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06Apr2016 Market Close: DOW Up Triple Digits, SP500 Up Over One Percentage Point, Dollar Falls And Crude Rises

Written by Gary

Wall Street closed higher, trending up all session working around a small dip in the road after the FOMC minutes were posted, though a consensus emerged that risks from a global economic slowdown warranted a cautious approach. WTI crude continued to coast sideways after rising some 4% and the US dollar settled lower, precariously testing its support.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Healthcare, energy shares boost Wall Street

NEW YORK (Reuters) - U.S. stocks jumped on Wednesday, bolstered by gains in healthcare shares after the collapse of the $160 billion merger of Pfizer and Allergan, and by a rise in energy shares.

Swiss police raid UEFA as Panama Papers scandal spreads

ZURICH/REYKJAVIK, (Reuters) - Swiss police raided the European soccer body UEFA on Wednesday to seize information about a contract disclosed in the Panama Papers that was signed by Gianni Infantino, now head of the global soccer body FIFA.

Fed debated April rate hike but caution reigned due to global fears: minutes

WASHINGTON (Reuters) - Federal Reserve policymakers debated last month whether an interest rate hike would be needed in April though a consensus emerged that risks from a global economic slowdown warranted a cautious approach.

U.S. weakens retirement advice rule, responding to industry

WASHINGTON (Reuters) - A new U.S. rule aimed at protecting retirement savers from profit-hungry brokers turned out to be much weaker than an initial proposal after the Obama administration bowed to pressure from the financial services industry.

Yahoo expects 2016 revenue to drop about 15 percent: Re/code

(Reuters) - Yahoo Inc estimates revenue to drop nearly 15 percent and earnings to fall by over 20 percent in 2016, Re/code reported on Wednesday.

Lindt & Spruengli names new head of U.S. business

ZURICH (Reuters) - Swiss chocolate group Lindt & Spruengli AG on Wednesday named U.S. sales chief Daniel Studer as head of its U.S. operations, replacing Thomas Linemayr, who is leaving the company at the end of April.

Pfizer, Allergan scrap $160 billion deal after U.S. tax rule change

(Reuters) - U.S. drugmaker Pfizer Inc and Ireland-based Allergan Plc walked away from their $160 billion merger on Wednesday, a major win for President Barack Obama, who has been pushing to curb deals in which companies move overseas to cut taxes.

Glencore sells agri unit stake for $2.5 billion to Canadian pension fund

LONDON (Reuters) - Commodity miner and trader Glencore has agreed to sell 40 percent of its agricultural unit to Canada's state pension fund for $2.5 billion, the company's latest step to cut debt and soothe investor concerns about the impact of weak commodity prices.

Fiat Chrysler cuts 1,300 workers in Michigan, scraps shift

DETROIT (Reuters) - Fiat Chrysler Automobiles said on Wednesday it is laying off about 1,300 workers indefinitely and ending one of the two shifts at its Sterling Heights, Michigan plant that makes the slow-selling midsize Chrysler 200 sedan.

U.S. Oil Production Continues to Drop in Latest EIA Report (Video)

By EconMatters

We had nearly a 5 Million drawdown in Oil Inventories during what is technically still the building season for Oil Stocks.

© EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle

Stocks Soar On Oil Ignition, Biotech Bonanza

In what was shaping up to be a low-volume snoozer of a day, things changed dramatically at 10:30am when the DOE confirmed last night's API data according to which US crude inventories had their biggest weekly decline since January even as distillates and gasoline stocks rose. That headline sent WTI soaring by 5.4%, the most since March 16.

The crude spike was all the "momentum ignition" that futures needed to stage a dramatic surge, soaring from 2035, jumping as much as 20 points higher to 2055 before the slightly more hawkish than expected FOMC Minutes reported pushed ES lower by 10 point. And then, out of nowhere, a massive buying program emerged out of nowhere, and sent the E-mini tofresh highs.

It wasn't just oil: an even more notable notable move took place in the biotech sector, which surged by over 5%, its biggest intraday gain since November 2011, and accounted for nearly half of the S&P500's gain. The reason was the collapse of the Valeant-Allergan deal. No really: while talking on CNBC, Brent Saunders said that now that the deal has been pulled, Allergan could weigh deals. That is all the slgos needed to hear and unleashed a massive frontrunning spree, buying up every N/M PE company they could find.

How Much Of S&P Earnings Growth Comes From Buybacks

Having pounded the table on buybacks as the only marginal source of stock purchasing since some time in 2013, we were delighted one month ago when Bloomberg finally got it, writing an article titled "There's Only One Buyer Keeping S&P 500's Bull Market Alive." The answer: corporate stock repurchases of course.

