13Jan2016 Market Close: DOW And Spooz Dropped To Lowest Level Since October, Brent Falling Below $30 Handle First Time Since '04

Written by Gary

US averages continued the morning slide unabated where the Spooz (SP500) closed below 1900, the lowest since October, 2015. Extending the year’s sharp selloff, on nervousness over tumbling oil prices and U.S. earnings, the DOW closed down 365 points to its lowest level since late September.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.
	Slowing auto market puts GM and Ford to the test DETROIT (Reuters) – A looming slowdown in global auto demand will test U.S. automakers General Motors Co and Ford Motor Co as they try to funnel more cash to shareholders while still investing adequately in new vehicles and technology.
	Wall St. tumbles to lowest level since September NEW YORK (Reuters) – U.S. stocks sank on Wednesday, pushing the S&P 500 below 1,900 for the first time since September and extending the year’s sharp selloff, on nervousness over tumbling oil prices and U.S. earnings.
	Chipotle ‘confident’ it can stop outbreaks, shares rise LOS ANGELES/SAN FRANCISCO (Reuters) – Chipotle Mexican Grill Inc executives on Wednesday said they are confident that steps they are taking to tighten food safety at the popular burrito chain will prevent future food poisoning outbreaks.
	Brent hits near 12-year low as market wrestles with weak demand NEW YORK (Reuters) – Brent crude ended 2 percent lower on Wednesday after falling below $30 a barrel for the first time since April 2004 as a growing stocks of oil in the United States stoked market fears about demand.
	Goldman Sachs throws support behind IEX exchange application NEW YORK (Reuters) – Investment bank Goldman Sachs Group has thrown its support behind upstart trading venue IEX Group’s bid to become a U.S. stock exchange, asking regulators to use the opportunity to address broader issues related to how the market is structured.
	U.S. says talks will continue to reach VW diesel emissions fix WASHINGTON (Reuters) – U.S. environmental officials said on Wednesday talks will continue with Volkswagen aimed at reaching an agreement on a fix for nearly 600,000 diesel vehicles that emit up to 40 times legally allowable limits.
	GE moving headquarters to Boston to tap tech talent NEW YORK (Reuters) – General Electric Co said on Wednesday it will move its global headquarters to Boston, tapping the city’s technology talent as the industrial conglomerate seeks to emphasize its digital capabilities.
	Controversial ‘pay-for-delay’ deals drop after FTC’s win in top court WASHINGTON (Reuters) – Branded drug companies hammered out far fewer deals with generic drug makers to delay sales of cheaper medicines in the year after the Supreme Court ruled the Federal Trade Commission could legally pursue such agreements as potentially illegal.
	Evans says Fed monitoring any impact from China slowdown CEDAR RAPIDS, Iowa (Reuters) – The Federal Reserve is keeping a close eye on how the slowdown in China’s growth is affecting the rest of the world, including the United States.
	Time To Pull Out The Nasdaq/China Comparison Chart Again Last August, following the recent Chinese market rout, Deutsche’s Jim Reid showed a chart he used for the first time in early June comparing the Shanghai Composite recent performance with that of the NASDAQ back in 1999-2000. As he said back then, “the ascent was very similar back in June and now the decline is pretty much on exactly the same path. So the NASDAQ ’99-00 has almost been like having a stock almanac for the recent Chinese experience. It reminds me of Back to the future II where Biff steals the time machine to take a sports almanac back to his younger self in order to make millions betting on these events. A great film. Although having only watched it recently again, I was amused to note it largely takes place in 2015 and everyone has flying cars. So perhaps the pace of technical change is not as great as was anticipated back in the eighties!” In any event, if the correlation to Nasdaq 2000 was any indication, the Chinese market was due for a modest rebound, and that is precisely what happened. Fast forward to today, when Reid did another update of the Nasdaq 1999-2001 vs Shanghai 2014-2015 chart. Here is what he says: The similarities continue. Both saw an initial sharp 2-3 month fall from their peaks followed by a quarter or so of stability. The NASDAQ then started to fall sharply again and Chinese equities seem to have started a similar trend on a similar timeline. While it’s hard to read too much into such a chart’s predictive power, it’s a reminder that when bubbles pop they can pop hard and carry on falling for some time. Both Oil and Chinese equities are currently victims of such a trend.
