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09Feb2018 Market Close: Wall Street Post Nice Recovery, So Far, DOW Travels 20,000 Points In One Of The Wildest Weeks Since The Financial Crisis, WTI Crude Settles In The 59 Handle

Written by Gary

US stocks held modest gains today (SPY +1.5%) in another volatile session during a week of huge swings that shook the market out of months of calm. Dow rallies more than 300 points, but still posts the worst week in 2 years

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Waymo accepts $245 million and Uber's 'regret' to settle self-driving car dispute

SAN FRANCISCO (Reuters) - Uber Technologies Inc [UBER.UL] will pay $245 million worth of its own shares to Alphabet Inc's Waymo self-driving vehicle unit to settle a legal dispute over trade secrets, allowing Uber's new chief executive to move past one of the company's most bruising public controversies.

Wall Street edges up in bumpy end to brutal week

(Reuters) - U.S. stocks held modest gains on Friday in another volatile session during a week of huge swings that shook the market out of months of calm.

Qualcomm rejects Broadcom's revised buyout offer, proposes meeting

(Reuters) - U.S. semiconductor company Qualcomm Inc on Thursday rejected Broadcom Ltd's revised $121 billion buyout offer, but proposed meeting its peer to see whether they can address what it called the bid's "serious deficiencies in value and certainty."

Bitcoin may not be worth all the hoopla: N.Y. Fed blog post

NEW YORK (Reuters) - Bitcoin and other digital currencies have, so far, not been formidable competition for cash, checks or credit cards as a payment method in the United States and other major economies, according to two economists at New York Federal Reserve.

Exclusive: Amazon eyes new warehouse in Brazil e-commerce push - sources

SAO PAULO (Reuters) - Amazon.com Inc is looking to lease a 50,000-square-meter warehouse just outside Sao Paulo, people familiar with the matter told Reuters, as it steps up its push into Latin America's biggest retail market, Brazil.

Exclusive: Renault's Mueller quits, clearing CEO succession path - sources

PARIS (Reuters) - Renault's Chief Performance Officer Stefan Mueller is leaving the company, sources told Reuters on Friday - likely clearing the way for rival candidate Thierry Bollore to be named second-in-command and eventual successor to CEO Carlos Ghosn.

Guess forms committee to oversee investigation against co-founder

(Reuters) - Fashion retailer Guess Inc on Friday said its board had formed a special committee to oversee an ongoing investigation into allegations of improper conduct by co-founder Paul Marciano.

Amazon tests delivery in Los Angeles, shipping shares sink

(Reuters) - Amazon.com Inc is testing a program to ship its sellers' goods, sending shares in FedEx and UPS tumbling even though analysts and the companies played down any near-term threat to the two global delivery businesses.

Nestle buys majority stake in organic food company Terrafertil

ZURICH (Reuters) - Nestle said on Friday that it has bought a majority stake in Terrafertil, a company selling natural and organic plant based foods.

'Goldilocks' Is Dead - Stocks Plunge Most Since Lehman Before Sudden Buying-Panic

Remember January's "Goldilocks" market?

Well it's gone...

The Short-Vol trade implosion has now spread to the rest of the world and all other asset classes.

China had one of its ugliest weeks ever...

Europe was ugly...

Meet The World's Next Central Banker: Mark Zuckerberg

Authored by Simon Black via SovereignMan.com,

Within the last week, Facebook announced a ban on all advertisements about bitcoin, initial coin offerings and other cryptocurrencies.

Facebook (along with Google) virtually controls Internet advertising. So their policies have enormous influence over consumer behavior.

Banning ICO advertisements on its platform, for example, will certainly have a negative impact on the amount of money flowing into new ICO's.

Facebook said it instituted this ban to "protect its users" from financial scams in the cryptocurrency sector. At least, that's the "official" reason.

And in fairness, there is a ridiculous amount of fraud out there — countless scammy ICO's and appallingly stupid tokens and coins.

But it's also possible that Facebook's main driver in this move goes beyond its desire to protect the well-being of its nearly 2 billion users.

