Morning News: September 15, 2016
Posted by Eddy Elfenbein on September 16th, 2016 at 7:03 am

Russia Bonds Fall After Policy Makers Apply Brakes to Rate Cuts

S&P 500 Futures Retreat Amid Growth Concerns Before Fed Meeting

Deutsche Bank to Fight $14 Billion Demand From U.S. Authorities

NAFTA Burn: The Real Ford Escape? Moving Its Small-Car Production to Mexico

Exxon’s Accounting Practices Are Investigated

Colonial Pipeline Issues Likely to Disrupt Gas Supply on East Coast

Wells Fargo CEO Defends Bank Culture, Lays Blame With Bad Employees

Bayer, Monsanto Shareholders Not All Cheering Over $57 Billion Deal

iPhone Buyers Poised for Letdown as Apple Supply Trails Demand

EpiPen Maker Mylan Quietly Steers Effort to Protect Its Price

A Decades-Old Drug Technology Finally Nears Its Big Breakthrough

How Did G.M. Create Tesla’s Dream Car First?

GE Wins $1.9 Billion Order From UK’s Hinkley Point Nuclear Plant

Roger Nusbaum: Eight Brutal Truths About Retirement

Josh Brown: “We Have Never Seen Anything Like This”

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What’s Really Driving Apple Higher?
Posted by Eddy Elfenbein on September 15th, 2016 at 5:16 pm

Morning News: September 15, 2016
Posted by Eddy Elfenbein on September 15th, 2016 at 7:10 am

Volatility Erupts in Currencies as Stimulus Appetite Seen Waning

EU Hopes Licensing System Will Help Save Indonesian Forests

Swiss Central Bank Keeps Policy Loose To Curb Strong Franc

As Britain Confronts ‘Brexit,’ a Canadian Is in Charge

Hinkley Point: Is The UK Getting a Good Deal?

Political Paralysis Is the Biggest Threat to U.S. Competitiveness

Wells Fargo And The True Cost of Culture Gone Wrong

Buffett Loses $1.4 Billion as Wells Fargo Tumbles on Scandal

Warren: Next Administration Should Probe, Maybe Jail Wall Street Bankers

Bayer Clinches Monsanto With Improved $66 Billion Bid

Apple Says Initial Quantities of iPhone 7 Plus Sold Out

Samsung Stumbles in Race to Recall Troubled Phones

Walmart Canada to Extend Visa Ban to More Stores From October 24

Your Next Trans-Atlantic Trip May Be on Boeing’s Diminutive 737

Jeff Carter: The Visionary vs. The Operator

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Morning News: September 14, 2016
Posted by Eddy Elfenbein on September 14th, 2016 at 7:07 am

BOJ to Make Negative Rates Centerpiece of Future Easing

Eurozone Industrial Output in Big July Fall

No ‘Brexit Effect’ in Latest Jobs Data

E.U. Rules Look to Unify Digital Market, but U.S. Sees Protectionism

What To Make Of Bond Yields

There’s a $300 Billion Exodus From Money Markets Ahead

The Economic Expansion Is Helping the Middle Class, Finally

Bayer Said to Agree to Pay About $56 Billion for Monsanto

Ford Motor Says 2017 Financial Results to Drop From 2016 Levels

Hedge Fund Manager Who Spotted Fraud at Enron Calls Tesla ‘The Anti-Amazon’

Microsoft Beats Out Rivals for HP Software Deal

How Halal Food Became a $20 Billion Hit in America

Stumpf, the Mr. Clean of Banking, Finds Himself Mired in Scandal

Cullen Roche: Warren Buffett is (Actually) Losing His Hedge Fund Bet

Howard Lindzon: You’ve Been Rothenberged…Thanks Harvard

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Daily Changes Since July 1
Posted by Eddy Elfenbein on September 13th, 2016 at 2:43 pm

Check out the daily changes for the S&P 500 since July 1. The market went 43 days in a row without a 1% swing. Now it’s looking at its third in a row over 1%.

Volatile days are not evenly spread out. They tend to travel in wolf packs. Once you think the market can’t be more complacent, the dramatic days come.

Hilsenrath: Fed Is a No-Go for Next Week
Posted by Eddy Elfenbein on September 13th, 2016 at 10:21 am

In today’s WSJ, Jon Hilsenrath says that the Fed will probably not raise interest rates next week.

