Saturday, July 30, 2016

Today's Headlines

  • S&P 500 Caps Fifth Monthly Gain as Rally Shows Signs of Fatigue. Bulls keep squeezing gains out of the U.S. equity market, sending the S&P 500 Index to its longest streak of monthly gains since 2014 just two weeks after reaching a record. How much more juice is left in a rally that showed signs of lethargy as the month wore on is another question. Powered by better-than-forecast earnings and weakening odds of a Federal Reserve interest rate increase, the S&P 500 jumped 3.6 percent in July, the biggest advance since March. Technology stocks led the way, climbing more than 7.8 percent thanks to strength in Alphabet Inc., EBay Inc. and Microsoft Corp.
  • Monte Paschi Capital Wiped Out in European Bank Stress Test. (video) Banca Monte dei Paschi di Siena SpA was the worst performer in European regulators’ stress tests, the only lender of 51 to have its capital wiped out in the exam, as the region struggles to contain an Italian banking crisis that the nation said won’t require state funds. Monte Paschi’s fully loaded common equity tier 1 capital ratio, a measure of its resilience, dropped to a negative 2.4 percent in the adverse economic scenario, according to the test results released Friday, which put lenders through a simulation of a severe recession over three years. UniCredit SpA’s ratio fell to 7.1 percent, as measured under fully-loaded capital rules, the second-worst result of the five Italian lenders being examined. 
  • Pro-Erdogan Rally in Germany Seen Drawing 30,000 Amid Tensions. As many as 30,000 people are expected to take to the streets in Cologne, Germany, on Sunday in support of Turkish President Recep Tayyip Erdogan, with local police concerned that a counter-demonstration may spark violence. “We assume the atmosphere will be emotionally charged,” police chief Juergen Mathies told Die Welt newspaper. “We are prepared for particular forms of violence.” About 2,300 policemen will be deployed at the rally, which is organized by the Union of European-Turkish Democrats. Erdogan’s government will be represented by Youth Minister Akif Cagatay Kilic, according to the Bild newspaper.
  • Wheat Slides to Decade Low as Global Glut Seen Getting Bigger. U.S. wheat prices dropped to the lowest in almost a decade as a global glut of the grain looks set to increase. Futures for September delivery in Chicago declined as much as 1.6 percent to the lowest since September 2006. The most-active contract slid 8.7 percent in July for the biggest monthly drop in a year. 
  • Oil Giants Find There’s Nowhere to Hide From Doomsday Market. Exxon Mobil Corp. and Royal Dutch Shell Plc this week reported their lowest quarterly profits since 1999 and 2005, respectively. Chevron Corp.’s third straight loss marked the longest slump in 27 years, and BP Plc lodged its lowest refining margins in six years. Welcome to year two of a supply overhang so persistent it’s upsetting industry expectations that the market would return to a state of balance between production and demand. It’s left analysts befuddled and investors running to the doorways as the crude market threatened to tip into yet another bear market, dashing hopes that a slump that began in mid 2014 would show signs of abating. Exxon missed analyst estimates by 23 cents a share and fell as much as 4.5 percent on Friday before recouping some of that decline. Chevron posted a surprise $1.47 billion loss after booking $2.8 billion in writedowns. The company’s per-share loss of 78 cents was in stark contrast to the 19- to 41-cent gains expected by analysts. BP and Shell registered similarly gloomy outcomes.
  • Bond World Sees ‘Live’ September for Fed, But It’s September ’17. Forget September, or even December. Bond traders are betting the Federal Reserve won’t be able to pull off another interest-rate increase until September next year. Earlier this week, the bond market was signaling an almost 50 percent chance that the Fed would raise rates by year-end. That optimism for the world’s biggest economy crumbled Friday, when the first reading of second-quarter economic growth showed a 1.2 percent annual pace of expansion, less than half the median forecast in a Bloomberg survey.
  • Two Fed Officials Say Weak GDP Doesn’t Rule Out 2016 Rate Move. (video) Federal Reserve Bank of San Francisco President John Williams played down a “low” reading on second-quarter U.S. growth and said the economy could still warrant as many as two interest-rate increases this year -- or none. “There’s definitely a data stream that could come through in the next couple of months that I think would be supportive of two rate increases,” Williams told reporters Friday after speaking in Cambridge, Massachusetts. “There’s data that we could get that wouldn’t be supportive of that -- it could be one, maybe, or none. Time will tell.” The U.S. Commerce Department reported earlier Friday that the economy expanded at a 1.2 percent annualized pace, less than half the advance projected by economists in a Bloomberg survey.
  • Apple’s(AAPL) Embrace by Bond Market Prompts Calls for Sanity Check. Debt investors’ irrepressible appetite for Apple Inc. turned the company into the biggest corporate-bond issuer in the world as it raised more than $80 billion in just four years. Now, some analysts are asking whether that’s too much, too fast.
Wall Street Journal:
  • Had bullish commentary on (AAPL), (GD), (HAR) and (YHOO).
  • Had bearish commentary on (WFC).
Fox News:
  • Trump criticized for comments on Muslim mother of fallen US soldier. (video) Donald Trump is taking issue with a speech at this week's Democratic National Convention by Muslim lawyer Khizr Khan, whose Army captain son was killed in action, and who said on stage that Trump has “sacrificed nothing and no one" for America. "I've made a lot of sacrifices,” Trump said in an interview with ABC's “This Week” to be aired Sunday. “I work very, very hard. I've created thousands and thousands of jobs, tens of thousands of jobs, built great structures." Khan made the comment during his tribute to his son, Humayun, who posthumously received a Bronze Star and a Purple Heart after being killed by a suicide bomber in Iraq in 2004.
  • 16 feared dead after hot air balloon crashes in Texas. (video) Sixteen people were feared dead Saturday after a hot air balloon caught on fire and crashed in Central Texas, officials said. Erik Grosof with the National Transportation Safety Board arrived at the scene and confirmed there were “a number of fatalities.” Caldwell County Sheriff Daniel Law said earlier that his office received a 911 call at 7:44 a.m. local time reporting a possible vehicle accident at a spot near Lockhart, Texas.
Zero Hedge:

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