It was only a month ago that Mark Zuckerberg said Facebook would study encryption and the blockchain to "see how best to use them in our services."

And one of the speakers at the crypto conference that one of our team members attended in New York City yesterday confirmed Facebook is investing a ton of capital into blockchain right now.

It stands to reason that Facebook's decision to ban crypto advertisements may be rooted in eliminating its own competition, i.e. Facebook may be working on its own proprietary blockchain and cryprocurrency to deploy on its own platform.

One possibility is that Fa ...

Jim Rogers: "Next Bear Market Will Be Worst In My Lifetime"

For months now, Jim Rogers has been talking to anybody (who cares to listen) about the coming equity crash, which he said would be the "worst in his lifetime" - and he's a spry 75 years old.

Today, in his latest pessimistic prognostication, the co-founder of George Soros' Quantum Fund told Bloomberg that the fact that the total US debt pile has only increased since the financial crisis threatens to upend stocks, and that he believes the current turmoil will continue until Jerome Powell and company hike rates next month. Or alternatively, it could just make the crash that much worse: as volatility surges and investors in certain highly risky volatility-linked products have seen all of their savings wiped out, the new Fed chair could rethink a hike, for fear of exacerbating the selloff.

"When we have a bear market again, and we are going to have a bear market again, it will be the worst in our lifetime," Rogers said. "Debt is everywhere, and it's much, much higher now."

Rogers has seen severe bear markets, including the most recent crash when the Dow plunged more than 50% during the financial crisis, from a peak in October 2007 through a low in March 2009. It sank 38% from its high during the IT bubble in 2000 through a low in 2002.

"Jim has been talking about severe corrections since I started in business over 30 years ago," said Alibaba Group President Mike Evans, a former Goldman Sachs Group Inc. banker. "So I'm sure he'll be right at some point."

* * *

Ok, so we know the magnitude, we just don't know the timing: why not also give a time frame for this ...

The Old Regime Is Done: Why The "Equilibrium Market Volatility Is Higher"

Rafiki Capital Management's Steven Englander has emphasized a macro underpinning to the sell-off, basically arguing that rising inflation expectations and a hawkish Fed mean that they have suspended the 'Fed Put' for the time being.

Others emphasize the collapse of inverse vol funds and deleveraging of risk-parity portfolios.

As Englander details below, these explanations are two sides of the same coin...

Consider the chart below which shows 10 year yields and the S&P. The obvious point is that yields and equity prices were moving in the same direction from September through late January and since have diverged. Bond prices and equity prices were moving in opposite directions. This green area corresponds to the period in which tax reform optimism was getting priced into asset markets, and the pink area to the sell-off period.

From a macro viewpoint I would argue that in the first period investors saw tax reform as a shock to demand and quite possibly productivity that would raise profits and generate higher real rates, but these would coexist peacefully with moderate inflation and real interest rates moving in line with productivity and equity prices.

So far so good. ...

Stocks Are Cheaper, But Not Cheap

Stocks are a lot less expensive than they were two weeks ago. Unfortunately, they are still far from cheap.

Beyond Tesla: How Else to Buy Into Electric Cars

Chemical group Umicore is massively expanding its capacity to produce cathodes for electric car batteries.

Viacom Inches Closer to a Deal

Though still struggling, the media company is showing early signs of a turnaround and odds of a deal with CBS have risen.

Market Extra: Head of the world's largest hedge fund said you'd 'feel pretty stupid' holding cash — but how's he feeling now?

Bridgewater Associates founder Ray Dalio offered some guidance to investors a few short weeks ago, on the sidelines of the World Economic Forum in Davos, Switzerland.

Trump Today: President defends embattled staffer, says budget deal proves need for more Republicans

President Donald Trump on Friday defended a staffer who resigned in the wake of spousal abuse allegations as he signed into law a bill raising spending by over $300 billion over two years.

The Tell: What technical analysts say about the stock-market collapse after the Dow, S&P 500 fall into correction

After more whipsaw price action on Friday that has the main stock markets on track for the worst weekly declines in years, here's how some market technicians are assessing the outlook.

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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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