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15May2015 Pre-Market Commentary: U.S. Futures Higher, Markets Expected To Open Higher, U.S. Dollar Edging Higher Off Support, WTI Crude Moving Lower

Written by Gary

U.S. stock futures rose slightly this morning, putting the S&P 500 index on track to push further into record territory. Rated low in importance, the US Empire Manufacturing for may came in low than expected and took off the edge of the SP500 opening at a new historic high.

Brent crude oil steadied below $67 a barrel on Friday after reports that a growing supply glut is boosting inventories worldwide. WTI Crude Moved to the High 58's this morning.

Here is the current market situation from CNN Money

European markets are mixed today. The CAC 40 is up 0.37% while the FTSE 100 gains 0.05%. The DAX is off 0.05%.

Not helping the "reflation" trade is that that other momentum trade, higher oil, may have reached a peak as sanity and rational though once again prevail as the market notices that US production is once again rising crushing Saudi's stated claim that it won the war on shale.

What Is Moving the Markets

Here are the headlines moving the markets.

Is The Dam Bursting?

Submitted by Jeffrey Snider via Alhambra Investment Partners,

The fact that these deficient economic estimates continue in April instead of the forecasted and pleaded rebound has raised more serious concerns even among those most loyal to the mainline tendencies. It is getting more difficult to deny that there is a major economic problem brewing, one which may already be rather severe despite the fact that the heaviest pressures associated with recession itself are still absent. The changing perception about the economy, with that 5% GDP talk now dead and buried, is itself one of those factors as there are enormous downstream implications from such a potential reset.

It probably has always been that way to some degree, and there is no doubt that there is at least a small basis in monetary theory about recession being not much more than pessimism. But the QE-world seems to have run massive interference in the ability of business, in my opinion, to operate with some sense. Take the case of inventory, as there has been a massive buildup in the past year without the salving and saving grace of actual sales growth up and down the supply chain. That has left wholesalers and retailers full of "stuff" and not much sign that it will eventually and easily move in the near term.

The question is why businesses, service businesses as they are classified, would befoul their own circumstances to such a high degree. The only answer I can come up with is the Blue Chip Economic Survey and all its kin. After the polar vortex setback last year, it was proclaimed by every economists and policymaker all over the world that that was an aberration, an anomaly to ignore as the ec ...

Very Important Moment for Vipshop

Short-seller reports attacking Chinese e-commerce player Vipshop don't land a knockout punchâ€"but the company is overvalued.

SEC Reviews Dubious Avon Bid

Avon hasn't received a bid from an entity calling itself PTG Capital, and the company is treating the purported proposal as a hoax.

Expansion of Toyota air bag recall includes 637,000 U.S. vehicles

DETROIT (Reuters) - Toyota Motor Corp is recalling 637,000 vehicles in the United States as part of a massive expansion of a global recall to replace potentially defective air bags that could rupture and send shrapnel into occupants.

Exor Offer No Slam Dunk for PartnerRe Investors

The Agnelli family vehicle Exor offers more cash today, but shareholders might still choose longer-term promise.

Google versus Oracle case exposes differences within Obama administration

SAN FRANCISCO/WASHINGTON (Reuters) - The Obama administration has been locked in internal wrangling over what position to take in high profile litigation between two American technology giants, Google and Oracle, according to multiple sources familiar with the discussions. It faces an end-of-May deadline to decide whether to take sides in a case before the U.S. Supreme Court that will have wide implications for the technology industry.

Dear Bureau Of Labor Statistics, About Those Plunging Gasoline Prices...

One of the major reasons for yesterday's market surge to new record highs was the surprise drop and miss in the April wholesale inflation report, or rather make that deflation, when the BLS announced that PPI in April had dropped by 0.4%, far below expectation of a 0.1% increase, of which the BLS said "over 30 percent can be attributed to the index for gasoline, which decreased 4.7 percent."

The implication, of course, being that with the US drifting ever further from the Fed's desired 2% inflation threshold, not only is the probability of a June rate hike negligible, but the last time US macro data was this bad, the Fed launched QE2 (and Operation Twist... and QE3).

