Today's Headlines

Bloomberg:

• Iran Sheds Economic Sanctions Yoke as Nuclear Deal Ratified. Iran has complied with the terms of an international agreement to curb its nuclear development program, allowing it to move out from under the yoke of crippling economic sanctions, the United Nations’ nuclear agency announced Saturday. The International Atomic Energy Agency concluded that the Islamic Republic had curbed its ability to develop an atomic weapon as required under an accord with world powers. The U.S. and five other nations agreed in July’s accord to lift sanctions on Iran “simultaneously with the IAEA-verified implementation” of the deal. “I thank God for this blessing & bow to the greatness of the patient nation of Iran,” President Hassan Rouhani said in a Twitter message. “Congrats on this glorious victory.” “Israel will continue to monitor and warn about Iran’s dangerous activities and will do everything it can to protect its own security and defend itself,” Israeli Prime Minister Benjamin Netanyahu said in a statement released by his office in Jerusalem.

• U.S. Stocks Extend Worst Start on Record With Weekly Tumble. The cost of being a bull on New Year’s has never been higher. Ten days into 2016 and the Standard & Poor’s 500 Index has dropped 8 percent, careening lower for a third straight week to reach the lowest close since August. The index is off to the worst start on record and just capped a three-day stretch that by one measure was its most volatile in four years. Plunging crude oil prices fueled a flight from risk assets around the world amid mounting concern China’s policy interventions won’t revitalize growth. At the same time, the Federal Reserve is tightening monetary policy. The result has been day-after-day reversals in the S&P 500, which tallied its two biggest slides since September along with its best rally in six weeks. The vertigo hasn’t been worse since S&P downgraded U.S. sovereign debt in August 2011.

• Global Earnings Downgrades Haven't Been This Bad in Seven Years. (video/graph) Stocks are losing their last line of defense. Amid a selloff that erased more than two years of gains -- about $14 trillion -- from global stocks now on the brink of a bear market, at least earnings stood as a potential bright spot. Those hopes are fading: analyst profit downgrades outnumbered upgrades by the most since 2009 last week, according to monthly data from a Citigroup Inc. index that tracks such changes. Declines in oil and and other commodities, the withdrawal of Federal Reserve support, Europe’s fragile recovery and China slowdown fears are combining to jeopardize one of the few remaining stock catalysts after a global rally of as much as 156 percent since 2009. And profit growth estimates are still too high for this year and 2017, says Bankhaus Lampe’s Ralf Zimmermann.

• Junk Bond ETFs Fall to Lowest Level Since 2009 as Oil Drops. (graph) Exchange-traded funds that hold U.S. junk bonds dropped to their lowest levels since 2009 as the global growth fears that clobbered stock markets also raised doubts about whether companies’ would continue to generate as much cash to pay their debt obligations. Energy companies’ bonds were hit hardest as oil prices fell to $29.73 a barrel, a 12-year low. Risk premiums on bonds in the sector -- a measure of the extra yield that investors demand for holding companies’ credit risk -- widened by 0.12 percentage point for investment grade credit, and 0.58 percentage point for junk bonds.

• Treasuries Surge as Investors Seek Refuge, Fed Rate Path Doubted. A dimming outlook for inflation and global economic growth pulled Treasury yields lower for a second week amid a stock-market rout and plunging oil prices, as traders push back the anticipated timing for Federal Reserve interest-rate increases. Benchmark 10-year yields dipped below 2 percent Friday for the first time since October while yields on 30-year bonds, the maturity most sensitive to inflation, closed at the lowest since August. The yield on the two-year note, which is most influenced by Fed policy expectations, fell for a 12th straight trading day. Futures traders assign about a 28 percent chance that the Fed will boost borrowing costs in March, based on the assumption that the effective fed funds rate will trade at the middle of the new target range after the next increase. The Fed expects to raise rates four times this year, which would bring the effective rate to 1.375 percent, according to the median forecast among Federal Open Market Committee members. Derivatives traders expect the effective fed funds rate will rise to about 0.7 percent in a year’s time, implying one increase this year, according to data compiled by Bloomberg. As of Dec. 30, they were betting borrowing costs would rise to 0.93 percent, which would require the Fed to lift rates twice, assuming it raised its target range by 0.25 percentage point each time.

