20Jan2016 Market Close: US Markets Closed In The Red, But Off The DOW’s Steep 500 Plus Drop Earlier, Oil Climbs Off Its 2003 Low And Settles In The Low 28’s

Wall Street slides again as oil prices drop

NEW YORK (Reuters) – Wall Street’s recent selloff deepened on Wednesday, with the S&P 500 closing at its lowest in over a year as U.S. oil prices plummeted to 2003 lows.

U.S. congressional committee subpoenas ex-drug CEO Shkreli

WASHINGTON/NEW YORK (Reuters) – A U.S. congressional committee has demanded that former drug executive Martin Shkreli appear at a hearing on drug prices to testify about his former company’s decision to raise the price of a lifesaving drug by more than 5,000 percent, congressional aides said on Wednesday.

News Corp denies rumors of Twitter bid

(Reuters) – Rupert Murdoch’s News Corp said rumors about the company’s interest in buying microblogging site Twitter Inc or building a stake in it were untrue.

Oil plumbs new lows below $27 as rout persists

NEW YORK (Reuters) – U.S. oil prices crashed below $27 dollars a barrel on Wednesday for the first time since 2003, caught in a broad slump across world financial markets with traders also worried that the crude supply glut could last longer.

Goldman Sachs sees M&A business weathering market slump

(Reuters) – Goldman Sachs Group Inc , the 2015 M&A champion, is putting a brave face on the prospects for its dealmaking business this year even with markets plunging.

Davos leaders look beyond 2016’s early market mayhem

DAVOS, Switzerland (Reuters) – Blood-letting in global markets is dominating corridor talk as business leaders and policymakers meet in Davos, although so far the view is that it doesn’t signal a financial crisis.

Exclusive: Saudi-backed shipping line UASC resumes Iran business

LONDON (Reuters) – United Arab Shipping Company is resuming business with Iran following the lifting of Western sanctions, despite the deep-seated political rivalry between the Islamic Republic and Saudi Arabia, one of the shipping line’s main shareholders.

Weak U.S. inflation, housing data lower March rate hike chances

WASHINGTON (Reuters) – U.S. consumer prices unexpectedly fell in December as the cost of gasoline dropped and rents rose moderately, signs of weak inflation that further diminish expectations of a Federal Reserve interest rate hike in March.

Wal-Mart to hike pay for 1.2 million workers in 2016

(Reuters) – Wal-Mart Stores Inc said more than 1.2 million of its employees would get a raise in 2016 and introduced new rules allowing staff to carry over paid days off as the retailer aims to retain workers amid a tight U.S. labor market.

“My Career Basically Ended Today”: What Is Really Happening In China

Two months ago, long before the WSJ and the NYT wrote virtually carbon-copy pieces, we laid out a list of China risk factors which everyone by now is familiar with. These were as follows:

a slowing economy crippled by soaring debt, now over 300% of GDP

an economy which is overly reliant on fixed investment

an artificially high exchange rate which is adversely impacting exports and impairing trade, in a “beggar thy neighbor” world everyone is rapidly devaluing their own currency

the feedback loop of plunging commodity prices and highly levered domestic corporation which can not pay their annual interest expense payments at current prices of industrial commodities, leading to surging business failures and defaults

a burst housing bubble which recently popped (although slowly growing again)

a burst stock market bubble which recently popped (although slowly growing again)

Non-performing loans, as high as 20%, and metastsizing across the Chinese banking sector

The market has been struggling to price many of these into any existing investment theses.

We also said what we think is, as of this moment, is the biggest, and most, underreported risk facing China: social discontent, resulting from a breakdown in recent “agreeable” labor conditions, wage cuts and rising unemployment, leading to labor strikes and in some cases, violence.

To corroborate this, in November we showed a tally of labor strikes through the 11th month amounted to a record high 2,005. We have updated this to show that in just the last two months of the year, labor strikes in China hav …

Saudis Line Up Chinese Energy Deals As Competition For Asian Market Heats Up

On Tuesday evening we checked in on Xi Jinping as he makes his first visit to the Mid-East as President.

As we detailed extensively, the trip comes at a critical time for the region. Saudi Arabia and Iran are at each other’s throats following a series of unfortunate events that began with the execution of a prominent Shiite cleric and quickly escalated into an all-out diplomatic firestorm.

Now, the spat is on the verge of triggering a wider sectarian conflict that could further destabilize an already precarious security situation.

But it’s not all about the long-running ideological divide. The two regional powers are also at odds economically.

The lifting of international sanctions against Tehran triggered a $100 billion windfall for the Iranians and increased access to global markets means Iran will be able to pull in as much as five times more per month from crude sales than it did under sanctions.

Saudi Arabia is Beijing’s number one supplier of oil, but as China’s economy continues to decelerate, there are questions as to how long the Chinese will continue to snap up cheap crude. On top of concerns about falling demand from the East, Riyadh is also worried that Beijing will look increasingly to other suppliers. Russia, for instance, surged ahead of Saudi Arabia as China’s top supplier on at least three occasions in 2015.

With Iran set to ramp up production by 500,000 b/d in Q1 and by 1,000,000 b/d by ye …

The Terminal Decline Of The Middle Class & Money Velocity

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

This has three extremely negative consequences.

In response to a recent post on the structural decline in the velocity of money, correspondent Mike Fasano described a key dynamic in both the decline of money velocity and the middle class.

“There is another reason for falling velocity. People like me who have saved all their lives realize that they their savings (no matter how much) will never throw off enough money to allow retirement, unless I live off principal. This is especially so since one can reasonably expect social security to phased out, indexed out or dropped altogether. Accordingly, I realize that when I get to the point when I can no longer work, I’ll be living off capital and not interest. This is an incentive to keep working and not to spend.”

Thank you, Mike, for highlighting the devastating long-term impact of the Federal Reserve’s zero-interest rate policy (ZIRP): with the real (i.e. adjusted for inflation) return on savings near zero (or even negative, for those who have to pay soaring rents, healthcare insurance premiums, college tuition, etc.), those saving for retirement are losing the Red Queen’s Race: no matter how much they save, the income will be too paltry to support retirement.

This has three extremely negative consequences. Those seeking a return above zero are forced to put their savings at risk in boom-and-bust markets that tend to reward only those who get into the bubble expansion early and exit early.

These boom-and-bust markets tend to savage the assets of the middle class when they blow up, but do little to rebuild these assets in t …

Dow Pares Steep Losses to Close Down 249

Major U.S. stock indexes pared losses near the end of trading Wednesday, ending another session of sharp moves that has been typical of markets so far this year.

Hedge Funds’ Hot Idea: Retreat

Hedge funds reeling from the recent stock-market turmoil are rallying around a hot tip: Buy nothing.

Goldman Sachs Profit Drops on Big Legal Bill, Trading Woes

Goldman Sachs’s profit tumbled 65% as weak trading and a large penalty took a heavy toll.

The Tell: Goldman’s stock could tumble another 20%, charts show

Goldman Sachs Group’s stock could fall another 20% before it hits the downside target produced by the bearish technical pattern known as a head-and-shoulders.

This is what the hottest year on record looked like

It was really hot last year. In fact, we’ve never endured a hotter year than in 2015, according to NASA and the National Oceanic and Atmospheric Administration. Here’s what the hottest year on record looked like.