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10Jan2017 Market Close: DOW Down -0.3 Percentage Points, Nasdaq Sets New Record, Crude Prices Slip, US Dollar Gains, Investors Sitting On Hands Awaiting Corporate Earnings

Written by Gary

Wall Street closed mixed again (SPY -0.03% & DOW down 32 points) on low volume. WTI crude prices slipped further to the 50 handle, while the US dollar recovered ground showing strength.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

S&P ends flat, Nasdaq hits record high close

NEW YORK (Reuters) - The S&P 500 ended flat on Tuesday as gains in healthcare and financials offset a drop in energy shares, while the Nasdaq hit another record high close.

Volkswagen confirms $4.3 billion U.S. settlement over diesel emissions

DETROIT (Reuters) - Volkswagen AG confirmed Tuesday it has negotiated a $4.3 billion concrete draft settlement with U.S. regulators to resolve its diesel emissions issues and plans to plead guilty to criminal misconduct as part of the civil and criminal settlement.

Xi to be first Chinese leader to attend Davos World Economic Forum

BEIJING/GENEVA (Reuters) - President Xi Jinping this month will become the first Chinese head of state to attend the World Economic Forum (WEF) in Davos, which this year will dwell on the rising public anger with globalization and the coming U.S. presidency of Donald Trump.

Wal-Mart plans to cut hundreds of jobs this month: WSJ

(Reuters) - Wal-Mart Stores Inc plans to cut hundreds of jobs before the end of January, the Wall Street Journal reported, citing people familiar with the situation.

U.S. companies have new business risk - being labeled 'anti-American' by Trump

NEW YORK/WASHINGTON (Reuters) - Some U.S. companies are reviewing potential mergers while others are rethinking job cuts or looking at their manufacturing operations in China for fear of being cast as "anti-American" by President-elect Donald Trump, according to Wall Street bankers, company executives and crisis management consultants.

Automakers tout new diesels despite Volkswagen's troubles

DETROIT (Reuters) - Automakers unveiled several new diesel models at the Detroit auto show this week, hoping to dispel the doubts created by Volkswagen's diesel emissions scandal and revive interest in a technology that offers benefits under fuel economy regulations.

Boeing, new lobby group aim to keep $8.7 billion in state tax breaks

SEATTLE (Reuters) - Boeing Co has joined a new coalition lobbying to preserve $8.7 billion in tax breaks that Washington state gave its aerospace industry in 2013, the group said.

Exclusive: Regulators criticize banks over Uber loan - sources

(Reuters) - Federal regulators criticized several Wall Street banks over the handling of a $1.15 billion loan they helped arrange for Uber Technologies Inc [UBER.UL] this past summer, according to people with knowledge of the matter.

EU privacy proposal could dent Facebook, Gmail ad revenue

BRUSSELS (Reuters) - Online messaging services such as WhatsApp, iMessage and Gmail will face tougher rules on how they can track users under a proposal presented by the European Union executive on Tuesday which could hurt companies reliant on advertising.

Jeff Gundlach's "Drain The Swamp" Presentation

One month after his webcast titled optimistically "Drain the Swamp", which was a forward look at the impact of the upcoming Trump administration (which one can debate if it "drained" the swamp, or alternatively added to it), today at 4:15pm ET (1:15pm PT), bond king Jeff Gundlach kicks off the new year by holding his first for 2017 monthly DoubeLine webcast, titled "Just markets."

Having kept a relatively low profile in the past month, in Gundlach last media appearance, the bond king, after turning more bearish on risk assets in late 2016, told Reuters on December 13 the 10-year Treasury note yield above 3% will harm the stock-market rally and housing market: "I think above 3 percent is a problem," Gundlach told Reuters. "If the 10-year goes above 3 percent, you would also have to say unequivocally you have seen the end of the bond bull market."

During his last webcast, Gundlach also reiterated that Donald Trump's administration will be "bond unfriendly" and investors should brace for a 6 percent 10-year Treasury yield within four to five years.

Gundlach said it is reasonable to be nimble and do some purchasing of Treasuries. "I think it is an okay buy right now," he said. "We hate the market less. We are a little bit less defensive," Gundlach said. Since then the 10Y has traded rangebound. Earlier today, Bill Gross noted that a breakout of the 10Y yield above 2.60% would end the 30 year bull market rally, and would have substantial adverse consequences for all risk assets. On the topic, Gundlach referenced a different level, and said if the 10-year yield exceeds 3 percent next year, high-yield "junk" bonds will drop into a "black hole of illiquidity."

In early December he said that "it is so late to be buying the Trump Trade." Th ...

Bullion, Biotechs, & Banks Bid As Bonds & Black Gold Skid

Following this morning's manic euphoria in small businesses and ahead of tonight's delusion by Obama, given the market's performance, this seemed appropriate...

But, it appears the hype of the reflation/growth trade is now well and truly over...

Financial conditions don't seem to matter...

For now it's all about 2018 or 2019 or 2020...?

Because trailing earnings are 'disappointing' to say the least...

And 2017 Earnings still haven't been notched up by the analysts...

"Remarkable Progress" - Obama Farewell Address Preview

Presented with no comment...

Source: Townhall.com

Trump Rally Starting To Thin Out

Via Dana Lyons' Tumblr,

Despite the recent string of Nasdaq new highs, more stocks have been declining than advancing.

One of the hallmarks of the post-election "Trump Rally" in stocks has been the fairly broad participation. With a few exceptions, most sectors and style groups have gone along for the ride, resulting in breakouts to new high ground among most mainstream indices. However, there are signs that such broad strength has begun to thin. For example, the last few days have witnessed a development in sharp contrast to that prior positive breadth. Looking at the Nasdaq specifically, we see that the Nasdaq Composite has made a 52-week high on each of the past 3 days. Despite the new highs, however, each of those 3 days saw more declining issues on the Nasdaq exchange than advancers.

As you might expect, such a streak is rare. Indeed, similar 3-day runs have only occurred 2 other times since 1988 (and perhaps longer). Those dates were July 13, 1998 and February 28, 2012. And while 3 days of diverging internals isn't necessarily a long-term death knell for the rally, it isn't a healthy condition either. Following the prior occurrences, the Nasdaq was able to rally another week in the former case and another month in the latter before succumbing to 25% and 10% pullbacks, respectively.

2 precedents is not a lot to go on, however, so we took a look at all streaks of at least 2 days in which either the Nasdaq Composite or the Nasdaq 100 (NDX) closed at a 52-week high with negative breadth on each day. That produced 20 prior occurrences going back to 1990. Two of them occurred in 1995 and 1996 and did not lead to more than a hiccup in the ongoing Nasdaq bull market. The other occurrences, beginning in 1998, were not all ...

M&A Boutiques in Risky Place Under Trump

For this Wall Street business, a Trump presidency may bring more risks than rewards.

U.S. Car Industry Has Unlikely Patriots

Tesla and the German luxury car makers can better afford U.S. manufacturing than the Detroit Three.

Alibaba Is Better at Selling Than Buying

Chinese e-commerce giant Alibaba says it will pay up to $2.6 billion, a 42% premium, to raise its stake in department-store operator Intime Retail. It's no bargain.

Currencies: Dollar looks for clarity ahead of Trump news conference

The U.S. dollar was little changed against its major rivals on Tuesday, as investors held off on drastically changing positions ahead of a news conference where President-elect Donald Trump's could provide clarity into his legislative priorities.

Outside the Box: Why elites are wrong and President Trump can restore America's global leadership

Donald Trump has the potential to stabilize American politics and restore reliable American leadership to the world stage in the coming years, says a former NATO secretary-general.

The Tell: Gross says this key bond level is a far bigger deal than Dow 20,000

The demise of the longstanding bull market in bonds has been squarely on the minds of investors lately. Bill Gross explains why the 10-year Treasury yield holds the key to stocks and other financial markets.

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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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