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21Oct2015 Market Close: SP500 Closes Below Support 2020, Investors Especially Worried About Markets Falling Further. Is This The Official Beginning Of The Bear Market?

Written by Gary

U.S. averages closed down fractionally, while the SP500 closed down BELOW 2020 (2019) and sent shivers down the backs of many investors. The 2020 support has been regarded by many as the jumping off point to fall even further. But, before we start jumping out of high-rise office buildings, let's see what Mr. Market has to say tomorrow.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall St. ends lower, energy and healthcare stocks fall

(Reuters) - U.S. stocks fell on Wednesday as insurers and other big healthcare names dropped and Yahoo shares declined following disappointing results.

Valeant shares plunge on short-seller scrutiny of pharmacy revenue

NEW YORK (Reuters) - Valeant Pharmaceuticals International Inc plunged as much as 40 percent after an influential short-seller accused the company of using specialty pharmacies to inflate its revenue, an allegation that the drugmaker denied.

Western Digital to buy SanDisk in $19 billion deal

(Reuters) - Hard-disk drive maker Western Digital Corp agreed to buy SanDisk Corp in a $19 billion deal that will greatly increase its ability to make flash memory storage chips used in smartphones and tablets.

Hedge fund mogul Ackman hit hard by huge Valeant bet

BOSTON (Reuters) - Hedge fund mogul William Ackman has become one of the biggest casualties of a meltdown in pharmaceutical firm Valeant, with losses on the position amounting to roughly $1.8 billion so far this year, including more than $800 million at one point on Wednesday.

Boeing says 777 output may fall as losses narrow on 787

(Reuters) - Boeing Co posted better-than-expected quarterly results and lifted its financial outlook on Wednesday, but signaled it may juggle plane production to keep profits flowing as one of its two main cash cows dries up.

EU rules Starbucks, Fiat tax deals illegal, rocking system

BRUSSELS (Reuters) - The European Commission ruled on Wednesday that Starbucks and Fiat benefited from illegal tax deals with the Dutch and Luxembourg authorities, dealing a heavy blow to profit-shielding arrangements used by many multinationals.

Credit Suisse to raise $6 billion as new CEO shows his hand

ZURICH (Reuters) - Credit Suisse plans to raise 6 billion Swiss francs ($6.3 billion) from investors, slim down its investment bank and cut jobs as new chief Tidjane Thiam embarks on the biggest overhaul of the Swiss bank in almost a decade.

Goldman adding data scientists, marketers in consumer lending push

(Reuters) - Goldman Sachs Group Inc is looking to hire engineers, data scientists, operations staff, and customer service professionals as it builds up its online lending business, according to people contacted by the bank and online job postings.

The Barclays Liquidity Gap Infographic - "This Could Lead To Potentially Severe Losses"

We have been covering the collapse in bond market liquidity since 2013. Some, and we envision mostly those residing at the Marriner Eccles building, still don't get it. So for their benefit, here is the problem with "liquidity gap" as explained in a one Barclays infographic.

From the bank: "The decline of fixed income liquidity in 2015 can be seen as a gap between supply and demand. Banks are supplying less liquidity, yet investors are still demanding more of it. The result? Potentially severe losses in fixed income."

This, in pictures:

Barclays' implied message? Bonds are risky, but stocks are safe, so please "rotate greatly" finally, and sell your bonds using the proceeds to buy risk free stocks. After all, the 0.1% - aka Barclays' clients - ha ...

Saudi Arabia Will Be Broke In 5 Years, IMF Predicts

As crazy as it sounds, the Saudis are going broke.

Of course you wouldn’t know it if you read the account of King Salman’s latest visit to Washington which included booking the entire DC Four Seasons and procuring a veritable fleet of Mercedes S-Class sedans.

You’d also be inclined to think that everything is fine if you simply looked at SAMA holdings (i.e. FX reserves) which still total nearly $700 billion.

The problem however, is the outlook.

Fighting wars costs money and so does bribing the citizenry to ensure you don’t get some kind of Arab Spring-type uprising. When you endeavor to artificially suppress the price of the export that is the source for your wealth and international prestige (all in an epic attempt to bankrupt the competition and secure geopolitical “ancillary benefitsâ€) you don’t do yourself any favors from a financial perspective and now, the Saudis are staring down a massive budget deficit and a current account that’s in the red for the first time in ages.

So while things may look on the up and up from an FX reserve perspective (even as the cushion is at its lowest level since 2013) and while the kingdom has plenty of capacity to borrow with a debt-to-GDP ratio of just a little over 2%, things are about to get ugly very quickly going forward and if Riyadh decides to plunge headlong into Syria’s civil war, it will only get wors ...

Valeant Rebuts Critical Report That Pummels Stock

Valeant defended its relationship with a specialty pharmacy that distributes some of its drugs, following a critical report by a short-selling research firm that wiped as much as $20 billion from its market value on Wednesday.

S&P 500 Dragged Lower by Losses in Health-Care Sector

Health-care shares capped a volatile day Wednesday with losses after a report targeted Canadian drug maker Valeant Pharmaceuticals International.

Credit Suisse to Launch $6.3 Billion Capital Increase

Credit Suisse Group AG’s new chief executive put his stamp on the bank Wednesday, announcing plans to raise $6.3 billion in capital and scale back investment banking.

Market Extra: Euro's fate hinges on Draghi's words

All eyes will be on the euro Thursday as European Central Bank President Mario Draghi steps up to the podium to address the media at the end of the central bank's two-day policy meeting.

The Wall Street Journal: Chip merger frenzy continues with Lam Research purchase of KLA-Tencor

Lam Research Corp. on Wednesday announced a deal to buy KLA-Tencor Corp. for $10.6 billion, the latest sign that consolidation pressures among chip makers have spread to their suppliers.

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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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