• Most Hated Guy in Oil Patch Gets Busier as Market Gloom Deepens. (graph) Never has corporate turnaround expert Jeff Huddleston been more needed or more dreaded. Huddleston says he’s gotten used to being “the most hated guy” in the room over the past year as oil industry job losses topped 250,000 and companies sought ways to curb spending. Turnaround specialists like him are about to get even busier in 2016, advising companies how to keep the lights on through the ugliest oil-market downturn in decades. "We’re like living symbols that something has gone really wrong," said Huddleston, a managing director at restructuring consultants Conway MacKenzie Inc. in Houston. The energy industry had 26 bankruptcies last year, a larger number than in the five previous years combined and more than any other sector of the U.S. economy, according to data compiled by Bloomberg. With no market rebound on the horizon, many more producers are running out of options.

• Gundlach Says Fed May Have to Ease Again: Barron's Roundtable. Weaker-than-expected market conditions will keep the Federal Reserve from raising rates as much as predicted in 2016 as company earnings and the global economy will remain strained, Wall Street strategists told Barron’s. Tumbling commodity prices and economic sluggishness will continue to limit profit growth, according to many of the nine strategists participating in Barron’s 2016 Roundtable panel discussion in the magazine’s Jan. 18 issue. Respondents see flat to modest gains for U.S. equities ahead as slow U.S. expansion won’t be enough to shake the headwinds from global economic turmoil and the fall in energy prices.

• Wal-Mart to Shut Hundreds of Stores. (video) The move by the largest private employer in the U.S. will affect about 10,000 jobs domestically at 154 locations, according to a statement Friday. Overseas, the effort will eliminate 6,000 jobs and includes the closing of 60 money-losing stores in Brazil, a country where Wal-Mart has struggled.

• Bernie Sanders Beating Hillary Clinton on Broadcast TV. After months of having the airwaves to herself, Hillary Clinton is now being out-gunned by her chief rival. For most of the year, Democratic presidential candidate Bernie Sanders and his supporters have been running an insurgent campaign against Hillary Clinton's well-oiled and well-funded political machine. But when it comes to the pricey undertaking of dominating the broadcast airwaves, the underdog has become the top dog. According to data from the ad tracking firm Kantar/CMAG, the Sanders campaign has purchased more broadcast television ad spots than the Clinton campaign during every week since mid-November.

Wall Street Journal:

• Al Qaeda Attacks in Burkina Faso Kill More Than 20. Gunmen storm hotel, coffee shop in Burkina Faso’s capital, Ouagadougou. A spree of attacks on two hotels, a coffee shop and a police station in Burkina Faso carried out at least in part by al Qaeda extremists killed at least 25 people, officials said Saturday, as a sprawling Islamist conflict in West Africa spilled into one of the world’s poorest countries.

• The Terrorists Freed by Obama. The president has misled the American people about the detainees released from Guantanamo: Dozens are jihadists ready to kill. The Obama administration in recent days has proclaimed a “milestone” in its efforts to close the detention facility at Guantanamo Bay, Cuba, after achieving its long-held goal of reducing the remaining population to fewer than 100 detainees. With the expedited release this month of 14 detainees, the total now stands at 93.

MarketWatch.com:

• Fund manager who’s been right on oil has a depressing new prediction. T. Rowe Price New Era’s Shawn Driscoll says the price for a barrel of oil could drop into the teens.

Fox News:

• Kerry says Iran has completed steps in nuclear deal, 'First day of a safer world'. (video) Secretary of State John Kerry and the International Atomic Energy Agency said independently Saturday that Iran has completed the necessary steps in the international nuclear deal to allow Tehran to immediately recoup roughly $100 billion in frozen assets. “Iran has honored its commitment to alter, in fact dismantle, much of its” nuclear operation, Kerry said Vienna. “All of Iran’s paths toward a nuclear weapon have been stopped. … Today marks the first day of a safer world.”

• Sanders gaining ground on Clinton, in echoes of 2008. (video)

CNBC:

• Bear market is here—expect another 15% plunge: Technician. (video)

• Not just oil and China, tech is falling apart.

Zero Hedge:

• Exclusive: Dallas Fed Quietly Suspends Energy Mark-To-Market On Default Contagion Fears.

• "How The Investment Grade Dominos Will Fall" - UBS Explains.

