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03Nov2015 Market Close: Markets Close In The Green After Slipping Off Session Highs, Oil Closes Higher, SP500 Within One Percent Of Historic Highs

Written by Gary

Markets closed higher as risk taking has returned, but off the session highs. Volume was moderately low in today's session after new orders for U.S. factory goods fell for a second straight month, but energy shares were the ones that drove U.S. stocks higher. Oil closed in the high 47's while the US dollar peaked earlier and settled in the low 97's.

Todays S&P 500 Chart

"We're back to where we were before that downturn took place, with reasonable earnings, modest growth and low interest rates," said Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates Inc. in Bethlehem, Pennsylvania. "That's a backdrop that's allowing upward momentum to re-enter the market. All of the fears built into the market in August and September haven't come to fruition."

"When you see energy and cyclicals continue to rally like this it's because they're under-owned sectors," said Michael Antonelli, an institutional equity sales trader at Robert W. Baird & Co. "They're the sectors that were left for dead. When you get these pain-trade rallies like we're seeing right now, those are the sectors that people go to because they're under-owned."

The Market in Perspective

Here are the headlines moving the markets.

U.S. factory orders fall, inventory liquidation under way

WASHINGTON (Reuters) - New orders for U.S. factory goods fell for a second straight month in September as the manufacturing sector continues to struggle under the weight of a strong dollar and deep spending cuts by energy companies.

U.S. fines on Takata could be $200 million for faulty air bags

WASHINGTON/DETROIT (Reuters) - The top U.S. auto safety regulator on Tuesday imposed a fine that could be as high as $200 million on air-bag supplier Takata Corp and ordered it to stop making inflators that use ammonium nitrate as a propellant. The National Highway Traffic Safety Administration cited the chemical as a factor in explosive air-bag ruptures that have caused seven deaths and nearly 100 injuries in the United States.

VW sees 800,000 more cars affected by 'inconsistencies'

BERLIN/FRANKFURT (Reuters) - Volkswagen said on Tuesday it found data "inconsistencies" on carbon dioxide emissions for 800,000 more cars, the latest sign of trouble for Europe's biggest automaker, already reeling from an emissions scandal.

As Keystone struggles, TransCanada pushes new Energy East terminal

CALGARY (Reuters) - TransCanada Corp is pushing ahead to develop Energy East, an all-Canadian alternative pipeline project to its struggling U.S. Keystone XL pipeline, and will soon reveal the location of a new export terminal.

U.S. auto industry headed for record sales in 2015 -GM

DETROIT (Reuters) - The U.S. auto industry is on track for a record year of annual sales, General Motors Co said on Tuesday, as the top U.S. automaker and its rivals reported October sales that far exceeded expectations.

Wall Street rises, as energy stocks continue run

(Reuters) - A fifth straight day of gains for energy shares drove U.S. stocks higher on Tuesday, while big tech names also helped propel the major indexes.

Lockheed, United Tech to close Sikorsky deal by Friday

WASHINGTON (Reuters) - Lockheed Martin Corp said it expects to close its $9 billion acquisition of Sikorsky Aircraft from United Technologies Corp on Friday, now that it has received final regulatory approval from China.

Sprint quarterly results miss forecasts, shares fall 7 percent

(Reuters) - Sprint Corp , the fourth largest U.S. wireless carrier, reported lower-than-expected quarterly results on Tuesday as promotional price cuts drove customer gains but weighed on growth.

Why Most Investors Will Never Go Back To Stocks Again, In One Chart

The simple answer: the risk/return is simply not worth it.

Whether it is two recent yet "generational" crashes still fresh in most investors' minds, or the countless micro flash crashes witnessed daily and countless market fragmentation events thanks to the ubiquitous penetration of HFT in every asset class which have led to partial or wholesale market closures and a risk to principal far beyond what is embedded in the "fundamentals", not to mention the risk that faith in central planning simply runs out in any given moment, for many equities are simply, as SocGen puts it, "too scary."

In short, for most return of capital is now far more important than return on capital.

We note this just in case Steve Liesman is confused "why"...

Subprime Auto Goes Full-Retard: Lender Sells $154 Million ABS Deal Backed By Loans To Borrowers With No Credit

If you frequent these pages, you may remember Skopos Financial, the subprime auto lender that’s been busy packaging all manner of questionable auto loans and offloading credit risk to investors via some of what can only be described as the most noxious looking ABS deals in the history of securitization.

Earlier this year for instance, Skopos sold some $150 million worth of paper backed by a collateral pool wherein 20 percent of the loans were made to borrowers with a credit score ranging from 351 to 500. In other words, a fifth of the loans backing the deal are to the least creditworthy borrowers in the country. Here’s a look at the details:

This comes against a backdrop of rising US auto sales (see the numbers for October, out earlier today) and it's not difficult to explain the gains. Just take a look at the following data from Experian on the lunatic loan terms being extended to borrowers (from Q1):


Average loan term for new cars is now 67 months â€" a record.

Average loan term for used cars is now 62 months â€" a record.

Loans with terms from 74 to 84 months made up 30% of all new vehicle financing â€" a record.

Loans with terms from 74 to 84 months made up 16% of all used vehicle financing â€" a record.

Stocks Higher as Energy Shares Rally

A rally in energy-company shares propelled U.S. stocks Tuesday. Oil prices jumped on concerns about output from Libya and Brazil, and energy shares followed suit.

Treasurys Hit Highest Yield in Weeks

U.S. government bond yields rose to their highest levels in nearly seven weeks on Tuesday, fueled by growing anxiety over an interest-rate increase from the Federal Reserve in December.

European Banks' Long Road to Recovery

Europeans banks are in the middle of a broad retreat as they try to solidify their balance sheets and refocus strategy amid global economic uncertainty.

Bond Report: Treasury yields hit 7-week high on rising rate-hike expectations

Treasury yields climb Tuesday for a second straight session, reaching their highest level since Sept. 16, as expectations that the Federal Reserve will raise interest rates in December continue to increase.

How an iPhone on a drone won over Mark Cuban and every other "Shark Tank" judge

A drone company that mounts smartphones on drones went on Shark Tank and walked away with $1.5 million in an investment from Mark Cuban.

Earnings Outlook: What to watch for in Facebook's earnings

Facebook is scheduled to report quarterly earnings after the market close on Wednesday.

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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