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04Feb2016 Market Close: US Markets Closed Fractionally Higher In An Unsettled Global Financial Rut, Investors Worried About Market Direction

Written by Gary

US markets closed up nicely with the DOW gaining 80 points in the green. The Spooz closed up 0.1% while the $NDX closed down 0.1%. Brent crude settled in the mid 34's, US dollar stops fall at support.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Shkreli laughs off questions from lawmakers, calls them 'imbeciles'

WASHINGTON/NEW YORK (Reuters) - Former drug executive Martin Shkreli laughed off questions about drug prices and tweeted that lawmakers were imbeciles on Thursday, when he appeared at a U.S. congressional hearing against his will.

Obama to seek new tax on oil in budget proposal

WASHINGTON (Reuters) - U.S. President Barack Obama will propose a $10-a-barrel fee on oil in his budget plan next week, as the White House seeks to boost the nation's investments in clean transportation projects, the White House said on Thursday.

Wall Street ends slightly up, helped by materials shares

NEW YORK (Reuters) - U.S. stocks eked out a second straight gain on Thursday as materials shares rose with commodities prices, but disappointing forecasts from retailers and anxiety ahead of Friday's monthly jobs report limited the advance.

Viacom names CEO Dauman as chair as Redstone exits; daughter protests

NEW YORK (Reuters) - Viacom Inc's board of directors named Chief Executive Officer Philippe Dauman as executive chairman, replacing majority owner Sumner Redstone, overriding calls for an independent board chief from Redstone's daughter, who voted against Dauman.

U.S. small businesses boost hiring in January: NFIB

WASHINGTON (Reuters) - U.S. small businesses stepped up hiring in January after taking a pause in December and many continued to point to difficulty finding qualified workers, a survey showed on Thursday.

Toymakers Mattel, Hasbro held talks on possible merger: Bloomberg

(Reuters) - U.S. toymakers Mattel Inc and Hasbro Inc have held talks about a possible merger, Bloomberg reported on Thursday, citing people familiar with the matter.

Delta CEO-designate: Zika has not impacted flight bookings

(Reuters) - The rapidly spreading Zika virus has not impacted bookings on Delta Air Lines Inc to Latin America and the Caribbean, its president and CEO-designate said on Thursday, but added that customers' future plans were tough to predict.

Fed's 'accommodation' outrun by tightening credit

WASHINGTON (Reuters) - Even as the Federal Reserve began raising interest rates in December its message was clear: it wanted to keep monetary conditions loose and felt the United States still needed accommodation to keep a modest recovery underway.

El-Erian: Markets front-run Fed in tightening financial conditions

NEW YORK (Reuters) - Mohamed El-Erian, the chief economic adviser at Allianz SE , said on Thursday that with volatility rising, the markets effectively have served as front-runners to the Federal Reserve in tightening global financial conditions.

Bonds & Bullion Best As Dollar Crashes To 4-Month Lows

European bonds are collapsing... systemic risk is rising... US Services economy "pillar" plunges... and jobs data is dismal - stocks shrugged...

The USD Index is down over 3% this week - the worst 4-day drop since China's devaluation in August and plunging it back to 4-month lows...

Perhaps this is why? PBOC is actively intervening - selling USDs to support offshore Yuan...

Trannies were ecstatic... but the rest of the US equity market just could not get with the program...

VIX spikes broke the market and sparked rallies...

US Financial credit risk broke out to its highest since 2013...

World's Biggest Containership "Hard Aground" As Baltic Dry Crashes Below 300 For First Time Ever

Before this year the lowest level The Baltic Dry Index had reached was 556 in August of 1986 and the highest was in June 2008 at a stunning 11,612. Today saw the freight index hit a new milestone however, crashing through the 300 barrier for the first time ever - at 298, this is almost 50% below the previous record low.

Commodities obviously are saying something very different from "the market"...

And as Dana Lyons notes, of course much of the input into the BDI comes from the price of raw materials. Considering the deflationary spiral in commodities, the drop in the BDI to all-time lows shouldn't be a shock.

However, the depths that the index is now plumbing is quite alarming and suggests trouble in the global trade picture.