• The Deflation Monster Has Arrived.

• How QE Crushes The Real Economy & Why The Secular Low In Treasury Yields Lies Ahead.

• When Omnipotence Fails: JPMorgan Warns Upside Uncompelling As Central Bank Put Wanes. (graph)

• The Great Unraveling Looms - Blame The 'Austrians'?

• Was That The Capitulation? Not Even Close. (graph)

• Pro-China Party Falls As Taiwan Elects First Female President In "Historic" Landslide Election.

• 23 Dead After Al-Qaeda Storms West African Hotel: "It Was Like A Scene From A Movie".

• Recession At The Gate: JPM Cuts Q4 GDP From 1.0% To 0.1%.

• Iran Frees US Hostages, WaPo Journalist On Day Sanctions Lifted.

• GM(GM)/Ford(F) Credit Risk Surges To 2 Year Highs As Fitch Raises Auto Sector Concerns. (graph)

• German Town Bans Refugees From Pools.

• "We Live In A Time Of Piecemeal-Planning & Incremental-Interventionism".

• Atlanta Fed Explains Why It Waited Until The Market Close To Reveal The Lowest Q4 GDP Estimate Yet.

• Atlanta Fed Waits Until The Close To Reveal 0.6% Q4 GDP Estimate.

• The US Consumer Is Drowning His Sorrows At The Bar.

• Weekend Reading: Breaking Markets - Season II.

• Black Friday. (graph)

Business Insider:

• CREDIT SUISSE: China risks 'losing control' of the economy.

• Carl Icahn's energy bets are backfiring.

• 'He looks like hell': Donald Trump unloads on Glenn Beck after being accused of voting for Obama. The Republican presidential front-runner said he was quite "bothered" by Beck's Friday-evening interview with Fox News host Bill O'Reilly. During that interview, Beck repeatedly attacked Trump as a "progressive" and compared him to Obama.

• Crowd boos when Donald Trump attacks Ted Cruz at conservative confab.

• Iraq’s oil production is going strong.

• This trade has contributed to Bill Ackman's rough start to 2016.

• STRATEGIST: There's a decent chance the US government will bail out the oil industry.

• America's most iconic retailers are shutting down stores and laying off thousands — and this could be just the beginning.

• At least 20 killed in a hotel after gunfire, explosions erupt in Burkina Faso's capital.

• Say goodbye to iTunes Radio — Apple's(AAPL) folding it into its $10 music streaming service.

• Former US official: ISIS has the capability to organize Paris-like attacks out of its new base in Libya.

• The real meaning of ISIS's expansion into Turkey, Afghanistan, and Indonesia.

• Series of bomb threats targets Boston-area schools.

Reuters:

• EXCLUSIVE : In negotiating to free Americans in Iran, U.S. blinked on new sanctions. The day before the Obama administration was due to slap new sanctions on Iran late last month, Iranian Foreign Minister Javad Zarif warned U.S. Secretary of State John Kerry the move could derail a prisoner deal the two sides had been negotiating in secret for months. Kerry and other top aides to President Barack Obama, who was vacationing in Hawaii, convened a series of conference calls and concluded they could not risk losing the chance to free Americans held by Tehran. At the last minute, the Obama administration officials decided to delay a package of limited and targeted sanctions intended to penalize Iran for recent test-firings of a ballistic missile capable of delivering a nuclear warhead. This account of previously unreported internal deliberations was provided by two people with knowledge of the matter.

• Taiwan opposition wins presidency, China warns against independence move. (video)

• Poland sees zloty turbulence at start of week after S&P downgrade. Poland shrugged off the impact of a downgrade by Standard & Poor's (S&P) on Saturday, saying the rating agency's decision was a mistake, but its ministers admitted they expected short-term turbulence for the zloty when markets open on Monday.

Financial Times:

• China steps up building in disputed waters despite US resistance.

Telegraph:

• Global slump 'will force UK factories into deeper recession’. Manufacturers expected to cut investment as oil prices head towards $20 a barrel mark. 

Sueddeutsche Zeitung:

• Schaeuble Wants German Military to Assist Police. Germany needs a legal basis for allowing military troops to be used to assist federal and state police, Finance Minister Wolfgang Schaeuble said in an interview. No effort should be spared to secure EU's external borders to curb migrant flow.