This is what it found:

Demand for U.S. shares among companies and individuals is diverging at a rate that may be without precedent, another sign of how crucial buybacks are in propping up the bull market as it enters its eighth year. Standard & Poor's 500 Index constituents are poised to repurchase as much as $165 billion of stock this quarter, approaching a record reached in 2007. The buying contrasts with rampant selling by clients of mutual and exchange-traded funds, who after pulling $40 billion since January are on pace for one of the biggest quarterly withdrawals ever.

œAnytime when you're relying solely on one thing to happen to keep the market going is a dangerous situation, said Andrew Hopkins, director of equity research at Wilmington Trust Co., which oversees about $70 billion. œOver time, you come to the realization, 'Look, these companies can't grow. Borrowing money to buy back stocks is going to come to an end. '

But, when you have the ECB backstopping purchases of corporate bonds, giving companies a green light to issue debt at will and use the proceeds to buyback even more stock, it won't end just yet.

However, now that it is common knowledge that over the past several years the market has been conducting the most elaborate acrobatic example of pulling ...

Here We Go Again: Obama Pushes Banks To Lower Home Loan Standards

Recently, White House Press Secretary Josh Earnest said the following: "One of the key legacy achievements of this presidency will be the important reforms of Wall Street. Those reforms have led to a financial system that is more stable and ensures that taxpayers are not on the hook for bailing out financial institutions that make risky bets."

Evidently the Obama administration has a different definition of œrisky bets , and œtaxpayers not on the hook than most people, because as the Washington Post reports:

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

... administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs " including those offered by the Federal Housing Administration " that insure home loans against default.

So on one hand the Obama administration is touting the fact that they are sure they've cleaned up the financial system to the point where it's more stable, and taxpayers "definitely" won't be on the hook for bailing out banks making risky bets. On the other hand, the administration is pushing banks to loan to sub-prime borrows again, less than eight years after completely blowing up the global financial markets for ...

The Fed's Next Rate Steps: Connecting the Dots

Uncover whose dot is whose in the Federal Reserve's dot plot, and the case for just two rate increases this year gets stronger.

Soup's On for ConAgra Investors

A more focused ConAgra and an attractive valuation look appetizing ahead of its fiscal third-quarter results.

Verizon and AT&T: Swimming in Different Video Streams

Verizon's purchase of a stake in AwesomenessTV reflects a very different mobile-video strategy than AT&T's.

16 March 2016 FOMC Meeting Minutes: Downside Risks Delay Raising Of Federal Funds Rate

Fed-sealSMALLThe 16 March 2016 meeting statement presented the actions taken. This post covers the economic discussion during this FOMC meeting between the members (minutes were released today). There was a significant amount of discussion about economic conditions and how it relates to the federal funds rate. The quote of these minutes was:

... several participants also argued for proceeding cautiously in reducing policy accommodation because they saw the risks to the U.S. economy stemming from developments abroad as tilted to the downside or because they were concerned that longer-term inflation expectations might be slipping lower, skewing the risks to the outlook for inflation to the downside. Many participants noted that, with the target range for the federal funds rate only slightly above zero, the FOMC continued to have little room to ease monetary policy through conventional means if economic activity or inflation turned out to be materially weaker than anticipated, but could raise rates quickly if the economy appeared to be overheating or if inflation was to increase significantly more rapidly than anticipated. In their view, this asymmetry made it prudent to wait for additional information regarding the underlying strength of economic activity and prospects for inflation before taking another step to reduce policy accommodation. .....

January 2015 Philly Fed Coincident Index Continues Slowing Rate of Year-over-Year Growth Trend

The year-over-year rate of growth of the US Coincident Index again declined - but this month insignificantly. A comparison of this US Coincident Index with the Aruoba-Diebold-Scotti business conditions index, Conference Board Coincident Index, ECRI's Coincident Index, and the Chicago Fed National Activity Index follows.

The Fed: Sentiment on Fed runs against April rate hike, minutes show

More Fed officials spoke against a rate hike at the central bank's next meeting than others who favored such a move, according to minutes of the Fed's March meeting released Wednesday.

The Fed: The Fed is split on this crucial economic question, March minutes show

The Fed seemed divided into two camps on whether recent data showing signs of life in core inflation would persist, minutes of the March meeting showed.

The Tell: Small-cap volatility measure reaches tipping point, may signal caution

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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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