It has been a busy couple of weeks while DHunplugged was on a short vacation. Markets rally, oil climbs and central banks are getting more aggressive.

China is still in terrible shape, but investors are still looking for more stimulative actions to come to the rescue.

It will be a big week upcoming with a busy economic calendar and the Fed’s rate decision on Wednesday…

And.. What is with the Unicorns? Write-downs happening quickly as there is a sense that valuations are way to rich for many of these names.

Click HERE for Show Notes and Links

Trip to Panama – had some interesting foods and experiences. (Plenty of Ceviche, Cow Foot Soup, Tripe and more…)

– Panama casinos… 5.5% cash check out charge!

– Diving 2 oceans on one day!

Daylight Savings Time is here! Happy? – Plenty of stories about problems related to the time change… More accidents, less productivity. Really? LINK

Prem Watsa, the investor who heads Fairfax Financial Holdings Ltd. and foretold a drop in technology company shares two years ago, is now saying “I told you so.” In his annual letter to shareholders, Watsa said he expects tech stocks from Twitter Inc. to Yelp Inc. to fall even further — as much as 90 percent from their peak in the last two years. Now calling former UNICORNS = UNICORPSES

Weird story – A day after indited on violations of Sherman Act, U.S. shale pioneer Aubrey McClendon dies in suspicious auto accident.

— Data shows he hit speeds of 89 miles an hour seconds before his Chevy Tahoe slammed into a concrete bridge earlier this month in a fatal crash, according to a report issued Monday afternoon by the Oklahoma City Police Dept. McClendon’s SUV, which was fitted to run on compressed natural gas instead of gasoline, crossed the center lane more than 60 yards before the crash. He wasn’t wearing a seat belt, the Oklahoma City Police said. Data recovered from the vehicle’s black box showed that McClendon tapped his brakes several times before the crash, but didn’t truly brake hard. His Tahoe hit the bridge at roughly 78 miles an hour.

Just as the markets turn, several big brokerages are slashing the year-end price target for S&P 500. Morgan Stanley is the latest with a price target of 2,050. Do we view this as a contrary indicator?

OOFAH – The massive rise for some energy and materials companies over the past couple of weeks has been amazing. (and the fall this week)

— Past 30 days: Halliburton +22% , Helmrich & Payne +29%,  Chesapeake Energy +176%, Marathon Oil +49%, Linn Energy +157%,  Continental Resources +43%…. (Some relief as companies get reprieve with advancing oil prices and secondary offerings)

Politics: Trump rallies cancelled as violent protests have begun. This is going to be a nightmare… What happened today? Who will drop out?

Twitter and social media – how to make sense of the financial world? So many players trying to advance their own agendas…

— Afterthefact’ers, toldyouso’ers, vague range gang, complainers, pumpanddump’ers, pompous parade, clickandsell’ers, negative nellies, positive posse…

Auto-Upgrade? As Microsoft auto-upgrades more PCs to Windows 10, some users are complaining that they weren’t adequately notified. Reports of unwanted Windows 10 upgrades have been circulating for the past few days on Reddit and Twitter, etc.

New trend?

The debate over the effectiveness of central bank actions is raging on. Once an investor’s best friend, confidence is waning and markets are reacting. Following the best week of 2016, equities are once again seeing weakness as oil falls on OPEC comments.

The bearish position is strengthening, but should this be a sign to start to nibble again on stocks? Is this a contrary indication or something that we should heed?

Click HERE for Show Notes and Links

Markets moved out of the correction as of Monday, only to slump again on Tuesday. Oil to blame? Iran essentially saying that they think price freeze is stupid/Saudi Arabia won’t cut production. Oil got smoked on that news as well as fact that yesterday’s rally was not what it seemed….

Market Update Midday 2/23

Coming into the last few days of the month – do you think that the markets will be able to turn green? Most major indices are off slightly…

– Indices are trading very technical, the 2,050 level was key resistance and that was hit with selling. Today, markets stopped on daily   support and held

Not surprised: Consumer confidence falls in latest reading. Middle income confidence fell the most since October 2008.

– Still, Fed officials are talking up more rate hikes for this year.

Listening to the news, TV, reading… Bearish commentary is everywhere…. What does that mean?

Fitbit (FIT) announced earnings. Stock down 19%on weak guidance. (Looks like same game-plan as GoPro)

– Look for these one-hit-wonders as potential rally and fade candidates in the future.

Politics – Jeb Bush is out!

Lumber Liquidators (LL) Unbelievable: The U.S. Centers for Disease Control and Prevention said earlier this month that tests on the company’s products showed minimal health risks, which renewed confidence in the chain as the stock rebounded. Now the agency has corrected those findings because of the math error (used feet instead of meters?) , saying formaldehyde exposure is three times higher than previously projected, although the risk of cancer remains low. Stock was crushed on Monday.

Home Depot (HD) out with earnings – company still looking good. Lowes (LOW) out tomorrow… Which do we prefer?

Do we want to chime in about the Apple/Feds rigmarole?

Oil plunge is starting to hit banks and energy sector companies. While stocks were suffering,  not much in the way of bankruptcy or otherwise. Now starting to see headlines about sales, div reductions, massive earnings shortfalls… (Massive build after the close tonight)

JP Morgan investor day – investment banking fees down 25% over year and sees some need to add to the reserves for bad debt related to oil related debt. Stock down 4% on the negative commentary from company

 

** ANNOUNCING THE FIRST (new and improved)  DHUnplugged Closest to the Pin Contest **

Walt Disney (DIS) …  Listeners will be  completing against John and Andrew

Now Open for entries through March 2nd (Final Price Date: March 11)

Some oddball Andrew stories:

Saw a raccoon in front of my house last night – called wildlife control and they gave me a sure fire way to get ride of it.

Had a very nice Uber driver. Woman driver had to take me to a boat ramp to pick up my car.

Oil soars on news that there will be a production cut, then sours after the announcement of a production freeze. Waiting on the “left-hook” devaluation from China after they pledged to keep the Yuan strong.

Draghi promises the world that more stimulus is on tap and Japan continues to believe that negative rates are the answer to their economic woes. Meanwhile, there is some chatter that the Presidential candidates are the reason that markets have been in a downward spiral. More on this and other important topics.

Click HERE for Show Notes and Links

Good is bad, Bad is good – Japan markets finished last week down 14.5% after the Yen rallies to 111/USD. GDP drops 1.4% YoY and that was enough to drop the Yen back to 114/USD and markets rally 5%.

Japan GDP Chart

U.S Markets finished lower for the week, even with the Friday surge of 2%. This week starts off on a different note as central bankers are jawboning the markets. ECB’s Draghi once again stating that he may add stimulus in March and Japan’s Kuroda talking up the benefits of negative deposit rates.

The 2-Speed economy – Manufacturing related continues to suffer:February Empire Manufacturing -16.6 vs -9.9 consensus; January -19.4

Meanwhile…. China is out with commentary that the RMB (YUAN) should not weaken from here. Yuan had one of its best rallies (strengthen) on record after markets re-opened from the New year holiday. Waiting for the left-hook devaluation… (Skeptical?)

Yuan Fizzle Chart

China loves the movies…. China’s retail sales over the Spring Festival holiday rose 11.2 percent from the same vacation period a year earlier, with cinemas posting sharp increases in box-office sales, the country’s Ministry of Commerce said in a statement Saturday.

** More info and an Update… Announcing the DHUnplugged Closest to the Pin Contest –

The first CTP will start in March…  Listeners will be  completing against John and Andrew **

 

The ECB Council voted today to scrap the €500 note. They say that they are doing this to counter black market and nefarious uses for higher denomination bills. The reality is that taking it out of the system will effectively reduce the cash in circulation by upwards of 30%. (Will this help gold, metals and alternatives like Bitcoin?) *** Larry Summers floating the idea of scrapping the $100 bill.

Oil… Check out inventories: (note – Saudi Arabia and Russia met and implemented a FREEZE rather than production cuts)

Crude Inventory Chart

Chatter that current Pres candidates are the reason that markets are acting poorly. Now on the front cover of Barrons this week…

Barron’s Cover

Here we go… Apple (AAPL) planing massive bond sale. 30-year bond may yield 2.

CDS – Credit Defaults Swaps blowing out in Europe as negative deposit rates are having a terrible impact. Tech stocks blowing up as earnings and outlook are really concerning investors.

Oil continues to get hammered and now below $30 per barrel – even with the rumors flying around that there will be a special/emergency meeting with OPEC/Non-OPEC countries in an effort to stabilize prices.

Japan market crumble, bond yields are dropping and all eyes are on the Fed’s next move. Listen in as we dive deep into the real news that matters most for investors.