Which is all great, we just have one question for the BLS: just what "data" are you looking at?

Because a quick reality check reveals April gasoline prices not only did not drop 4.7%, they rose by 8%!

... leading to the following grtesque divergence between "data" from the US Department of Truth and, well, the real world.

And just to put it in perspective, at this rate in a few weeks gasoline prices in America's most auto-dependent state, California, will be at or above levels seen from last year. In f ...

Anglo American Can't Solve Problems With Surgery

Anglo American shares have lagged mining peers because of higher debt levels and concerns around its dividend. It doesn't look like there is a good, quick fix for the miner.

Futures rise as dollar weakens; data eyed

(Reuters) - U.S. stock index futures rose on Friday, a day after a weakening dollar pushed the S&P 500 to a record-high, as investors awaited manufacturing and consumer sentiment data.

Frontrunning: May 15

The fake: Avon-Offer Hoax Shows It's Easy to Put One Over on SEC's Edgar (BBG)

And the real: US buyout group TPG snaps up UK discounter Poundworld (FT)

El Niño near-certain to last through summer: U.S. climate center (Reuters)

Oil Sands Land Becomes Alberta's Hot Real Estate as Oil Rebounds (BBG)

SEC a stumbling block in banks' forex guilty pleas: sources (Reuters)

Pimco's Stocks Chief Maisonneuve to Leave as Funds Closed (BBG)

Bank of America's Woes Test â€'Fixer' CEO (WSJ)

Puerto Rico Governor, Lawmakers Agree on Revenue Proposal (BBG)

The weathermen strike back: economists are counting on the U.S. to bounce back in 2015 (WSJ)

U.S., China set for high-stakes rivalry in skie ...

Oil steadies below $67 as global glut builds

LONDON (Reuters) - Brent crude oil steadied below $67 a barrel on Friday after reports that a growing supply glut is boosting inventories worldwide.

Justice Department to Tear Up Past UBS Settlement

UBS had hoped that the Justice Department would look past alleged violations of a 2012 settlement related to alleged interest-rate rigging. That hope has been dashed.

Tide Retreats in Europe's Oil Capital

Aberdeen, Scotland, is in a double bind. Not only has the price of oil plummeted, but supplies in the North Sea are running out.

Pimco Pulls Out of Stock Strategies

The move, including the departure of its chief investment officer of global equities, is the latest setback in the effort to expand in stock-fund investing.

Futures Make Further Record Gains On Bad Economic Data, Lack Of Volume, News And Bund Selling

Was that it for the "reflation" aka Bund-rout trade? One look at German bonds this morning and the sharp, panic selloffs seen in recent days are completely gone making one wonder if the ECB is done selling Bunds the CTAs who were riding the momentum train have all been squeezed out of their long positions and now the trend back to -0.20% can resume only to be followed by another abrupt 6-sigma move as the ECB once again sells inventory to buy itself more monetization runway. As a reminder, the ECB has to buy debt until September 2016 and it won't be able to if the 30-Year Bund is at -0.20% in a few months (or weeks).

Not helping the "reflation" trade is that that other momentum trade, higher oil, may have reached a peak as sanity and rational though once again prevail as the market notices that US production is once again rising crushing Saudi's stated claim that it won the war on shale. Don't be surprised if today's Baker Hugher oil rig report shows the first rebound in 2015. Some of the smartest money is already betting on the next oil downturn, one which would promptly send global Treasury yields sliding back to recent tights.

In the meantime, while mutual fund and ETF flows continue to exit equity fund, stocks maintain their lower volume levitation, with S&P futures printing at new record highs this morning, as Europe rises on another newsless, volumeless overnight session. We already documented that the worse the US economy is, the higher stocks rise...

King Digital Still Coming Off Sugar High

Candy Crush maker King Digital might look like a bargain next to its peers, but diversification is still an issue.

Honda Motor to recall 11,381 cars in India to replace air bags

NEW DELHI (Reuters) - Honda Motor Co's local unit will recall 11,381 vehicles in India to replace potentially faulty air bags, the company said in a statement on Friday, a day after its Japanese parent said it would recall 5 million vehicles for the same reason.

