13Jan2016 Market Update: US Averages Slide After Opening, Oil Inventories Add To Glut, US Dollar Declines Fractionally

Written by Gary

US markets opened fractionally higher, but immediately began to melt lower. Currently the DOW is down triple digits and the averages are expected to continue the slide until the closing where a ‘minor’ upswing is expected. Crude prices fell after an increase in inventory was reported, but the $30 support seems to be quite substantial.

Here is the current market situation from CNN Money
	North and South American markets are mixed. The IPC is higher by 0.13%, while the Bovespa is leading the S&P 500 lower. They are down 0.94% and 0.81% respectively.

Traders Corner – Health of the Market

Index	Description	Current Value
Investors.com Members Sentiment:	% Bullish (the balance is Bearish)	45%
CNN’s Fear & Greed Index	Above 50 = greed, below 50 = fear	20%
Investors Intelligence sets the breath	Above 50 bullish	26.2%
StockChart.com Overbought / Oversold Index ($NYMO)	anything below -30 / -40 is a concern of going deeper. Oversold conditions on the NYSE McClellan Oscillator usually bounce back at anything over -50 and reverse after reaching +40 oversold.	-61.49
StockChart.com NYSE % of stocks above 200 DMA Index ($NYA200R )	$NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% – 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.	20.92%
StockChart.com NYSE Bullish Percent Index ($BPNYA)	Next stop down is ~57, then ~44, below that is where we will most likely see the markets crash.	30.60%
StockChart.com S&P 500 Bullish Percent Index ($BPSPX)	In support zone and rising. ~62, ~57, ~45 at which the markets are in a full-blown correction.	32.20%
StockChart.com 10 Year Treasury Note Yield Index ($TNX)	ten year note index value	21.03
StockChart.com Consumer Discretionary ETF (XLY)	As long as the consumer discretionary holds above [66.88], all things being equal, it is a good sign for stocks and the U.S. economy	73.87
StockChart.com NYSE Composite (Liquidity) Index ($NYA )	Markets move inverse to institutional selling and this NYA Index is followed by Institutional Investors	9,529

CBOE SKEW Streaming Chart remains quite high.

