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04Sep2015 Market Update: WTI Oil Experiencing Heavy Volatility, Averages Down Close To 2%, DOW Off 326 Points

Written by Gary

U.S. Markets opened lower today and have melted even further down following a jobs report that many investors saw as strong enough for the Fed to possibly raise rates this month.

Here is the current market situation from CNN Money

North and South American markets are sharply lower today with shares in Brazil off the most. The Bovespa is down 1.89% while U.S.'s S&P 500 is off 1.87% and Mexico's IPC is lower by 1.57%.

Traders Corner - Health of the Market

Index Description Current Value Members Sentiment: % Bullish (the balance is Bearish) 59%
CNN's Fear & Greed Index Above 50 = greed, below 50 = fear 15%
Investors Intelligence sets the breath Above 50 bullish 28.1% Overbought / Oversold Index ($NYMO) anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold. 25.62 NYSE % of stocks above 200 DMA Index ($NYA200R) $NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.

21.64% NYSE Bullish Percent Index ($BPNYA) Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash. 34.34% S&P 500 Bullish Percent Index ($BPSPX) In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction. 38.00% 10 Year Treasury Note Yield Index ($TNX) ten year note index value 21.21 Consumer Discretionary ETF (XLY) As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy 73.64 NYSE Composite (Liquidity) Index ($NYA) Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors 9,862

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. labor market shows some muscle despite slower job growth

WASHINGTON (Reuters) - U.S. job growth slowed in August, but the unemployment rate dropped to a near 7-1/2-year low and wages accelerated, keeping alive prospects of a Federal Reserve interest rate hike later this month.

Jobs Report Gives Ammunition to Both Sides of Fed Rate Debate

The American economy added 173,000 jobs in August, less than expected, as the Fed tries to decide whether it will raise interest rates this month.

Dow Dumps 600 Points From Last Friday's Panic-Buying Ramp, Drops 10% Year-To-Date

Remember last Friday? The Dow screamed 140 points higher in the last hour of the day to "prove" everything was awesome into the weekend. It wasn't! With The Dow down 300 points today, it is now 600 points below those panic-buying highs just a week ago...

It seems the idea of China being open and US closed on Sunday night/Monday is making more than a few nervous.

The Dow is now down 10% for the year and Nasdaq is back in the red...

Nissan to recall about 300,000 vehicles in U.S. to fix console panel

(Reuters) - Nissan Motor Co Ltd's North America unit said it would recall about 300,000 vehicles in the United States and 28,000 vehicles in Canada to adjust a console panel.

Canada's top court says Ecuadoreans can sue Chevron in Ontario

OTTAWA (Reuters) - Canada's top court ruled on Friday that a group of Ecuadorean villagers could pursue a multi-billion pollution lawsuit against Chevron Corp in the Canadian province of Ontario.

"We've Run Out Of Buyers" - Half Of Homes In New York Are Now Losing Value

Late last month, when we reported that Case-Shiller's 20-City home price index missed expectations for the 3rd month in a row in June, bringing the string of flat price appreciation to 5 months, we said that perhaps, just perhaps, another pillar of the 'strong' US economy meme is being kicked out. We also noted that a Fed hike would be just about the last thing the housing market needs.

Well don't look now but according to a new index created by Allan Weiss (co-founder of the Case-Shiller home price indexes), nearly half of homes in the New York and Washington metropolitan areas are falling in value by at least 2%.

More from Bloomberg:

The values of 45 percent of houses in both the Washington and New York areas slumped by at least 2 percent in June from a year earlier, according to a new index created by Allan Weiss, co-founder of the Case-Shiller home price indexes. In June 2014, only 15 percent of Washington residences dropped in value, while 20 percent fell in New York. Because the index is of only single-family homes, it doesn't include Manhattan. More properties also were in decline in Los Angeles, Chicago, Phoenix and Miami.

A steady rise in U.S. home prices since the bottom of the market combined with ...

