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01Nov2016 Market Close: DOW Closes Down Triple Digits, US Dollar Continues To Fall, Investors Still Battling With A So, So Economy, Short-Term Indicators Moderately Bearish, But Some Analysts See Hopium In The Tea Leaves

Written by Gary

Wall Street closed sharply lower after a choppy session (SPY -0.7%), but off its session lows. WTI crude settled higher in the mid 46's, gold is volatile at 1290 and the US dollar off session lows, settling at 97.78. The S&P 500 touched a nearly four-month low, amid growing concern over the impending U.S. presidential election and prospects for higher U.S. interest rates.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street shaken by U.S. election, rate uncertainty

(Reuters) - Wall Street sold off sharply on Tuesday, with the S&P 500 touching a nearly four-month low, amid growing concern over the impending U.S. presidential election and prospects for higher U.S. interest rates.

U.S. manufacturing sector expanding, but risks remain

WASHINGTON (Reuters) - U.S. factory activity increased for a second straight month in October amid a pickup in production and hiring, supporting views that the embattled manufacturing sector would regain some momentum in the fourth quarter.

Pfizer scraps cholesterol fighter, trims profit forecast

(Reuters) - Pfizer Inc said it halted development of a costly new type of cholesterol fighter because disappointing clinical trial data and an unfavorable market for similar approved drugs bode poorly for its injectable medicine.

Tesla, SolarCity shares fall ahead of merger details

SAN FRANCISCO (Reuters) - Shares of Tesla Motors Inc and SolarCity Corp tumbled on Tuesday ahead of expected financial details from the electric carmaker on a pending $2.6 billion merger that has been met with widespread investor skepticism.

GM sales drop 1.7 percent; U.S. auto sales seen off despite discounts

DETROIT (Reuters) - General Motors Co's sales in October fell a less-than-forecast 1.7 percent as hefty gains for smaller pickups and big SUVs offset declines in sedans, marking vehicle trends that could be seen at other large automakers.

Atlanta Fed lowers U.S. fourth-quarter GDP view to 2.3 percent

NEW YORK (Reuters) - The U.S. economy is on track to grow at a 2.3 percent annualized pace in the fourth quarter on expected lower consumer spending and overall investments, the Atlanta Federal Reserve's GDP Now forecast model showed on Tuesday.

Instagram to test new shopping feature

(Reuters) - Facebook Inc's Instagram said that it will start tests next week on a new shopping feature through which users can buy products from U.S.-based retailers via the photo-sharing app.

U.S. House Republicans want answers on VW settlements

WASHINGTON (Reuters) - Two senior U.S. House Republicans on Tuesday asked environmental regulators to answer questions about Volkswagen AG's diesel emissions settlements, including disclosing how the government calculated the penalties imposed on VW to offset excess pollution.

On Wall Street, a high-ranking few still avoid email

(Reuters) - In an age when most bankers use keyboards to communicate with each other, a small group of the Wall Street elite refuses to say anything substantive in an email, text or chat, and some will not communicate digitally at all.

New Podesta Email Reveals More Clinton Campaign Collusion With CNN

Another day of WikiLeaks reveals yet another Podesta email illustrating the blatant collusion between the Clinton campaign and their "friends" at CNN. The following example comes from Clinton Communications Director Christina Reynolds who promises to "leak" a memo to Dan Merica at CNN before sending it to other members of the "press." Guess they had to pay CNN back for the early look at those debate questions in some way...this is as good a currency as any.

Hillary

But, as we've been told by democrats many times in recent months, this is just another example of "normal behavior."

The election is absolutely being rigged by the dishonest and distorted media pushing Crooked Hillary - but also at many polling places - SAD

— Donald J. Trump (@realDonaldTrump) October 16, 2016

Valeant Soars On Report It May Sell Salix For $10 Billion

Yesterday, near the close of trading, Valeant plunged on a report a criminal accounting probe was focusing on the company's former CEO and CFO. Today, near the close of trading, VRX soared after a WSJ report that the company is in talks to sell its Salix stomach-drug business to Takeda for about $10 billion, and added that another bidder is also "circling."

More as we get it, but one look at the VRX stock price over the past 24 hours, and it is obvious that the next drug Valeant should develop is one for daytrading nausea.

