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18Mar2016 Pre-Market Commentary: US Futures Near Yesterday's Highs, WTI Crude Climbing Higher, 'Rally' May Be In Early Stages Of Stagnation

Written by Gary

US stock future indexes are fractionally higher this morning a day after the Dow Jones industrial average turned positive for the year. WTI crude climbed higher overnight to the low 41's just below a minor resistance on expectations of a production freeze by major exporters.

The markets are expected to open near yesterday's session highs, near the SP500's 2044 resistance, but going higher is in doubt as short-term indicators show this 'rally' is already deep into unwinding.

Here is the current market situation from CNN Money

European markets are higher today with shares in London leading the region. The FTSE 100 is up 0.42% while Germany's DAX is up 0.30% and France's CAC 40 is up 0.19%.

What Is Moving the Markets

Here are the headlines moving the markets.

Luxury jeweler Tiffany warns on profit as tourists cut spending

(Reuters) - Upscale jeweler Tiffany & Co said it expected profit to fall in the first half of this fiscal year as a strong dollar hurts tourist spending at its stores in the United States and erodes revenue from other markets.

Daimler receives huge order from Uber: Manager Magazin

FRANKFURT (Reuters) - Ride-hailing service Uber [UBER.UL] has placed a large order for cars with Germany's Daimler , Manager Magazin reported on Friday.

Oil hits 2016 high above $42 on production and demand outlook

LONDON (Reuters) - Oil rose above $42 a barrel on Friday, hitting its highest this year and extending a rally into a fourth week on expectations of a production freeze by major exporters, stronger seasonal demand and dollar weakness.

Bitcoin finds room in small funds; large institutions still on sidelines

NEW YORK (Reuters) - Digital currency bitcoin has found favor among smaller investors, thanks to the availability of funds designed to invest in it, but remains a niche among the larger investing community.

German court clears former Porsche CEO over VW bid

STUTTGART, Germany (Reuters) - A German court on Friday acquitted Wendelin Wiedeking, a former chief executive of Porsche , of alleged market manipulation in the course of one of the auto industry's most controversial takeover battles.

How UK company formation agents fuel fraud

LONDON (Reuters) - British government efforts to crack down on money laundering and fraud through UK businesses are failing to tackle a key area - the role of company formation agents - a Reuters study of the sector shows.

Futures drift higher as risk appetite increases

(Reuters) - U.S. stock index futures were higher on Friday, a day after the Dow Jones industrial average turned positive for the year, as investors took to riskier assets.

Indian airlines look to smaller planes in regional push

HYDERABAD, India (Reuters) - Indian airlines are in talks with ATR, Bombardier and Embraer to buy smaller planes to fly to the country's booming second and third tier cities ahead of a government drive to get more of the country connected by air.

Toshiba says it may write down nuclear business, U.S. units probed

TOKYO (Reuters) - Japan's Toshiba Corp said on Friday it was looking at whether it would need to write down its nuclear business given damage to the company's credit profile after a $1.3 billion accounting scandal last year.

Why Currency Traders Are So Confused

This morning the WSJ leads with an article that summarizes the prevailing market confusion at the moment, namely that global currencies are soaring, "defying central bankers" despite a flurry of easing around the globe in the past month, all of which have been undone by one Fed dot plot which cut the number of rate hikes forecast by Yellen & Co., from 4 to 2. To wit: "efforts by many of the world's central banks to weaken their currencies are failing, raising concerns about whether policy makers are losing the ability to wield control over financial markets."

Despite the Bank of Japan 's efforts to push down its currency and jump-start the economy with negative interest rates, the yen is up 8% this year and is at its strongest level against the dollar since October 2014. European central bankers are having similar problems containing the strength of the euro and other currencies.

The European Central Bank has struggled with its efforts to weaken the euro, which gained 0.8% against the dollar on Thursday. Last week, the ECB cut interest rates further into negative territory, yet the currency is up 4.2% this year.

