at BMO Global Asset Management. “What we’re seeing now is the result of a lot of government intervention” from China.

Earlier, China’s central bank fixed the yuan CNYUSD, -0.1624% at 6.5616 to one U.S. dollar, slightly stronger from the previous fix of 6.5630 on Wednesday.

The onshore yuan, which can trade 2% above or below the central bank’s daily guidance, was last at 6.5861, slightly weaker than 6.5756 the previous session.

The Japanese yen USDJPY, +0.27% was last weakening by 0.3% against the dollar at ¥117.96. Still the currency was near its strongest levels in almost five months and has gained 2.5% this year, as investor rush to haven assets amid uncertainty about China. A stronger currency hurts Japanese exporters as their goods become less competitive overseas.

China’s Yuan Strategy Backfired

This photo illustration shows a Chinese 100-yuan note in Beijing in August.
This photo illustration shows a Chinese 100-yuan note in Beijing in August.Photo: Agence France-Presse/Getty Images

Last week, confusion about China’s currency policy, as the yuan weakened more than expected, triggered a global stock selloff, and raised questions about how authorities will address capital outflows. Rapidly diminishing foreign-exchange reserves signal the central bank is deploying its huge war chest to steady the yuan.

Meanwhile, analysts say the large-scale government buying that buoyed stocks this summer has all but evaporated, and that officials’ tactics are becoming subtler.

Since the summer, Chinese authorities have resorted to a range of measures to keep a grip on the stock market, from buying hundreds of billions of U.S. dollars in stocks to freezing trading altogether. They allowed firms to voluntarily suspend trading last July and froze new public listings.

Less than two full weeks into the year, officials have flip-flopped on their policies, first curbing a commitment to allow large shareholders to sell their stakes, before doing away with the very brakes that were meant to stem volatility.

Steep losses in a benchmark of blue-chip stocks tripped a new “circuit-breaker” system twice in the first week it was launched. Authorities scrapped the mechanism last Thursday, after just four days in use.

“The circuit breaker was the most memorable blunder yet,” said Hao Hong, managing director at Bank of Communications Co. in Hong Kong.

While Chinese economic data from Wednesday offered some relief to investors, fears persist about the slowdown in China and its impact on global growth. China’s exports fell 1.4% in December in dollar terms from a year earlier, while imports last month fell 7.6%. Both figures exceeded expectations.

More from MarketWatch
Recommended by
After Hero4 bust, GoPro’s hopes rest on drones and virtual reality
13 M.B.A.s that are really worth your money
2 U.S. Navy boats held by Iran, AP reports


The Port Harcourt refinery in Nigeria. Oil prices have continued to sink, as demand from China has slowed and oil-producing countries have continued to flood the markets. Credit Pius Utomi Ekpei/Agence France-Presse — Getty Images

Asian Markets Follow U.S. Lower

By Amie Tsang
The New York Times

HONG KONG — Asian markets were rattled on Thursday after a sell-off in the United States on Wednesday, as investors failed to shake concerns about the strength of the world’s largest economies.

The Standard & Poor’s 500-stock index in the United States dropped 2.5 percent on Wednesday, despite two days of gains that suggested confidence might be returning after a tumultuous start to the year. The technology-heavy Nasdaq dropped 3.4 percent.

Markets in Asia followed by opening lower on Thursday morning.

In Jakarta, Indonesia, where attacks left at least four people dead, stocks were down about 0.4 percent by the afternoon. The Indonesian currency, the rupiah, also weakened after the capital was hit in what authorities said was a terrorist attack, but strengthened through the day and was up 0.1 percent in the afternoon.

Read the rest: