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02Mar2017 Market Close: Wall Street Closes Sharply Lower Led By Financial Stocks And Heavy Profit Taking, Bears Waiting Just Off Stage

Written by Gary

US stocks retreated today (SPY -0.6%), closing near the opening numbers yesterday, led by financial stocks. Caterpillar shares dropped following news that federal officials searched its Illinois facilities. Crude prices continue to slip lower while the US dollar remains strong.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Snap's shares pop after $3.4 billion IPO

NEW YORK (Reuters) - Snap Inc's shares continued to defy doubts about the company's early-stage business model and slowing user growth, jumping nearly 50 percent in their first day of trading on the New York Stock Exchange.

Investors see Snap's IPO as 'too big to fail'

NEW YORK/SAN FRANCISCO (Reuters) - Institutional investors anxious not to be left out of this year's marquee initial public offering helped Snap Inc pull off the biggest U.S.-listed technology share sale this week since Chinese e-commerce juggernaut Alibaba Group Holding Inc smashed records in 2014.

U.S. law enforcement searches Caterpillar's Illinois facilities

CHICAGO (Reuters) - Federal law enforcement officials searched three facilities of heavy machinery manufacturer Caterpillar Inc on Thursday, a spokeswoman for the U.S. Attorney Office for the Central District of Illinois said, prompting a sharp selloff in the company's stock.

Wall Street retreats after rally; Caterpillar, financials fall

(Reuters) - U.S. stocks retreated on Thursday, led by financial stocks, while Caterpillar shares dropped following news that federal officials searched its Illinois facilities.

Amazon blames human error for cloud-service disruption

(Reuters) - Amazon.com Inc blamed human error for the disruption in its cloud services that resulted in widespread glitches for its clients from news sites to government services on Tuesday.

Mexico economy minister to meet with Ford, GM in Detroit

MEXICO CITY (Reuters) - Mexico's economy minister will travel to Detroit on Friday to meet with executives from automakers Ford Motor Co and General Motors Co as Mexico seeks to deter U.S. President Donald Trump from imposing a border tax on Mexican-made goods.

Exclusive: China's ZTE expected to plead guilty over Iran sales - source

NEW YORK (Reuters) - Chinese telecom equipment maker ZTE Corp is nearing an agreement to plead guilty to U.S. criminal charges and pay hundreds of millions of dollars in penalties over allegations it violated U.S. laws that restrict sale of U.S. technology to Iran, a person familiar with the matter said.

Exclusive: Japan's Toshiba prepares $2 billion sale of Landis+Gyr - sources

FRANKFURT/BERLIN/ZURICH (Reuters) - Japan's Toshiba Corp is preparing a potential $2 billion divestment of smart meter group Landis+Gyr, hoping to rake in capital after a major writedown on its U.S. nuclear unit last month, three people familiar with the matter said.

Jeff Sessions Holds Press Conference: Live Feed

With less than an hour lead time, moments ago Attorney General Jeff Sessions announced he would hold an impromptu press conference at 4pm, his first as the nation's top law enforcement official, although it may also be his last: some have already speculated there is an outside chance Sessions may announce his resignation, which would be second prominent departure in the Trump administration. Alternatively, Sessions may simply declare that the media scandal has been largely overblown, as he did first thing this morning, and move on.

It is unclear if news of the Sessions presser is what unleashed a late day selling program in the S&P which has taken the market to its intraday lows.

Live feed of the press conference below:

Venezuela Is Down To Its Last $10B As Debt Payments Loom

Via Zainab Calcuttawala of OilPrice.com,

Venezuela's central bank is down to its last $10.5 billion in foreign reserves, according to the institution's most recent report on the country's financials.

Over the remainder of 2017, Caracas needs to fund $7.2 billion in debt payments - an amount that it can only meet if oil prices spike far higher than the ongoing boosts caused by OPEC's output reduction agreement.

Current reserves stand 66 percent lower than levels in 2011, when the government held $30 billion in foreign currencies to spend on loan repayments and other official business (and down 75% from 2008 highs)

"The question is: Where is the floor?" Siobhan Morden, head of Latin America fixed income strategy at Nomura Holdings, told CNN Money. "If oil prices stagnate and foreign reserves reach zero, then the clock is going to start on a default."

Venezuela's financial report for 2016 stated that roughly $7.7 billion of the remaining $10.5 billion in foreign reserves had been preserved in gold. Last year, in order to fulfill debt obligations, Caracas began shipping gold to Switzerland.

The drastic fall in oil prices in 2014 and widespread corruption have both caused an economic meltdown in the South American country, where citizens had become accustomed to im ...

Peak Animal Spirits

The gap between people's perceptions of reality (as judged by consumer and business surveys of confidence) and reality (as judged by fundamental economic data) has never been higher than it is today.

Peak 'Animal Spirits'

The problem for those waiting for 'hard' data to catch up to 'soft' data is - it never has.

And in this case - the 'soft' survey data has moved 2 standard deviations above the norm...

The problem - for the hope enthusiasts - is the last 5 times that the gap between perceived economic reality and actual economic reality was near this high, the S&P 500 had a troblesome few weeks/months after:


JUL 2007 -12%

JUN 2009 -9%

APR 2010 -17%

MAR 2011 -19%

NOV 2014 -6%

Still, this time will probably be different.

Goldman Sachs & Morgan Stanley Pull Off the Heist of the Decade, Bends Over Those Who Don't Read BoomBustBlog

President Obama implemented the Fiduciary Rule, which was supposed to go in effect next month. In short, it says financial advisors and salesmen had to put the best interests of thir clients ahead of thier own interests. In other words, it outlawed blatantly ripping off our clients. Trump came in and halted this, basically ensuring that it will still be legal to put your bonus pool's interest ahead of you client's interest. Cue in Goldman Sachs and Morgan Stanley. They have pulled off the heist of the decade, essentially selling 200 million digital tokens (they're calling them stocks) with no voting rights at a trailing P/S multiple of 60x and forward multiple of 20x for a startup losing half a billion per year, with said losses increasing over $200M Y-o-Y. This is almost the ultimate in reward free risk

you basically take the risk of a venture capital investor, get the protective covenants of... Oh yeah, there are none, and the rewar ...

How Chinese Companies Finance Their Ambitions Abroad

With Beijing cracking down on capital outflows, SkyBridge Capital buyer HNA Group has found a new way to raise cash offshore.

Skeptical Wall Street Strategists Undone by Market Rally

The S&P 500 has already surged above Wall Street strategists' original year-end target.

The Biotech Stock Safety Net

Dirt cheap borrowing costs for big pharma gives risky biotechs a boost.

In One Chart: Stop! This is NOT like the dot-com bubble... it's much worse, according to this chart

Stocks were crazy overvalued back then, but by some measures, they're even more stretched today.

Currencies: Dollar hits 2-month high as Fed officials hint at March rate hike

The dollar strengthened against major rivals on Thursday sending the ICE U.S. dollar index to two-month high.

Zuckerberg sells a chunk of Facebook stock as prices reach a record

Facebook co-founder and Chief Executive Mark Zuckerberg sold nearly 400,000 shares in the open market to start the week, as the stock closed at a record high on Monday before pulling back slightly on Tuesday.

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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