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28Dec2016 Market Close: Wall Street Closes Lower, Volume Lower And Choppy As Investors Do Their Year-end Wall Street Dance

Written by Gary

US markets lower (SPY -0.8%) on choppy volume. Both crude prices and the US dollar slipped off their respective session highs. Short-term indicators are noncommittal.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall St. stumbles in broad selloff

NEW YORK (Reuters) - Stocks fell in low volume on Wednesday in a broad decline, triggered in part by a sharp drop in home resales.

Pending home sales drop to 10-month low in November

WASHINGTON (Reuters) - Contracts to buy previously owned U.S. homes fell in November to their lowest level in nearly a year, a sign rising interest rates could be weighing on the housing market, the National Association of Realtors said on Wednesday.

Writedown fears wipe $5 billion off Toshiba's value as it weighs options

TOKYO (Reuters) - A looming writedown at Japanese conglomerate Toshiba Corp has wiped almost $5 billion off its value in two days and prompted a credit rating downgrade on Wednesday, as the company grapples to plug a potential multi-billion dollar hole.

Takata could pay up to $1 billion to settle U.S. criminal probe: WSJ

(Reuters) - Japan's Takata Corp is nearing a settlement with the U.S. Department of Justice and is expected to pay up to $1 billion to resolve allegations of criminal wrongdoing related to its faulty air bag inflators, the Wall Street Journal reported.

FTC requires divestitures in $13.53 billion Boehringer-Sanofi deal

WASHINGTON (Reuters) - The U.S. Federal Trade Commission said on Wednesday that German pharmaceutical company Boehringer Ingelheim agreed to divest five types of animal health products to settle FTC charges that a proposed asset swap with Sanofi would harm competition.

U.S. shale companies to boost spending as banks loosen purse strings

(Reuters) - U.S. shale drillers are set to ramp up spending on exploration and production next year as recovering oil prices prompt banks to extend credit lines for the first time in two years.

Kate Spade exploring sale: WSJ

(Reuters) - Hand bag and accessories maker and retailer Kate Spade & Co , under pressure from an activist investor, is exploring a sale and is working with a bank to sound out possible buyers, the Wall Street Journal reported, citing people familiar with the matter.

Abbott gets U.S. antitrust approval to buy St. Jude Medical

WASHINGTON (Reuters) - Healthcare company Abbott Laboratories has won U.S. antitrust approval for its proposed $25 billion acquisition of medical device maker St. Jude Medical Inc , the U.S. Federal Trade Commission said on Tuesday.

South Korea fines Qualcomm $854 million for violating competition laws

SEJONG, South Korea/SAN FRANCISCO (Reuters) - South Korea's antitrust regulator fined Qualcomm Inc 1.03 trillion won ($854 million) for what it called unfair business practices in patent licensing and modem chip sales, a decision the U.S. chipmaker said it will challenge in court.

Rebalance Rout: Stocks Slump Most Since October As Bonds, Bullion Bounce

Who could have seen this coming?

This just about sums things up...

And Bob Pisani is not happy...

Stocks midday: classic low-volume drift lower. Bids have evaporated, buyers acting like done for year. < 1% from historic high on $SPY.

— Bob Pisani (@BobPisani) December 28, 2016

As The S&P tumbled most since Oct 11th...

Trannies and Small Caps were worst today...

Futures show the difference as yesterday's US open was a buying panic and today's a selling panic.. ...

Bank EPS Misses On Deck: Rising Rates Lead To Biggest Bank Portfolios Losses Since The "Taper Tantrum"

Wondering how the blow out in interest rates is impacting commercial banks, which just happen to have hundreds of billions in duration exposure in the form of various Treasury and MBS securities, not to mention loans, structured products and of course, trillions in IR swap, derivatives and futures? Wonder no more: the Fed's weekly H.8 statement, and specifically the "Net unrealized gains (losses) on available-for-sale securities" of commercial banks, gives a glimpse into the pounding that banks are currently experiencing. In short: it has been a bit of a bloodbath.

