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08Mar2016 Market Close: Global Economic Slowdown, Weak China Financial Data, Falling Crude Prices Moved Markets Down To Support Levels

Written by Gary

Major indexes are resting precariously at their support levels with the SP500 closing at 1979, WTI crude settling at 36.23 and investors are now waiting for the other shoe to drop. Soft Chinese trade data stoked investors fears that the global economy is weaker than anticipated and the decline in crude prices also brought down energy shares.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall St. falls as oil, Chinese data weigh

NEW YORK (Reuters) - U.S. stocks ended near session lows on Tuesday in a late selloff as the energy sector tumbled alongside the price of oil and after soft Chinese trade data rekindled fears that the global economy is weaker than anticipated.

VW faces Allianz suit over share drop; jobs under threat after scandal

WOLFSBURG, Germany (Reuters) - German insurer Allianz plans to sue Volkswagen over the sharp drop in its shares as a result of the carmaker's diesel emissions scandal, a source familiar with the situation told Reuters.

Global stocks ease as China worries resurface, oil drops

NEW YORK (Reuters) - World stock markets declined on Tuesday after weak data from China reignited worries about a global economic slowdown and oil prices pulled back from recent strong gains.

Ex-JPMorgan adviser gets five years in prison for embezzling $20 million

NEW YORK (Reuters) - A former JPMorgan Chase & Co investment adviser was sentenced to five years in prison on Tuesday after admitting that he stole at least $20 million from client accounts to fund a gambling addiction and to trade in stock options.

Takata enlists restructuring lawyers: WSJ

(Reuters) - Japanese air bag maker Takata Corp enlisted restructuring lawyers at law firm Weil Gotshal & Manges LLP amid recalls covering millions of vehicles, the Wall Street Journal reported, citing people familiar with the matter.

Oil down 3 percent; rally snaps on supply worry, Goldman caution

NEW YORK (Reuters) - Oil prices fell 3 percent on Tuesday, retreating after six days of gains for benchmark Brent crude, as Goldman Sachs suggested the rally was unsustainable and analysts predicted U.S. stockpiles reached record highs again last week.

Noble Group seeks $2.5 billion in borrowing base facility: Bloomberg

(Reuters) - Singapore-listed commodity trader Noble Group Ltd is seeking $2.5 billion in a borrowing base facility guaranteed by oil, Bloomberg reported citing people familiar with the deal.

Home Depot settles consumer lawsuit over big 2014 data breach

(Reuters) - Home Depot Inc agreed to pay at least $19.5 million to compensate U.S. consumers harmed by a 2014 data breach affecting more than 50 million cardholders.

Never Go Full-Kuroda: NIRP Plus QE Will Be Contractionary Disaster In Japan, CS Warns

In late January, when Haruhiko Kuroda took Japan into NIRP, he made it official.

He was full-everything. Full-Krugman. Full-Keynes. Full-post-crisis-central-banker-retard.

In fact, with the BoJ monetizing the entirety of JGB gross issuance as well as buying up more than half of all Japanese ETFs and now plunging headlong into the NIRP twilight zone, one might be tempted to say that Kuroda has transcended comparison to become the standard for monetary policy insanity.

The message to DM central bank chiefs is clear: You're either œfull-Kuroda or you're not trying hard enough.

But as we've seen, the confluence of easy money policies are beginning to have unintended consequences. For instance, it's hard to pass on NIRP to depositors without damaging client relationships so banks may paradoxically raise mortgage rates to preserve margins, the exact opposite of what central banks intend.

And then there's the NIRP consumption paradox, which we outlined on Monday: if households believe that negative rates are likely to crimp their long-term wealth accumulation, they may well stop spending in the present and save more. Again, the exact opposite of what central bankers intend.

In the same vein, Credit Suisse is out with a new piece that explains why simultaneously pursuing NIRP and QE is likely to be contractionary rather than expansionary for the real economy in Japan.

In its entirety, the note is an interesting study on the interaction between BoJ policy evolution and private bank profitability, but the ove ...

EIA's Dire Oil Forecast: $34 Crude Due To Far More Resilient Production, Oversupply And Lower Demand

Now that the massive USO-driven squeeze appears to be over (congratulations to whoever managed to sell equity and their secured lenders) the bad news can return. First, it was Goldman slamming the "unsustainable rally, and then just a few hours ago, the EIA released its latest monthly short-term outlook report in which it brought even more bad news for long-suffering bulls who thought the pain was finally over.

Instead, the pain is only just beginning, after the EIA revised its 2016 supply forecast higher as "production is more resilient to lower prices than previously expected" - why thank you desperate momentum chasing "investors" of other people's money, who can't wait for that secondary offering to repay JPMorgan's credit facility.

The EIA also revised its forecast demand lower as a result of a decline in global economic growth.

Yes, someone finally admitted that demand is lower.

End result: a cut in forecast oil prices for 2016 and 2017 from $37 and $50 to just $34 and $40.

Here is the summary, with the troubling parts highlighted:

Global oil inventories are forecast to increase by an annual average of 1.6 million b/d in 2016 and by an additional 0.6 million b/d in 2017. These inventory builds are larger than previously expected, delaying the rebalancing of the oil market and contributing to lower forecast oil prices. Compared with last month's STEO,

Gold Screams (But What's It Saying?)

As global stock markets have soared in recent weeks, accelerating most recently after the dud of the G-20 meeting, gold has also rallied, strongly suggesting there is anything but confidence in this ramp.

So Gold Is Screaming, but as ConvergEx's Nick Colas asks, What Is It Saying?

Gold is up 19% so far in 2016, with prices making new one-year highs just in the past week. That shouldn't be happening.


First, gold has been stuck in a nasty (-44% peak to trough) bear market for +4 years.

Second, global equity markets have begun to recover so risk-hedging assets like gold should be falling as stocks advance.

Finally, isn't technology supposed to be making all physical forms of wealth obsolete anyway?

Turns out there is a bull case for gold, and it is as simple as supply and demand. World Gold Council data for 2015 shows the slowest growth in mine production since 2009 and the weakest recycled supply since 2007. They expect production to actually fall in 2016. Meanwhile, demand is on the upswing from financial buyers like ETF investors and bullion coin investors. Looks like we can add another year to the +5,000 prior ones where gold has been a relevant asset class.

Investors in risk assets are breathing a sigh of relief as we begin the sprint to the end of the first quarter. Stocks in developed markets have stabilized after a rough start. ...

U.S. Stocks Drop After Recent Rally

U.S. stocks fell Tuesday following five straight sessions of gains, their longest winning streak since October.

U.S. Energy Agency Sees Lower Global Oil Prices

The U.S. Energy Department lowered its price expectations for the global Brent crude contract this year and next, saying it expected supplies to grow more than previously anticipated.

The Fed: Labor market not as strong as unemployment rate suggests, former Fed official says

The labor market is not as strong as the unemployment rate, said former Fed Gov. Kevin Warsh on Tuesday.

Bond Report: Treasury yields slide as China's export slump stirs economic jitters

Treasury prices rallied, pushing the yield on a 10-year note down the most in a month, as weak export data from China stoked fears of a global slowdown, sinking equity and oil markets after weeks of gains.

Market Extra: Lumber Liquidators's stock tumbles as Tilson reveals new bearish bet

Lumber Liquidators Holdings's stock plunged on Tuesday, after Whitney Tilson said he re-shorted the stock, citing increased risk of bankruptcy.

Summary of Economic Releases this Week

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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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