All other securities are trading alongside the stock, with bonds ripping and CDS suddenly tumbling as a $10 billion liquidity injection would make the risk of a near-term bankruptcy virtually non-existent, even if it means that one of the biggest Valeant cash cows is about to go away in what is now a reverse-rollup.

RBC: "Be Prepared For Another 'Vol-Control' Deleveraging Wave"

Confused by the suddenly "loud noises" emerging from what until very recently was a quiet, peaceful equity market? Then here is one of the best possible explanations of what is happening today, courtesy of RBC's cross-asset guru, Charlie McElligott.

LIVE DE-RISKING: The de-risking is real so far today into this US election scenario re-pricing / hedging scramble (VIX +17.0% & VVIX +9.8%, while intraday CBOE equity put / call ratio is at 2nd highest level of the year at 1.52)...and with it, a re-pricing of Dec Fed hike probabilities as well. The global equities "US as a hiding-spot" is now being exposed, with HF-heavy small cap significantly underperforming large cap (again, nearly 2% underperf in Russell vs S&P over past six sessions as a de-leveraging "tell"); HY CDX is at four-month wides; Yen, Swiss Franc and Gold are all at highs of the day and contributing to the USD being hammered with DXY -0.8% (again, as I believe the market re-prices now a lower probability of December hike).

'TRUMP HEDGE' SCRAMBLE IS REAL—USDMXN 1M VOL:

USTs FINALLY CATCHING A BID: At first blush I was surprised that there hadn't been more of a 'bid' to USTs on this significant "risk-off" trade initially, until I contextualized it again from the perspective of the YTD supply / demand drivers. "THE" overseas real $ buyers were not there today in the MBS market earlier (where said demand-drivers have been focusing their buying instead of USTs over recent weeks), as there has effectively been a "buyers strike" from this group of investors who've previously been there to buy any and all mea ...

FBI Unexpectedly Releases Documents Related To 2001 Probe Into Clinton Foundation

Update: According to NBC's Tom Winter, the FBI Vault twitter account "released all files pertaining to Donald Trump's father, Fred Trump, a few weeks ago. That was response to FOIA" and adds that "the release of WJC FBI files was sent by the FOIA office under normal guidelines. A proper requested was made -Pete Williams rpts.... The account, @FBIRecordsVault started tweeting several days ago after not tweeting for a year. The first tweet.... about Fred Trump's files." And now, it is tweeting about the Clinton Foundation.

NBC News: The release of WJC FBI files was sent by the FOIA office under normal guidelines. A proper requested was made -Pete Williams rpts.

— Tom Winter (@Tom_Winter) November 1, 2016

And then, the following choice piece: "the young federal prosecutor who ultimately decided not to charge Clinton or anyone else in "pardongate"... James Comey."

Is it time for Comey to come clean?

And the young federal prosecutor who ultimately decided not to charge Clinton or anyone else in "pardongate"... James Comey. https://t.co/1bTnFvmH9K

— Tom Winter (@Tom_Winter) November 1, 2016

* * *

In what appears to be an unexpected, and very surprising, disclosure, moments ago the FBI released 129 pages of heavily redacted records from its 15-year-old investigation into the Clinton Foundation and Bill Clinton's 11th hour pardon of financier Marc Rich (less than a week before the election).

Tronc Got Too Greedy

The failure of Gannett's bid for Tronc suggests the Chicago Tribune publisher may have demanded too much and blown up a lucrative deal.

Colonial Pipeline's Brief Trading Bonanza

An explosion Monday on a critical energy pipeline sent traders looking for companies that would benefit or suffer as a result.

A Trust-Me Story at Software Maker PTC

Software maker PTC's fiscal fourth-quarter results didn't ease concerns surrounding its business-model transition.

Chuck Jaffe: Here's proof that kids prefer cash over candy, even on Halloween

Chuck Jaffe reports on the results of his experiment with neighborhood trick-or-treaters.

Capitol Report: Throughout this surprising election, the one constant — a so-so economy

For all the events and outrageous claims and shocking turns during this election cycle, there's been one remarkable constant: a slumbering economy.

: FBI releases files on Clinton pardon of Marc Rich

The FBI on Tuesday released files from its closed investigation of President Clinton's pardon of financier Marc Rich.

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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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