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12Jan2017 Market Close: Wall Street Closes Lower, But Avoids Steep Losses From This Morning, Choppy Trading On Moderate Volume Depicts Worried Investors

Written by Gary

US stock markets generally closed at the opening level (SPY -0.3%), thus avoiding steep losses occurring during the morning session. Crude prices stabilized at the 53 handle, The US dollar rose 0.65 off session lows and gold declined over $20 dollars. Tension among the investment community as awaiting fourth-quarter earnings.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

EPA accuses Fiat Chrysler of excess diesel emissions

NEW YORK/DETROIT (Reuters) - The U.S. Environmental Protection Agency on Thursday accused Fiat Chrysler Automobiles NV of illegally using hidden software to allow excess diesel emissions to go undetected, the result of a probe that stemmed from regulators' investigation of rival Volkswagen AG.

Wall St. falls with earnings in sight

NEW YORK (Reuters) - The three major U.S. stock indexes closed lower on Thursday as investors awaited fourth-quarter earnings and details of U.S. President-elect Donald Trump's economic policy a week before his inauguration.

Takata to pay $1 billion to settle U.S. air bag probe: sources

NEW YORK (Reuters) - Japan's Takata Corp is expected to plead guilty to fraud charges as early as Friday as part of a $1 billion settlement with the U.S. Justice Department over its handling of air bag ruptures linked to 16 deaths worldwide, sources said.

U.S. appeals court revives antitrust lawsuit against Apple

SAN FRANCISCO (Reuters) - iPhone app purchasers may sue Apple Inc over allegations that the company monopolized the market for iPhone apps by not allowing users to purchase them outside the App Store, leading to higher prices, a U.S. appeals court ruled on Thursday.

Pharma company executives debate drug pricing increases

SAN FRANCISCO (Reuters) - Grappling with a backlash against high U.S. prescription drug prices, more pharmaceutical companies are pledging to limit annual increases to under 10 percent - but the tactic is doing little to salve critics, including President-elect Donald Trump, who on Wednesday said drugmakers are "getting away with murder."

Amazon to add more than 100,000 jobs in U.S. hiring spree

NEW YORK/WASHINGTON (Reuters) - Amazon.com Inc on Thursday said it will create more than 100,000 jobs in the United States, from software development to warehouse work, in its latest move to win over shoppers by investing in faster delivery.

Exclusive: Morgan Stanley cuts bankers, bonuses as deals, IPOs stall - sources

(Reuters) - Morgan Stanley laid off a number of senior investment bankers last week and cut bonuses by roughly 15 percent because of a decline in revenue from dealmaking and capital raising across Wall Street, people with knowledge of the matter told Reuters.

Lowe's to cut 'less than 1 percent' of workforce: CNBC

(Reuters) - Lowe's Cos Inc , the No. 2 U.S. home improvement chain, is expected to cut "less than 1 percent" of its workforce in the near future, CNBC reported on Thursday, citing a person familiar with the matter.

Fed officials see quick economic boost from Trump, risks to follow

NAPLES, Fla. (Reuters) - Federal Reserve officials cautioned on Thursday that the fiscal and tax plans sketched out by the incoming Trump administration could trade a short-term economic boost for longer-run inflation and debt problems they might have to counteract.

Dr. Stephen Cohen on Tucker Carlson: Empty Accusations of Russian Meddling Have Become "Grave National Security Threat"

cohWith eyebrows suspiciously furrowed, Tucker Carlson sat down tonight with NYU Professor of Russian Studies and contributor to The Nation, Stephen Cohen, to discuss the 35 page #FakeNews dossier which has gripped the nation with nightmares of golden showers and other perverted conduct which was to be used by Russia to keep Trump on a leash.

The left leaning Cohen, who holds a Ph.D. in government and Russian studies from Columbia, taught at Princeton for 30 years before moving to NYU. He has spent a lifetime deeply immersed in US-Russian relations, having been both a long standing friend of Mikhail Gorbachev and an advisor to President George H.W. Bush. His wife is also the editor of uber liberal "The Nation," so it's safe to assume he's not shilling for Trump - and Tucker was right to go in with eyebrows guarded against such a heavyweight, to say the least.

Cohen, who has been quite vocal against the Russophobic witch hunt gripping the nation, believes that this falsified 35 page report is part of an "endgame" to mortally wound Trump before he even sets foot in the White House, by grasping at straws to paint him as a puppet of the Kremlin. The purpose of these overt attempts to cripple Trump, which have relied on ham-handed intelligence reports that, according to Cohen "even the New York Times referred to as lacking any evidence whatsoever," is to stop any kind of détente or cooperation with Russia.

