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05Feb2018 Market Update: Wall Street Drops For 2nd Session, Volatility Spikes, DOW Whipsaws After Dropping 355 Points, Apple Jumps 2%, WTI Crude Falls Sharply

Written by Gary

US major indexes pared losses to trade little changed in late morning trading. Early afternoon trading has started to trend down towards the opening levels (SPY -0.8%).


Here is the current market situation from CNN Money

North and South American markets are lower today with shares in U.S. off the most. The S&P 500 is down 1.00% while Mexico's IPC is off 0.39% and Brazil's Bovespa is lower by 0.26%.

Traders Corner - Health of the Market

Looking at the last three columns (below), the first one (Actual), is what was reported this morning. The second column (Forecast) is what analysts had forecast and the third column is the previous report. Full calendar HERE.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street selloff ebbs as rise in bond yields pauses, tech stocks gain

(Reuters) - U.S. stocks pared losses to trade little changed in late morning trading on Monday as a rise in bond yields paused and technology stocks gained.

Fed restrictions continue to badger Wells Fargo; U.S. banks down

(Reuters) - Wells Fargo & Co's shares fell as much as 9.4 percent to $58.05 on Monday, sparking a sector-wide sell off after the Federal Reserve imposed regulatory restrictions on the bank, forcing it to improve its governance and controls in the wake of the sales scandal.

Bitcoin extends slide with a more than 10 percent fall

LONDON (Reuters) - Bitcoin , the world's best-known cryptocurrency, fell more than 10 percent on Monday and approached three-month lows on concerns about a global regulatory clampdown on the trading of the digital coins.

Broadcom sweetens Qualcomm bid, calling it the final offer

(Reuters) - Chipmaker Broadcom Ltd on Monday sweetened its bid to buy Qualcomm Inc for more than $121 billion, ratcheting up pressure on its rival to come to the table for negotiations in its "best and final offer".

Qualcomm shares fall as reports say Apple will dump chips

(Reuters) - Qualcomm Inc's shares fell 3 percent on Monday after two brokerages said Apple Inc might drop the chipmaker in favor of Intel Corp as the supplier for modem chips in its next generation of iPhones.

A decade after recession, a jump in U.S. states with wage gains

OAKLAND, Calif./CANTON, N.Y./WASHINGTON (Reuters) - The kind of pay raises for which American workers have waited years are now here for a broadening swath of the country, according to a Reuters analysis of state-by-state data that suggests falling unemployment has finally begun boosting wages.

Exclusive: U.S. consumer protection official puts Equifax probe on ice - sources

WASHINGTON (Reuters) - Mick Mulvaney, head of the Consumer Financial Protection Bureau, has pulled back from a full-scale probe of how Equifax Inc failed to protect the personal data of millions of consumers, according to people familiar with the matter.

Waymo lawyer tells U.S. jury Uber 'cheating' on autonomous car secrets

SAN FRANCISCO (Reuters) - Uber was so driven to "win at all costs" in the race to develop self-driving vehicles that it cheated, a Waymo lawyer told a jury on Monday, the opening salvo in a trade-secrets lawsuit between the two technology companies that could help determine who emerges in the forefront of the autonomous car business.

Apple, Cisco team up with insurance companies to offer cyber policy discounts

(Reuters) - Apple Inc and Cisco Systems Inc have teamed up with insurer Allianz SE to offer discounts on cyber insurance to businesses that primarily use equipment from both technology companies, they said on Monday.

US Equity Market 'Dead-Cat-Bounce'... Dies

"Hope is not an investment strategy..."

Equity futures back to the overnight lows...

And VIX back above 19...

Ray Dalio Warns: Investors Just Got "A Taste Of What Tightening Will Be Like"

Echoing his recent comments on how investors' exposure to low interest rates is extreme and warned that a rise in yields could spark the biggest crisis for fixed-income investors in almost 40 years.

"A 1 percent rise in bond yields will produce the largest bear market in bonds that we have seen since 1980 to 1981," Bridgewater Associates founder Dalio said in a Bloomberg TV interview in Davos on Wednesday. We're in a bear market, he said.