Click HERE for Show Notes and Links

Japan reeling after the BOJ implements negative rate policy – Yen up 5% since 1/29/16 and markets tanking (Nikkei dropped 5.5% last night) — Japan 10-year falls below 0% for first time

FACT – Negative rates are not good for markets – Central Banks are now tinkering with tools they have no idea what outcome will be. (Yen rallying again tonight – now at 114.31)

Yen Chart

The biggest concern right now may be that  China devalues the Yuan after the Chinese New year Holiday.

The global financial situation is getting worse as seen by the Contingent Default Swaps (CDS) – remember those?

CDS Spreads Chart

Interesting: Last year, the number of dividend reductions far surpassed 2008.

Dividend Reduction Trend

Goldman Sachs Abandons Five of Six ‘Top Trade’ Calls for 2016 – Inflation, dollar bullish call, Emerging market stocks, U.S. banks and a few others. So much for the big boy’s being right…

There has been a lots of talk about a potential U.S. recession. There are lots of voices that are protesting that concept. There are some areas that are clearly in recession.

ISM Composite Chart

Oil at $30 a barrel is blowing a hole in the insurance that U.S. shale drillers bought to protect themselves against a crash. Companies including Marathon Oil Corp., Noble Energy Inc., Callon Petroleum Inc., Pioneer Natural Resources Co., Rex Energy Corp. and Bonanza Creek Energy Inc. used a strategy known as a three-way collar that doesn’t guarantee a minimum price if oil falls below a certain level, company records show. While three-ways can be cheaper than other hedges, they leave drillers exposed to sharp declines.

May be some market moving potential as Janet Yellen is giving testimony to congress over the next few days. Will the Fed dare to hike rates again anytime soon? (U.S. yields have slid since the rate hike)

What is this all about? A record 4,279 individuals renounced their U.S. citizenship or long-term residency in 2015, according to data released by the Treasury Department.

LinkedIn (LNKD) stock tumbles 50% after earnings release. Are advertisers feeling the pinch and finally giving up on some social media? (FB,

Markets are still contending with cross currents and the free-fall in commodity prices. The most recent earnings from Apple (AAPL) and Google (GOOG) are pushing and pulling investors in different directions.

We delve into the recent move by the Bank of Japan, earnings and the latest news that are shaping the investment climate. Plus, we reveal the winning entry from our 300th Anniversary show.

Plus, we take a look at negative interest rates and the potential for the Fed to restart QE.

Click HERE for Show Notes and Links

RegisterLogin

Results from the DHFed – No one got it exactly right – but close… (Scroll to bottom)

The Bank of Japan shocked markets last Friday with the announcement that they are moving toward negative rates. (Only for new money deposited at the BOJ and will not hurt bank profits) Yen drop 2% on the news after initially soaring. Negative rates are a really bad experiment.

Tonight, in response to the selloff in US and oil hitting $29.45 (down 23% YTD), Japan markets down 3%, Hang Seng down 3%, and futures running lower)

* Tomorrow may be ugly…. However, probably a good amount of potential bounce opportunity ahead of Friday. **

Crude oil now back to $30… Nasty fall after big move up.  markets following step-by-step. DJIA dropped 300 points today and NAZ and S&P ugly. Where to next?

Google/Alphabet (GOOG) unseats Apple (AAPL) as the most valuable company in the world. With the recent earnings announcement, Google’s market cap is larger than Apple. WOW!

– Google had more paid clicks at a lower cost per click and beat by a wide margin.

Yahoo! laying off 2,500 employees. But, is Marissa Mayer one of them .. NO!

WAIT!!! 3:30pm, some chatter about yahoo! looking for…. “Strategic Alternatives” – stock ramps (smells like desperation).

Yahoo! also announced that they are going to explain a major restructuring after the earnings announcement tonight – that led me to believe that there is the potential for a significant miss in their quarterly report. (There is also some discussion out there are lawsuits against Yahoo! regarding their stacking process for employee reduction)

Natural gas getting whacked! Below $2.00 now and off by 14% YTD, 13% in Feb. Maybe because Punxsutawney Phil sees no shadow, predicts early spring??

The 10-year Treasury is 1.87% now, the recent low was 1.5% in 2012 when the Fed was pressing rates. Does this mean that markets do not believe that the Fed will be raising rates again AND may be moving toward additional stimulus? Or something else under the surface…

BANKS: This is bad..Click to see recent performance

Click For Bank Performance

Iowa Caucus – Clinton and Cruz. WOW… Trump must be pissed.