Cohen ...

VIX-Crushing, Panic-Buying Bounce Saves Stocks From Worse Day In 3 Months

For Nasdaq traders today...

Small Caps (and briefly The Dow) sunk into the red for 2017... (NOTE: the moment Trannies and The Dow tagged unchanged for 2017 a miracle bid appeared)...

Second day in a row if VIX-smashing, panic-V-shaped-recovery-stock-buying...

Though we note it seems all about the European close once again...

They were desperate to get Nasdaq green into the close...

In fact everything jumped after Europe closed...

Peso Traders Have An Unusual Solution To Halting The Collapse Of Mexico's Currency

Following central bank governor Agustin Castens' comments earlier in the day that "intervention is a tool to smooth changes in currency value," and "Trump's win has created uncertainty on Mexico's growth model," Mexican Peso traders have come up with unusual solution: instead of dumping billions in intervention with no effect, buy Twitter and shut it down.

As Bloomberg reports, the strange idea has a certain logic to it...

It goes like this: Instead of spending its precious reserves to defend the peso, Mexico should just buy Twitter Inc. -- at a cost of about $12 billion -- and immediately shut it down.

The notion made the rounds this week after the central bank revealed it had already blown through $2 billion of reserves in a largely futile effort to shield the peso from a steady stream of anti-Mexico Tweets from Donald Trump.

"I would suggest they do it fast," joked Juan Carlos Alderete, a foreign-exchange strategist at Banorte-Ixe in Mexico City. "Because we can barely afford it now."

Of course this is unlikely to happen, but, quit ...

Chatter Of Fed Balance Sheet Unwind Spikes Yield Curve

While the Fed watchers have been obsessing in recent weeks about the pace and size of any upcoming Fed rate hikes, summarized best by Dallas Fed president Robert Kaplan who earlier today said:


KAPLAN: AMONG BIGGEST DISAGREEMENTS AT FED IS ON HOW QUICKLY TO RAISE RATES

... and unexpected new buzzword emerged today, namely Fed balance sheet unwind when first Philly Fed's Steve Harker noted it in his speech earlier this morning...


HARKER: WHEN RATES AT 1%, NEED TO LOOK AT UNWINDING BAL SHEET

followed later in the day by St. Louis Fed's James Bullard who, likewise, hinted that selling Fed assets may be coming soon:


BULLARD: BAL SHEET ROLLOFF MAY BE BETTER THAN AGGRESSIVE HIKING

Of course, how credible it is that the the Fed may actually engage in this is anyone's guess: should the Fed "unexpectedly" start to reduce its balance sheet, the impact on global yields would be devastating, and make the Taper Tantrum and the TanTrump seems like child's play in comparison. Which, perhaps, is why today for the first time we got not one but two such "trial balloons" from two separate Fed presidents, just to gradually acclimate the market with the concept of upcoming balance sheet normalization.

The mechanics of such a process are rather mindboggling, especially coming at a time when even the Republicans are pushing to layer on an addition $9 trillion in US government debt over the next decade, which - all else equal - would mean require more QE to monetize the deficit, precisely the opposite of selling Fed-owned Treasuries.

Then again, the Fed has been known to make major, and quite public, mistakes. Whether this is one of them, and whether it is intentional remains to be seen, however the sharp steepening in the curve that has taken place today amid the sudden Fed talk of Fed balance sheet unwinding, is very much unmistakable.

< ...

Bank Earnings: Why This Time Is Different

Bank shares may be due for a pullback, but their long-term prospects are strong.

A Volkswagen-Scale Bill for Fiat Chrysler Would Be $3.5 Billion

Fiat Chrysler shares could have further to fall

Big-Bank Earnings: What Not to Look At

This financial metric large lenders are touting in their earnings releases can be deceiving.

Market Extra: Best sign Trump rally is fading? Stocks are getting beaten by gold in 2017

Perhaps one of the clearest signs that a rally inspired by President-elect is starting to stall is shiny and yellow and is outperforming its other asset peers by a healthy margin.

End of a stock-market era: Alcoa breaks tradition of being first to report earnings

The fourth-quarter earnings season kicks off on Friday with reports from three big banks. Alcoa's new parent Arconic is not reporting until Jan 31.

Market Extra: Dollar, bonds and more: 'Trump trades' are unraveling—fast

Several of the most popular "Trump trades" have either stalled or reversed in recent weeks — a sign that the market's postelection exuberance is beginning to wane.

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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