That’s what I expected. Hilsenrath is generally considered to be the Fed’s main go-to guy. In other words, when Hilsenrath says “senior Fed officials,” he means very senior.

Federal Reserve officials, lacking a strong consensus for action a week before their next policy meeting, are leaning toward waiting until late in the year before raising short-term interest rates.

It is a close call. But with inflation holding below the Fed’s 2% target and the unemployment rate little changed in recent months, senior officials feel little sense of urgency about moving and an inclination toward delay, according to their public comments and recent interviews.

(…)

With the jobless rate at 4.9%, some regional Fed bank presidents believe that the labor market has largely recovered from the financial crisis of 2007-2009, and that short-term interest rates just above zero are no longer warranted. This group notes that risks to the U.S. economy from overseas have dissipated in recent weeks, strengthening the case for a move now.

For others, the watchword is patience. This group largely expects to raise rates this year but doesn’t see a need to act now. These officials note the jobless rate hasn’t moved much this year. Slack in the labor market is thus diminishing at a slower pace than before. That has reduced the urgency to raise the cost of credit to prevent the economy from overheating.

Moreover, because the economy is growing so slowly, this group doesn’t believe rates need to move very high in the months and years ahead, thus the Fed can take its time.

Morning News: September 13, 2016
Posted by Eddy Elfenbein on September 13th, 2016 at 6:49 am

German ZEW Investor Confidence Unchanged as Brexit Risks Persist

German Bonds Rally as Brainard Stokes Wagers on More Cheap Money

The Crazy, Mixed-Up Global Oil Market

Fed’s Lockhart Urges Serious Discussion of Rate Hike This Month

LinkedIn’s Hoffman Offers $5 Million for Trump’s Tax Returns

Once Ailing, Renesas of Japan Buys the U.S. Chip Maker Intersil

Hanjin Shipping Secures $45 Million, More May Take ‘Considerable Time’

Ford Paid More Than $65 Million for Shuttle-Van Startup Chariot

How Goldman Plans to Turn Retail Deposits Into Wall Street-Style Profits

Value-Seekers Warm to a $450 Annual Credit Card Fee

Ford’s Driverless Car Plan: Embrace Tech and Go Slow

The Chevy Bolt EV Range Is Blowing Away Expectations—and Even Tesla’s Model 3

Former AIG Chief Hank Greenberg Finally Goes on Trial

Jeff Carter: The Sunk Cost Fallacy

Cullen Roche: Indexing is the Result of Homogeneous Markets, not the Cause

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Volatility Begets Volatility
Posted by Eddy Elfenbein on September 12th, 2016 at 4:04 pm

Friday was a big move to the downside for the stock market, our first big move in some time. Today we had a nice counter-action. The S&P 500 looks to add about 1.5% in today’s session. Defensive stocks did the best today while cyclicals pulled up the rear.

Fed Governor Lael Brainard made some comments today saying she was still very cautious about raising interest rates. She’s been one of the strongest doves on the FOMC. The Fed now goes into its “quiet period” ahead of next week’s meeting. I doubt we’ll see a rate hike at this meeting, but something may come before the end of the year.

Can Utilities Hold Up?
Posted by Eddy Elfenbein on September 12th, 2016 at 9:18 am

Late last year, Utility stocks surged. That’s a sign that investors had taken a much stronger defensive posture.

But Utes have gradually lagged the market over the last two months, and the sector got hit hard on Friday.

This is a sign that investors expect rates to go up. They’re rotating away from dividends and towards cyclicals.

The S&P 500 Drop 2.45%
Posted by Eddy Elfenbein on September 12th, 2016 at 8:09 am

Friday’s move in the market was the largest, by far, in more than two months. The S&P 500 lost 2.45%. In the weeks prior to that, the daily volatility for the index was incredibly low.

Within the market, Financials stocks fell the least while Utilities fell the most. That suggests the market is expecting higher rates from the Fed. This was spurred on Friday by comments from Eric Rosengren, head of the Boston Fed who said that a “reasonable case can be made” for raising rates.

Today, all eyes will be on Lael Brainard who’s speaking in Chicago. She’s been rather dovish about a rate hike, so any change from her would be a big deal.