Even some central banks with less actively traded currencies are having a hard time guiding markets. Norway's central bank on Thursday cut its main interest rate to a record low of 0.5%, and a bank governor said he wouldn't rule out negative rates, in which central banks charge big lenders to hold deposits. The Norwegian krone gained more than 1% against the dollar and was up against the euro.

The WSJ then briefly touches on what we have been warning about since 2009: "These difficulties are a reminder that the long stretch of exceptionally low rates ...

Frontrunning: March 18

Dow's Freakish Bounce Makes Investors Whole, Can't Erase Doubts (BBG)

R.I.P. Dollar Rally as Dovish Fed Spurs Worst Slump Since 2011 (BBG)

Global Currencies Soar, Defying Central Bankers (WSJ)

Oil hits 2016 high above $42 on production and demand outlook (Reuters)

The U.S. Is Exporting Its Oil Everywhere (BBG)

Hillary Clinton's Allies Launch Plan to Undercut Donald Trump Now (WSJ)

Sanders calls notion he should quit Democratic race 'absurd' (Reuters)

Turns Out a 'Lie' Lurked Beneath the Bookends of the BRICS (BBG)

Valeant Jitters Infect Specialty Drug Sector (WSJ)

Subprime auto loans come under scrutiny (FT)

ECB Urges Italy Banks Planning M&A to Target Strong Capital (BBG)

Senators ...

Tiffany Slashes Guidance, Sees Q1 Earnings Down As Much As 20%, Three Time Worse Than Consensus

As of this moment, the DXY dollar index currently just above 95, is lower than where it was a year ago, but that does not stop companies from using it as an excuse for continuing earnings weakness. Case in point, Tiffany & Co (which once used to be a bellwether for the luxury consumer and the overall market, but lately not so much) which moments ago reported Q4 earnings of $1.46, beating consensus expectations of $1.40, on inline revenues of $1.21bn, 6% lower than a year ago, as sales in the US, Asia Pacific and Europe all declined in the mid-single digits, offset by a 9% rebound in Japan; comparable store sales declined 5%.

This is what the company said: œWe faced various challenges during the year that negatively affected our financial results, especially related to the strong U.S. dollar." The company further said that "worldwide sales growth of only 2% on a constant-exchange-rate basis, or down 3% as reported, along with the lack of earnings growth, did not meet the forecasts we had communicated at the start of the year;" the good news is that since the company preserved "gross margin, and strong free cash flow" it was still able to return cash to shareholders through another dividend increase and share repurchases.

Mostly repurchases, which in 2015 were conducted at an average price of $78/share or about 10% higher than the current stock price:

The Company spent $220 million in the full year (at an average cost of $78 per share), including $104 million in the fourth quarter (at an average cost of $73 per share) to repurchase shares of its Common Stock. On January 21, 2016, the Company's Board of Directors approved a new stock repurchase program, authorizing the repurchase of up to $500 million of the Company's Common Stock; this new program immediately replaced the ...

Global Currencies Soar, Defying Central Bankers

Efforts by many of the world's central banks to weaken their currencies are failing, raising concerns about whether policy makers are losing the ability to wield control over financial markets.

Global Stocks Higher

Global stocks were mostly higher Friday as oil prices rose and the dollar began to climb back from two days of steep declines.

401(k) Plans Take Different Tack on Money Funds

New rules are causing many 401(k) plans to shift out of prime money funds into other low-risk alternatives that aren't required to have redemption fees or set up œgates to block withdrawals.

Rail Week Ending 12 March 2016: Rail Returns To Its Slide Into The Abyss

Week 10 of 2016 shows same week total rail traffic (from same week one year ago) declined according to the Association of American Railroads (AAR) traffic data. All rolling averages are again negative and in decline.

Fed's Balance Sheet 16 March 2016 Still Little Changed

Total Fed Balance Sheet:

Fed's Balance Sheet week ending balance sheet was $4,447 trillion. Over the last 6 weeks, changes have been very minor.

Metals Stocks: Silver leads weekly gains for metals

Gold, and especially silver, are on track for solid weekly gains as the dollar trades at its lowest level in five months due to reduced expectations for a string of U.S. interest-rate hikes.

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