Visually:

However, as we explained last December, this is a low-ball estimate which "understates the potential losses" as it "does not include high-yield bonds, fixed-rate mortgages, and fixed-income derivatives", which would suggest that the real number is likely more than double the estimated when taking into account all duration products.

As a reminder, Goldman calculated the entire duration universe at $40 trillion as of the summer of 2016, resulting in $2.4 trillion in losses for a 1% move. By now the number is far, far greater.

Bridgewater Founder Ray Dalio warns today,

Are Markets Coming To Terms With The Notion Of The Punch-Bowl Running Dry?

After a number of years of increasingly compressed volatility and an endless supply of greater fools willing to buy any asset price dip and sell any asset vol spike, something changed last week. However, as former fund manager Richard Breslow notes, while assets are on the move, there's no need to be scared... yet.

Via Bloomberg,

One thing I'm pretty sure we shouldn't be doing is taking the recent market moves and trying to compare the relative attractiveness of various assets based on some recalculated dividend yield.

We didn't get here following classical value-investing techniques nor will the path out follow such a comforting script.

For too many years, we've had central banks relentlessly providing front-running opportunities for investors. Just about the easiest environment, in theory, in which to make money. Yet a shocking number of funds grossly underperformed. You either got risk-parity or you didn't. And leverage wasn't meant to be used to turbo-charge your best ideas but to double down on the good faith and easy credit of monetary authorities.

The marke ...

Is Congress Finally Pushing Back Against Security Agencies' Over-Reach?

Authored by Charles Hugh Smith via OfTwoMinds blog,

The last time the U.S. Congress pushed back against the Imperial Presidency and the over-reach of the nation's Security Agencies was 43 years ago, in 1975.

The last time the U.S. Congress pushed back against the Imperial Presidency and the over-reach of the nation's Security Agencies was 43 years ago, in 1975. In response to the criminal over-reach of the Imperial Presidency (Watergate) and to the criminal over-reach of the security agencies (FBI, CIA, et al.), the Church Committee finally resusitated the constitutional powers of the Congress to serve the interests of the citizenry rather than the interests of political elites and the rogue agencies of the federal government.

The erosion of congressional power (or more correctly, the surrender of power by Congress) long pre-dates 9/11. The rise of the Imperial Presidency and the Shadow State of "national security" agencies dates back to World War II. Those interested in tracing this long-term and troubling decline of the constitutional powers of the elected representatives may find value in these two books: The Imperial Presidency (Arthur M. Schlesinger, Jr.) and Takeover: The Return of the Imperial Presidency and the Subversion of American Democracy

The constitution grants the greatest powers to the elected representatives of the citizenry. The power to ...

Bond Market Says, 'What Europe Crisis?'

Rising yields and shrinking ECB bond purchases were supposed to be bad for bonds from indebted southern European governments. So far, at least, it isn't working out like that: southern Europe is the place to be.

Is Google Losing to Amazon?

Amazon's accelerating growth wins favor over Google's much bigger bottom line.

On Wage Growth, You Ain't Seen Nothing Yet

If wages have finally started a sustained rise, imagine what will happen to the economy when businesses and consumers start spending their tax cut windfalls. And imagine how the Federal Reserve will respond.

January 2018 Conference Board Employment Index Growth Rate Improves

Written by Steven Hansen

The Conference Board's Employment Trends Index - which forecasts employment for the next 6 months improved with the author's saying "The Employment Trends Index continues its solid path upwards and shows no sign of slowing down".

The Tell: Why stock-market investors might need to worry more about fiscal policy than the Fed

The stock market selloff reflects fears the specter of inflation will spook the Fed into tightening monetary policy too quickly and triggering a recession. But what if the real danger is that the sweeping tax cuts passed into law late last year instead represent a fiscal policy mistake?

Key Words: Does Bud Light's 'Dilly, dilly' catchphrase have any historical basis?

Bud Light's series of commercials dramatizing a sort of soft "Game of Thrones" and a silly call to arms have aired during NFL and college football broadcasts, and again during Sunday's Super Bowl.

London Markets: FTSE 100 finishes 1.5% lower, dragged to a 2-month low

U.K. stocks tanked on Monday, extending last week's global stock selloff that saw markets post some of their biggest losses in years.

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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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