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07Oct2015 Market Close: DOW Closes Up 122 Points, Oil Slides, Major Resistances Not Penetrated

Written by Gary

Markets closed up with the DOW up 122 points, crude closed down in the low $48's and the U.S dollar, although very volatile, remained statistically where it started this morning.

The short-term indicators are neutral with a bearish odor to them. The sideways channel started on 8-25-2015 is still intact as is the fears of a China Hard Landing and other silly 'inconsequential' fears of a global slowdown remain in investors minds. I am waiting for the 'fat lady' to sing before jumping - how about you?

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Oil down, snaps three-day rally after big U.S. crude build

NEW YORK (Reuters) - Oil fell in volatile trading on Wednesday, snapping a three-day rally, after U.S. government data showing a large crude inventory build surprised traders the day after an industry group had reported a draw.

Wall Street rises as health care rebounds

(Reuters) - U.S. stocks rose in a volatile session on Wednesday, led by a rebound in biotechnology stocks, putting the S&P 500 on track for its sixth day of gains out of the last seven.

Monsanto slashing 2,600 jobs, buying back shares as sales fall

(Reuters) - Monsanto Co, one of the world's largest seed and agrichemical companies, said on Wednesday that it was slashing 2,600 jobs and restructuring operations to cut costs in a slumping commodity market.

Yum's China missteps amplify calls for spinoff, other change

LOS ANGELES (Reuters) - Yum Brands Inc's disappointing results from restaurants in China including KFC and Pizza Hut add new pressure on Chief Executive Greg Creed to make swift changes to the business that is its main driver of sales and profit, analysts said Wednesday.

"You Never Go Full-Krugman": Insane Helicopter Money Calls Continue As Trapped Central Banks Face Keynesian Endgame

For those who follow the pronouncements of central bankers and the sellside penguin brigade, one thing you might have noticed recently is an increase in the number of very “serious†people who are suddenly calling for so-called “helicopter money.â€

“Seriously.â€

Take Citi for instance, where both the firm’s chief economist Willem Buiter and global head of G10 currency strategy Steven Englander both called for helicopter money in September as apparently, the only way to save the world now is to simply have the government print debt certificates only for the central bank to immediately monetize them.

Note the enormity of that suggestion: that is just one degree of separation away from suggesting that central banks literally drop cash from the sky.

("Yes, more of that!!")

On Wednesday, we bring you the latest “helicopter†analysis courtesy of SocGen who apparently fears that the only way to avoid secular stagnation (which, for the uninitiated, is just another complicated-sounding, economist buzzword for the more colloquial “everything grinds to a haltâ€) is for central bankers to call in the Krugman Kraken and go full-Keynes.

* * *

From SocGen

Hard landing â€" the long view

The long-term view for case 3 (hard landing / reform) essentially reflects a return to more normal market conditions. Reforms support a quick cl ...

As A Shocking $100 Billion In Glencore Debt Emerges, The Next Lehman Has Arrived

One week ago, in a valiant attempt to defend the stock price of struggling commodity trading titan Glencore, one of the company's biggest cheerleaders, Sanford Bernstein's analyst Paul Gait (who has a GLEN price target of 450p) appeared on CNBC in what promptly devolved into a great example of just how confused equity analysts are when it comes to analyzing highly complex debt-laden balance sheets.

In the clip below, starting about 2:30 in, CNBC's Brian Sullivan gets into a heated spat with Gait over precisely how much debt Glencore really has, with one saying $45 billion the other claiming it is a whopping $100 billion.

The reason for Gait's confusion is that he simplistically looked at the net debt reported on Glencore's books... just as Ivan Glasenberg intended.

However, since Glencore - like Lehman - is first and foremost a trading operation, one also has to add in all the stated derivative exposure (something we did ten days ago), in addition to all the unfunded liabilities, off balance sheet debt, bank commitments and so forth, to get a true representation of just how big, or rather massive, Glencore's true risk is to its countless counterparties.

Conveniently for the likes of equity analysts such as Gait and countless others who still have GLEN stock at a "buy" rating, Bank of America has done an extensive analysis breaking down Glencore's true gross exposure. Here is the punchline:

We consider different approaches to Glencore's debt. Credit agencies, such as S&P, start with "normal& ...

U.S. Stocks Rise Amid Health-Care Rebound

U.S. stocks rose Wednesday, driven by a rebound in shares of health-care companies.

Oil's Rally Fades as U.S. Stockpiles Grow

Oil prices slid Wednesday after weekly inventory data showed U.S. stockpiles of crude oil and petroleum products at a record high.

Tech Startup Pure Storage Trades Below IPO Price in Market Debut

Flash-storage company Pure Storage traded below its initial public offering price on Wednesday, signaling that a difficult summer for tech IPOs may be seeping into the fall.

August 2015 Consumer Credit Growth Rate Continues to Slow

Written by Steven Hansen

The headlines say consumer credit rate of growth declined - and came in well below market expectations. Our analysis shows year-over-year consumer credit growth rate insignificantly declined. There continues to be moderate growth in revolving credit.

Oil Prices Sink In Third Quarter

from the Dallas Fed

-- this post authored by Michael Plante and Amy Jordan

Oil prices fell during a volatile third quarter 2015. Despite low prices, global production of oil and oil products remains high, keeping the market oversupplied and inventories above normal levels. However, low oil prices have finally led to a decline in U.S. oil production and are affecting oil and gas firms.

GoPro plummets after thunderous price cut, but analysts still see opportunity

Shares of GoPro sold off sharply Wednesday after Morgan Stanley cut its 12-month price target in half.

The Tell: Bank of America says banks may have $100 billion in exposure to Glencore

Embattled commodities giant Glencore PLC could prove a $100 billion elephant in the room for some of the biggest U.S. banks as they report quarterly results and undergo tests of their financial health in the coming months.

Capitol Report: Sen. Bob Corker says investors should short Fannie and Freddie

The continued stock-market strength of Fannie Mae and Freddie Mac has been a puzzle to some, so much so that one senator came out on Wednesday and said to short the security.

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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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