Massachusetts regulator investigates BNY Mellon fund pricing snafu

BOSTON (Reuters) - The top securities regulator of Massachusetts said on Friday he is investigating the computer glitch at BNY Mellon Corp that last month disrupted pricing on more than $400 billion worth of mutual fund and exchange-traded fund assets.

Bull Or Bear?

Submitted by Bill Bonner via Bonner & Partners (annotated by's Pater Tenebrarum),

The Bull Market in Stocks May Have Ended Already

As expected, Wall Street's shills were out in force on Wednesday. And the Dow rebounded from Tuesday's rout - up 293 points. CNBC assured investors that the "U.S. is a place you should be investing."


The can and the road ...

And Bloomberg explained that, "based on history," investors could expect to wait no more than four months until the stock market fully recovers:

"The S&P 500 rally that began in March 2009 has been marked by two previous corrections: a 16% sell-off from April to July in 2010, and a 19% slump over seven months a year later. The benchmark recovered within about four months of each. So if history is any guide, the market may not be back at its May peak until late December."

Nikkei, LT

The Jobs Report and Stocks: What's Not to Hate?

Friday's jobs numbers didn't provide a clear win for either hawks or doves. It did offer stocks the worst of both worlds.

Must Be The Weather?

Low oil prices? Low interest rates? Jobs galore? Wages pressures? Time for a rate hike? Then explain this...

Welcome to the 'recovery'

h/t @Not_Jim_Cramer

And by way of the most recent example - the once-was-a-bellwether... GAP:




Apparently this is due to Labor Day's timing... not the weather.

Muddled U.S. jobs report leaves Fed in a 'jam' watching markets

NEW YORK/RICHMOND, Va. (Reuters) - The latest U.S. jobs report was not definitively good or bad enough to help the Federal Reserve decide whether to raise interest rates later this month, leaving the decision hanging on volatility in financial markets over the next couple of weeks.

GE set for cost cuts as EU decision on Alstom deal nears

(Reuters) - General Electric Co is expected to win regulatory approval next week for its purchase of the power equipment business of France's Alstom, allowing the U.S. industrial conglomerate to finally carry out a major cost-cutting program 16 months after first announcing the deal.

Why Capital Is Fleeing China: The Crushing Costs Of Systemic Corruption

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

What China will be left with a poisoned land stripped of talent and capital.

Corruption isn't just bribes and influence-peddling: it's protecting the privileges of the few at the expense of the many. Rampant pollution is corruption writ large: the profits of the polluters are being protected at the expense of the millions being poisoned.

This is why capital and talent are fleeing China: systemic corruption has poisoned the nation and raised the cost of doing business. External costs such as environmental damage must be paid eventually, one way or the other.

Either the cost is paid in rising chronic illnesses, shorter lifespans and declining productivity, or profits and tax revenues must be siphoned off to clean up the damage and the sources of environmental degradation.

In large-scale industrial economies such as China and the U.S., that cost is measured not in billions of dollars but in hundreds of billions of dollars over a long period of time.

I have often noted that one key reason why the U.S. economy stagnated in the 1970s was the enormous external costs of runaway industrialization were finally paid in reduced profits and higher taxes.

China's manufacturing base simply isn't profitable enough to pay for the remedial clean-up and pollution controls needed to make China livable. That means labor and all the other sectors will have to pay the costs via higher taxes.

Pollution and environmental damage is driving away human capital, i.e. talent. This loss of talent is difficult to quantify, but it's not just foreigners who have worked in China for years who are pulling up stakes to escape pollu ...

Wall St. lower as mixed jobs report adds to uncertainty

(Reuters) - U.S. stocks fell in late morning trading on Friday as a mixed August jobs report did little to quell investor anxiety over the timing an interest rate increase.

Lira Plunges To Record Lows As Turkish Minister Addresses G20

On Thursday evening we noted - with more than a little amusement - that Brazil's embattled finance minister had cancelled an appearance at a G20 summit in Turkey in order to address his future in President Dilma Rousseff's government amid a plunging BRL and a horrendous fiscal situation.

