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14May2015 Pre-Market Commentary: U.S. Futures Higher After US Jobless Claims Dip

Written by Gary

U.S. stock futures maintain gains after Jobless claims dip to 264,000, but remain at a 15-year low. Gold futures fell slightly lower after jobless claims and PPI data. The U.S. Dollar has fallen down through its support worrying the dollar bulls that it may fall further.

Markets expected to open higher, but test yesterdays lows. A solid breakout is not yet foreseen, but volatility is assured with short term indicators remaining slightly bearish.


Here is the current market situation from CNN Money

European markets are higher today with shares in Germany leading the region. The DAX is up 0.70% while France's CAC 40 is up 0.64% and London's FTSE 100 is up 0.13%.

What Is Moving the Markets

Here are the headlines moving the markets.

April 2015 Overall Producer Prices Year-over-Year Deflation Accelerates

Written by Steven Hansen

The Producer Price Index inflation year-over-year deflation continued to grow. The intermediate processing continues to show a large deflation in the supply chain. Deflation was worse than the market expected.

Read more ...

Jobless claims fall; four-week average at 15-year low

WASHINGTON, (Reuters) - The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, indicating the jobs market was on solid footing even as the economy struggles to regain momentum after abruptly slowing in the first quarter.

Who Is The Biggest Player In Energy?

Submitted by John Manfreda via OilPrice.com,

PetroChina (NYSE: PTR) just surpassed Exxon Mobil (NYSE: XOM) to become the largest energy company in the world, on a market cap basis.

PetroChina was able to accomplish this despite Exxon's growth of 1.5 billion barrels of oil equivalent (BOE) in reserves. These new reserves are located at the Permian Basin in West Texas and the Kearl Oil Sands project in Canada.

PetroChina's primary operations are located in China. This may not seem like a major oil hub to the average investor, but China is actually the 5th largest oil producing country in the world.

Now the question becomes: can PetroChina retain its status as the world's largest energy company?

Business Plans: Exxon vs PetroChina

Investors Double Down on Spring Turnaround

When the dollar's rally stalled in March, some investors began buying beaten-down assets in a shift many expected to be short-lived. Now, many of those traders are increasing their bets on the euro, oil and other investments.

'Flash Crash' Trader Accused Rivals of Misconduct

Navinder Singh Sarao, the trader arrested on U.S. charges he manipulated futures prices and contributed to the May 2010 "flash crash," leveled claims of similar misconduct against other traders.

How Saudi Arabia Sets The Global (Currency) Markets

Oil price Fed

Most investors believe that the U.S. dollar is the primary influence upon commodity prices. While there certainly is a strong correlation between the dollar and commodities, we would argue that the real dynamics in the market work slightly differently.

Example: Oil has the potential to set the dollar price, which in turn puts pressure on the broader commodity complex. Has the world turned upside down? Please bear with us as we explain our view.

There is an almost perfect negative correlation between crude oil and the U.S. dollar. Consequently, crude oil has a strong positive correlation with the euro. The next two charts show those relationships.

Crude Oil (red) versus EUR (black)

crude_oil_euro_2000_2015_590

Crude Oil (red) versus USD (black)

CRUDE-DOLLAR-2000-2015-590

Examine the oil/currency correlation. Crude oil is one of the largest markets with an annual value of $1.7 trillion so its moves strongly influence other markets. As the price of crude oil drops, there are fewer dollars in circulati ...

Shale-Oil Producers Ready to Raise Production

After slashing production for months, U.S. shale-oil companies say they may bring rigs back into service, setting up the first big test of their ability to quickly react to rising crude prices.

Credit-Card Firms Reap Rewards of Consumer Brand Loyalty

Stuck with slow growth prospects in a saturated market, banks that issue credit cards are increasingly churning out cards that are aimed at creditworthy customers loyal to a store, airline or hotel.

PBOC Asks Banks to Hold Steady on Deposit Rates

China's central bank, while publicly pushing ahead with plans to liberalize interest rates, has asked banks to keep deposit rates below a ceiling in an effort to restrain funding costs for borrowers.

SocGen Asks If "$60 Billion Of Money Printing Monthly Can't Get The Euro Down Then What's Next?"

One by one, everyone is not only realizing but admitting that if after 7 years of ZIRP, QE and currency warfare in general, nothing changes, then perhaps the 8th year (and 9th, and 10th) won't do much either. Here's Socgen:

Two months of QE for nothing. Well, not strictly true of course, for inflation expectations are up 30bp and Euro stocks are still up 15% since January even after investors withdrew $1.5bn last week. But look at the euro. EUR/USD yesterday returned over 1.1350, the highest level since the ECB announced QE on 22 January. The trade-weighted euro is up 3.4% from its April low. The Q1 GDP data were not bad, excellent in fact for Spain and France, but net exports are not contributing much. Perhaps this underlined the limitations of how a weaker currency, in the euro area at least, is no panacea because of the structural headwinds, and this does not offset the impact of the weak currency on the demand side. Former BoE governor King yesterday made a timely intervention, warning that central banks risk tipping the world into a currency war. We're there already, of course, but if $60bn per month of money printing by the ECB can't get the euro down (because of the USD), then what's next? The RBA has cut rates twice this year, and AUD/USD trades back over 0.8100. Is FX intervention next?

That, and every other form of "intervention" as well. Because the closer central banks are to losing all control, the more "intervention" there will be until the concept of a "market" disappears forever.

