25Jan2016 Market Update: US Markets Down Fractionally, Trading Sideways, Crude Down Fractionally, Short-Term Indicators Bullish

Here is the current market situation from CNN Money

North and South American markets are mixed. The Bovespa is higher by 0.83%, while the S&P 500 is leading the IPC lower. They are down 0.72% and 0.48% respectively.

Oil falls 4 percent after Iraq supply adds to glut

NEW YORK (Reuters) – Oil prices resumed their slide on Monday, falling about 4 percent to wipe out some of the surge at the end of last week, on news that Iraq flooded a massively oversupplied oil market with record output last month.

McDonald’s sales beat as all-day breakfast a hit

(Reuters) – McDonald’s Corp reported better-than-expected quarterly same-restaurant sales as the launch of all-day breakfasts proved to be a hit with diners in the United States and demand continued to recover in China.

Johnson Controls to buy Ireland-based Tyco for $16.5 billion

(Reuters) – Johnson Controls Inc , a U.S. maker of car batteries and heating and ventilation equipment, said on Monday it had agreed to acquire Ireland-based peer Tyco International Plc in a $16.5 billion deal aimed at lowering its tax bill.

Materials, energy stocks weigh on indexes

(Reuters) – Wall Street looked set to snap a two-day rally on Monday as retreating crude oil prices weighed on materials and energy stocks.

Homebuilder D.R. Horton reports lower-than-expected revenue

(Reuters) – D.R. Horton Inc , the No. 1 U.S. homebuilder, reported lower-than-expected revenue for the final quarter of the year as its home sales fell in all regions but the Southeast.

Saudi Aramco chief says maintaining oil and gas investment

RIYADH/LONDON (Reuters) – National oil giant Saudi Aramco is continuing to invest in oil and gas production capacity despite cost-cutting due to low oil prices, its chairman Khalid al-Falih said on Monday.

Fed says policy meeting to go forward as scheduled despite snow

WASHINGTON (Reuters) – The U.S. Federal Reserve said on Monday its policy meeting set for Tuesday and Wednesday would go forward as scheduled despite an ongoing cleanup in Washington after a major snowstorm.

Top Twitter executives to leave company, CEO Dorsey tweets

SAN FRANCISCO (Reuters) – Four senior Twitter executives are leaving the media company, CEO Jack Dorsey tweeted late Sunday night, the biggest leadership changes since Dorsey returned as chief executive as he struggles to revive the company’s growth.

Valeant’s Pearson says timing of return uncertain

(Reuters) – Valeant Pharmaceuticals International Inc’s ailing chief executive, Michael Pearson, said he was on the road to recovery but was uncertain about when he would return from medical leave.

What Squeeze: Bets Oil Will Drop Below $25 Hit Record High

Having briefly reached bull market status (ripping 20% off last week’s lows), WTI crude oil is collapsing again this morning as the reality of excess supply and dwindling demand crash on the shores of manipulated futures and ETFs. However much hope was imbued into this rally as “setting the bottom” for oil, it seems the rally was used by ‘investors’ to hedge the downside as bets on a bearish plunge have soared to record highs.

Hope fades for a big stimulus package…

And reality hits oil with the chaos in financial markets remaining…

As the last week has seen bearish bets soar to record highs…

As Bloomberg reports, bets that crude oil will retreat below $25 a barrel have reached an all-time high as stockpiles continue to grow.

Open interest, or the amount of total contracts outstanding, for March West Texas Intermediate crude $25 put …

Bad Loans Pile Up In Alberta, As Oil Bust Weighs On State Lender

As regular readers are no doubt acutely aware, Alberta is in trouble.

The province is at the heart of Canada’s dying oil patch and crude’s inexorable decline has had a devastating economic impact.

30% of provincial revenue is derived from resources and as crude collapsed, so did oil and gas investment. O&G spending plunged by more than a third in 2015 and as provincial authorities wrote in their latest fiscal update, œweakness in the oil and gas sector has spread to other sectors of the economy.

As the layoffs piled up, so too did the social consequences of the bust. Food bank usage rose, property crime soared, and suicide rates spiked.

