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22Sep2015 Market Close: Markets Close Significantly Lower, Oil Is Volatile And The U.S. Dollar Rising As Investors Uncertain About Fed Raising Rates

Written by Gary

Groan was the sound the averages made in trying to climb back up to the morning lows without success and finally settling for a 1.0% loss. Global stocks obviously fell sharply today, as worries about the pace of global growth and uncertainty about the Federal Reserve's plans to raise interest rates continued to create big swings in markets.

Todays S&P 500 Chart

The DOW closed down 180 points and the Nasdaq was off 1.5% loss for the day. Short-term indicators are mildly bearish and the averages remain trading in a sideways channel closing today with another spinning top. Your guess what is going to happen tomorrow is as good as mine.

Commodities also tumbled today, led by a steep decline in copper prices (Chart Here), as concerns about Chinese demand resurfaced ahead of manufacturing data from the world's biggest consumer of raw materials.

WTI oil fell to a 'support' (45.40) and then rose to a 'resistance' (46.30) and traded mostly sideways in a very tight narrow channel during the closing hour of today's session (Chart Here). There is a division of analysts that say the price of oil will go higher and those saying it will drop below $45, but not going higher today shows weakness on the part of the bulls and most likely manipulation.

U.S. gasoline prices are likely to remain under pressure as inventories bulge and crude-oil production isn't falling rapidly enough.

The Market in Perspective

Here are the headlines moving the markets.

Volkswagen says 11 million cars hit by scandal, probes multiply

BERLIN (Reuters) - Volkswagen AG said a scandal over falsified U.S. vehicle emission tests could affect 11 million of its cars worldwide as investigations of its diesel models multiplied, heaping fresh pressure on CEO Martin Winterkorn.

Wall Street slides amid selloff in commodity prices

(Reuters) - U.S. stocks dropped late Tuesday afternoon, dragged down by investor uncertainty over when the Federal Reserve will raise interest rates and as a selloff in commodities pushed materials shares lower.

GoPro shares attract more short sellers on competition fears

SAN FRANCISCO (Reuters) - Short sellers have dramatically increased bets against GoPro in September as the wearable videocamera maker's stock fell sharply due to growing concerns about competition.

B of A shareholders allow CEO Moynihan to remain chairman

BOSTON/NEW YORK (Reuters) - Bank of America Corp shareholders voted to allow Chief Executive Brian Moynihan to remain as chairman, handing a victory to a CEO who has been slowly turning the bank around since the financial crisis.

Meanwhile, Brazil's Currency Just Plunged To An All-Time Low...

On Monday, we updated the rapidly deteriorating situation in Brazil which for the uninitiated, faces a laundry list of seemingly intractable problems which Goldman recently summarized as follows:

We expect the economy to continue to face headwinds from:


the ongoing fiscal and quasi-fiscal adjustment

higher interest rates

increasingly exigent credit conditions

rapidly weakening labor market

higher levels of inventory in key industrial sectors

higher public tariffs and taxes

high levels of household indebtedness

weak external demand

soft commodity prices

political uncertainty

extremely depressed consumer and business confidence

And believe it or not, that's actually putting it nicely. The outlook for Brazil's fiscal adjustment is clouded by the country's political crisis which threatens Dilma Rousseff's presidency and makes passing badly needed spending cuts virtually impossible. Meanwhile, the current account continues to face pressure from a commodities slump that's exacerbated by depressed Chinese demand.

Of course as Pedro Pau ...

U.S. business borrowing for equipment falls in August: ELFA

(Reuters) - U.S. companies' borrowing for capital investment fell 7 percent in August, the Equipment Leasing and Finance Association (ELFA) said.

Why Stocks Are Sliding: For The First Time Since 2009 Spending On Buybacks Surpasses Free Cash Flow

Back in early 2014, we first explained how it was possible that with the Fed's QE tapering, the S&P kept rising higher despite declining intervention by the Fed in capital markets: the answer was corporate buybacks, which had then soared to the highest level in history.

This artificial stock-support by CFOs and Treasurers only increased in the subsequent year, with buyback announcements hitting a record high one year later, in May 2015, as also profiled previously.

