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03Feb2016 Market Close: US Markets Close Higher, WTI Crude Surges To Mid 32's, US Dollar Falls To Low 97's, Global Growth Remains A Big Concern

Written by Gary

U.S. averages turned higher in a mild volatile session today with the Dow rallying over one percentage point as energy shares jumped with crude prices and financial shares cut losses to trade flat. The US dollar fell against the euro today, as investors sold the greenback amid falling interest rates in the U.S. and continued nervousness about global growth. The small caps remained in the red, down a half percentage point.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street closes higher after late-day rally

NEW YORK (Reuters) - U.S. stocks staged a late-day rally to end higher on Wednesday as an 8-percent jump in oil drove up beaten-down energy shares and financials rebounded.

Honda expanding Takata air bag recall again in North America

DETROIT/WASHINGTON (Reuters) - Honda Motor Co is expanding its recall in North America of late-model vehicles equipped with potentially defective Takata air bags, in a move that could affect nearly 2.3 million vehicles.

Toyota pulls the plug on Scion small car brand

(Reuters) - Toyota Motor Corp said on Wednesday it will wind down its Scion brand in the United States, ending a 12-year effort to create a separate identity for small cars aimed at young buyers.

ChemChina's Syngenta swoop: a 12-year crush, a 12-month courtship

BEIJING/LONDON (Reuters) - A frenetic year of negotiations and setbacks preceded China National Chemical Corp's (ChemChina) blockbuster $43 billion bid for Swiss seeds and pesticides giant Syngenta .

Preliminary U.S. January truck orders down 48 percent: FTR

CHICAGO (Reuters) - U.S. January Class 8 truck orders fell 48 percent on the year, preliminary data from freight transportation forecaster FTR showed, indicating that 2016 could be another weak year for truck makers.

Global business activity starts 2016 on weak note

LONDON (Reuters) - Global economic growth began 2016 on a weak note, surveys of business activity suggested on Wednesday, and with inflation remaining low central banks are seen under pressure to keep monetary policies easy.

GM posts record profit in fourth quarter and 2015, but shares skid

DETROIT (Reuters) - General Motors Co reported record quarterly and annual profits on Wednesday and promised 2016 will be even better, but unimpressed investors dumped the automaker's shares.

Complete And Utter Chaos

Before we start, this tweet summed up most of the desk chatter todasy...

#WallStreet traders at their desks today :D @ForexStopHunter @livesquawk @ForexLive @zerohedge @Schuldensuehner pic.twitter.com/yrfmQTwTkW

— Jakub Stasik (@kubachybas) January 20, 2016

Services economy dismal, ADP data weak, crude fundamentals horrible... rip snorting ramp in crude and stocks...

To be clear, today's idiotic ramp in Crude oil was nothing but an algo-induced short-squeeze just like we saw last week. Chatter of OPEC emergency meetings desparately tried to jerk headline-scanning algps higher while everything fundamentally was a disaster with inventories surging across the complex, production unchanged for the lower 48, demand plunging 16% YoY, and energy credit continuing to weaken... But then this happened...

We noted early that Yuan caught a sudden unexpected bid early...

"It's Probably Nothing": January Truck Orders Collapse 48%

We have previously shown just how bad the situation in the US heavy trucking space - trucks with a gross weight over 33K pounds - was most recently in "US Trucking Has Not Been This Bad Since The Financial Crisis" in which we looked at November data and found, that "Class 8 truck net orders at 16,475, were 59% below a year ago and the lowest level since September 2012. This was the weakest November order activity since 2009 and was a major disappointment, coming in significantly below expectations. All of the OEMs, except one, experienced unusually low orders for the month."

For those who missed the proverbial wheels falling of the heavy trucks, so to speak, the charts below do the situation justice:

So with 2015 in the history books, and as we start 2016 where the base effect was supposed to make the annual comps far more palatable, we just got the latest, January data. In short: the drop continues to be one of Great Recession proportions, manifesting in yet another massive 48% collapse in truck orders in the first month of the year as demand appears to have go ...

All Roads Lead To Treasuries

Via Scotiabank's Guy Haselmann,

Rapidly Standing Still

While global central bank quasi-coordination ended in 2014, it completely diverged in 2015. This is highly troubling and dissimilar to other historical comparisons. The reason is because when both nominal and real interest rates are already zero and/or negative, cutting interest rates further is an action taken to directly weaken the currency. Making real rates more negative will simply not lead to more borrowing for capital spending. Therefore, the BoJ's easing last week sounded an alarm that a currency war has basically begun.

By cutting rates, the BoJ has made the Fed's job more difficult. A continuation of diverging policies would ultimately place too much upward pressure on the US dollar. One reason the dollar materially slipped today is due to this realization and the market reacting to further price out Fed hikes.

Because a currency represents a relative relationship, Fed hikes could have helped pull other central banks away from the dangers and consequences of negative rates, while still helping their hidden desire for a weakened currency. Opposing central bank policy actions would cause too powerful of an impact on exchange rates. Unfortunately, it appears the path into negative territory is winning the directional battle. A classic prisoner's dilemma has arisen for the Fed.

The pressure for China to devalue its currency is now stronger as well. This is not only true because Japan is a key trading partner, but because China recently shifted its policy from a USD fixed exchange rate to a trade-weighted basket that includes the yen. (Similarly, further cuts in Europe are intended to weaken the Euro.)

A strong dollar has always posed one of the biggest risks to the derailment of the Fe ...

Dollar Weakens Amid Growth Fears

The dollar tumbled against the euro and yen Wednesday, as investors sold the greenback amid falling interest rates in the U.S. and continued nervousness about global growth.

U.S. Stocks Rebound in Volatile Session

U.S. stocks rebounded in afternoon trading, buoyed by a rally in energy and materials shares.

Bank of America: Why Its Stock Is Worth More Than This

BofA's shares are getting pummeled. Things aren't as bad as they seem.

Economic Outlook: What to expect from LinkedIn's earnings

LinkedIn reports fourth-quarter earnings after the market closes Thursday.

In One Chart: Ugly earnings may mean a scary 20% S&P 500 plunge

Keith McCullough CEO at Hedgeye says that back-to-back quarters of declining earnings have œalways resulted in declines of 20% or more for the S&P 500.

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Earnings Summary for Today

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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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