US markets melted up solidly into the green and the Spooz crested the 2044 level before slacking off to close at 2041. The next level for the SP500 is 2075/80, but the MACD is indicating we have reached, or almost reached, the crest. WTI crude settled in the low $40's and may be headed higher. Projections remain moderately bullish for the short-term.
NEW YORK (Reuters) - Russ Koesterich, who was BlackRock Inc's global chief investment strategist, has left that role and is joining the team responsible for the $47 billion BlackRock Global Allocation Fund , according to an internal memo.
NEW YORK (Reuters) - Oil prices hit 2016 highs on Thursday, with U.S. crude surging 5 percent to pierce the $40 barrier, on optimism that major producers will strike an output freeze deal next month amid rising crude exports and gasoline demand in the United States.
FRANKFURT/SAN FRANCISCO (Reuters) - A German district court has ruled that Apple Inc violated patents acquired by Swiss security company Kudelski's OpenTV business, which could force Apple to remove some video streaming features from popular products sold in Germany.
(Reuters) - Bank of America Corp Chief Executive and Chairman Brian Moynihan received a higher year-end compensation award for 2015 than any other executive at the bank, the first time this has happened since he took the top job in 2010.
(Reuters) - China's Anbang Insurance Group Co has hired a proxy solicitation firm to advise it on how Starwood Hotels & Resorts Inc shareholders view its $12.8 billion acquisition offer and prepare its next steps, people familiar with the matter said.
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.
Another day, another criminal Fed employee admits to being just that.
Recall that just yesterday we wrote about former NY Fed employee Jason Gross who somehow managed to avoid a prison sentence, but was slapped on the wrist with a $2,000 fine after he admitted to stealing confidential NY Fed data and handing it over to his former supervisor in his new role working for Goldman Sachs.
As it turns out he wasn't the only "cockroach" - moments ago the DOJ Office in Illinois announced that another former senior analyst at the Chicago Fed, Jeffrey Cho, 35, has pled guilty to stealing "sensitive financial data" which he took with him days before resigning from the Fed and moving to a different employer. The conviction carries a maximum sentence of one year in federal prison. A sentencing hearing has been scheduled for June 21, 2016, at which point we can only expect Cho will get the Jason Gross treatment and get away with merely a fine.
In the charge, the DOJ states that in his role as a Senior Supervision Analyst, Cho had access to sensitive, proprietary and valuable information belonging to the bank. The information included financial data and materials relating to the bank's responsibility to monitor the health of certain financial institutions in the United States.
According to a written plea agreement, Cho was in discussions in May 2015 to take a new job outside of the bank. Less than a week before accepting the outside company's employment offer, Cho printed a confidential Federal Reserve document from his work computer and took it home with him. After accepting the offer on May 12, 2015, Cho printed an additional 31 confidential Federal Reserve documents from his work computer and brought those home as well. On the same day he resi ...
We often see charts comparing the S&P 500 to the growth in the Federal Reserve's balance sheet, or more specifically, to assets held by the Fed. There is undeniably a close correlation between the two, but it has struck us as not very useful as a "timing device", or an early warning device if you will.
Recently we have come across a video of a presentation by Bob Murphy, in which he uses a slightly different comparison that might prove more useful in this respect. Instead of merely looking at Fed assets, he uses the total monetary base. Here is a chart comparing the monetary base to the S&P 500 Index since 2009:
The monetary base (red line) vs. the S&P 500 (blue line) - as can be seen, sometimes one or the other series leads, but in recent years the monetary base has been a leading indicator. It probably lagged the market in 2010/11 due to the fact that traders at the time bought stocks in anticipation of more monetary pumping - whereas nowadays the market appears to be reacting with a slight lag to changes in base money - click to enlarge.
Below is a chart that shows consolidated assets held by the Federal Reserve system for comparison. Since the Fed is currently reinvesting funds from MBS and treasuries that mature, its total asset base is b ...
JPM's head quant, Marko Kolanovic, who turned somehwat gloomy in the past few months, has seen some hits and misses in his recent forecasts. On one hand he did accurately predict the surge in gold one month ago, as well as the rebound in oil and Emerging Markets; however on the other he suggested that being long VIX and cash would be a good place to wait out the upcoming market volatility.
Most recently, when looking at the market's fundamentals which as we pointed out in late February are massively stretched, he also noted that "EPS recoveries that follow 2 consecutive EPS contractions (~20% of times) were typically triggered by some form of stimulus (fiscal, monetary or exogenous). We expect market volatility to stay elevated and investors to remain focused on macro developments such as the Fed's rates path, developments in China, and releases of US Macro data. Elevated volatility and EPS downside revisions will provide a headwind for the S&P 500 to move significantly higher (via multiple expansion)."
Perhaps Kolanovic failed to anticipate the "animal spirits" response to first a stimulative PBOC, then a dovish BOJ, followed by an even more dovish ECB and topping it off, yesterday's dovish FOMC, which was clearly sufficient to boost both the Dow Jones and the S&P500 into the green for the year. He is correct, however, that in the absence of a major stimulus, EPS will likely remain subdued: after all ...
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