30Dec2015 Market Close: DOW Off Triple Digits, WTI Oil Recovers Most Of Mornings Losses And US Dollar Slips

Oil down more than 3 percent on U.S. crude build; Brent near 2004 low

NEW YORK (Reuters) – Crude prices fell more than 3 percent on Wednesday, with Brent sliding toward 11-year lows, after an unusual build in U.S. stockpiles and signs Saudi Arabia will keep adding to the global oil glut.

Puerto Rico to default on some debts, will pay GO debt

SAN JUAN (Reuters) – Puerto Rico will default for the second time in five months, but will pay the bulk of $1 billion due on Jan. 4, including its most senior debt, Governor Alejandro Garcia Padilla said on Wednesday.

Apple drags Wall St. lower as S&P 500 clings to gain for 2015

(Reuters) – Wall Street fell on Wednesday as Brent crude slid towards 11-year lows and Apple weighed on the S&P 500 index, which clung to a meager gain for 2015.

Apple to pay Italy 318 million euros, sign tax deal – source

MILAN (Reuters) – Apple Inc will pay Italy’s tax office 318 million euros ($348 million) to settle a dispute over allegations it failed to pay taxes for six years, a source with direct knowledge of the matter said on Wednesday.

KaloBios Pharmaceuticals files for bankruptcy in wake of Shkreli arrest

(Reuters) – KaloBios Pharmaceuticals Inc, a biotechnology company that fired Chief Executive Martin Shkreli earlier this month after his arrest on charges of securities fraud, filed for Chapter 11 bankruptcy on Tuesday.

Year’s best U.S. global stock fund sees emerging markets rallying in 2016

NEW YORK (Reuters) – The year’s top-performing U.S.-listed global equities fund as rated by Morningstar sees Asian and emerging market stocks as undervalued and primed to outperform in 2016.

Icahn to buy Pep Boys for $1 billion after Bridgestone bows out

(Reuters) – Carl Icahn’s Icahn Enterprises LP has agreed to buy Pep Boys-Manny Moe & Jack for about $1 billion, the companies said on Wednesday, hours after Bridgestone Corp quit the race for the U.S. auto parts retailer.

Fidelity boosted pre-IPO value of Twilio by 31 percent in November

BOSTON (Reuters) – Fidelity Investments, one of the largest investors in pre-IPO companies, boosted the value of Twilio Inc by 31 percent in November, as speculation builds that the provider of mobile messaging platforms may go public in 2016.

U.S. pending home sales fall in November

WASHINGTON (Reuters) – Contracts to buy previously owned U.S. homes fell in November for the third time in four months, a signal that growth in the U.S. housing market could be cooling.

The Fed Just Gave The Treasury A Record $19 Billion Holiday Bonus

Something surprising emerged in the latest Daily Treasury Statement report showing the sources and uses of operating cash of the US Treasury: the line item for Federal Reserve Earnings exploded to $19.3 billion on December 28, doubling the amount of cash the Fed had remitted to the Treasury for all of 2015.

This record, unprecedented one-day payment is shown in the chart below:

And just like that the Fed, also known as the printer of US currency, gave the Treasury a one time record bonus of $19 billion.

But wait, isn’t direct funding of the Treasury against US policy: after all, hasn’t Bernanke been on the record countless times repeating that the Fed does not monetize the US deficit?

What is going on here.

For the answer, go back to the $1.1 trillion spending deal which the “bipartisan” Congress fought so hard to get, and specifically the Highway Bill, which as a reminder would be funded with surplus funds from the Federal Reserve and part of the annual dividend banks get for owning shares of Fed regional banks.

As Bloomberg reported previously, the Fed’s surplus capital comes from the 12 reserve banks. “The highway bill would allow for a one-time draw of $19 billion from the surplus fun …

Caught On Tape: Saudi Warplanes Vaporize Coca Cola Plant In Yemen

Earlier this week, Saudi Arabia released budget numbers which showed that the kingdom ran a deficit in 2015 that amounted to some 15% of GDP.

To be sure, that was far better than feared, but it’s still a disaster and reflects just how much damage Riyadh’s two wars are inflicting on the monarchy’s finances.

