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12Feb2018 Market Close: Wall Street Closes Higher, DOW Closes Up 410 Points, Stock-market Volatility Means It's A ‘trader's Paradise', Says Wall Street Luminary, Stocks Erase 2018 Decline After Today's Rebound

Written by Gary

US stocks rose for a second straight session today (SPY +1.5%) with broad-based gains across indexes as investors appeared to regain some confidence after Wall Street's biggest weekly drop in two years.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street gains for second straight day after tumultuous week

(Reuters) - U.S. stocks rose for a second straight session on Monday with broad-based gains across indexes as investors appeared to regain some confidence after Wall Street's biggest weekly drop in two years.

Murdoch pledges independent Sky News to smooth path for Fox deal

LONDON (Reuters) - Rupert Murdoch's Twenty-First Century Fox pledged to keep Sky News independent and continue funding the loss-making channel for five years, in an attempt to overcome regulatory concerns over its $15.7 billion takeover of pay-TV firm Sky.

Exclusive: Europe's A400M army plane may see some features axed

SINGAPORE/BERLIN (Reuters) - Europe's new troop transporter may never go into battle with all the promised military capabilities after buyers of the A400M agreed to let Airbus negotiate an opt-out for features deemed too difficult to build.

Ford expands 'Do Not Drive' warning to 33,000 more pickup trucks

WASHINGTON (Reuters) - Ford Motor Co on Monday warned an additional 33,000 owners of older pickup trucks in North America to stop driving them until potentially defective Takata Corp air bag inflators can be repaired.

New York sues Weinstein Co., Harvey Weinstein over sexual misconduct

NEW YORK (Reuters) - New York's attorney general sued the Weinstein Company and Harvey Weinstein on Sunday alleging years of sexual harassment and misconduct by the movie producer, in a move that could jeopardize talks on a potential sale of the studio.

Volkswagen Chairman sees no reason to question CEO position

LINZ, Austria (Reuters) - Volkswagen Chairman Hans Dieter Poetsch said on Monday there is no reason to question the position of the carmaker's top executive.

Amazon cutting hundreds of Seattle jobs in its consumer business: source

(Reuters) - Amazon.com Inc is cutting hundreds of jobs in its consumer business in Seattle, a person familiar with the matter said on Monday, as the company shifts resources into fast-growing areas like its work on voice assistant Alexa.

Deutsche Bank, trader settle U.S. SEC charges over bond prices

(Reuters) - Deutsche Bank AG will pay nearly $4.5 million to settle U.S. Securities and Exchange Commission civil charges that it failed to police traders and salespeople who lied to customers about bond prices, the regulator said on Monday.

U.S. Consumer Financial Protection Bureau aims for more restraint: memo

WASHINGTON (Reuters) - The U.S. Consumer Financial Protection Bureau will pull back its activities and seek to promote a free market for financial services, according to a memo obtained by Reuters on Monday.

Markets 'Not' In Turmoil: Dow Jumps Over 400 Points Amid Record Low Liquidity

If you chose "Tradable Bottom" as you CNBC-Bingo word-of-the-day... You Won!!

Having been up almost 400 points from its Friday cash close, Dow futures plunged back into the red,perhaps accelerated by Ray Dalio's dismal diatribe, amid chaotic swings and the lowest market liquidity ever seen. But that did not last as the machines dragged stocks back up - The Dow up over 500 points to a 50% retrace of its Volocaust losses... before running out of steam...

Bull Not Yet Broken pic.twitter.com/7AYngqJIhE

— Rudolf E. Havenstein (@RudyHavenstein) February 12, 2018

As Nanex's Eric Scott Hunsader notes, the last week has seen liquidity levels for S&P futures - the most liquid equity security in the world - collapse to record lows, far worse than during the peak of ...

Why Continuing Down This Path Leaves America In A No Win Scenario

Authored by Chris Hamilton via Econimica blog,

According to conventional economic wisdom, economic growth is the increase in an economy to produce goods and services, compared from one period to another. This view deems that the greater the growth in capacity and utilization of that capacity, the greater the economic growth. Strangely, what this school of thought fails to account for is the basis of the US consumer economy...the quantity of growth among the US population (aka, consumers)? Or how a population growing ever more slowly can consume a capacity that (thanks primarily to innovation, technology, and ever cheaper and greater debt) is allowing for ever greater production?

