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18Apr2017 Market Close: Wall Street Closes Down, DOW Off Triple Digits, US Dollar In The Mid 99's, More Bearish Analysts Spouting Their Views With More Downside Ahead

Written by Gary

US stock markets closed marginally lower (SPY -0.3%) after poor corporate financial reports from GS and J&J spooked investors across the global markets. Geopolitical tensions continue to weigh on market sentiment resulting in the US dollar spinning downwards.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street falls as Goldman, J&J weigh

NEW YORK (Reuters) - U.S. stocks declined on Tuesday, weighed down by a drop in Goldman Sachs and Johnson & Johnson in the wake of their quarterly results, while geopolitical tensions continued to fuel investor caution.

In rare fumble, Goldman stuns Wall Street with weak trading

(Reuters) - Goldman Sachs Group Inc fell short of earnings expectations on Tuesday due to a drop in quarterly trading revenue, prompting analysts to demand explanations for underperformance in an area where the bank usually outshines rivals.

U.S. housing starts tumble, but building permits increase

WASHINGTON (Reuters) - U.S. homebuilding fell more than expected in March as the construction of single-family homes in the Midwest recorded its biggest decline in three years, but an increase in building permits suggested the housing market recovery remained intact.

Netflix shares on track for worst day in five months

SAN FRANCISCO (Reuters) - Shares of Netflix fell from record-high territory on Tuesday and were headed for their worst session in five months after a mixed quarterly report failed to impress Wall Street.

BofA posts solid growth boosted by trading, rates

(Reuters) - Bank of America Corp's quarterly profit rose 44 percent as its investment banking and trading units produced hefty gains, and higher long term interest rates also underpinned results for the second-largest U.S. bank.

J&J first quarter revenue misses estimates; new forecast includes Actelion

(Reuters) - Johnson & Johnson on Tuesday reported disappointing pharmaceutical and consumer product sales as revenue missed analyst estimates, sending its shares sharply lower.

United chief met Chinese officials over dragged passenger

NEW YORK (Reuters) - The head of United Airlines met with the Chinese consulate in Chicago over the possible impact to bookings from a customer being dragged off a plane but it was too early to tell if business in China had been hit by the event, the company said.

Verizon, Corning agree to $1.05 billion fiber deal

NEW YORK (Reuters) - Verizon Communications Inc has agreed to buy optical fiber from Corning Inc for at least $1.05 billion over the next three years as the No. 1 U.S. wireless carrier aims to improve its network infrastructure, the companies said on Tuesday.

UnitedHealth plans for costly Obamacare tax in 2018

(Reuters) - UnitedHealth Group Inc reported stronger-than-expected quarterly results on Tuesday and said it was coping with uncertainty in U.S. healthcare laws by pricing its 2018 insurance plans to include a costly Obamacare tax.

US Fighter Jets Intercept Two Russian Tactical Bombers 100 Miles Away From Alaska

The U.S. Air Force scrambled two F-22 stealth fighters on Monday night to intercept a pair of Russian nuclear-capable bombers which came as close as 100 miles from Alaska's Kodiak Island, Fox reports. This was the first time since President Trump took office that Moscow has sent bombers so close to the U.S.

The two Russian Tu-95 "Bear" tactical bombers flew roughly 280 miles southwest of Elmendorf Air Force Base, within the Air Defense Identification Zone of the United States. The U.S. Air Force promptly scrambled two F-22 stealth fighter jets and an E-3 airborne early warning plane to intercept the Russian bombers.

The American jets flew alongside the Russian bombers for 12 minutes, before the Russian bombers reversed course and headed back to their base in eastern Russia.

An official quoted by the Washington Examiner said that while TU-95s are capable of carrying nuclear weapons, the planes involved in Monday's incident did not appear armed. The interception was conducted in a "safe and professional" manner, the official added, as the bombers did not violate U.S. airspace or break international norms.

Monday's incident comes amid escalating tension between Russia and the U.S., particularly over Syria's ongoing civil war. Trump's decision to strike Assad's government earlier this month put the U.S. at odds with Russia, which has long supported Assad. Russian Foreign Minister Sergei Lavrov said last week that the chemical attack was staged.

Lavrov also said that another U.S. military strike in Syria could prompt "grave consequences not on ...

