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23Mar2015 Pre-Market Commentary: Pre-Market Commentary: Saudi's Refuse To Lower Output, Futures Fractionally Lower, New Market High Possible Today

Written by Gary

Oil is climbing back up after a bearish report from a Saudi minister early this morning; Saudi Arabia will cut oil production if everyone else does. The premarkets are down fractionally, US dollar is trading at support and gold is trading sideways. Greek debt problems are troubling markets as U.S. Futures reflect concerned investors.

The big question for the day is whether or not the SP500 is going to best its previous historic high? Then, like past highs, what is going to happen next?


Here is the current market situation from CNN Money

European markets are lower today with shares in Germany off the most. The DAX is down 0.98% while France's CAC 40 is off 0.73% and London's FTSE 100 is lower by 0.05%.

What Is Moving the Markets

Here are the headlines moving the markets.

February 2015 CFNAI Super Index Shows USA Economy Slowing

Written by Steven Hansen

The economy was growing slower last month based on the Chicago Fed National Activity Index (CFNAI) 3 month moving (3MA) average - and is now growing below the historical trend rate of growth.

Saudi Production Comments Send WTI Sliding To $45 Handle

Following Friday's manic quad-witching melt-up in oil (and everything else), the exuberance (surprise surprise) is fading as fundamental reality is slapped back onto the face of the energy complex by Saudi Arabia. As Reuters reports, Saudi oil minister Ali al Naimi also said the kingdom was now pumping a record high 10 million barrels per day (bpd), and would only cut if non-OPEC countries cut production. The 'supply' weakness in crude has been tempered somewhat by a tumbling USD (EUR surging) for now (and also by news from Sinopec of major capex cuts).

As Reuters reports,

Saudi Arabia has stood firm on output, saying it would only consider cutting it if other producers outside OPEC also joined.

Saudi oil minister Ali al Naimi also said the kingdom was now pumping around 10 million barrels per day (bpd), which could indicate an increase of 350,000 bpd over its February production.

Analysts at Barclays forecast on Monday that if OPEC production held near current levels of near 30 million bpd, the market surplus would expand from 900,000 bpd to 1.3 million bpd.

"In the past 15 years, the global economy was defined by rising commodity prices, zero interest rate polic ...

Oil slips close to $55 as Saudi output rises to near record

LONDON (Reuters) - Oil prices declined on Monday, holding near $55 a barrel after Saudi Arabia indicated it was now pumping near a record high of 10 million barrels per day, adding to concerns of global oversupply.
< ...

ChemChina to buy into Italian tire maker Pirelli in $7.7 billion deal

MILAN (Reuters) - China National Chemical Corp (ChemChina) is to buy Pirelli, the world's fifth-largest tire maker, in a 7.1 billion-euro ($7.7 billion) deal that will put the 143-year-old Italian company in Chinese hands.

Who Left the Crash Window Open?

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Can stocks keep hitting new highs even as sales and profits fall?

Given that we live in a world where a modest 3% decline in the stock market triggers panicky demands for more quantitative easing (QE 4), few observers expect much a correction, regardless of the souring fundamentals such as sales and profits. A correspondent notified me of a Puetz "crash" window (based on the analysis of Stephen J. Puetz) opening in late March-early April. (Since I am not a subscriber to Puetz's work, I can't confirm this.) As I understand it, while these windows do not predict a crash/sharp correction, such moves tend to occur in these windows, which are based on cycles and events such as eclipses. So I decided to look for any evidence that a sharp correction might be in the offing. One classic precursor of corrections is weakening market leaders and narrowing of breadth/liquidity/volume. When leaders who pulled the index higher roll over, the index is usually not far behind. Consider the chart of Apple, (AAPL), long the engine that has been pulling the indices higher for years. Apple's chart is looking weak: Another classic precursor of a decline is high levels of complacency, which is reflected in a low VIX or volatility index. When fear has been vanquished, the VIX declines to the 10-12 range. These levels reliably indicate market to ...

