Weekly Scoreboard*

Indices

• S&P 500 1,922.03 -5.96%

• DJIA 17,425.03 -6.19%

• NASDAQ 4,643.63 -7.26%

• Russell 2000 1,046.20 -7.89%

• S&P 500 High Beta 26.45 -9.67%

• Goldman 50 Most Shorted 94.12 -8.85% 

• Wilshire 5000 19,794.61 -6.19%

• Russell 1000 Growth 939.64 -6.05%

• Russell 1000 Value 906.48 -6.03%

• S&P 500 Consumer Staples 503.22 -2.93%

• Solactive US Cyclical 114.23 -7.51%

• Morgan Stanley Technology 1,002.14 -7.50%

• Transports 6,946.36 -7.48%

• Utilities 578.82 +.17%

• Bloomberg European Bank/Financial Services 90.46 -8.62%

• MSCI Emerging Markets 32.42 -1.21%

• HFRX Equity Hedge 1,133.78 -1.96%

• HFRX Equity Market Neutral 1,037.36 -.44%

Sentiment/Internals

• NYSE Cumulative A/D Line 226,596 -1.91%

• Bloomberg New Highs-Lows Index -1,493 -1,081

• Bloomberg Crude Oil % Bulls 16.7 -50.0%

• CFTC Oil Net Speculative Position 184,177 -6.20%

• CFTC Oil Total Open Interest 1,703,201 +3.29%

• Total Put/Call 1.34 +32.67%

• OEX Put/Call .43 -79.33%

• ISE Sentiment 50.0 -33.33%

• NYSE Arms 1.70 +35.43%

• Volatility(VIX) 26.37 +43.88%

• S&P 500 Implied Correlation 63.67 +7.81%

• G7 Currency Volatility (VXY) 9.89 +7.15%

• Emerging Markets Currency Volatility (EM-VXY) 11.93 +4.56%

• Smart Money Flow Index 17,608.65 -.70%

• ICI Money Mkt Mutual Fund Assets $2.735 Trillion -.88%

• ICI US Equity Weekly Net New Cash Flow -$2.925 Billion

• AAII % Bulls 22.2 -11.6%

• AAII % Bears 38.3 +62.0%

Futures Spot Prices

• CRB Index 168.57 -4.30%

• Crude Oil 32.91 -11.17%

• Reformulated Gasoline 112.51 -11.29%

• Natural Gas 2.48 +5.36%

• Heating Oil 104.49 -4.96%

• Gold 1,103.40 +4.0%

• Bloomberg Base Metals Index 131.69 -4.43%

• Copper 201.60 -5.53%

• US No. 1 Heavy Melt Scrap Steel 142.33 USD/Ton unch.

• China Iron Ore Spot 42.13 USD/Ton -3.31%

• Lumber 247.10 -4.52%

• UBS-Bloomberg Agriculture 1,027.28 -1.47%

Economy

• ECRI Weekly Leading Economic Index Growth Rate -1.4% -50.0 basis points

• Philly Fed ADS Real-Time Business Conditions Index .0034 +149.27%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 125.82 +.07%

• Citi US Economic Surprise Index -21.30 +10.5 points

• Citi Eurozone Economic Surprise Index 25.50 +10.1 points

• Citi Emerging Markets Economic Surprise Index 1.10 -11.8 points

• Fed Fund Futures imply 92.0% chance of no change, 0.0% chance of 25 basis point hike on 1/27

• US Dollar Index 98.44 -.21%

• MSCI Emerging Markets Currency Index 1,432.73 -1.6%

• Euro/Yen Carry Return Index 134.12 -1.78%

• Yield Curve 118.0 -4.0 basis points

• 10-Year US Treasury Yield 2.11% -16.0 basis points

• Federal Reserve's Balance Sheet $4.448 Trillion n/a

• U.S. Sovereign Debt Credit Default Swap 20.29 +5.45%

• Illinois Municipal Debt Credit Default Swap 292.0 +2.32%

• Western Europe Sovereign Debt Credit Default Swap Index 17.17 +6.02%

• Asia Pacific Sovereign Debt Credit Default Swap Index 76.31 +5.3%
  

• Emerging Markets Sovereign Debt CDS Index 195.98 +6.63%
  

• Israel Sovereign Debt Credit Default Swap 87.50 +7.46%

• Iraq Sovereign Debt Credit Default Swap 951.72 +2.23%

• Russia Sovereign Debt Credit Default Swap 335.12 +8.41%

• iBoxx Offshore RMB China Corporates High Yield Index 123.60 -.16%

• 10-Year TIPS Spread 1.50% -8.0 basis points

• TED Spread 42.25 -4.25 basis points

• 2-Year Swap Spread 8.0 -3.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -19.0 -.5 basis point