The recent rally notwithstanding, the outlook for oil prices is grim. Overnight, Saudi Aramco Chairman Khalid Al-Falih announced his company hasn’t reduced its investment capacity which suggests they’ll be no abrupt about face on the supply side from Riyadh and Iran is set to ramp production by 1,000,000 barrels per day by the end of the year.

In Canada, WCS is sitting just a dollar above the marginal cost of production and Stephen Poloz didn’t do drillers any favors by eschewing a rate cut last week.

Just in case you needed another reason to fear for the worst in Alberta, Moody’s and DBRS are becoming increasingly concerned about crown corporation ATB Financial. œAlb …

…Until The Bubble Bursts

Submitted by John Rubino via DollarCollapse.com,

Critics of today’s fiat currency/fractional reserve banking world have (for what seems like forever) made the common sense point that when debt rises faster than cash flow, bad things are bound to happen. In every cycle since 1980 this has been dismissed by the vast majority who benefit from inflating bubbles — until the bubble bursts.

And here we go again. The following chart from Stock Traders Daily shows the relationship between margin debt (money borrowed by investors against existing stock positions in order to buy more stock) and cash on hand in brokerage accounts. The idea is that when investors hold lots of cash they’re pessimistic, and when they borrow a lot they’re optimisitc. Extremes of either tend to signal changes in market direction. At the end of 2015 investors were even more excited than at the peak of the housing bubble, indicating that there’s not much retail money left to be tossed at US stocks.

China, being a little more bubbly than the US, is a good indicator of where US margin debt might be headed …

Which Italian Banks Are Most Exposed To Soaring NPLs: Citi Crunches The Numbers

With European markets increasingly jittery on Italian bank concerns, now that after 7 years of build up those staggering Italian non-performing loans were finally noticed by traders, resulting in speculation that the creation of an Italian bad bank is imminent, overnight Citi’s Azzurra Guelfi released a note trying to qualify just how exposed Italian banks are to rising bad loans, and quantify which banks have the most exposure.

As Citi writes, “Italian banks’ share prices have been volatile YTD, given the market’s renewed fears over asset quality and potential developments on a possible bad bank creation. Asset quality is a central discussion point for investors on Italian banks. Italian banks have challenging asset quality metrics compared with European peers, but some of the difference can be explained by lack of state-driven clean-up in the past, NPL mix, longer recovery time, high level of collateral (eg lower coverage), capital effect, etc. The resolution of 4 smaller Italian banks has increased questions about system asset quality and M&A.”

In other words, while the rest of Europe, and especially Spain, was proactive in sweeping as much of the NPL exposure under the rug (where it still remains), Italy has been far less prompt in addressing this issue which is suddenly plaguing its banking sector leading to dramatic losses for stocks of local banks.

So here is Citi’s take on the severity of the problem:

Total gross NPLs in Italy has increased by c160% since 2009 and now represents c18% of loans (vs c8% in 2009). Gross Sofferenze (eg the worst category of NPLs) are c60% of this or c ‚¬200bn. While new inflows of NPLs have decreased, there have been limited disposals, pos …

Oil, Stocks in Tightest Lockstep in 26 Years

Oil and stock markets have moved in lockstep this year, a rare coupling that highlights intensifying fears about global economic growth.

Stocks Drop as Oil Prices Resume Slide

Stocks in the U.S. and Europe slipped Monday after notching their first week of gains this year, while oil prices resumed their slide.

Time to Say Goodbye to Long Bull Market?

A turbulent January has sent investors scrambling to consult their charts, where many are seeing signs that a nearly seven-year-old bull market in U.S. stocks is nearing an end.

January 2016 Texas Manufacturing Survey Manufacturing Activity Now Contracting With a 23 Point Decline.

Of the three Federal Reserve districts which have released their January manufacturing surveys – all are in contraction. A complete summary follows.

The Wall Street Journal: Hilton targets millennials with new Tru by Hilton brand

Hilton Worldwide said it is launching the Tru by Hilton brand to reach younger guests by the end of the year.

NewsWatch: U.S. stocks extend losses as oil rout deepens

U.S. stocks built on losses Monday in late-morning trade, with the Dow industrials briefly dropping over 100 points, as a slump in oil prices weighed on energy and materials shares.