Wednesday, January 20, 2016

Stocks, Commodities, & Bond Yields Are Collapsing on Wednesday morning.......

Stocks, Commodities, & Bond Yields Are Collapsing on Wednesday morning

Stocks wipe out most gains on Tuesday  as oil slump resumes.....


US stocks were sliding in afternoon trading after opening firmly higher....

Dow: 16,016, +27.9, (+0.2%)

S&P 500: 1,881.3, +1, (+0.05%)

Nasdaq: 4,477, -11.5, (-0.2%)

WTI crude oil: $29.60, -2.6%

Technically speaking, the U.S. markets have broken down to start 2016. In the process, each major benchmark has violated significant support, opening the path to potentially material longer-term downside.

Tuesday's anemic rebound in stocks comes after a brutal two-week start to the year and is being followed by a brutal Wednesday selloff.

Gains for U.S. stocks continued to disappear after Tuesday's opening surge, as a fresh drop in oil prices put pressure on the main indexes.

Stocks, Commodities, & Bond Yields Are Collapsing on Wednesday morning.

Markets In TurmOIL: Futures Plunge, Japan Enters Bear Market, Crude And Commodity Currencies Crash.

S&P 500 futures down 1.8% to 1840 below critical technical levels, suggesting a lot more selling to come.

10Y Treasury Yields are plunging back below 2.00% (lowest in 3 months), WTI crude front-month (March) has just tumbled to a $28 handle, and Dow futures down over 500 points at one point Wednesday morning.

Wall Street is set for steep losses at the open on Wednesday, as a renewed selloff in Asia and tanking oil prices triggered a flight from risky assets such as equities.

Any hope that the late momentum in the US session last night might continue has evaporated with steep losses. The rout then spilled over to Europe, where the Stoxx 600 is down 3% to the lowest level in 13 months.

Ugly; very very ugly, describes current equity markets, with momentum swinging negative yet again and the bears firmly in control. With every upturn being followed by deeper falls, investors are increasingly wary as it becomes more and more difficult to determine what might happen next.

The bear market in stocks looks like it's finally arrived.......

Europe this am

Stoxx 600 down 3%

FTSE 100 down 2.9%

DAX down 3.1%

German 10Yr yield down 6bps to 0.49%

Italian 10Yr yield up 2bps to 1.57%

Spanish 10Yr yield down 2bps to 1.69%


The ruble plunged to a record low.

Asia this am

MSCI Asia Pacific down 2.8%

Nikkei 225 down 3.7%

Hang Seng down 3.8%

Shanghai Composite down 1%


Hong Kong Dollar Forwards Sink to Weakest Since 1999.

Hedge Fund That Called Subprime Crisis Says Yuan Should Fall 50%.

Chinese stocks fell heavily on Wednesday, dragging commodities and higher-yielding currencies lower.

The world is on the verge of a global bear market, exacerbated by an ongoing earnings deterioration which has sent the MSCI gauge of global equities to the brink of a bear market. As the chieftains of the global economy gather this week in Davos, Switzerland, they're facing the darkest outlook since the financial crisis tipped the world into recession seven years ago.

Bank of America shares are on track for the lowest close in over 2 years.

Oil market could 'drown' in oversupply, IEA warns.

WTI Crude futures down 2.8% to $27.65

Brent Futures down 2.2% to $28.12

Shell Oil 
Profit Plunges at Least 42%

The selloff in oil could get even worse in 2016, as the energy market grapples with excessive oversupply, a strong dollar and a weak global economy, the International Energy Agency has warned. Oil supply could exceed demand by 1.5 million barrels a day in the first half of 2016, the IEA said.

Can it go any lower?.... unless something changes, the oil market could drown in oversupply. So the answer to the question is an emphatic yes. It could go much lower and stay low for a long period of time. Economic slowdowns in China and Brazil also are likely to hit oil demand in 2016.

West Texas Intermediate oil futures headed lower on Tuesday, but Brent prices climbed as the market reacted to confirmation over the weekend that sanctions on Iran were lifted, clearing the path for a potential flood of new crude in the global market. Oil prices "no matter what time frame you look at, it's pretty clear that it's in a distinct downtrend and there is no reason to try bottom-fishing yet.

The world's financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability.

Virtually every major program of every major nation-state is financially unsustainable going forward.

Though triage is typically used in a medical setting, we are entering an era when financial triage will increasingly be necessary on a household, enterprise and national level. Financial triage is the process of sorting financial expenses/ programs that are unsustainable and cannot be "reformed", those that cannot be saved except with systemic reforms, and those that will survive if simply scaled back.

Financial triage is intrinsically painful and wrenching. Corporations have much more practice in inancial triage, as divisions or departments that aren't generating profits are sold, closed or slashed to save what can still be salvaged.

Nation-states typically have near-zero experience with financial triage. Programs are rarely ever shut down or slashed to the bone to save core functions; cuts are modest and as soon as the crisis passes, expenses soar as everyone who suffered minor cuts demands pay raises and benefits that restore whatever was trimmed.

Virtually every major program of every major nation-state is financially unsustainable going forward. Every major program is funded by wages and profits, both of which will be eviscerated in the global recession that is just starting.

Longer term, the demographics of a shrinking work force and the profit-destroying forces of automation render immensely costly social and military programs unsustainable. The idea that these trillion-dollar programs can be reformed/saved with minor cuts and policy tweaks is delusional; to save these programs, cuts must be deep and permanent--precisely what the status quo cannot accomplish because it is politically impossible to over-ride vested/ entrenched interests.

Unfortunately, this inability to save what could be saved with deep cuts/ reforms means programs that could have been saved will collapse, and politically acceptable half-measures of "reform" will end up dragging other programs that could have been saved to the financial morgue.

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