• N. America Investment Grade Credit Default Swap Index 96.35 +8.92%

• America Energy Sector High-Yield Credit Default Swap Index 1,583.0 -6.37%

• European Financial Sector Credit Default Swap Index 80.80 +5.21%
  

• Emerging Markets Credit Default Swap Index 374.69 +4.80%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 140.0 unch.

• M1 Money Supply $3.077 Trillion -.24%

• Commercial Paper Outstanding 1,081.30 +2.4%

• 4-Week Moving Average of Jobless Claims 275,750 -1,250

• Continuing Claims Unemployment Rate 1.6% unch.

• Average 30-Year Mortgage Rate 3.97% -4.0 basis points

• Weekly Mortgage Applications 328.60 -11.57%

• Bloomberg Consumer Comfort 44.2 +.6 point

• Weekly Retail Sales +2.20% +20.0 basis points

• Nationwide Gas $1.99/gallon -.01/gallon

• Baltic Dry Index 445.0 -6.90%

• China (Export) Containerized Freight Index 734.95 +1.62%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 60.0 +14.3%

• Rail Freight Carloads 187,920 +2.02%

Best Performing Style

• Mid-Cap Value -5.1%

Worst Performing Style

• Small-Cap Growth -8.0%

Leading Sectors

• Gold & Silver +3.7%

• Utilities +.3%

• Coal -1.8%

• Tobacco -2.1%

• REITs -2.8%

Lagging Sectors

• Biotech -10.1% 

• Gaming -11.2%

• Steel -11.2%

• Homebuilding -12.0%

• Oil Tankers -13.7%

Weekly High-Volume Stock Gainers (6)

• DVAX, MCRN, NLS, TDOC, CHUY and MSM

Weekly High-Volume Stock Losers (23)

• NTK, HLF, OCFC, BRKR, APPF, SONC, VWR, ARRS, HF, CALD, FOSL, GIMO, CFMS, SYNA, PAG, AN, SRI, KBH, ACAD, NHTC, FIT, XLRN and EPZM

Weekly Charts

ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Reversing Lower into Final Hour on China Bubble-Bursting Fears, Emerging Market Currency Worries, Oil Decline, Retail/Homebuilding Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 24.05 -3.76%

• Euro/Yen Carry Return Index 134.09 -.19%

• Emerging Markets Currency Volatility(VXY) 11.93 +2.76%

• S&P 500 Implied Correlation 63.82 +2.27%

• ISE Sentiment Index 49.0 -19.67%

• Total Put/Call 1.23 -11.51%

• NYSE Arms 1.41 +10.40% 

Credit Investor Angst:

• North American Investment Grade CDS Index 97.53 +2.11%

• America Energy Sector High-Yield CDS Index 1,551.0 -2.89%

• European Financial Sector CDS Index 81.90 +3.32%

• Western Europe Sovereign Debt CDS Index 17.17 -.75%

• Asia Pacific Sovereign Debt CDS Index 76.31 -3.44%

• Emerging Market CDS Index 375.10 +1.93%
  

• iBoxx Offshore RMB China Corporate High Yield Index 123.60 -.11%

• 2-Year Swap Spread 8.0 -1.5 basis points

• TED Spread 42.25 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -19.25 +.75 basis point

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 67.90 -.23%
• 3-Month T-Bill Yield .19% -1.0 basis point

• Yield Curve 119.0 -1.0 basis point

• China Import Iron Ore Spot $42.13/Metric Tonne -1.22%

• Citi US Economic Surprise Index -21.3 +8.5 points

• Citi Eurozone Economic Surprise Index 25.5 -3.4 points

• Citi Emerging Markets Economic Surprise Index 1.10 -1.3 points

• 10-Year TIPS Spread 1.50% -2.0 basis points
• 40.5% chance of Fed rate hike at March 16 meeting, 46.0% chance at April 27 meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -277 open in Japan 
• China A50 Futures: Indicating -337 open in China

• DAX Futures: Indicating -5 open in Germany

Portfolio: 