The chart below shows three variables from 1790 to present;

Columns are US debt to GDP

Black line is annual total US population growth (%)

Yellow line is annual under 65yr/old US population growth (%)



Given the US is a 'nation of immigrants', the US has had a naturally high rate of population growth due to this net inflow of immigrants. However, annual population growth has consistently decelerated from an annual growth rate of 3.1% in 1790 to just 0.6% in 2017 (an 80% deceleration, with all growth now dependent on immigration). The substitution of more and cheaper debt (likewise corporately and personally) to maintain an unnaturally high rate of economic growth while population growth decelerated is plain. Also noteworthy is the abandonment of the Bretton Woods agreement in 1971 and the simultaneous shift from net exporter to net importer at progressively higher levels. ***BTW, the sharp waterfall in population growth in 1918 was tied to the global H1N1 influenza pandemic.

VIX-Trader '50Cent' "Steamrolls" XIV-Traders To $200 Million Gain

If the XIV-buyers were "picking up nickels," then mysterious VIX trader '50-cent' was the "steamroller" as his cumulative P&L swung $400 million last week from a big loss to a $200 million plus gain in a year...

As a reminder, there are a number of infamous 'traders' that keep popping up in the volatility complex as Macro Risk Advisers' Pravit Chintawongvanich has detailed in the past:

Bloomberg reports that, after suffering the slow drip-drip-drip of losses throughout 2017, Pravit Chintawongvanich, head of derivatives strategy at Macro Risk Advisors, estimates that the trader dubbed "50 Cent" (a play on the rapper known as "50 Cent," Curtis Jackson), has made nearly $200 million total on this trade since the start of 2017 -- thanks to a swing of $400 million in a single month.

A Warning Shot For Passive Investing: "That Wasn't 'The Crash'"

Authored by Lance Roberts via RealInvestmentAdvice.com,

Last week, investors received a "warning shot" about the dangers of "passive indexing."

While the idea of "passive indexing" sounds harmless enough, we have spilled a lot of ink on this site digging into the relative dangers of it.

The biggest risk to investors is when "passive indexers" turn into "panic sellers."

We witnessed it all first-hand last week.

The "sell off" proved our previous premise of the flaws of "passive investing."

"While it is believed ETF investors have become 'passive,' the reality is they have simply become 'active' investors in a different form. As the markets decline, there will be a slow realization 'this decline' is something more than a 'buy the dip' opportunity. As losses mount, the anxiety of those 'losses' mounts until individuals seek to 'avert further loss' by selling."

I have also stated that while "robo-advisors" are the new "shiny toy" for the markets to play with, and inexperienced investors to be lured into, when a crash does come, individuals will not be willing to just "ride it out." To wit:

"The websites of two of the country's biggest robo-advisers — Wealthfront Inc. and Betterment LLC — crashed on Monday as t ...

The Wayfair Riddle

The furniture retailer's business has serious flaws. But the stock keeps soaring.

Why New Barclays Fraud Charge Isn't the Threat it Appears

Barclays was slapped with another fraud charge by U.K. investigators following last summer's charges. Luckily for Barclays's investors, this new element sounds more serious than it probably is.

White House Eyes Role of Middlemen in Drug Price Fight

A closer look at the Trump admistration's 2019 budget shows where policymakers are hoping to get deeper cost savings on drug prices.

Trump Today: Trump Today: President unveils infrastructure plan and backs 'reciprocal' import tax

President Donald Trump on Monday unveiled both his long-awaited proposal to rebuild U.S. infrastructure and his budget plan for the next fiscal year, as he also backed what he called a reciprocal tax on imports.

Market Extra: Stock-market volatility means it's a 'trader's paradise', says Wall Street luminary

Not everyone is yanking their hair out after a resurgence of dormant volatility. For one traders, whose life blood is trying to profit from the vagaries of asset prices on Wall Street, view this recent shift to a decidedly bumpier ride for stocks as downright happy-making.

Market Extra: Here's the nagging question at the heart of the stock-market selloff

Is this just a technical stock-market pullback amplified by the implosion of the short-volatility trade, or is there something wrong with the underlying 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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