It would also suggest perhaps that the deflationary pressure is not just a supply issue. Consider every prior drop in the Baltic Dry Index down to the 500-600 level. Each time, the index immediately jumped as if latent demand was just waiting for those lower prices. That development has not yet occurred this time around, even as prices are reaching 45% below the previous rec ...

"The Worst Case Scenario Is Already A Reality": Minnesota's Mining Country Is "Melting"

There's been no shortage of coverage both in these pages and elsewhere of the impact falling oil prices have had on the American and Canadian oil patches.

Take Texas, for instance, where a year of crude carnage has wreaked havoc upon what, until last year anyway, was the engine driving the œrobust US labor market. As we showed in November, layoffs in Lone Star land far outrun job losses in any other state. In Houston (which was already staring down a worsening pension crisis), vacant office space is œpiling up. As WSJ wrote last week, œthe amount of sublease space on the market in the Houston area hit 7.6 million square feet, or the size of more than two Empire State Buildings. œThe unemployment rate in Texas rose sharply to 9.2% in 1986, an all-time high for the state, Goldman wrote recently, recalling a previous period of low oil prices in a note entitled œHow Bad Can Texas Get?

œReal house prices fell 30% peak to trough, and the number of bankruptcy filings (including both business and non-business filings) more than doubled from 1984 to 1986, the bank added.

North of the border, things are even worse. As regular readers are no doubt aware, Alberta is a veritable nightmare as suicide rates rise, the number of jobless multiplies, food bank usage soars, and property crime in Calgary spikes.

But with all of the focus on oil, not much attention has been paid to the impact the commodities downturn has had on other things people pull out of the ground in North America.

Courtesy of . . .

Obama Proposes $10/Barrell Oil Tax To Fund Government Transportation Spending

"It's a supply issue", "No, it's a demand issue" - when it comes to the cause for plunging oil prices, the two camps will surely never agree on just what is causing it.

Luckily, Obama may provide just the tiebreaker.

Moments ago, Politico reported that in his final budget, Obama is set to unveil an ambitious plan for a œ21st century clean transportation system. which will be funded by a $10/barrel tax on oil.

Punishment for evil oil companies, you say? Not so fast: any government tax would be immediately passed on to those US consumers who recently had to take out a second-lien subprime loan to finish funding the purchase of that brand new Ford F-150 truck.

From Politico:

Obama aides told POLITICO that when he releases his final budget request next week, the president will propose more than $300 billion worth of investments over the next decade in mass transit, high-speed rail, self-driving cars, and other transportation approaches designed to reduce carbon emissions and congestion. To pay for it all, Obama will call for a $10 œfee on every barrel of oil, a surcharge that would be paid by oil companies but would presumably be passed along to consumers.

In other words, while there may be excess supply of about 3 million barrels daily according to Saudi Arabia, suddenly demand is about to fall off a cliff as the price of oil surges thanks to Obama's latest brilliant intervention in the "free market", one which would result in a roughly 30% tax to E&P companies and a 25 cent jump in the price of a gallon of gas.

The good news: it won't pass...

Dollar Slips Further Ahead of Jobs Data

The dollar retreated further Thursday, as investors cut their positions in the currency ahead of key U.S. economic data at the end of the week.

U.S. Stocks Rise as Beaten-Down Sectors Advance

U.S. stocks rose Thursday as investors retreated from bets against some of the year's most beaten-down sectors.

The Hottest Idea in Finance: Capital Controls Are Good

Long shunned by economists, capital controls are gaining advocates as a tactic to cope with destabilizing global investment flows.

Financial News: Navinder Sarao sent millions of trade messages ahead of flash crash, prosecutors say

The trader accused of helping trigger the flash crash of 2010 sent 7.4 million œtrade modification messages " sometimes seen as a sign of abusive trading " on a single day, according to prosecutors seeking to extradite him to the U.S.

Capitol Report: Obama proposing $10-a-barrel oil tax to pay for clean transportation

President Barack Obama is proposing a $10-a-barrel tax on oil to pay for clean transportation projects, the White House said Thursday.

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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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