Shares set for weekly gain as bonds stabilize

LONDON (Reuters) - Global shares were on track for a weekly rise on Friday, with Europe following Asia higher, as bond-market jitters eased after a rollercoaster unwind of bets linked to the European Central Bank's stimulus plan.

Decoding the Enigma of Satoshi Nakamoto and the Birth of Bitcoin

Conversations with those most deeply involved in Bitcoin yielded a quiet consensus about the possible identity of the virtual currency's creator.

Ray Dalio: "If You Don't Own Gold, You Know Neither History Nor Economics"

Bridgewater's Ray Dalio explains in under 120 seconds why everyone should allocate some of their portfolio to gold:

"If you dont own gold...there is no sensible reason other than you dont know history or you dont know the economics of it..."

Of course, few 'status quo' believers will pay heed to the $150 billion AUM fund manager, despite his imploring everyone that to be successful, one must "Think Independently, Stay Humble"

How You'll Get Shortchanged By Social Security If You Retire Early

While you can claim Social Security benefits at 62, it may be the worst financial decision in retirement. Here's how to reap more money from Social Security.

Why Not Tell Greece How To Run A Democracy?

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

I know I've talked about this before, but it just keeps coming and it keeps being crzay. Bloomberg 'reports' that the 'German Finance Ministry', let me get this right, "is supporting the idea of a vote by Greek citizens to either accept the economic reforms being sought by creditors to receive a payout from the country's bailout program or ultimately opt to leave the euro." And that's it.

They 'report' this as if it has some sort of actual value, as if it's a real thing. Whereas in reality, it has the exact same value as Greek Finance Minister Varoufakis suggesting a referendum in Germany. Or Washington, for that matter. Something that Bloomberg wouldn't even dream of 'reporting' in any kind of serious way, though the political value would be identical.

Apparently there is some kind of consensus in the international press - Bloomberg was by no means the only 'news service' that 'reported' this - that Germany has obtained the right to meddle in the internal politics of other eurozone member nations. And let&r ...

Honda exec says latest air bag-linked recall may impact Japan sales

TOKYO (Reuters) - Honda Motor Co could see an impact on sales in Japan from its plans to recall some 5 million cars to replace potentially fatal air bags made by Japan's Takata Corp, a top executive said on Friday.

UBS Shocked To Learn Ratting Out Fellow Criminals Doesn't Buy DOJ Immunity

Back in 2012, when the first massive marketwide-rigging scandal made the front pages, that of Libor (one which Zero Hedge discussed first in January 2009 with "This Makes No Sense: LIBOR By Bank" and for which we won early points in the "you are a fringe tinfoil blog" category until proven correct as usual) the prosecution's case was handed on a silver platter by one bank which hoped it would squeeze through the prosecutorial cracks by ratting out all of its heretofore complicit partners in crime: UBS.

And sure enough, UBS did indeed get away with a paltry fine, and the whole affair was quietly swept under the rug with a December 2012 settlement, in which the U.S. agreed not to prosecute the bank on the condition that it "commit no United States crime whatsoever" for the two-year term of the agreement, subsequently extended by an extra year.

Unfortunately for UBS, its reputation as a ratting squealer was all for nothing, because just over one year later UBS as well as virtually all the same banks that were manipulating Libor, were caught rigging that other massive, global market in secret online chatrooms such as the "Bandits" and the "Cartel": foreign currency rates.

And also unfortunately for UBS which had sworn to commit no US crimes, it had just been caught committing at least one US crime. As a result, as Bloomberg reported earlier this week and as WSJ reported tonight, the US "Justice" Department is now tearing up and voiding the UBS 2012 settlement.

Actually, make that two crimes: "UBS also was viewed by the Justice Department as a repeat offender, having reached previous settlements including one in 2011 related to antitrust vio ...

Fed's Balance Sheet 13 May 2015 - A Sharp Increase

Total Fed Balance Sheet:

Fed's Balance Sheet week ending balance sheet was $4,462 trillion..

Read more ...

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