• Slightly Higher: On gains in my index hedges

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short

• Market Exposure: Moved to 25% Net Long

Friday Watch

Evening Headlines

Bloomberg:  

• China Flip-Flops on Stock Crash Rule and Adds to Chaos. (video) After watching a stock-market collapse wipe out $5 trillion of wealth in less than three months last year, Chinese authorities hatched a plan to stem the pain: circuit breakers that would be triggered by daily declines of 5 percent. The new system went into effect Jan. 4. It lasted all of four days. After two harrowing sessions -- on Monday and Thursday -- that tripped the breaker repeatedly and convulsed global markets, officials suspended the rule, saying it was only exacerbating declines. While that acknowledgment addresses critics’ concerns, the flip-flop at the same time only adds to the sentiment among global investors that authorities are improvising -- and improvising poorly -- as they try to stabilize markets and shore up the economy. “They are changing the rules all the time now,” Maarten-Jan Bakkum, a senior emerging-markets strategist at NN Investment Partners in The Hague with about $206 billion under management. “The risks seem to have increased.”

• Offshore Yuan Extends Gains as China Ends Run of Fixing Cuts. The offshore yuan extended gains after China set its reference rate little changed from Thursday’s fixing after an eight-day run of reductions that sent shockwaves through financial markets and escalated fears of a global currency war. The People’s Bank of China set the daily fixing, which restricts onshore moves to a maximum 2 percent on either side, at 6.5636 a dollar, 0.02 percent stronger than the previous day. That’s 0.5 percent higher than Thursday’s onshore effective closing price in the spot market and ends an eight-day reduction of 1.42 percent.

• China's Stock Market Is Hardly Free With Circuit Breakers Gone. China’s removal of market-wide circuit breakers after just four days still leaves investors facing plenty of restrictions in how they trade. A 10 percent daily limit on single stock moves and a rule preventing investors from buying and selling the same shares in a day remain in force. Volume in what was once the world’s most active index futures market is minimal after authorities curtailed trading amid a summer rout, making it more difficult to implement hedging strategies. Officials unveiled curbs Thursday on share sales by major stockholders just a day before an existing ban was due to expire. And the activity of foreign investors is limited by quotas, given either to asset managers or to users of the Hong Kong-Shanghai exchange link.

• Samsung Profit Misses Estimates on Falling Chip, Display Prices. Samsung Electronics Co. posted fourth-quarter profit that missed analysts’ estimates as demand for premium smartphones and their components remained sluggish over the year-end holiday shopping season. Operating income rose to 6.1 trillion won ($5 billion) in the three months ended December, the world’s largest maker of phones and memory chips said in preliminary results released on Friday. That compares with the 6.64 trillion-won average of analysts’ estimates compiled by Bloomberg. Demand is waning for smartphones, including its own Galaxy devices and those from Apple Inc., as markets mature and China’s economy slows. That’s pressuring profit margins at Samsung businesses from screens to semiconductors that supply rivals including the iPhone maker, as sliding demand for TVs propels a steep decline in display-panel prices. “The latest iPhone 6s devices didn’t outsell its predecessors and that pressured the major components suppliers,” Lee Jae Yun, an analyst at Yuanta Securities Korea Co., said in Seoul before the earnings release. Samsung’s components business will face weaker sales “until global demand shows signs of a recovery.”

• China Woes Send Traders Running From Germany's Once-Mighty DAX. You know things are bad for German stocks when even Greece is beating them. The DAX Index has tumbled 7.1 percent this week through Thursday, posting one of the worst drops among developed markets and its biggest slump since the China-led rout in August. The German measure closed below 10,000 for the first time since October, just after completing a fourth straight year of advances. Here’s how bad it’s been and why:

• Europe Property Sales Growth to Slump to Zero, Knight Frank Says. Offices and shops in London, Paris and Frankfurt may be a little harder to sell this year because of concerns over high prices and shrinking demand from Asian and Middle East investors. The value of commercial property sales will probably be little changed in 2016, following three years in which it rose by more than 20 percent, property broker Knight Frank LLP said in a report on Friday. The deal volume for 2015 amounted to about 235 billion euros ($255 billion), according to the firm’s provisional estimate, approaching the 260 billion-euro record set in 2007.

• Asian Stocks Rise in Volatile Trading as Investors Watch China. Asian stocks advanced in volatile trading, with the regional measure paring its steepest weekly slump since 2011. The MSCI Asia Pacific Index reversed an early decline after China refrained from another cut to the yuan’s reference rate, with the equities gauge rallying as much as 0.9 percent.