What is with this Zika virus – really picking up steam. WHO now calling this a global emergency. (LINK)

— Report that the first spread through sexual contact in the US just hit the wires.

Comcast – Xfinity – I have service and they opened up their WiFi so wherever I am it picks it up, piggybacking off of others Wifi. Is this right?

It is starting…. Exxon Mobil profits down 58%, BP down 90% or so…..

Market comeback? Short-squeeze ahead of the Fed? Oil hitting bottom? Not so fast…

Apple’s (AAPL) earnings, facts about Oil and the million dollar Oprah Tweet – Just a few of  the important discussion points from this episode – and much more.

The big question is: Will this end up being the worst January for market in history or will the Yellen and her band of merry men be able to save the markets?

Oh – not to forget that we are having a special giveaway this episode – check the show notes below for more information.

Click HERE for Show Notes and Links

Announcing the DHFed – We give away money too! Special giveaway for the 300th show will be announced at the end of the show. (Scroll to bottom)

The first week up this year. With a good amount of chatter from Central Banks last week, the thought is that they are going to once again save markets. However, there is a palpable change in sentiment over whether they can do it this time.  (Draghi spoke last week and promised to do “everything possible” again and there is the hope floating that the Bank Of Japan will add stimulus.)

Several “big firms” are cutting their year end price target for the S&P 500. The latest was JP Morgan with a move from 2,200 to 2,000 by the end of 2016.

– Quick calc: EPS of $120 X PE 17 = 2,040 or 7% possible move from here…

– The above also assumes EPS grows by 10%+ for full year 2016

China continues to be the target of selling as the PBOC not trusted and massive flight of money out of the country. Some capital controls have been added to try to keep money from leaving.

Meanwhile, China is targeting further cuts in crude steel production capacity by as much as 150 million tons and “large scale” reductions in coal output as part of supply-side measures aimed at curbing overcapacity and excess labor in state-owned industries. The country has lowered steel production by about 90 million tons “in recent years” and will push to cut a further 100 million to 150 million tons, while “strictly controlling” steel capacity increases and halting new coal mine approvals. (LINK)

Don’t believe China’s economic data? The Communist Party’s anticorruption commission announced late Tuesday that it was looking into the head of the country’s statistics agency over what it called “serious violations.”

Markets following price of Crude. In 2016, 95% correlation of S&P 500 to the daily move in crude price. Usually only 50% over longer term period.

Post Close,  WTI oil futures sell off after the API reports a massive build of +11.4 mln barrels of oil vs. last week’s build of 4.6 mln barrel (Briefing.com)

Big week for earnings – 150+ companies in the S&P 500 are reporting this week. So far a mixed bag. Amazon (AMZN) on Thursday.

Twitter (TWTR) – big management changes, very abrupt departures of heads of key areas of the company. And, Twitter Chief Executive Jack Dorsey announced Tuesday that American Express’s Leslie Berland will join the social media company as its chief marketing officer (AXP? Really???).

News out of Re/code that Twitter has stopped showing ads to their more valuable users.

Twitter Stopping Ads…

Apple (AAPL) out with earnings: (now holding $216 billion in cash)

There has been no let up of the selling pressure. Even with an overnight pop, stocks lost most of their luster as the correction continues.

Earnings season is now in full swing and even as we see some decent beats, that is not helping. Banks are expecting big losses on energy related debt and few companies have bright outlooks to share.

Click HERE for Show Notes and Links

Three Powerball winners – Since we are still doing the show, assume that neither of us won?

Market update: At the end of last week, January 2016 moved up to the #1 worst January since 1966. While it came off the bottom Friday, it is still in the Top 3. Oil dropping, concern over rising provisions at banks for bad debt, consumers spending less and the outlook for earnings still has a cloud hanging over markets. Today we are seeing a bit of a relief rally from an oversold condition – will it last? (All major indices in correction territory now)

BIG reversal (again) today. Futures on S&P 500 were up 24 handles pre-market. By mid-day they were flat. Sellers are not kidding around. (By 2pm, all major indices in the red)

Slowest growth in 25 years! China GDP 6.8% – world markets watching this closely as concern over the growth of the country’s economy could be a problem for the rest of the world. Lowest GDP since 2009. The question is: Do we believe it?