Why is that amusing? Because Turkey isn't doing so well itself either politically or economically, and when it comes to plunging currencies well, Ankara is doing its absolute best to make things worse. Here's what we said yesterday:

Last month, Turkey's central bank had a chance to give the plunging lira some respite by preempting the Fed and hiking rates.

Only they didn't.

And not only did they not hike, they made it clear that tightening would only occur once the Fed tightened and then made matters immeasurably worse by proceeding to stumble through a "roadmap" of how they planned to deal with DM policy normalization. That, combined with political turmoil, an escalating civil war (and yes, that's what it is), and pressure on EM in general has led directly to further weakness for TRY.

Don't look now, but the lira just plunged to a (new) record low:

Put simply: if we don't see aggressive emergency hikes sometime soon, this debacle is going get a whole lot uglier and that means more pass through inflation like we saw in August which in turn will do absolutely nothing to calm nervous traders let alone a nervous populace.

And the punchline (from ...

New Record In Waiters And Bartenders Masks First Manufacturing Drop In Over 2 Years

In August, the reality of the oil crunch finally caught up with the BLS, when not only did the number of Mining and Logging employees decline again by 10,000 workers to 823K, the lowest since October 2011, an 8-month stretch of consecutive declines last seen during the previous recession driven by the ongoing weakness in the oil patch and the US shale drilling sector...

... but far more importantly for those tracking the US manufacturing recession, for the first time in over two years, the US manufacturing sector also lost workers, as 17,000 mfg lost their jobs. As shown in the chart below, this is the first time US manufacturing jobs have declined since July 2013, and the sudden drop means that only 28,000 manufacturing jobs have been added so far in 2015.

Considering the flurry of subprime-debt driven activity in US auto manufacturing, this was a very unexpected outcome, and those concerned that the US is about to enter, or already finds itself in, a manufacturing recession this will be the most important number in the months to come.

But don't worry: while US manufacturing may have peaked, US waiters and bartender are more than making up for it. In August, the US service economy grew by another 26,100 waiters and bartenders, bring the total to a record 11.1 million, thanks to 207,100 "food service and drinking places" jobs added in ...

Micro-distillers craft limited space in crowded market

LONDON (Reuters) - Small, independent distillers are popping up and taking market share but liquor giants like Diageo and Pernod Ricard say barriers to entry and the range of spirits already available will limit their impact.

Pentagon Admits Russian Spy Ship Discovered Near US Submarine Base, Heading For Cuba

On the heels of the unprecedented proximity of 5 Chinese naval ships in the Bering Sea, U.S. military satellites have been tracking a Russian spy ship - capable of cutting undersea communications cables and other sensors - since it was spotted in the north Atlantic last month off the coast of Kings Bay, Ga., home to the U.S. Navy's East Coast ballistic missile submarine fleet. As FOX News reports, The Pentagon says the ship is transiting toward its next destination - Cuba.

At the U.S. sub base in Georgia, there are six Ohio-class ballistic missile submarines, known as "boomers," each capable of firing 24 Trident intercontinental ballistic missiles. Each missile holds up to 10 independent nuclear warheads. In addition to the ballistic missile subs, there are two other guided-missile subs capable of firing hundreds of Tomahawk cruise missiles.

As FOX News reports, a Russian intelligence ship, capable of cutting undersea communications cables and other sensors, has been spotted by the U.S. military off the coast of Kings ...

NFLX Down 25% From Highs, Tumbles To June Stock Split Levels

FANG - Forget About New Gains?

Since The FOMC Minutes, things have changed...

It appears another one of the legs of the new investing meme has broken. NFLX is now down 25% from its record highs in August and has entirely roundtripped from the post-stock-split exuberance...

The big question now - will we retest the Black Monday Flash Crash lows?

28 August 2015: ECRI's WLI Growth Index Slides Deeper Into Contraction

ECRI's WLI Growth Index which forecasts economic growth six months forward - slid further into negative territory. This index had spent 28 weeks in negative territory then 15 weeks in positive territory - and now is in its third week in negative territory. ECRI also released their inflation index this week.

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