US stock future indexes are down fractionally (SPY -0.2), WTI crude is trending sideways at $39 and the US dollar has plunged to the high 94's which is close to support. The number of Americans filing for unemployment benefits rose from a five-month low last week. European markets are trading in the red and the US markets are expected to open lower near the unchanged line.
Here is the current market situation from CNN Money
European markets are broadly lower today with shares in Germany off the most. The DAX is down 1.73% while France's CAC 40 is off 1.41% and London's FTSE 100 is lower by 0.41%.
LONDON (Reuters) - Fund manager Neil Woodford, a top investor in GlaxoSmithKline and a critic of the drugmaker's current structure, said on Thursday he wanted to see an outsider replace Andrew Witty as the group's chief executive.
WASHINGTON (Reuters) - Federal Reserve policymakers urging caution over interest rate hikes have gained the upper hand in the central bank's internal debate, but the risk for the U.S. economy is that they are wrong to downplay a recent rise in inflation.
CAPE TOWN (Reuters) - The amount of light, recyclable aluminum in European cars will rise to 180 kg on average by 2020 as automakers look to cut harmful carbon emissions, a senior metals industry official said.
SHANGHAI (Reuters) - A slowdown in the pace of deregulation is the biggest challenge facing UBS AG in China, an executive at the Swiss bank said as it opened a branch of its wealth management business in Shanghai on Thursday.
LONDON (Reuters) - Oil rose towards $41 a barrel on Thursday, trading close to a 2016 high, bolstered by a plan among some of the world's biggest producers to meet next month to discuss supporting the market.
FRANKFURT (Reuters) - BMW's Chief Financial Officer Friedrich Eichiner said that after taking out inventories to restore demand in China in the fourth quarter, the market appeared to have bottomed out.
(Reuters) - U.S. stock index futures were lower on Thursday, a day after the Federal Reserve's lowered expectations of two interest rate hikes in 2016 pushed the S&P 500 to its highest close this year.
NEW YORK (Reuters) - Viacom Inc's new lead independent director pledged on Wednesday to represent all of the media company's shareholders and improve board and management coordination, including on potential mergers and acquisitions.
Nikkei futures rallied post-Fed into the Japanese open (despite weakness in USDJPY) and then when trade data struck (and exposed the utter failure of competitive devaluation), everything went into freefall. The Nikkei crashed 700 points and USDJPY plunged to its lowest since QQE2...
.... which prompted us to summon the cartoon character at the head of the BOJ as follows:
YEN CLIMBS PAST 110.99 PER DOLLAR TO STRONGEST SINCE OCT., 2014. Time for Peter Panic
" zerohedge (@zerohedge) March 17, 2016
And sure enough, just moments later right on cue "someone" started panic selling JPY, sending the USDJPY soaring higher by over 100 pips.
In a note that may have been quite prescient, BofA's HY strategist Michael Contopoulos released a note last night titled "Fed acknowledges global growth concerns ¦ again", in which he said that "we have to admit; today's dovish comments by Yellen took us by surprise" and adds that "although the market's initial reaction was positive, we think the longer run impact of a very dovish message is bad for risk assets. In fact, we're a bit amazed by the initial response from high yield today."
The catalyst that clued Contopoulos to what the Fed really meant was to be found in the reaction of financial stocks:
We also believe it is telling that bank stocks moved significantly lower after the rate decision. Though the price action in banks makes sense - a lower for longer rate environment and slower economic growth is not a positive scenario for financials - typically the moves in bank equity and high yield spreads are very well correlated (-48%). In our view the challenging bank environment is a canary in the coal mine for high yield. As financial volatility increases, bank earnings decline, and unease about the global economy heightens, banks pull back on risk and lending. Note the latest Fed survey on lending standards as a prime example of declining risk tolerance of loan officers.
Judging by the market's performance this morning, Contopoulos was correct. And if he was correct about that, then he may well be correct about what happens next, which is as follows:
Given the apparently weaker consumer (retail sales, nonmanufacturing ISM), the poor Q4 earnings season, and problems abroad, the acknowledgment by Chair Yellen of stresses in financial markets creating tighter financial conditions should have created ...
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