When we say œtwo wars, we’re of course talking about the figurative œwar on US shale production and the literal war against the Iran-backed Houthis in neighboring Yemen. The following graphic from Deutsche Bank should give you an idea of just how much Riyadh spends on the military:

Indeed, as we noted on Monday, the kingdom would sooner overhaul the welfare state (i.e. reduce subsidies) than it would cede market share to US producers or allow Iran to establish what would amount to a colony overlooking the Bab-el-Mandeb.

The Saudi intervention in Yemen dates back to March of this year when airstrikes dubbed œOperation Decisive Storm began. At that point, the Houthis had advanced all the way to Aden, driving President Mansur Hadi into exile in Riyadh. With the help of ground troops from the UAE and Qatar, the Saudi-led coalition has now pushed the rebels back to Sana’a, home of a UNESCO world heritage site which has sustained irreparable damage under heavy Saudi airstrikes.

Despite ceasefire talks held earlier this month, the violence continues as Saudi Arabia has been forced to shoot down three Scud missiles fired from Yemen over the past two weeks.

Well, in case the obliteratio …

The Oligarch Tax Bracket: How The Tax Rate For The Wealthiest 400 Americans Plunged From 27% To 17%

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

I never liked the saying: “We are the 99%.” While admittedly catchy and effective as a slogan, I think it is ultimately divisive and counterproductive. The reason I say this is because the statement itself alienates much needed allies for no good reason.

In a country with a population of 320 million, the 1% represents 3.2 million people, which is a pretty big number. While the 1% certainly have far superior material lives compared to the 99%, that doesn’t mean a particularly large percentage of them are thieves, cronies or oligarchs. In fact, it behooves people interested in transitioning to another paradigm to court as many of them as possible to the cause. It is very useful to have well meaning people with resources and connections on your side. To blithely assume there aren’t plenty of potential allies from a pool of 3.2 million is committing strategic suicide.

– From the post: Charting the American Oligarchy – How 0.01% of the Population Contributes 42% of All Campaign Cash

Much of my focus throughout 2015 was on the pernicious influence of the 0.01%, i.e., the American oligarchy. Indeed, nothing would please oligarchs more than to define a struggle as the 99% vs. the 1% in order to shift attention away from the real root of the problem, themselves.

As I’ve mentioned time and time again, 99% of the 1% do …

The Next Time Your Financial Advisor Tells You To Buy Stocks, Show Them This Chart

Earlier today, we noted that while the market was surging last week, the smart money was selling. This comes at the same time as ICI reported major redemptions from both stock ($3.9 billion) and bond ($4.5 billion) mutual funds, even as corporate buybacks were decelerating, leading to the question of just who was buying stocks during the Santa rally of the past two weeks.

But something even more surprising emerged when looking at the detailed breakdown of how the “smart money” has been flowing. As Bank of America clarifies, when explaining where its $0.7 billion in weekly outflows came from, “net sales were chiefly due to institutional clients last week” and adds that institutionals “have sold stocks for eight consecutive weeks”!

And then something even more surprising emerges when looking at the YTD breakdown of flows: while hedge funds and private clients (retail) have largely offset each other over the past year, the former selling $2.8BN and the latter buying $2.2BN in 2015, something odd has taken place at the institutional level: starting in early January, the largest financial institutions – mutual funds and various other asset managers – have unleashed an unprecedented selling spree for 11 consecutive months, which has brought their total outflow to $26.8 billion.

Which leads to another question: if institutions are actively dumping stocks, perhaps mom and pop investors should show the following chart to their financial advisors, who directly or indirectly work for these institutions, and ask them: why should they be buying, when the counterparty they are buying from is, most likely, this very same financial advisor?

U.S. Stocks Decline

A decline in oil prices rippled through markets Wednesday, triggering losses in energy stocks and currencies of commodity-exporting countries.

Oil Prices Fall on Oversupply Anxiety

Oil prices tumbled Wednesday after data showed an unexpected increase in U.S. crude supplies.

From Oil Glut to Shortage? Some Say It Could Happen

As the oil glut has sent prices to decade lows, plummeting investment by oil producers means fewer barrels will be pumped.

Pimco flagship fund beats former star trader Bill Gross in 2015

The former Pimco founder and star trader is showing negative returns for the year for his Janus Global Unconstrained Bond Fund.

Bond Report: Treasury yields slip as risk-appetite wanes

Treasury yields inched lower Wednesday particularly in short-term maturities, as a rout in oil prices that weighed on global equities, fueled demand for assets considered as safe, such as U.S. government debt.