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29Feb2016 Market Close: US Markets Make Precipitous Drop At The Close, Gold And Oil Settle Higher, Bullishness In Trouble

Written by Gary

US markets closed lower and the Spooz closed below the S2 during the last minute of trading. The latest batch of 'tea leaves' suggest that there is not enough volume to push markets higher. Despite higher oil prices as a drop in healthcare and energy shares offset an increase in utilities stocks.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Launch of Maserati SUV brings hope to Turin car workers

TURIN, Italy (Reuters) - Hundreds of workers from Fiat's sprawling Mirafiori plant in the Italian city of Turin hope Maserati's first sport-utility vehicle will finally change their fortunes for the better and end years of layoffs.

Unlocking iPhone would leave millions exposed, Apple to tell Congress

WASHINGTON (Reuters) - Unlocking an iPhone used by one of the San Bernardino shooters would leave hundreds of millions of Apple Inc device owners vulnerable to cybercriminals and other hackers, the company's top lawyer is expected to tell U.S. lawmakers on Tuesday.

Buffett says owning IBM shares could prove a mistake: CNBC

NEW YORK (Reuters) - Warren Buffett, chairman and chief executive of Berkshire Hathaway Inc , told CNBC on Monday the firm's ownership of IBM Â shares could prove a mistake and that he was buying more U.S. stocks overall since the end of last year.

Valeant under investigation by SEC: Bloomberg

(Reuters) - Shares in embattled drugmaker Valeant Pharmaceuticals International Inc fell as much as 21 percent on Monday after Bloomberg reported that the company is under investigation by the U.S. Securities and Exchange Commision in a previously undisclosed probe.

U.S. pending home sales hit one-year low; manufacturing weak

WASHINGTON (Reuters) - Contracts to buy previously owned U.S. homes fell to their lowest level in a year in January amid a persistent shortage of properties for sale, which could slow the housing market ahead of the spring selling season.

U.S. shale's message for OPEC: above $40, we are coming back

NEW YORK (Reuters) - For leading U.S. shale oil producers, $40 is the new $70.

GE to 'aggressively' cut costs in 2016: Immelt

(Reuters) - General Electric Co will continue to "aggressively" cut costs this year, Chief Executive Jeff Immelt said, reiterating the company's target for spending on restructuring in 2016.

Lumber Liquidators' sales fall more than feared, shares drop

(Reuters) - Lumber Liquidators Holdings Inc reported a bigger-than-expected drop in sales for the third straight quarter as it struggled with falling demand due to fears that some of its hardwood flooring laminates could cause cancer.

Gold Leaps, Stocks Sleep As February Bounce Burns Out

So much excitment but by the end of the month...

Some high-/low-lights for February...



China's Shenzhen Composite Down 28.8% in 2 months - biggest drop since July 1994

Dow Transports Up 6.75% in Feb - best month since Jan 2013

Financial Stocks Down 2.3% in Feb - 3rd loss in a row for first time since 2011

FANGs Down 4.5% in Feb - biggest drop since March 2014

10Y Treasury Yield Down 54bps in 2 months - biggest absolute drop since May 2012

Treasury Curve (2s10s) Down 17% in Feb - 4th flattening in a row, biggest drop since Jan 2015 to Nov 2007 lows

Gold Up 10.8% in Feb - best month since Jan 2012 (best 2 months since Aug 2011)

Crude Oil (April WTI) Down 4.2% in Feb - 4th loss in a row for first time since Dec 2014

USDJPY Down 7% in Feb - biggest monthly collapse since October 2008

GBPUSD Down 9.8% in 4 months - biggest plunge since Dec 08 to lowest since Aug 1985

S&P 1940.25 was all that mattered today (the line between a red or green close for Feb)

On the day, we reoundtripped from early exuberance on terrible data... NOT off the lows...

Keynesian Youth? Boston Fed Unleashes "Wishes & Rainbows" Children's Story Book

"Designed to stimulate students' imagination as they explore the economic problem of scarce resources, various methods of allocation, and how societies react to alleviate such problems," The Boston Fed has unleashed a chidren's story book called "Wishes and Rainbows" indoctrinating the American youth into the ways of the Keynesian.

Boston Fed - Wishes and Rainbows

Ackman Losses $200 Million In An Instant After Valeant Reveals SEC Investigation; Stock Crashes

Over the weekend, our friend John Gavin at Probes Reporter revealed something disturbing to Valeant longs, namely that "New Data Now Confirms Valeant's Undisclosed SEC Investigation." This is what the report said:

Sunday Special UPDATE: Last week, on 23-Feb-2016, we published a report warning of the potential for a new and undisclosed SEC probe of Valeant. In a letter dated 22-Feb-2016, and just received by us on Saturday via US Mail, the SEC has now confirmed Valeant's involvement in on-going enforcement proceedings that remain undisclosed as of this date. All we know about the SEC probe at this time is that it somehow pertains to the conduct, transactions, and/or disclosures of Valeant Pharmaceuticals.

The SEC's letter now confirming on-going enforcement proceedings at Valeant has the same date as the press release put out by Valeant last week in which the company announced a restatement and delayed filings. (See, œValeant Ad Hoc Committee has Made Substantial Progress in Its Review of Philidor and Related Accounting Matters .) Despite the same date, the company remained silent on any new SEC investigation.

Updated Analysis and Opinion: We remain convinced that the now-confirmed SEC investigation of Valeant likely started last fall and absolutely should have been disclosed by now. Management may have their [strained] rationale for having not disclosed, but that matters little. The continued silence raises troubling questions about the overall quality of Valeant's disclosures and the integrity of the management team that produces them

As it turns out, Gavin was right, and moments ago Valeant admitted as much:< ...

Peak Complacency (Again)

As stocks have risen in recent weeks on the biggest short-squeeze in 7 years, so VIX - the expected volatility of the market - has dropped to 2016 lows. However, with VIX at around 20, remains almost double the peak-QE-suppression lows of July 2014. Complacency is peaking though as VVIX - the expected volatility of VIX - has collapsed to its post-QE lows and erased all fear since before China's August 2015 devaluation.

It seems the VIX complex is pricing in some "easing" (in other words "vol suppression") soon...

Is the VIX derivative market expecting more QE? Unlikely. But NIRP maybe... as bets on The Fed going negative soar to record highs...

Charts: Bloomberg

Argentina, Holdout Creditors Reach $4.65 Billion Settlement

Argentina and its œholdout hedge-fund creditors reached an agreement that could free the nation to return to the global financial markets for the first time in 15 years.

Dow Industrials Notch Gains for February

The Dow industrials fell Monday but finished February slightly higher after steep declines in January.

Brett Arends's ROI: Warren Buffett's best opportunity might be his company's own stock

Berkshire Hathaway is selling for less than two times tangible book value, a historic 'buy' signal, writes Brett Arends.

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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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