These 11 Oil Drillers Still Have Maxed Out Credit Lines, Despite Energy HY Recovery

The first signs of financial distress often surface when CFO's start to play games with their balance sheet. First, comes the ballooning of current liabilities as payable balances are stretched out to the max to preserve cash. Next, the most astute vendors catch on fairly quickly to the gamesmanship and move to COD terms for new purchases. Once that happens, the gaming CFO typically faces a 'run on the bank' which prompts a full revolver draw and generally, soon thereafter, a bankruptcy filing.

As Bloomberg points out, this exact scenario played out last year in the oil industry when crude prices tanked and E&P companies were forced to max out their credit lines.

For example, consider last fall, when more than 20 energy companies had borrowed more than two-thirds of their limit on their credit lines, according to Spencer Cutter, a senior credit analyst with Bloomberg Intelligence. More than four of those have since filed for bankruptcy. The degree of distress last year wasn't surprising given the sharp plunge in oil prices that started in 2014. A mounting number of energy companies were forced to sell assets, restructure or file for bankruptcy.

But now that oil prices have rebounded and borrowing costs for riskier junk-rated oil companies have dropped, it makes sense to think that the worst companies have either filed for bankruptcy or recovered, right? Well, not so much actually.

This is not the case. For evidence, just look at the relatively high number of companies relying on revolving loans for their financing needs. At least ...

Are Options Traders Running For The Hills?

Via Dana Lyons' Tumblr,

Fear finally made its way into the equity options market at the end of last week - at least for a day.

After months of (well-documented) investor complacency, recent stock turbulence has begun to introduce some fear back into the market. It has been manifested in the volatility market, as we covered extensively in our Vexing Vix miniseries last week. And after last Thursday's sharp selloff, fear has now also crept into the options market - at least for a day.

We base this on last Thursday's reading of the CBOE Equity Put/Call Ratio. Of course, when the ratio is elevated, it is indicative of relatively heavy put volume - and a possible sign of an elevated level of fear on the part of traders. Last Thursday, the reading came in at 0.95. This was just 1 of 3 readings that high over the last 12 months. The other 2 dates happened to be within a day or 2 of the market lows during the Brexit episode and the U.S. Presidential election.

So now that options traders have seemingly headed for the hills, is the coast clear for stock investors? Inasmuch as the coast is ever really "clear" in the markets, we may have to caution investors about getting too giddy based on this data point. For, as we also demonst ...

Michael Savage Reminds Us What Trump Has Accomplished So Far

After criticizing Trump's swagger a last week for enjoying a 'beautiful' chocolate cake with China's President Xi Jinping before informing him the USA was lobbing 59 tomahawk missiles into Syria, radio host Michael Savage has slipped into a rare spell of optimism - spelling out Trump's accomplishments thus far:

Michael savage (@ASavageNation) reminds us what Trump has accomplished so far: https://t.co/wKUGWBaDGm pic.twitter.com/C0hOJ4S2lo

— ZeroPointNow (@ZeroPointNow) April 18, 2017

So while concessions have clearly been made to the 'deep state' over Syria and NATO - perhaps to fend off the ongoing Russophobic witch hunt by the neocons, Savage laid out more than a few examples of things moving in the right direction. Perhaps the flip-flops are just "art of the deal: DC edition," where compromise is necessary to gain political capital. Trump isn't a dictator, after all. That said, the whole Jared / Ivanka / Dina Powell / Gary Cohn / McMaster infiltration will continue to be troublesome - especially if Bannon is ever out of the picture. We didn't vote for liberal advisors and regime change, after all - and the usual suspects seem to be quite pleased with Trump's Goldman Sachs and Petraeus-connected staff. Hopefully Trump ...

Goldman's Mighty Traders Strike Out

A weak quarter could put pressure on Goldman Sachs to cut costs further.

Unicorns Looking Less Magical Through IPO Lens

Cloudera is cutting its last private valuation to sell its IPO, which bodes ill for other tech unicorns.

Cardinal Health Feels Pain of Falling Drug Prices

Drug distributor Cardinal Health cuts earnings guidance as rising competition among generic drugmakers pressures the industry.

In One Chart: This is where your tax dollars went

It's tax day — do you know where your dollars are going? Last year, according to the National Priorities Project, more than half of every tax dollar went toward just two items in the federal budget: health care and the military.

Bond Report: Treasury yields slide on persistent geopolitical concerns, lackluster data

Treasury prices rallied on Tuesday, pushing yields lower, as weak economic data, geopolitical concerns and falling expectations of a Trump-enacted stimulus drew money flows into U.S. government bonds.

Personal Finance Daily: The problem with watching Netflix at night and the skills you need to earn higher wages

Tuesday's top personal finance stories

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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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