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23Apr2015 Pre-Market Commentary: U.S. Futures Down, Unemployment Up, First Quarter Corporate Financial's Continue To Be Mixed Worrying Investors

Written by Gary

'Initial Unemployment Claims Rolling Averages Marginally Worsens', reads the headline as the U.S. Futures remain off 0.3%. Concern this morning is that the poor unemployment figures is going to play prominently in pushing the equities down today.

Procter & Gamble Unveils Mixed Fiscal Third-Quarter Results', reads another headline, further worrying investors along with Greek, China and a possible oil glut.


Here is the current market situation from CNN Money

European markets are mixed. The FTSE 100 is higher by 0.04%, while the DAX is leading the CAC 40 lower. They are down 1.23% and 1.03% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

18 April 2015 Initial Unemployment Claims Rolling Averages Marginally Worsens

Weekly Initial Unemployment Claims

The market was expecting the weekly initial unemployment claims at 280,000 to 305,000 (consensus 286,000) vs the 295,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 282,750 (reported last week as 282,750) to 284,500. The rolling averages have been equal to or under 300,000 for most of the last 7 months.

GM First-Quarter Profit Disappoints on South American Weakness

General Motors Co posted a smaller-than-expected quarterly profit on Thursday as weakness in South America and Russia hurt demand and the company's tax rate was higher than expected, sending shares down 3 percent.

PepsiCo Profit Beats Estimates as Frito-Lay Sells More

PepsiCo Inc reported a better-than-expected quarterly profit, helped by higher demand for its Frito-Lay snacks in North America and beverages in the Americas.

Volkswagen Chairman says is not seeking to push out CEO: Bild

BERLIN (Reuters) - Volkswagen Chairman Ferdinand Piech is not seeking to push out Chief Executive Martin Winterkorn, Bild-Zeitung reported on Thursday, citing Piech.

Deutsche to pay U.S., UK $2.5 billion over interest rate manipulation: NY regulators

WASHINGTON (Reuters) - Deutsche Bank will pay U.S. and British authorities $2.5 billion for interest rate manipulation, New York regulators said on Thursday.

U.S. Oil Glut: How High Can It Go?

By EconMatters

Oil Glut Build in PAD3 Gulf Coast

As expected, EIA today reported for week ending April 17, U.S. crude-oil inventories gained 5.3 million barrels to 489 million barrels, which is still the highest in at least 80 years, according to the EIA. Looking closer at each PAD region, almost all the inventory adds occurred in Gulf Coast PAD3; meanwhile, Cushing, OK added 738,000 barrels. Although 738,000 does not seem that bad by itself, Cushion is now is sitting at 62.2 million barrels of oil in storage (vs. a year ago inventory at 26 million barrels) , a new record high since April of 2004

Fed eyes ability of asset managers to repay in a panic

WASHINGTON/NEW YORK (Reuters) - Sections of the U.S. financial system that may be vulnerable to investor panic are raising concerns inside the Federal Reserve, as policymakers preparing for the first interest-rate hike in nearly a decade seek to ensure that the market is ready and able to handle it whenever it happens.

Nissan says supports Renault call for balance

TOKYO (Reuters) - Nissan Motor Co said its board of directors met on Thursday and unanimously supported alliance partner Renault SA's decision to seek a balance between its two main shareholders: the French government and Nissan.

United Airlines swaps ten Boeing Dreamliners for 777-300ER jets

(Reuters) - United Airlines said Thursday that it has swapped 10 orders of Boeing Co 787 Dreamliners for 10 larger 777-300ER jets, marking a victory for the plane manufacturer as it seeks to sell out the 777 planes before their production ends.

"Blew" Chips: 3M Latest To Miss, Guide Lower On "Strong Dollar, Mixed Global Economy"

If one steps back from the adjusted, non-GAAP EPS "beats" reported by companies this earnings season which benefit from what is set to be a record quarter of stock buybacks and an unprecedented drop in consensus expectations, Q1 earnings season for the "blue chips" so far has truly "blown", with revenue declines announced at IBM (12th in a row), McDonalds, Coke, and earlier today Procter & Gamble also reporting that its sales have fallen for fifth straight quarter. And then moments ago "diversified global tech" bellwether 3M reported that its sales declined 3.2% year-on-year to $7.6 billion. The company also missed its EPS, and adding insult to injury, "the company now expects earnings to be in the range of $7.80 to $8.10 per share versus $8.00 to $8.30 per share previously."

Why? Blame the soaring dollar which is taking away from US corporate profitability and giving to European, Japanese and any other geographic region that is actively crushing its currency. That, and the fact that there continues to be no global recovery (thanks Chinese hard landing).

From the company:

"We are executing well against a more challenging economic backdrop in early 2015," said Inge G. Thulin, 3M's chairman, president and chief executive officer. "The stronger U.S. dollar negatively impacted sales and earnings in the first quarter, and global economic growth was mixed. Despite these near-term challenges, we grew organically in all business groups and all geographic areas, and expanded operating margins by nearly a full percentage point."

Surprisingly, unlike Netflix, 3M doesn't realize that it can merely "add back" FX losses to non-GAAP EPS.

Procter & Gamble's sales miss estimates on strong dollar

(Reuters) - Procter & Gamble Co reported a steeper-than-expected 8.3 percent fall in quarterly sales, blaming a strong dollar and said currency fluctuations would hurt 2015 sales by 6-7 percent.