One Day After Retiring As Dallas Fed President, Dick Fisher Elected To Pepsi Board Of Directors

Former Dallas Fed president Dick "Feral Hogs" Fisher may be worried about a major correction in a market that is "hyper overpriced", and he may be confused and unable to grasp that the only reason "traders are lazy" is because the Fed's Chief Risk Officer has made risk, and selling, illegal but when it comes to finding sources of funding there are no conerns or confusion at all. Because promptly after he officially resigned from the Dallas Fed, on Thursday March 19, the very next day the board of Pepsi announced that "On March 20, 2015, the Board of Directors (the "Board") of PepsiCo, Inc. ("PepsiCo") elected Richard W. Fisher as an independent member of the Board, effective March 23, 2015. Mr. Fisher will serve on the Audit Committee of the Board, effective March 23, 2015."

From the press release:

Mr. Fisher, 66, served as President and Chief Executive Officer of the Federal Reserve Bank of Dallas from 2005 until March 2015. Previously, Mr. Fisher was Vice Chairman of Kissinger McLarty Associates, a strategic advisory firm. From 1997 to 2001, Mr. Fisher served as Deputy U.S. Trade Representative with the rank of Ambassador, where he oversaw the implementation of the North American Free Trade Agreement (NAFTA), the Bilateral Trade Agreement with Vietnam, and other trade agreements. During this tenure, Mr. Fisher was also instrumental in China and Taiwan joining the World Trade Organization. Mr. Fisher's experience also includes serving as Managing Partner of Fisher Capital Manag ...

Stock futures dip after strong gains with eyes on Greece

NEW YORK (Reuters) - U.S. stock index futures ticked lower on Monday following strong gains in major indexes last week, as investors eyed negotiations over the future of Greece in the euro zone and as oil prices fell further.

Frontrunning: March 23

Saudis keep on pumping, oil prices keep on slumping (Reuters)

Tenet Healthcare Nearing Deal to Buy United Surgical Partners (WSJ)

Dizzying Pre-IPO Tech Values Spurred by Rush of Hedge-Fund Money (BBG)

Russia threatens to aim nuclear missiles at Denmark ships if it joins NATO shield (Reuters)

Torrent of Cash Exits Eurozone (WSJ)

Draghi Cheerleads for Euro-Area Economy as Greek Risk Looms (BBG)

Fortescue Mines for More Financing Options (WSJ)

Topix Charts Evoke Calm Before '13 Rout as Momentum Gains (BBG)

How Adidas Aims to Get Its Cool Back (WSJ)

Volkswagen to cut working hours, jobs at Russian plant

MOSCOW (Reuters) - Volkswagen will reduce shifts and lay off at least 150 workers at its Russian car plant, the German car producer said on Monday, to try to cut costs in a market downturn.

Online ad revenue at risk in war on 'click fraud'

NEW YORK/BOSTON (Reuters) - A growing number of U.S. companies, including MillerCoors and AIG, are stepping up the battle against online ad fraud by demanding proof that their ads have been seen by real people instead of computers hijacked by cybercriminals.

Buying Euphoria Fizzles Ahead Of Make Or Break Tsipras-Merkel Talks

As previously observed (skeptically), a main reason for the surge in the DAX, and thus the S&P, on Friday was premature hope that the Greek talks on Thursday night were a long-overdue precursor to a Greek resolution, and as we further noted yesterday, subsequent bickering and lack of any clarity as we go into today's critical "final ultimatum" meeting between Merkel and Tsipras, is also why the Dax is lower by 1.1% at last check, even if the EURUSD continues to trade like an illiquid, B-grade currency pair whose only HFT purpose is to slam all stops within 100 pips of whatever the current price may be.

Not helping the weak euro case was a plethora of research reports (to follow in subsequent post), which saw the penguin consensus reiterate that despite the Fed's rhetoric, the strong dollar case is the dominant one for the coming months and well into the summer. As for whether the last few hours' stop hunt higher in the EURUSD is credible, one look at where oil is trading (based on fundamentals or rate differentials) suggests the latest spike in the EUR is to be faded. Indicatively, Brent and WTI are trading down ~$1/bbl as talks on Iran nuclear program enter final week before political deal ...