What Is Moving the Markets

Here are the headlines moving the markets.
	For VW, sorry seems to be the hardest word (Reuters) – Volkswagen said on Wednesday it “sincerely and honestly” apologized for breaking the trust of the American public, as its chief executive tried to agree a fix with U.S. authorities for hundreds of thousands of cars rigged to cheat emissions tests.
	China may slow Fed’s interest rate rises: Fed officials BOSTON (Reuters) – Headwinds from China and the world’s commodity markets may once again be upending the U.S. Federal Reserve’s plans less than a month into its first-in-a-decade tightening cycle.
	Wall St. rally fades as crude retreats, Amazon weighs (Reuters) – Wall Street’s early gains evaporated on Wednesday morning, led by a drop in Amazon and other consumer discretionary stocks, while crude oil prices struggled to end their losing streak.
	General Electric to move headquarters to Boston: report NEW YORK (Reuters) – General Electric Co is set to move its global headquarters to Boston from its current location of Fairfield, Connecticut, the Boston Globe reported on Wednesday, citing a source familiar with the situation.
	Oil falls toward $30 as U.S. crude inventories rise LONDON (Reuters) – Oil prices fell on Wednesday after a rise in weekly U.S. crude inventories fed into bearish sentiment about the deepening global supply glut that has brought oil prices close to 12-year lows.
	Wall Street rainmaker Michael Klein no longer a one-man show (Reuters) – Star dealmaker and former Citigroup Inc executive Michael Klein, the lead adviser to Dow Chemical Co on its $130 billion merger with DuPont, has quietly tripled the size of his advisory firm in the last 18 months.
	Federal probe sought for Buffett’s mobile home unit (Reuters) – Senior U.S. Democratic lawmakers asked federal regulators to investigate whether Clayton Homes, the mobile home unit of Warren Buffett’s Berkshire Hathaway Inc, targets minority borrowers with discriminatory lending and collection practices.
	Uber receives nearly $2 billion investment from Chinese firms HONG KONG/BEIJING (Reuters) – Uber Technologies Inc said on Wednesday it has received almost $2 billion in funding from Chinese investors, some as part of a recent fundraising round that valued the U.S. firm’s Chinese unit at $7 billion.
	U.S. home loan applications jump as mortgage rates fall NEW YORK (Reuters) – Applications for U.S. loans to refinance and buy homes booked their biggest weekly rise in three months as mortgage rates fell from their highest in over five months, data released from the Mortgage Bankers Association showed on Wednesday.
	Paper Gold: Utopia for Alchemists Paper Gold: Utopia for Alchemists John Hathaway, respected authority on the gold market and senior portfolio manager with Tocqueville Asset Management has written an excellent research paper on the fundamentals driving the gold market today. Å“An acute shortage of readily marketable physical gold is developing that we believe will deepen in years to come. This possibility seems to be unrecognized by those who are short the gold market through paper contracts. The relentless dumping of synthetic or paper gold contracts since 2011 by speculators in Western financial markets has caused the shortage. The steady selling has driven down the price of physical gold, hobbled the gold-mining industry, and drained the stores of gold held in the vaults of Western financial centers Â¦ ï¿½ Veteran gold market analyst and CFA, Hathaway concludes that: Å“Much of what passes for financial wealth is in our opinion imprisoned in a matrix from which there is no easy exit. The return migration of capital to real assets promises to be disruptive. The misdirection of capital could well cause losses for many but opportunity for a few. The list of opportunities is short, limited in capacity, possibly complex, and difficult to access. Among the possible opportunities, gold is accessible and straightforward. Gold has a history of responding inversely to the direction of confidence. …
	Order Book For Biggest Bond Sale Ever Takes Shape: Over $100BN In Orders For $40BN AB InBev Offering While the market for corporate bond issuance has been relatively quiet among the recent broader market turbulence, in a few hours a historic new bond is about to price and be sold to investors. Earlier today, Anheuser-Busch InBev NV, the acquiror in the second largest M&A deal of 2015 valued at $117 billion and just shy of Pfizer’s massive $160 billion merger with Allergan, started offering bonds that will back its takeover of SABMiller Plc in a sale that according to Bloomberg will stretch into Europe and is set to become the biggest corporate-debt offering on record. Anheuser-Busch InBev may sell about $25 billion of dollar-denominated bonds, and has already gotten well over $100 billion in orders ($110 billion according to the FT) for the offering. That’s more than the $75 billion of loans it has lined up to help fund the takeover. AB InBev is expected to tap debt markets in other regions later. Indicatively, the $110 billion (and growing) order book is already bigger than the $101 billion lined up for Verizon’s 2013 $49 billion mega deal. According to Bloomberg, the sale is the biggest test in years for credit markets that are grappling with a slowdown in China, a commodities slump and the first U.S. interest-rate hike in almost a decade. The concern has pushed corporate borrowing costs to the highest in more than three years. As the chart below shows, the dollar offering alone would be eclipsed only by Verizon Communications Inc.’s $49 billion deal two years ago to fund its buyout of Vodafone Group Plc’s stake in a wireless venture.
	FANG Bloodbath Just when you thought it was safe to get back in the warm waters of the FANTAsy stocks, they slap you in the face with their triple-digit valuations… Facebook, Amazon, Netflix, Tesla, Alphabet… Not off the lows…
	Inflation Expectations Collapse Post-Rate-Hike, Near Record Lows Since The Fed hiked rates in December, the market’s inflation expectations have collapsed in yet another clear indication of “policy error.” 5Y5Y Forward inflation swaps have crashed below 2.00% for only the 3rd time in history (Lehman 2008 and September’s Fed Fold were the other two) as despite central banker promises of transitory low-flation, the money is being bet against them as the regime-shift from full-faith to no-faith in Fed support continues. But a rate-hike was supposed to stimulate inflation? This is near record low levels for forward inflation
	Stocks Lower on Slide in Consumer Shares U.S. stocks gave up early gains Wednesday, dragged down by declines in the consumer discretionary sector.
	Actively Managed Mutual Funds Saw Outflows in 2015 Clients yankedÃ‚ $207.3 billion from actively managed mutual funds while shifting $413.8Ã‚ billion into passively managed funds that mimic indexes for a fraction of the cost, according to Morningstar.
	Oil Gives Up Gains on Supply Data Oil prices gave up their gains Wednesday to trade near flat as weekly supply data showed inventories of crude oil and refined products hit record highs.
	Fundamental Disagreement: How Much And Why? from Liberty Street Economics — this post authored by Richard Crump and Stefano Eusepi Everyone disagrees, even professional forecasters, especially about big economic questions. Has potential output growth changed since the financial crisis? Are we bound for a period of “secular stagnation”? Will the European economy rebound? When is inflation getting back to mandate-consistent level? In this post, we document to what degree professional forecasters disagree and discuss potential reasons why.
	Capitol Report: Economic growth expected to speed up 2016 but not reach past peaks The U.S. is primed to grow in 2016 at the fastest pace since the end of the Great Recession. But even if it does the economy is likely to fall well short of what Americans used to expect.