Caterpillar quarterly profit rises

CHICAGO (Reuters) - Caterpillar Inc on Thursday reported a higher quarterly net profit despite a dip in revenue, citing a boost from the strong U.S. dollar on imported goods, especially from Japan, and a pre-tax gain from the sale of a third-party logistics business.

Dow profit beats estimates as margins expand

(Reuters) - Dow Chemical Co reported a better-than-expected quarterly profit, helped by higher margins in five of its six units.

GM posts weaker-than-expected quarterly profit

DETROIT (Reuters) - General Motors Co on Thursday posted a weaker-than-expected quarterly profit as weakness in South America and Russia hurt demand and the company's tax rate came in higher than expected.

PepsiCo quarterly revenue falls 3.2 percent on strong dollar

(Reuters) - PepsiCo Inc said its quarterly revenue fell 3.2 percent, largely due to a strong dollar.

Frontrunning: April 23


Clinton charities will refile tax returns, audit for other errors (Reuters)

China Warns North Korean Nuclear Threat Is Rising (WSJ), or another country realizes war is the only "exit"

Shares, euro sag after euro zone PMIs disappoint (Reuters)

China Manufacturing Gauge Drops to Lowest Level in 12 Months (BBG)

Deutsche Bank Said to Pay $2.14 Billion in Libor Case (BBG), or roughly a €20,000 per banker "get out of jail" fee

Brazil's Petrobras Reports Nearly $17 Billion in Asset and Corruption Charges (WSJ)

Can This Oil Baron's Company Withstand Another Quake? (BBG)

Bad for Q1 GDP: Raytheon sales fall amid weak U.S. defense spending (Reuters)

Aramark CEO Tops U.S. Executives With $800,000 Plane Tab in 2014 (BBG)

Nasdaq hikes dividend, cuts costs as profits top views

NEW YORK (Reuters) - Transatlantic exchange operator Nasdaq OMX Group on Thursday said it raised its dividend 67 percent and took substantial restructuring charges to combat foreign exchange headwinds as its profits topped expectations.

Trader's Arrest Raises Concerns About Market Rigging

Accusations of market manipulation by a little-known British futures trader have ignited a debate about how widespread deceptive trading strategies have become.

Raytheon sales fall amid weak U.S. defense spending

(Reuters) - U.S. weapons maker Raytheon Co , the maker of Tomahawk and Amraam missiles, reported a 4 percent fall in quarterly sales as U.S. defense spending remained weak.

Futures Unexpectedly Red Despite Disappointing Economic Data From Around The Globe

Today is shaping up to be a rerun of yesterday where another frenzied Asian session that has seen both the Shanghai Composite and the Nikkei close higher yet again (following the weakest Chinese HSBC mfg PMI in one year which in an upside down world means more easing and thus higher stocks) has for now led to lower US equity futures with the driver, at least in the early session, being a statement by the BOJ's Kuroda that there's a "possibility" the Bank of Japan's 2% inflation target will be delayed and may occur in April 2016.

This official admission of failure (first of many) by the central bank that it won't be able to reach 2% inflation by its stated year-end goal, clearly reduces expectations of additional easing on April 30, according to Shinkin Asset Management. And in a world without EPS growth (and outright revenue declines) in which every PE multiple expansion turn is driven by some incremental central bank easing (preferably sooner rather than later), less easing is bad for risk, which may explain why US futures are red, if only for now: we fully expect a momentum ignition wave in the USDJPY to promptly push the pair above 120, and take the S&P with it to new all time highs on nothing but correlation algos, either at the usual ramp time of 8:30 am or just before the US market open.One just has to think like a criminal algo.

Meanwhile, "recovering" Europe also fired the first shot across the QE bow, reminding everyone that soaring stock markets have nothing to do with the underlying economies, as Europe's PMIs disappointed across the board. As Goldman summarizes, the Euro area flash composite PMI fell by 0.5pt to 53.5 in April, below consensus expectations of a modest gain (Cons: 54.4, GS: 54.2). This was the first decline since November. The manufacturing and services subcomponents were both weaker on the month, declining 0.3pt and by 0.5pt respectively. On a national level, composite P ...

Airbus moves ahead with defense electronics, other asset sales

FRANKFURT (Reuters) - Airbus has started approaching potential buyers for electronics and other assets it wants to sell to focus its defense division on warplanes, missiles, launchers and satellites, three sources familiar with the matter said.

Barclays CEO sees 'significant' progress in conduct probes this year

LONDON (Reuters) - Barclays Chief Executive Antony Jenkins said he expects the bank to make "significant" progress this year toward settling outstanding investigations into past misconduct.

Shares, euro sag after euro zone PMIs disappoint

LONDON (Reuters) - World shares weathered soft readings on Chinese and Japanese manufacturing on Thursday that merely drove expectations of more policy stimulus there, though lackluster euro zone data was less well received.

PSA Peugeot Citroen CEO open to expand mini-car collaboration beyond Toyota

SHANGHAI (Reuters) - French automaker PSA Peugeot Citroen is open to bringing in more partners to its existing collaboration with Toyota Motor Corp to share the cost of designing and manufacturing mini-cars, according to its chief executive.

Online store merger prods luxury goods makers toward Internet

PARIS (Reuters) - The merger of the world's two biggest online fashion stores, Net-a-Porter (NAP) and Yoox, sends a warning to luxury brands to embrace the Internet with more vim after years of resistance.

Two shareholders sue American Apparel over CEO's ouster

(Reuters) - Two American Apparel shareholders have filed a lawsuit against the clothing and accessories retailer, alleging its founder and former Chief Executive Dov Charney was fired because he refused to sell the company.

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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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