• Copper Pain Seen Not Deep Enough to Spur Cuts Needed to End Glut. Copper at $2 got the market’s attention, but it will fail to spur big enough production cuts to reverse a glut of the metal. Futures, which Thursday traded below $2 for the first time since 2009, could drop as much as 25 percent more before the industry implements “meaningful” reductions in output, according to Kenneth Hoffman, a senior analyst of metals and mining at Bloomberg Intelligence. That’s because prices are still above production costs, allowing producers to wait and “let the other guy” curb output, Hoffman said.

• S&P 500 Caps Worst-Ever Start to Year on China Woes, Oil Slump. (video) The Standard & Poor’s 500 Index capped its worst-ever four-day start to a year, while gold rallied with the yen as turmoil in China spread around the world and billionaire George Soros warned that a larger crisis may be brewing. The U.S. equities benchmark ended the first four days of 2016 lower by 4.9 percent, while the Dow Jones Industrial Average has erased more than 900 points so far this year. A measure of global shares wrapped up a four-day slide of 5.2 percent, its worst start in records back to 1998. Selling in global equities began in China after the central bank weakened the yuan an eighth day. Crude settled at a 12-year low, and copper dipped below $2 for the first time since 2009. The yen reached a four-month high.

Wall Street Journal: 

• Missing U.S. Missile Shows Up in Cuba. Inert Hellfire missile sent to Europe for a training exercise makes mysterious trip, sparking concerns over loss of military technology. An inert U.S. Hellfire missile sent to Europe for training purposes was wrongly shipped from there to Cuba in 2014, said people familiar with the matter, a loss of sensitive military technology that ranks among the worst-known incidents of its kind.

• ‘All Is Not Well’ in Global Economy, Warns Investor Jeffrey Gundlach. And the Federal Reserve’s decision to raise interest rates is compounding the problem. Many investors believe the U.S. will weather the global market downturn better than other nations, thanks to its steadily expanding economy. But Jeffrey Gundlach, who runs asset manager DoubleLine Capital LP, is downbeat on financial markets and the global economy, and he is worried the Federal Reserve is compounding the problems. Mr. Gundlach argues that sharp declines for oil, commodity, junk-bond and stock prices...

• Why China Shifted Its Strategy for the Yuan, and How It Backfired. Investors pounce on the central bank’s efforts to steer the currency lower. When the International Monetary Fund added the Chinese yuan to its elite basket of global reserve currencies in late November, officials at China’s central bank patted themselves on the back.

• Commodities Rout Forces Resource Firms to Cut Further. Mining, oil companies must search for new savings, as hopes of a commodity-price rebound fizzle on weak Chinese demand. Resource companies are facing renewed pressure to cut spending and investor payouts after a deepening commodities rout erased billions of dollars in shareholder value on Thursday.

• 5 Things to Watch in the December Jobs Report.

• Crayons Down, Kids. It’s Hillary Story Time. Two new picture books depict Mrs. Clinton with a hagiographic glow that even kindergartners might find hard to swallow.

Fox News:

• US student visa program's 'many vulnerabilities' raise spying, terror fears. (videos) From potential terrorists who enroll at phony schools only to melt into the U.S. population, to foreign scientists who come to study weapons technology at America’s top schools, the student visa program is allowing dangerous enemies into the country, a former top federal official told FoxNews.com.

MarketWatch.com:

• Gap(GPS) December sales fall 5%; shares tumble. Gap Inc. said its core sales fell 5% in December amid declines across all of its brands, as the retailer continues to struggle to turn itself around. Shares of Gap tumbled 6.9% to $24.90 a share in after-hours trading. Gap's stock had risen 5.7% in trading Thursday as a number of retailers reported strong holiday results.

• Container Store(TCS) slumps after reporting third-quarter loss. Shares sank 12% in after-hours trading.

• Here’s how China’s yuan drives the global selloff.

CNBC:

• Oil bull Andy Hall ends year down 35%. Respected energy hedge fund manager Andrew Hall, a well-established bull in the embattled oil market, lost about 35 percent last year, according to someone who has reviewed Hall's performance numbers.

• How bad? Strategist says up to 25% drop ahead.

• More key Apple suppliers cut revenue forecasts. (video) Two Apple suppliers tempered expectations Thursday, warning their quarterly results would likely be below estimates in the latest of a string of supplier woes that have dimmed the tech giant's shine on Wall Street. 