	“You Lie” – Fact-Checking Obama’s SOTU Job “Gains” Claims Via FactCheck.org, President Barack Obama’s final State of the Union address came up short of the facts on several topics: He embellished his record on jobs, citing “more than 14 million new jobs,” without mentioning that’s only private sector jobs and only since the job losses hit bottom in February 2010. Obama similarly omitted part of his presidency in boasting of nearly 900,000 manufacturing jobs “in the past six years.” Over his entire time in office, manufacturing jobs have gone down by 230,000. And he said he had cut the country’s deficits by “almost three-quarters.” But that’s measured from fiscal 2009, which included some increased spending by Obama. He repeated his now years-long claim of crediting the Affordable Care Act for a slowdown in health care spending, which economists have linked mainly to the economy. In fact, the growth rate jumped in 2014, when the law’s coverage provisions were implemented. Obama claimed, like he did in 2014, that the U.S. has “cut carbon pollution more than any other country on Earth.” That’s true in terms of total tonnage but not in terms of percentage reductions. He said that the U.S. spends “more on our military than the next eight nations combined.” That’s close enough in terms of dollars, but as a share of the nation’s economy, the U.S. is only the fourth highest of the top 15 countries.
	Is This The Start: Regional Bank Tumbles After Admitting To Previously Underreserved Energy Loss While the energy carnage over the past year has impaired commodities, mostly oil, and increasingly the equity and bond prices of US energy companies, so far one industry has been left relatively unscathed: banks. The reason for this was that over the past year banks have, in filings, earnings calls and investor meetings, taken every possible opportunity to assure investors they all overly provisioned for any potential losses stemming from their exposure to impaired energy loans (despite not one but two consecutive quarters of Jefferies earnings fiascos). All of this changed today when BOK financial, a $31 billion regional financial services company based in Tulsa, Oklahoma with a $3.4 billion market cap lender covering the West South Central States region of the United States, announced that not only was it overly optimistic with its “previously forecasted a provision for credit losses of $3.5 million to $8.5 million”, and as a result of a major loan impairment on just one energy producer it would have to take a dramatic $22.5 million in credit losses, but that things are slowly going from great to not so great when it also admitted that “we continued to see credit grade migration and increased impairment in our energy portfolio. The combination of factors necessitated a higher level of provision expense.” BOK Financial is the first bank to admit its rose-colored glasses no longer fit: we expect many more banks with billions in energy exposure to admit they too have been overly optimistic and to send their credit loss reserves soaring even as they have no choice but to admit major charge offs on existing loan portfolios. But it’s just a $22.5 million loss, what’s the big deal? That may be a good question for the shareholder, who have taken the axe to BOKF stock, which just today has wip …
	Stocks Sell Off Broadly; Dow Hits Lowest Level Since September A broad selloff in stocks accelerated Wednesday, dragging the Dow Jones Industrial Average to its lowest level since late September.
	Investors Snub Money Managers for Market Clones Clients yankedÂ $207.3 billion from actively managed mutual funds while shifting $413.8Â billion into passively managed funds that mimic indexes for a fraction of the cost, according to Morningstar.
	Brent Dips Briefly Below $30 Brent crude dropped below $30 a barrel intraday for the first time in more than 10 years, a day after the U.S. benchmark took a similar fall.
	What We Read Today 13 January 2016 Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary “reading list” which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for “reading list” items are gratefully reviewed, although sometimes space limits the number included. This feature is published every day late afternoon New York time. For early morning review of headlines see “The Early Bird” published every day in the early am at GEI News (membership not required for access to “The Early Bird”.). BECOME A GEI MEMBER – IT’s FREE! Every day most of this column (“What We Read Today”) is available only to GEI members. To become a GEI Member simply subscribe to our FREE daily newsletter.
	January 2016 Beige Book: Economy May Have Slowed In Parts of the Country. Written by Steven Hansen The consolidated economic report from the 12 Federal Reserve Districts (Beige Book) “indicated that economic activity has expanded in nine [of 12] of the Districts since the previous Beige Book report”. The previous report said “indicate that economic activity increased at a modest pace in most regions of the country since the previous Beige Book report”. My interpretation is that the Fed is saying the rate of economic expansion has slowed in parts of the country.
	The Tell: Sell everything? This economist says that’s nuts and will bet $7,000 on it Stephen Koukoulas, a well-known economist and commentator in Australia, challenges Andrew Roberts, the head of European economics and rates at Royal Bank of Scotland in the U.K., over this œsell (mostly) everything call.
	Market Extra: Consumer-discretionary stocks have worst one-day loss since Aug. 24 It is getting ugly for the U.S. stock market. But it is particularly hideous for the consumer discretionary sector of the S&P 500.
	Deep Dive: 10 oil companies that will thrive as crude prices rebound Companies with low debt, such as National Oilwell Varco, will be able to scoop up rivals and grab market share.