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25Sep2015 Market Close: Markets Close Down For The Week, Nike Up 8.9%, Nasdaq Down 1%

Written by Gary

U.S. stocks end week with a whimper, book a weekly loss after realization that the hawkish-er Yellen actually said absolutely nothing different from what she said last week, and investors are really hanging on by a thread. The DOW closed up 113 points with Nike, up 8.9%, contributing 68 points while Nasdaq Composite sees a 2.9% weekly decline. The number of U.S. rigs (oil and gas) fell four more over the last week to 838. The number has fallen 1,093 from a year ago.

Todays S&P 500 Chart

Today's early rise was because the NYA Index was into oversold territory yesterday, so we saw an oversold bounce today. The Large caps were mostly flat at the close while the small caps were down 1%.

The Market in Perspective

Here are the headlines moving the markets.

Stocks Lose Steam on Biotech Selloff

U.S. stocks curbed their early gains amid a renewed selloff in the biotechnology sector.

Stocks Give Up "Yellen's Alive" Gain Amid Biotech & Junk Bond Bloodbath

Having almost puked all over her speech last night, the "Yellen's Alive" rally gathered pace overnight...

But then reality bit with a sudden realization that a hawkish-er Yellen actually said absolutely nothing different from what she said last week...and they are hanging on by a thread...

The last time we had a closing in stocks on a Friday as ugly as this was Aug 21st (before Black Monday)

Chinese stocks were supported all week (with Xi's visit to the US) until last night... with SHCOMP roundtripping to unchanged

And while Europe rallied on Yellen and BMW today, it remains notbaly hard hit post-FOMC...

The Biggest News Today was Biotechs and Junk Bonds Bloodbathery...

Biotechs were monkey-hammered this week with a 12% plunge... down 6 days in a row

To Dec 2014 levels - the biggest weekly drop since ...

Wall Street ends flat as early rally fizzles

NEW YORK (Reuters) - The S&P 500 erased an early Fed-driven rally to close flat on Friday, as a selloff in biotechs offset a banking rally.

Artist's Impression Of Current Fed Policy

Presented with no comment...

h/t @FedPorn

The Bear Market Catalysts

As we showed earlier, at this point any debate whether or not the S&P500 is driven purely by the "outside money" injected by the Fed, is over: financial markets are now down since the end of QE3, while cash is the only asset that is rising because the Fed is no longer actively debasing the US currency (it will again, but not right now). Feel free to ignore and/or mock any so-called expert who still idiotically argues it is anything but money printing.

But while we know what happened in the past, what everyone wants to know is what will happen, and whether the recent correction will morph into a far more serious bear market (such as the one that just slammed the recently bubbly biotech sector).

Here, according to BofA's Michael Hartnett, are the key bear market catalysts that everyone should be watching.

1. Peak in liquidity

QE & zero rates reflated financial assets significantly. The only assets that QE did not reflate were cash, volatility, the US dollar and banks. Cash, volatility, the US dollar are all outperforming big-time in 2015, which tells you markets have been forced to discount peak of global liquidity/higher Fed funds. Frequent flash cashes (oil, UST, CHF, bunds, SPX) tell the same story. Peak in liquidity = peak of excess returns = trough in volatility.

2. Defla ...

BlackBerry Has to Crack Android's Code

Handsets still matter for BlackBerry, despite its race to build a software business.

Volkswagen picks company veteran to tackle emissions crisis

WOLFSBURG, Germany (Reuters) - Volkswagen named company veteran Matthias Mueller as its chief executive on Friday as the German carmaker struggles to get to grips with a crisis over rigged diesel emission tests that its chairman called "a moral and political disaster".

Stronger U.S. second quarter growth backs case for Fed hike

WASHINGTON (Reuters) - The U.S. economy expanded more than previously estimated in the second quarter on stronger consumer spending and construction, backing the case for an interest rate rise before the end of the year despite data sounding a note of caution for September.
< ...

Margin Debt Drops: Healthy Pullback, Or Budding Headwind?

Via Dana Lyons' Tumblr,

Pullback in Margin Debt is healthy... unless it signifies the start of a larger decline.

In our post yesterday on household stock investment, we discussed what we call "background indicators". These various investment metrics describe the longer-term conditions in the marketplace, but are not catalysts themselves. Thus, we consider them to be measures of potential risk should a catalyst come along to trigger a decline. In that case, the potential risk begins to manifest itself in actual risk. Considering it is near its all-time highs, we consider household stock investment to carry significant potential risk. Another background indicator signaling the same is NYSE margin debt.

Margin debt refers to the amount of money borrowed for the purposes of leveraging a stock position. The higher the level of margin debt, the more leverage in the system - and the greater the amount of potential risk. As of April this year, NYSE margin debt was at an all-time high at more than $500 billion. Over the past few months, the level has moderated a bit. After August's market rout, margin debt sat at $473 billion, down 6.7% from the highs.


So is this a healthy pullback in potential risk? Or is it a beginning of a larger trend whereby more potential risk will become actualized risk? There ...

With Subscription Snacks, Entrepreneurs Think Inside the Box

Subscription snack and food box businesses are popping up everywhere, hoping to cash in on America's appetite for novelty, convenience and munchies.

Caterpillar's global woes ripple out through supplier base

CHICAGO (Reuters) - Caterpillar Inc's suppliers were feeling the pain of slumping sales at the world's largest mining and construction equipment maker long before it announced an extensive cost-cutting program.

Shutdown could lead to volatility spike

NEW YORK (Reuters) - As if U.S. markets did not have enough in the way of worries, the threat of another government shutdown has resurfaced and that uncertainty could add to volatility.

Nasdaq & Small Caps Give Up "Hawkish-er Yellen" Gains As Dec Rate-Hike Odds Tumble (Again)

With NKE almost single-handedly holding The Dow up, the rest of the US equity market is rapidly giving back any gains from a hawkish Yellen and 'fixed' European automaker market. Notably, Dec rate-hike odds were 41% pre-Yellen, jumped to 49% earlier this morning, but have now fallen back to 42%... so the 'market' is not "embracing" a rate hike environment as one supposed expert said this morning...and the Biotech bloodbath is weighing everything down...

And then it all went pear-shaped...

Small Caps and Trannies are now down over 5.5% since The FOMC Meeting

As Biotechs collapse...

Charts: Bloomberg

Will A Black Swan Land In Spain On Sunday? Full Catalonia "Referendum" Preview

Earlier this week, we asked why multiple armored vans were parked outside the Bank of Spain's Barcelona branch.

The convoy would have been curious enough on its own, but the fact that the vehicles were stationed in the Catalan capital ahead of what amounts to an independence referendum piqued our interest and we asked if perhaps the Bank of Spain was preparing for any and all contingencies. According to the Bank of Spain itself, our suspicions were unfounded as "nothing extraordinary happened [on Wednesday] in the building of Banco de España in Barcelona."

"By the way," the central bank added, "there is no gold in this site of Banco de España in Barcelona."

Maybe not, and perhaps nothing was amiss, but this Sunday's plebiscite in Catalonia is worth watching closely as it could very well represent the next European black swan.

To be sure, we've long said that in the wake of Greece's latest bailout negotiations, political events in Spain and Portugal have the potential to further destabilize the EMU. Regional elections in May signaled a growing disaffection among Spanish voters with the status quo and seemed to telegraph a shift towards parties whose election promises mirror those which helped Syriza sweep to power in Greece earlier this year.

In Barcelona for instance, the anti-poverty, anti-eviction activist Ada Colau (who leads Barcelona En Comú) was elected mayor in what she called a victory "for David over Goliath."

The point here is that on ...

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