After hitting a recent high of $34 billion in gains three months ago when interest rates were still near 2016 lows, the reported amount of net unrealized gains has tumbled, and from a gain it has turned into a loss of $14 billion as of the week ended December 14. On a 4-week rolling basis, the change amounts to $37 billion in losses, the biggest monthly drop since the 2013 Taper Tantrum.

This may not be the end of it: as the next chart below shows, commercial banks are holding just shy of an all time high of $747 billion in Treasuries and other non-MBS securities, a number which rises to $2.43 trillion if one includes all Treasury and agency securities on commercial bank balance sheets.

Hawaii Restaurant Bans Trump Voters: "You Cannot Eat Here! No Nazis."

Honolulu's Cafe 8 1/2 would like for you to know that if you voted for Trump then, (1) you're not welcome in their establishment and (2) you're likely a Nazi. The tiny "eclectic mom-and-pop restaurant" is drawing a lot of attention after posting the following bright yellow sign in their window:

"If you voted for Trump you cannot eat here! No Nazis."

Hawaii

The sign obviously rattled some Trump supporters who told Fox News the message "is discriminatory, and harkens back to the 'racist and hate-filled' days before statehood."

"It's childish and very unprofessional," she said in an email. "... The restaurant owner doesn't have to worry ... I will not be stepping foot in that establishment."

Willes Lee, former chairman of the Hawaii Republican Party and now president of National Federation of Republican Assemblies, told FoxNews.com the sign is discriminatory, and harkens back to "racist and hate-filled" days before statehood.

"Remember when Filipinos couldn't go in certain places, or Japanese wouldn't be allowed [in] many homes? And, it didn't matter who they voted for," said Lee, who is of Japanese ...

Freezing Winter Sees Natural Gas Prices Surge

Submitted by Nick Cunningham via OilPrice.com,

Natural gas prices are surging as cold weather eats into U.S. inventories, tightening the market much more quickly than many analysts had expected.

The blast of Arctic weather in December put a strain on natural gas markets, with millions of people cranking up the heat to keep warm. The EIA reported a surprise drop in storage levels in the week ending on December 16, falling by 209 billion cubic feet. That decline puts total storage levels at 3,597 Bcf, or just a small 78 Bcf above the five-year average.

(Click to enlarge)

Such a scenario was difficult to imagine earlier this year, when the U.S. was emerging from peak winter demand season with record levels of gas sitting in storage. Flush with supply, prices crashed below $2/MMBtu. But natural gas production suddenly started to fall after years of blistering growth, upending forecasts calling for years of oversupply. Meanwhile, demand continues to rise as gas-fired power plants replace coal, so while natural gas consumption is highly seasonal, the seasonal peaks are getting taller and the valleys are getting shallower. Structural demand will continue to rise.

By mid-December, Arctic weather descended on much of the U.S., pushing temperatures to extremely low lev ...

Where the Action Is in the Last Trading Days of the Year

In quiet financial markets, window dressing could spice things up as the year winds down.

Qualcomm: The Company Governments Love to Hate

The company's dominant position in wireless means state-sponsored pressure is unlikely to ease.

China's Currency Drops But Pressure Still Builds

Markets got somewhat used to a sliding yuan in 2016. That doesn't mean the warning signals the currency is sending about China's financial system have gone away.

Personal Finance Daily: These are the brands you'll never see on sale and why the dinner date is dead

Wednesday's top personal finance stories

The Ratings Game: Bank of New York stock pops after mostly missing out on post-election rally

Raymond James lifts Bank of New York stock to strong buy from outperform and lists the factors that should support price gains.

Moviegoers are hoping next year's line-up will be better than 2016's

Walt Disney's 'Star Wars: Episode VIII' will likely be 2017's biggest movie.

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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