Zero Hedge:

• This Is The Dow's Worst Start To The Year... Ever. (graph)

• Russell Napier Explains How The Decline Of The Yuan Destroys Belief In Central Banking.

• Slovak PM Closes The Door To Refugees: "We Don't Want What Happened In Germany To Happen Here".

• The "Monsters" Unmasked: Cologne Police Admit "Most Of The Attackers Were Refugees".

• As The Saudi Economy Implodes, A Fascinating Solution Emerges: The Aramco IPO. (graph)

• "Nowhere To Hide" As Baltic 'Fried' Index Careens To Fresh Record Low. (graph)

• Bob Janjuah Warns The Bubble Implosion Can't Be "Fixed" This Time.

• For Commodities, This Is The Next Great Depression. (graph)

• Bloodbath. (graph)

Business Insider:

• Wall Street's nightmare stock(SUNE) crashed 35%.

• Former US defense secretary reportedly found top Obama national-security aides 'dangerously naive'.

• Bill Gross went to see 'The Big Short' and thinks the same thing is happening all over again.

• US to China: End 'business as usual' with North Korea.

• The stock market is losing its biggest source of demand. (graph)

• Here's one reason why Saudi Arabia is happy to take the pain of low oil prices.

Reuters:

• U.S. stock funds bleed: see biggest outflows since September - Lipper. Investors pulled more than $12.2 billion out of U.S. stock funds over the week that ended Jan 6, Lipper data showed on Thursday, slicing their risk as U.S. markets tumbled. The withdrawals struck both mutual funds and exchange-traded funds during a week that saw concerns about a slowdown in China weigh heavily on U.S. markets. Taxable bond funds saw $2.7 billion in withdrawals during the same period.

• EMERGING MARKETS-Latam currencies drop on China turmoil; Mexico peso hits record low.

• US high-yield bond market stumbles out of the gate. The embattled US high-yield market has struggled to get back on track in the first week of 2016, after three issuers bypassed public bond sales in a sign of more trouble for the asset class. The junk-bond sector, which delivered a net loss in 2015, now faces renewed questions about the extent of demand for what is believed to be a US$90bn pipeline of bond and loan deals.

Financial Times:

• Mexico warns of China triggering ‘perverse’ currency wars. Chinese market turmoil and the renminbi’s fall to a four-year low against the US dollar risks the prospect of “perverse” currency wars, Mexico has warned. Latin America’s second-biggest economy, which saw its currency tumble to a historic low of 17.72 pesos to the dollar on Thursday — on top of a slide of more than 14 per cent in 2015 — would be in the front line since the peso is the most widely traded emerging market currency and is often used by traders as a proxy.

Telegraph:

• Capital flight pushes China to the brink of devaluation. Beijing cannot keep burning through reserves at a record pace to defend the yuan and at the same time loosen monetary policy. It has to choose.  

Economic Information Daily:

• China Local Govts May Sell 1t Yuan New Debt This Year. Regions with "overly high" debt ratio will be allocated with fewer new debt to prevent risks, citing a person familiar with the matter. The new debt includes general bonds that use fiscal revenue for repayment and special notes which rely on project income. China may also allow larger amount of local debt swaps this year.

Night Trading 

• Asian equity indices are -.50% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 146.0 +2.0 basis points.

• Asia Pacific Sovereign CDS Index 79.0 +3.5 basis points.

• Bloomberg Emerging Markets Currency Index 68.12 +.1%.

• S&P 500 futures +1.18%

• NASDAQ 100 futures +1.25%.

Morning Preview Links 

Earnings of Note 

Company/Estimate

• (AYI)/1.58

• (AZZ)/.89

• (SYRG)/.00

Economic Releases

8:30 am EST

• The Change in Non-Farm Payrolls for December are estimated to fall to 200K versus 211K in November.

• The Unemployment Rate for December is estimated to remain at 5.0%

• Average Hourly Earnings MoM for December are estimated to rise +.2% versus a +.2% gain in November.

10:00 am EST

• Wholesale Inventories MoM for November are estimated to fall -.1% versus a -.1% decline in December.

3:00 pm EST

• Consumer Credit for November is estimated to rise to $18.0B versus $15.982B in October.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Lacker speaking, Fed's Williams speaking, China CPI report and the German Industrial Production report and could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by financial and industrial shares in the region. I expect US stocks to open higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the day.