– Several analysts out saying that GDP may really be well below, possibly 5%

– China may need to continue to devalue the Yuan to reduce debt and stoke growth

China GDP Trend

Iran economic sanctions lifted. Iran immediately added 500,000 barrels per day to oil production. Sent Brent crude under $29. Current forecasts are all over the place – see chart.

Brent Crude Forecast

Over five million jobs will be lost by 2020 as a result of developments in genetics, artificial intelligence, robotics and other technological change, according to World Economic Forum research. (But there are over 3 billion employed worldwide, is this a big deal?) (LINK)

Seems that there is not just one cockroach. Renault SA shares plunged the most in 17 years after a union said French fraud investigators seized computers from the automaker, apparently as part of a probe into emissions testing. (Seems that Europe is not very concerned and wants to possibly change emissions rules as their auto sector could be hit by these findings)

Problem for the big ticket housing market? The Treasury Department’s Financial Crimes Enforcement Network said that it will seek out the identity of individuals behind limited-liability companies that pay cash for high-end residential real estate in Manhattan and Miami-Dade County. Starting in March, title insurers will be required to name the true “beneficial owner” behind the anonymous entities.

Bank earnings are flowing in – while they look good on the surface, there is concern over the outlook and loan loss provisions. Bank of America (BAC) reported and stock down again. (Also concern about banks in Europe as potential for banking crisis rising again) For 2016:

– Bank of America (BAC): – 16%

It was a historic week on Wall Street. 2016 started with a nasty blow to markets. Investors liquidated as they ran for cover and headlines are painting a bleak picture.

Earnings season, China, crude and the major news that will move markets are all discussed. We also confirm our car sales theory with data that backs it up.

The Iranian affair and the State of The Union Address are up for commentary as well.

What is that coffee company that John can’t recall?

Show Notes and Links

President Obama’s final State of the Union… and?

THE WORST FIRST WEEK OF YEAR EVER – that is the headline that is being pushed around. Also seeing many compare the future to 2008…. Yes, it was bad…. How bad?

Some Stats:

XHB

SPDR S&P Homebuilders

-9.13%

XLB

S&P Sel Materials Spdr Fd

-7.74%

XTL

SPDR S&P Telecom ETF

-6.92%

XLF

S&P Sel Finl Spdr Fd

-7.26%

XLE

S&P Sel Energy Spdr Fd

-7.08%

XLK

S&P Sel Tech Spdr Fd

-6.40%

XLI

S&P Sel Industrial Spdr Fd

-6.21%

XLY

S&P Sel Consum Discretion’y Sp

-5.82%

SPY

SPDR S&P 500 ETF

-5.86%

XLV

S&P Sel Health Care Spdr Fd

-5.57%

XLP

S&P Sel Consum Staples Spdr Fu

-2.91%

XLU

S&P Sel Utilities Spdr Fd

-0.39%

Other markets around the world fared even worse last week:

China -13%, Africa -11%, Australia, -11%, Mexico -9%, Brazil -8%, Canada -6.75%….

Sectors that are getting beat up so far in 2016:

Homebuilders -9%, Materials -7.75%, Telcom -7%, Financials -7%, Energy -7%…

Utilities and Consumer Staples held up the best with only fractional losses.

Technical Conditions at end of last week:

* At the close of the week, only 101 stocks in the S&P 500 were above their 200 day moving average

* At the close of the week, only 61 stocks in the S&P 500 were above their 50 day moving average

* S&P 500 is under the 10-month and 12-month moving average

* Our Key Reversal Indicator (KRI) is flashing “oversold levels” consistent with near-term market turning points

* The Spearman Indicator is close to a low point that shows bottoming

Key Reversal Indicator

From Tom McClellan this week: “In a Dec. 11, 2015 Chart In Focus article, I posed the rhetorical question about whether the market was reliving its past from 2012, or from 2008.  The financial panic in China seems to have settled the question for us, and the market has decided on the 2008 scenario.”

Market Doomsday Chart

China is trying to get a grip on markets. After falling 7% and triggering circuit breakers on the first trading day of the year, the govy spent $20 billion to try to keep a bid under markets. In addition, the expiration of the share sale regulations is going to be moved further out. (not to mention that the govy may look to make selling a criminal action (of course the next 7% drop and mar...

The countdown until the Fed rate decision is getting down to the last few hours. Markets seem “prepared” for a hike and then some very dovish commentary to follow. Will this cause the U.S. dollar to rally or will we see an unwind of risk assets? On the table for discussion is the recent and […]