OVERNIGHT

How do you like me now? That's the volatility question of the moment in the minds of  many investors. You can bet there are some option traders out there who like it as the fallout from China continued in markets world-wide Thursday.

Overnight Chinese stocks showed some signs of a positive pulse beat as the The Shanghai Composite
rallied 1.5% after officials torpedoed the circuit breaker that presumably caused all the pain and angst. Such things tend to be catching as Japan, Hong Kong and Korean markets joined the upswing in share prices.

But the underlying concern remains among many investors--that is, the state of the global economy's health as witnessed by the Thursday market slaughter that stretched from Japan to Europe to the U.S. There are lots of bogus numbers out there and many are in the U.S.from the phony drop in jobless claims numbers masking the recent 70,000 high paying jobs that disappeared in the energy sector to the now apparently 40,000-plus low-paying  Macy jobs about to go poof.

China's GDP numbers have been suspect all along. There's a growing disquiet as demand for goods and services are weak, see the Baltic Freight index, a global scene that is rife with conflict and staggering amounts of sovereign debt.

Some analysts said they expect to see continued volatility this month, as investors grapple with fresh information about the health of economies and markets following a nearly seven-year-long bull market that took the Dow to a fresh record as recently as last May. Thursday’s declines left the 30-stock index down 5.2% for the year and 9.8% below its May 19 high.

The selling has intensified the concerns of many investors that stocks are vulnerable after the Federal Reserve’s first interest-rate increase since 2006 pushed up borrowing costs for traders. Even so, there was a widespread sense that U.S. investments remain the most viable option given the darkening global picture, the WSJ reported.

Some are arguing that what happens in China, like Las Vegas, stays there and will not impact the U.S. supposed ongoing recovery. But apparently bond guru Jeffery Gundlach sees it a bit differently.

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. 

Gundlach argues that sharp declines for oil, commodity, junk-bond and stock prices signal deep, fundamental economic problems that some investors are overlooking.
The marked weakness is "a symptom" of "insufficient and dwindling global growth," he says. "The Fed should not be hiking" interest rates, though it raised the fed funds rate last month for the first time in nine years and has signaled it likely will raise rates several times this year.

Gundlach notes that the Fed held off on raising interest rates in September due to market turbulence at the time. By that logic, he says, the Fed shouldn't be considering boosting rates any time soon, since almost every financial market, from commodities and junk bonds to stocks and emerging markets, is down sharply since September. 

marketwatch.com/story/all-is-not-well-in-global-economy-says-bond-guru-jeffrey-gundlach-2016-01-07