Tuesday, January 26, 2016


Dow falls over 200 points as Wall Street's losses intensify

U.S. stocks extended losses on Monday, as a deepening rout in oil prices weighed on energy and materials shares.

Dow industrials down 1.3% to 15,885.

S&P down 1.6% to 1,877.

Nasdaq down 1.6% to 4,518. 

Oil fell over 7%.  

All European markets were down on Monday.

Small Caps were the worst performer today along with Trannies.

Twitter shares also took it on the chin on Monday, falling about 4%.

Apple is reporting earnings tomorrow after the closing bell and this is the quarter that we're all supposed to be scared of.

Stocks are rolling over fast...as it seems Draghi did not offer enough assurance's to the marketplace.

Looks like the end of the week rebound last week was just a dead-cat bounce.

Kuwait says oil situation 'will be difficult' until 2020
Worries about a possible U.S. recession have been mounting in the wake of the stock market's slump this month. The herd is about to be thinned.

China Crashes To 13 Month Low After Last Hour Panic Selling In Over night Trading.

We only had one economic data point cross the wires on Monday but fortunately it was exciting report (though bad for Texas). The latest manufacturing report from the Dallas Federal Reserve was released Monday with the business activity index falling to a remarkable -34.6, the lowest reading in over six years and another sign that the oil rich state is struggling in the wake of the oil price crash. Expectations for the economy in Texas "weakened notably" in January's survey with one executive saying, "Demand slowed more quickly than is typical in December. Early demand is weaker in January, leading to the belief that growth in 2016 may be elusive."

January 2016 has been the worst month for capital formation (IPOs) globally since August 2008. In fact we have had exactly....... Zero... nada... zip! That's how many IPOs have started trading on US exchanges in 2016 so far. January is on track for the slowest month for IPOs since December 2008, when no companies filed after the bankruptcy of Lehman Brothers Inc.

Relentless, ongoing, over-aggressive central bank activism and policies have created incredibly fake markets and wildly inflated asset prices — but that fa├žade is now starting to collapse around us. So the only solution to preserve wealth is to stop playing along and get the heck out of the way.

One CIO for a European insurance giant said: "The trade now is to hold as much cash as possible." The chairman of Swiss banking giant UBS said: "There may be no limit to what the ECB is willing to do but there is a very clear limit to what QE can and will achieve." And still another financial CEO said: "The sickness is not inflation, it's the mispricing of assets." These are the very same people who feasted off the booms/bubbles those policies helped create.

Why did we see record M&A, record stock buyback activity, and record high-end real estate pricing and sales in 2014 and early 2015? Because easy, nearly free money was pouring out of almost every central bank vault around the world, that's why. Now the profiteers are packing their bags and going home. But if the richest and most powerful people on the planet are now selling into rallies, that's a potentially very powerful "sell" signal. If there aren't fundamentals that would move the market higher, it can only go lower.

Sure, oversold bounces like we saw last week are nice. Sadly, and inevitably the selling resumed on Monday with the Dow down over 200 points. Yes, the black boxes are trying to pump up the market and when they give up, there will be no bids. The markets peaked in May of last year, found a low in August, rose to a lower high in November, then a lower low in January of this year. The chart forms a slowly descending channel, which is likely to move much lower.

Unfortunately, history has been a brutal teacher about the value of risk management.

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