More change at Tesco as senior independent director quits

LONDON (Reuters) - The senior independent director of Tesco is to quit, bringing yet more change to the board make-up of Britain's biggest retailer.

China to reap Alibaba windfall as tightens up on tax

HONG KONG (Reuters) - China could make billions of dollars from taxing gains made by employees of e-commerce giant Alibaba Group who are free to sell their shares for the first time since its IPO, as the country tightens up its leaky mechanisms for tax collection.

DuPont to hold annual shareholder meeting on May 13

(Reuters) - DuPont , which is embroiled in a proxy war with activist investor Trian Fund Management LP for board seats, said it would hold its annual shareholder meeting on May 13.

U.S. hedge fund prepares challenge to Bollore's Vivendi: FT

PARIS (Reuters) - The U.S. hedge fund P Schoenfeld Asset Management is weighing a challenge to the strategy of Vincent Bollore, the powerful chairman and largest shareholder of Vivendi , at the group's upcoming shareholder meeting, wrote the Financial Times.

Greece worries leave Europe subdued, Asia makes gains

LONDON (Reuters) - Caution about Greece ahead of a meeting between its prime minister and Germany's Angela Merkel prompted a nervy start to the week for European markets on Monday.

Exclusive: CN Rail derailment numbers soared before recent crashes

TORONTO (Reuters) - Canadian National Railway's safety record deteriorated sharply in 2014, reversing years of improvements, as accidents in Canada blamed on poor track conditions hit their highest level in more than five years, a Reuters analysis has found.

Fed's Mester urges shift in forward guidance role

PARIS (Reuters) - The forward guidance issued by the Federal Reserve should gradually evolve back to its "normal" role of communicating the thinking behind policy moves, Cleveland Fed President Loretta Mester told a bankers' conference in Paris on Monday.

These Three Factors Can Trigger Movement In Pfizer's Stock Price

The recent patent cliff has significantly impacted the company's sales and we currently value its stock at $35, implying a slight premium to the market. However, there are certain triggers and plausible developments that can move the stock significantly in the next couple of years, assuming the market prices in these triggers correctly. Specifically, we believe the possibility of a large acquisition, better-than-expected results from drugs currently in phase 3 trials, and a failure to rationalize R&D spending are some of the key plausible events that can trigger stock price changes for better or worse.

Oilfield Services Notes: Scrapped Rigs, Lower U.S. Activity, New Technologies

The oilfield services sector had another news-filled week, with the North American oil rig count continuing its descent as capital spending cuts continued to take effect and oil prices remained low. As of Thursday, Benchmark Brent crude was trading at levels of under $55 per barrel while WTI was trading at under $44 per barrel, on the back of a strong U.S. dollar and also due to a possibility that the nuclear deal with Iran might materialize, potentially easing sanctions on oil exports from the country. In other news, Transocean announced that it expects to dispose of another four rigs, while Schlumberger unveiled new ultra high-temperature drilling technologies.

Epoch of Belief, Epoch of Incredulity (10): Flogging the Dead Horse

Written by Adam Whitehead, KeySignals.com

In Epoch of Belief, Epoch of Incredulity (9) "Comfort Zones" Chinese policy makers and the PBOC were observed preparing for the next round of monetary stimulus. This was dutifully delivered at the beginning of last week - [i]; on the eve of Communist Party's annual meeting. It now appears that China has restarted the asset backed security market that it was once forced to shut down, because it was leading to the kind of dodgy lending practices that created the American housing bubble - [ii].

BOJ's Kuroda: Told PM Abe Japan's long-term price trend unchanged

TOKYO (Reuters) - Bank of Japan Governor Haruhiko Kuroda said he told Prime Minister Shinzo Abe on Monday that inflation is slowing due to a decline in oil prices but there is no change in the long-term rising trend for consumer prices as the economy improves.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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