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11Dec2015 Market Close: U.S. Markets Close Sharply Down Along With Tumbling Crude Oil Prices, US Dollar Volatile, But Steady, Gold Closed Higher

Written by Gary

U.S. averages closed sharply lower today, ending their worst week since August, as plunging crude oil prices compounded investor nervousness ahead of the first U.S. interest rate hike in nearly a decade on December 16th.

Oil tumbled to its biggest weekly decline of the year after an IEA report highlighted the magnitude of the global crude glut.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Dow, DuPont set $130 billion megamerger, could spark more deals

(Reuters) - Chemical titans DuPont and Dow Chemical Co agreed to combine in an all-stock merger valued at $130 billion in a move that pleased activist investors, would generate tax savings and trigger more consolidation while drawing scrutiny from regulators.

Renault-Nissan's French peace deal leaves investors underwhelmed

PARIS (Reuters) - The Renault-Nissan alliance drew a line under an eight-month power struggle with the French government on Friday, with a compromise deal balancing increased state influence at Renault with weakened control over its Japanese affiliate.

Halliburton to be told about EU concerns over Baker Hughes deal: source

BRUSSELS (Reuters) - Oilfield services provider Halliburton will meet EU antitrust regulators next week and is likely to be told about competition worries over its $35 billion bid for Baker Hughes , a person familiar with the matter said on Friday.

U.S. consumers loosen purse strings as holidays start

WASHINGTON (Reuters) - U.S. consumers showed some muscle in November at the start of the holiday shopping season, suggesting enough momentum in the economy for the Federal Reserve to raise interest rates next week for the first time in nearly a decade.

AstraZeneca in talks to buy cancer drugmaker Acerta for $5 billion: WSJ

(Reuters) - British drugmaker AstraZeneca Plc is in advanced talks to buy privately held cancer drug developer Acerta Pharma BV for more than $5 billion, the Wall Street Journal reported, citing people familiar with the matter.

Wells Fargo to move securities arm to New York's West Side

(Reuters) - Wells Fargo & Co is moving the New York headquarters of its Wells Fargo Securities arm to Manhattan's West Side, to 30 Hudson Yards, which is currently under development, the company said in a statement.

Which stock sectors will Fed rate hike help most? History no guide

NEW YORK (Reuters) - It has been so long since the Federal Reserve raised interest rates that U.S. stock market investors probably should not look to past rate hike cycles for clues about potential winners and losers.

U.S. regulators weigh limiting funds' use of derivatives

WASHINGTON (Reuters) - U.S. regulators are considering restrictions on how mutual, exchange-traded and other funds can use derivatives, with the Securities and Exchange Commission head saying she is concerned that investors are exposed to too much risk.

Australian Media Throws Up All Over 'Stellar' Jobs Report, Again

One month ago, when Austrlia released job numbers that too ridiculous to believe - they were a 6 sigma beat - the local mainstream media - very much unlike that of the US - threw up all over the numbers.

This is how Australia's primary media outlet, ABC, slammed the number with the following excoriating reaction of the economic propaganda, which would certainly have been censored in the US.

A fall in the unemployment rate from 6.2 per cent to 5.9 per cent in the space of one month? Be sceptical. Treat with extreme caution.

Nearly 60,000 jobs created in Australia last month? A fall in the jobless rate in Victoria of 0.7 percentage points? Predictably, the numbers moved markets. Yet the seasonally adjusted labour force estimates from the Australian Bureau of Statistics for October sound incredible and they should be treated as just that: not credible.

There were 44,640 minutes in October and, if you accept the estimate, 58,600 jobs were created. As the Age's economics editor Peter Martin points out, count only normal business hours, and that equates to 5.5 workers being hired each minute of the working day.

Even the economist known as "Mr Sunshine", Craig James of Commsec, is not buying it. "It's hard to believe that almost 60,000 jobs were created in one month with 40,000 of these jobs in full-time positions," was his response.

The ABS is itself cautions against placing too much credence on the monthly figures, which are based on a changing sample, particularly the se ...

This Is How America Has Changed Since The Last Fed Rate Hike

On June 29, 2006, the Fed did something it would not do again for (at least) nine and a half years: it hiked rates by 25 basis points, its 17th consecutive rate hike. Everyone knows what happened after.

On December 16, 2015, the Fed is expected to do something it hasn't done for 3,457 days: hike rates by 25 bps, ending the longest period in US history (84 months) of zero interest rates.

How has the world changed in the interim? Some quick observations from BofA:

Back then US housing starts were booming (2¼ million per annum), a stock market bubble was taking place in Saudi Arabia, another one was forming in China, no one had heard of œQuantitative Easing and there was no such thing as the iPhone.

Today, US housing starts are moribund (around 1 million per annum), the Saudi's have just been downgraded (a devaluation of the Saudi riyal is one of BofAML's noted œblack swan events in 2016), Chinese debt deflation has reduced China's œgrowth opportunity set to babies, tourists & capital outflows, central banks have purchased a remarkable $12,400,000,000,000 of financial assets since Bear Stearns, and the iPhone now powers retail sales.

And here is the biggest difference: back then total debt/GDP was 61%, with total debt just over $8 trillion. Now, it is 104%, with the total US debt just shy of $19 trillion.

Good luck Fed.

Chinese Move Would Loosen The Yuan's Peg to the Dollar

China's central bank signaled its intention to change the way it manages the yuan's value by potentially loosening its peg to the U.S. dollar and instead letting it track the currencies of its broader trading partners.

DuPont-Dow Deal Aims for Cost Cuts Totaling $3 Billion

Dow Chemical and DuPont announced Friday that they have agreed to merge, fusing two of the U.S.'s oldest companies into a chemical giant currently worth about $130 billion.

Currencies: Dollar index posts 2nd straight weekly decline

A key dollar index recorded its second straight weekly loss Friday as the worsening selloff in crude oil raises concerns that it could slow the pace of any Federal Reserve interest-rate increases in 2016.

Bond Report: Treasury yields post largest single-day drop in 5 months

U.S. Treasury prices closed sharply higher Friday, pushing yields to their lowest level since late October, as the crude-oil rout worsened, weighing on stock markets and luring investors into the perceived safety of government bonds.

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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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