"We believe that the current environment is not a normal cyclical downturn but a fundamental shift in the operating environment for these commodities. As a consequence, a wholesale recalibration of ratings in the mining industry is deemed necessary. " - Moody's
And with that we can close the chapter on today's "Greece is fixed" "oil production will be cut" trial balloon/rumor fiasco.
SAUDI HAS NO PROPOSAL TO CUT OUTPUT 5%: OPEC GULF DELEGATE
To all those who panicked and covered their shorts, our condolences.
Biotechs are getting crushed, extending losses of the last few days as it appears the earnings beat for Facebook has sparked a great rotation from everything into the social network.
Following the post-regulatory-change spike in existing and new home sales, pending home sales disappointed with a mere 0.1% rise MoM (missing expectations of a 0.9% rise). The weakness of the forward-looking indicator of home closings was blamed - as usual - on low inventories but also on "sizable losses in the stock market." The 3.1% YoY sales increase is close to the weakest since November 2014.
The consumer comfort of Democrats soared this week relative to Republicans - pushing their relative confidence to 4-month highs. However the last week saw an almost unprecented surge in Democrat confidence. This is the biggest surge in Democrat confidence since President Obama was elected in November 2008 - in a week when it looks like Hillary will be indicted and Bernie takes the lead in New Hampshire and Iowa...
OPEC DELEGATES SAY NO PLAN YET FOR MEETING WITH RUSSIA
IRAN WANTS TO RECOUP OIL MARKET SHARE AND IS A CHALLENGE IN ANY DEAL TO CUT OIL OUTPUT - OPEC SOURCES
Headline hockey continues in the energy complex as earlier confirmation of a pending OPEC meeting possible in February has seen more color added, via Reuters, that Saudi Arabia made a proposal that OPEC members cut production by a maximum of 5%. There remains confusion however as Bloomberg reports simply that Russian energy minister has said they "may discuss it," as opposed to being a specific proposal.
This is just getting farcical...
0843ET - NYSE AMEX OPTIONS PROBING ISSUE ON MKT DATA UNDERLYING AAPL
And the market roars...
Durable Goods Orders crashed 5.1% MoM and turned back negative YoY and ex-transports continues to deteriorate YoY flashing if nothing else a recessionary environment is upon us (if not an actual recession). However, it is in the core - non-defense ex-aircraaft - segemnt that we see the real bloodbath as shipments plunged and new orders collapsed 7.5% YoY - the "worst since Lehman." Of course we still have bartenders and waitresses to maintain the US economy so this is just transitory weakness in the stock market's most-dependent segment of the economy.
Having surged to six-month highs, initial jobless claims dropped modestly on the week but the smoother 4-week average that is broadly used pushed to new cycle highs at 285k - the highest since March 2015 confirming The Fed's concerns over the economy. This is a trend that is certainly not the friend of Janet and her friends... but we are sure this is all just transitory.
"We learned one thing yesterday: the U.S. Federal Reserve is in the same position as the rest of us when it comes to forecasting the future path of economic growth. Nobody really “Knows” anything right now. Now, there’s enough doubt for everyone: markets, central banks, consumers, governments. Everyone. The best thing we can say about that: if markets accept that the Fed is no better informed than they are, maybe investors will devote more time to stock fundamentals and intrinsic value analysis."
Just when you want that 100% correlation with crude to lift stocks from their post-Fed quagmire, it breaks down. Just as WTI was breaking back red this morning, Interfax headlines hit that confirmed Russia and OPEC in talks for a potential production cut and sure enough old news is good news and WTI ramped back up towards $33. The problem is... higher oil is no longer great news for stocks (for now)...
CAT confirmed the flow through from its depressed retail sales picture when it announced that not only did revenue tumble by 23% to $11 billion, but it missed already deeply cut estimates of $11.4 billion, leading to a 111% collapse in operating profit which from $1.1 billion turned into a $114 million loss in the quarter. To be sure, the company tried to pull an Alcoa and stuff massive restructuring charges in the quarter amounting to $689, boosting non-GAAP EPS by $0.89 to $0.74, however one can simply ignore this latest accounting fudge attempt.