Frontrunning: May 14



Amtrak train in Philadelphia wreck was traveling at twice speed limit (Reuters)

The engineer has no recollection of the crash and "no explanation" for what happened (WSJ)

Taliban claim attack on Afghan guesthouse that killed 14 (Reuters)

Chicago's Junk Rating From Moody's Puzzles Investors (BBG)

House votes to end spy agencies' bulk collection of phone data (Reuters)

Wesley Clark: The Penny-Stock General (BBG)

AOL's Armstrong to Leave $213 Million Richer After Verizon Deal (BBG)

Shale-Oil Producers Ready to Raise Production (WSJ)

Why Ted Cruz is wowing some of Wall Street's money-men (Reuters)

Elon Musk's Space Dream Almost Killed Tesl ...

Dollar Nears Three-Month Low Against the Euro

The dollar tumbled to its lowest level against the euro in more than two months, hurting stocks in export-dependent Europe.

Ad Technology Is at Center of Verizon-AOL Deal

In a merger with Verizon, AOL would gain a wealth of consumer data that it could use to personalize and target marketing messages. Others are skeptical of the effort. Above, Bob Lord, president of AOL.

Greece's Varoufakis says debt swap fills Draghi's 'soul with fear'

ATHENS (Reuters) - Repayment of what Greece owes to the European Central Bank should be pushed into the future, but it is not an option because it fills ECB chief Mario Draghi's "soul with fear", Greece's finance minister said on Thursday.

Is This Why The Dollar Is Sliding

From the Gartman Letter, May 12, 2015:

To end our discussion of the forex markets, we think it is time to return to an old friend: long of the English speaking currencies/short of the Yen and we shall do so en masse this morning, buying the US, the Canadian, the Aussie and the Kiwi dollars against the Yen upon receipt of this commentary. We shall have stops on the trades individually in tomorrow's TGL, but we'll give them 2% against us as an initial stop point.

Immediately after:

... And:

Not even Stolper was this good.

Sharp gains $1.9 billion bailout but restructuring steps disappoint

TOKYO (Reuters) - Japan's Sharp Corp said it had secured a $1.9 billion bailout, its second major bank-led rescue in three years, after falling deep into the red as its smartphone display business was battered by competition from Asian rivals.

Despite Surging Euro S&P Futures Jump On Stop Hunt, Lack Of Daily Bund Rout

It has gotten to where just the lack of a rout in Bunds or any other government issue is enough to activate the "bullish" outside stop hunting algo, which is probably why ES has jumped overnight in another illiquid, newsless session. Curiously, Bunds shave not sold off even though the EUR has jumped sharply by almost 100 pips overnight to a 3 month high also on no news (with some amusing acrobatics by the USDJPY alongside) traditionally a bearish indicator for the Dax and thus the S&P. Perhaps the algos are just late, or maybe the "weak dollar is good for stocks" thesis has been activated, but in any event this morning's ramp higher in the ES will continue until all upside stops are hunted down by Virtu and crushed mercilessly.

A look at markets: in Asia the Nikkei 225 (-1.00%) was weighed on by a raft of soft earnings and JPY strength. Chinese markets fluctuated between gains and losses as participants counterbalance the latest slew of disappointing Chinese data with expectations for additional easing. JGB's shrugged off earlier weakness to trade up by 4 ticks after finding support at the key 146.50 level, despite a poor 30-year government bond auction, which saw the lowest b/c since February.

Overall, price action for equities this morning has been driven by currency fluctuations with stocks in Europe pulling away from their worst levels in tandem with the EUR. On a sector specific basis, energy names are the notable underperformers in the wake of yesterday's DoE-inspired slide in oil prices with equity newsflow otherwise relatively light. From a fixed income perspective, Bunds have drifted higher since the open in a partial pull-back of yesterday's heavy losses with the German curve now at its steepest level in 5 month.

EUR started the session on the front-foot amid no new fundamental catalyst with the move to the upside aided by the USD-index breaking below the Feb low seen at 95.25, leading EUR/USD to trade at 3-month highs. A ...

Citigroup Closes Exclusive Credit Program

Citigroup has closed a program that allowed a few coveted clients to make bets on currency markets without going through the bank's normal procedures to manage risk.

Bond Market Rout: Born in the USA?

Explanations of the great selloff in eurozone bonds tend to be too Eurocentric; the selloff has been global, pushed by slowing growth and fears of higher inflation, writes Simon Nixon.

Corporate Bonds Not Shaken by Market Rout

European corporate debt is showing resilience in the face of bond-market trouble.

Honda adds to Takata air bag recalls; global tally now around 36 million

TOKYO (Reuters) - Honda Motor Co on Thursday recalled close to 5 million vehicles fitted with potentially faulty Takata Corp air bag inflators, as investigations showed the problem behind one of the biggest auto safety crises may be more widespread than thought.

Euro at three-month high, bond yields key

LONDON (Reuters) - The euro hit a three-month high against the dollar on Thursday, drawing further support from a sustained surge in euro zone government bond yields that again kept global stock markets on the defensive.

Marc Faber Macro Views and Investments. US Bonds, Currencies and Gold Miners

Marc Faber Mao Room

Marc Faber's Mao Room

China Fires Away at Coal Power

Reforms to China's electricity sector are coming into focus, spelling more bad news for coal-powered operators such as China Resources Power.

Cisco Sets Up For New Boss

A modest earnings report and forecast sets a low bar for Cisco's first new CEO in 20 years.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

leading Stock Positions

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Current Commodity Prices


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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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