Then after the early euphoria of 2015, repurchase activity slowed down. As Factset observes in its just released quarterly buyback report, the dollar-value of share repurchases amounted to $134.4 billion ove ...

Futures speculators guess right on U.S. Fed rate hold

NEW YORK (Reuters) - At least one group of speculative investors threw caution to the wind last week and bet big that the U.S. Federal Reserve would not end its near-zero interest rate policy.

The End Game Has Begun

For six years, the world has operated based on faith and hope that Central Banks somehow fixed the issues that caused the 2008 Crisis.

All of the arguments supporting this defied common sense. A 5th grader knows that you cannot solve a debt problem by issuing more debt. If the below chart was a problem BEFORE 2008... there is no way that things are better now. After all, we've just added another $10 trillion in debt to the US system.

Similarly, anyone with a functioning brain could tell you that a bunch of academics with no real-world experience, none of whom have ever started a business or created a single job can't "save" the economy. Indeed, few if any of the Fed Presidents have even run a bank before. And yet they're in charge of the banking system.

However, there is an AWFUL lot of money at stake in maintaining the illusion of Central Banking omniscience. So the media and the banks and the politicians were happy to promote them. Indeed, one could very easily argue that nearly all of the wealth and power held by those at the top of the economy stem from this fiction.

So it's little surprise that no one would admit the facts: that the Fed and other Central Banks not only don't have a clue how to fix the problem, but that they actually have almost no incentive to do so.

So here are the facts:

1) The REAL problem for the financial system is the bond bubble. In 2008 when the crisis hit it was $80 trillion. It has since grown to over $100 trillion.

2)The derivatives market that uses this bond bubble as collateral is over $555 trillion in size.

Oakland lawsuit accuses Wells Fargo of mortgage discrimination

NEW YORK (Reuters) - The City of Oakland, California has sued Wells Fargo & Co, accusing the largest U.S. mortgage lender of steering minorities into high-cost mortgage loans that allegedly led to foreclosures, abandoned properties and neighborhood blight.

The Second Bullard Rip Dips - They Do Ring A Bell At The Top

Submitted by David Stockman via Contra Corner blog,

After the Fed's cowardly capitulation to the Wall Street gamblers last week our clueless monetary politburo got quite the surprise. The post-announcement "rip" lasted all of 90 minutes, and by the market's close on Friday the S&P 500 was down 3% from Thursday's algo-driven spasm and 8% from the May highs.

That even left my head spinning. On Wednesday afternoon I had told Yahoo Finance that in the event of no rate hike there would be a "short term relief rally" but that even "the gamblers were losing confidence" in the Fed's con job:

.........If the fed doesn't raise rates, there probably will be a short term relief rally, but I think its becoming evident that even the gamblers in the casino are losing confidence in the Fed. Because however they come out this week, there will be signs of division, there will be evidence of confusion and indecision, and once that process begins to fully unfold, which it will for meeting after meeting as we go forward.........(because) the Fed painted itself into a corner and has no clue how to get out.....once that process of division and confusion develops, the markets are going to lose confidence in the whole central bank bubble and were going to have a huge correction.

Alas, confidence was apparently so ...

Boeing CEO sees scope for additional 737 work in China

SEATTLE (Reuters) - Boeing Co Chief Executive Dennis Muilenburg said on Tuesday he sees scope for additional 737 work going to China as the company continues to increase production rates of the single-aisle jetliner.

The Market's Other "Panic Indicator" Just Went Vertical (Again)

The Nasdaq was the last great hope holding on to positive returns in 2015... until this morning...

And as it hit unch year-to-date, TRIN surged (implying notably bearish contrarian sentiment)...

An Arms Index value above one is bearish, a value below one is bullish and a value of one indicates a balanced market. Traders look not only at the value of the index, but also at how it changes throughout the day. Traders look for extremes in the index value for signs that the market may soon change directions. The Arm's Index was invented by Richard W. Arms, Jr. in 1967. In essence, a sudden surge in the TRIN indicates a jump in trader lack of confidence, as everyone scrambles to either go long the 2-3 rising stocks, or to sell or short the biggest decliners, ignoring the bulk of the market..

Today's move was larger than Black Monday's panic and almost as high as the panic on 9/1

Summary of Economic Releases this Week

Real Time Economic Calendar provided by Investing.com.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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