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09Sep2016 Market Update: Wall Street Off Sharply, Crude Prices Declining As Well, Watch For Moderate Reversal Tomorrow

Written by Gary

Late afternoon post. US markets have continued to sink (SPY -2%) as we approach the closing bell. Crude prices falling sharply while the US dollar trades in the mid 95 handle. Gold has sunk to1333 and appears to be weakening further. Although short-term indicators are very bearish, BTFDers are about to jump in.


Here is the current market situation from CNN Money

North and South American markets are sharply lower today with shares in Brazil off the most. The Bovespa is down 3.40% while U.S.'s S&P 500 is off 1.92% and Mexico's IPC is lower by 1.83%.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street falls on North Korea nuclear test, U.S. rate hike worry

NEW YORK (Reuters) - U.S. stocks dropped on Friday as investors were rattled by a nuclear test by North Korea and comments by Federal Reserve officials that hinted at a U.S. interest rate hike, putting the S&P 500 on pace for its worst day in over two months.

GM recalls 4.3 million vehicles over air bag-related defect

WASHINGTON (Reuters) - General Motors Co said on Friday it will recall nearly 4.3 million vehicles worldwide due to a software defect that can prevent air bags from deploying during a crash, a flaw already linked to one death and three injuries.

Fed officials divided as September policy meeting nears

WASHINGTON/QUINCY, Mass. (Reuters) - U.S. Federal Reserve policymakers on Friday headed towards their policy meeting later this month divided on whether a rate rise is in the offing, with some of the permanent voting members appearing wary of supporting an immediate hike.

Hanjin Shipping funding plan faces further delay, Samsung tries to recover goods

SEOUL (Reuters) - Korean Air Lines , the biggest shareholder in Hanjin Shipping , on Friday delayed a decision on a funding plan for the troubled company for a second time, adding to uncertainty about cargo stranded at sea following the failure of the world's seventh-largest container carrier.

Volkswagen engineer pleads guilty in U.S. diesel emissions probe

DETROIT/WASHINGTON (Reuters) - A Volkswagen AG engineer pleaded guilty on Friday to helping the German automaker evade U.S. emission standards, and his lawyer said he would cooperate with federal authorities in their criminal probe.

Business jet makers deepen discounts to fly out of turbulence

(Reuters) - Business-jet makers such as Bombardier Inc and Textron Inc are offering more discounts and incentives to prevent buyers from canceling orders or delaying purchases amid sluggish global growth, analysts and dealers said.

Caesars mediator resigns in casino unit's bankruptcy

CHICAGO (Reuters) - The mediator trying to resolve the $18 billion bankruptcy of Caesars Entertainment Operating Co Inc (CEOC), a unit of Caesars Entertainment Corp , has stepped down, according to a court filing.

Exclusive: BMW bosses to skip Paris show to thrash out electric car strategy

FRANKFURT/MUNICH (Reuters) - BMW's management board is skipping the Paris Motor Show to hold talks aimed at breaking a deadlock over whether to produce new electric cars, including a battery-powered Mini, sources familiar with the matter told Reuters.

Mastercard sued for $19 billion in Britain's biggest damages claim

LONDON (Reuters) - Some 46 million people in Britain could potentially benefit from a legal case brought against Mastercard demanding 14 billion pounds ($19 billion) in damages for allegedly charging excessive fees, according to court documents filed in London.

"Complacency" Has Never Been Higher

While Put-Call ratios, VIX curves, and Fear-Greed Indicators are better known, the so-called "Complacency" Index - comparing real profitability of companies to their risk - has never been more complacent. In fact, markets are more 'exuberant' than at the peak in 2000 and 2007...

As Bloomberg's Christopher Langner notes, the whole world is moving together and signs of a massive bubble that spans asset classes are becoming clearer.

Historically, very high correlations are associated either with a panic or a bubble.

Extreme asset inflation tends to reach fever pitch partly because of what scholars call positive feedback, or where exuberance and herd mentality feed further investment.Some of the biggest bubbles of the past century were marked by this spillover to all asset classes.

But once one market pops, the rest deflate as well.

There are clear marks of a bubble in the current market.

Perhaps the best indicator is the so-called complacency index, which relates enterprise value (dictated by market prices for a company's debt and stock), Ebit (a measure of actual profitability) and the Chicago Board Options Exchange's Volatility Index, or VIX.

Wells Fargo's Questionable Cross-Selling Strategy

Wells Fargo's fiasco illustrates that institutions that lean on cross-selling excessively to drive sales will hit limits. A strategic rethink may be needed at the banking company.

Quiet Central Banks Wake Up Market, Sending Bond Yields Higher

The Federal Reserve and European Central Bank aren't doing much. That is exactly what's causing bond yields to jump.

Why China Will Continue To Exert Low Prices on the World

China's producer prices may eventually turn positive, but the effect on the world isn't necessarily changing.

The Tell: Jeff Gundlach's Fed-tightening talk set stage for a stock, bond-market rout

Don't blame DoubleLine's Jeff Gundlach for causing the stock market to fall the most since the aftermath of the U.K.'s decision to break from the European Union, roiled global markets.

The Wall Street Journal: GM recalls more than 4 million vehicles for possible air-bag, seat-belt failures

Problem has been linked to one death and three injuries.

Twitter hashtag #boycottNFL shows the Kaepernick controversy is not slowing down

Tweeters upset with Kaepernick took to Twitter, but were met with many who found their stance ironic.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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