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12Apr2016 Pre-Market Commentary: US Futures Fractionally Higher, WTI Crude Prices Trending Up, US Dollar Remains Weak, Economic Growth Braked Sharply In First Quarter

Written by Gary

US stock future indexes are fractionally higher this morning as some analysts are wondering if the market will stay in the green today. March Import Prices rose 0.2%, coming in lower than the estimate for a rise of 1%. Export Prices were unchanged. A downbeat first batch of corporate results prodded European stock markets lower on today while oil prices are holding above $40.


Here is the current market situation from CNN Money

European markets are mixed today. The DAX is up 0.31% while the FTSE 100 gains 0.08%. The CAC 40 is even.

What Is Moving the Markets

Here are the headlines moving the markets.

Gloomy start to results season hits shares

LONDON (Reuters) - A downbeat first batch of corporate results prodded European stock markets lower on Tuesday while oil prices held above $40 ahead of a meeting of major producers to discuss freezing output.

U.S. small business confidence hits new two-year low

WASHINGTON (Reuters) - U.S. small business confidence fell to a fresh two-year low in March amid persistent worries about sales and profits, the latest indication that economic growth braked sharply in the first quarter.

EU regulators resume scrutiny of Halliburton, Baker Hughes deal

EU competition regulators have resumed their scrutiny of U.S. oil industry services group Halliburton Co's plan to acquire smaller rival Baker Hughes , a deal which U.S. authorities say is uncompetitive and wants to block.

French bank chief Oudea to meet senators over Panama Papers

PARIS (Reuters) - Societe Generale's boss is due to meet French senators on Tuesday to discuss the Panama Papers revelations on offshore banking and accusations he misled France's upper house of parliament over the bank's tax haven activity in 2012.

Alcoa profit falls; demand seen growing faster than supply

CHICAGO (Reuters) - Metals company Alcoa Inc on Monday reported a lower quarterly profit, with results hurt by low commodity prices, the strong U.S. dollar and plant closures or divestments, but the company's top executive said he expected aluminum demand to grow faster than supply this year.

Veteran U.S. investor Rogers looks to add more Russia to portfolio

MOSCOW (Reuters) - Veteran U.S. investor Jim Rogers is looking at possible investments into Russian oil firm Bashneft and diamond miner Alrosa as he aims to add more Russian assets to his portfolio, he told Reuters.

Under Armour drops as Wall Street traders focus on Spieth meltdown

SAN FRANCISCO (Reuters) - Shares of sports apparel maker Under Armour dropped nearly 6 percent on Monday, a day after defending champion Jordan Spieth lost the Masters golf tournament in a shocking meltdown.

Goldman Sachs to pay $5 billion in U.S. Justice Department mortgage bond pact

(Reuters) - Goldman Sachs Group Inc has agreed to pay $5.06 billion to settle claims that it misled mortgage bond investors during the financial crisis, the U.S. Department of Justice said on Monday.

SEC charges Texas attorney general for stock scam

(Reuters) - U.S. regulators charged Texas Attorney General Ken Paxton on Monday for his alleged role in a stock scam that defrauded investors in a Texas-based technology company called Servergy Inc.

Nomura Fires 1,000 As It Quits European Equity Business; Blames "Extreme Volatility And Lack Of Liquidity"

The latest confirmation of the pain global megabanks are suffering as a result of an abysmal trading environment, in no small part made even worse due to constant central bank tinkering, comes from Japan's largest brokerage, Nomura, which eight years after buying Lehman's European and Asian units has decided to fire 15% of its European staff and is abandoning most of its European equities business.

According to the FT, Nomura will also announce US job cuts and other cost-saving measures when it unveils a restructuring plan on April 27. The bank said in a statement that the plan followed a œstrategic assessment of its international operations. It will take the heaviest toll in Europe, the Middle East and Africa, where Nomura employs about 3,500 people. Altogether, Nomura will fire about 1,000 bankers between its European and US groups.

As reason for the cuts, Nomura cited "extreme volatility and a significant decline in liquidity, triggered by heightened uncertainty in the global economy." But we thought that with the S&P just 3% from all time highs... oh nevermind.

The FT adds that the "restructuring will open up old wounds for the bank's staff who have already endured $2bn in cost cuts and a series of adjustments in recent years as the bank overexpanded and then gave up on trying to become a global investment bank. Some of the staff losing their jobs left immediately."

The people familiar with the situation said the job cuts would include more than 150 who work in the European equities business, plus significant numbers of support staff. ...

Silver Surges To 8-Month Highs As Hedgers Unwind

Silver is now up almost 10% from its spike lows last week (up over 5% since Friday), has broken above $16, snapped 2016's highs at $16.17 and is back at its highest since October 2015. Amid the big tumble in commercial hedgers positions, we also note the Gold/Silver ratio has plunged to 2-month lows - just as we suggested.

Silver breaks 2016 highs...

To October levels...

As hedgers unwind...

A month ago we said, So bottom line, if you're a speculator in precious metals, now may be a good time to consider trading in some gold for silver.

And since then,Silver is up 4.6% and gold unch...

Manhattan's Real Estate Woes Get Worse: No Demand In Building Where Ackman Splurged $90 Million

Over the weekend, we asked the question, Did the Canary of New York's Luxury Housing Market Just Die, following reports of the bankruptcy of a New York luxury real estate developet. Now, just two days later, we learn that another high-end real estate developer is having trouble closing out an ultra-luxury project in Manhattan.

Courtesy of Bloomberg, we find that luxury real estate developer Extell Development Co can't sell luxury condos at what may be New York's premier ultra luxury destination, the One57 tower, which it is attributing it to the fact that there is an abundant supply of condos already on the market. As a reminder, One57 is where Bill Ackman paid $91.5 million in April 2015 for a condo (which he hoped to flip), just a few months before Valeant, and his fund, suffered staggering losses. Perhaps that should have been the tell.

The situation has gotten to the point that instead of leasing luxury condos, Extell will now try to sell the units as higher end apartments. Said otherwise, there is suddenly no market for luxury condos right now, and developers will have to try and capitalize on investments at a lower price point than originally planned.

As the following chart shows, the median price of luxury Manhattan apartments has fallen 3.5% y/y through March, reiterating the fact that oversupply and slowing demand are taking a toll on prices

Frontrunning: April 13



Gloomy start to results season hits shares (Reuters)

Stocks Rise Around World as Commodities Advance; Bonds, Yen Drop (BBG)

Oil hits 2016 high above $43 on producer meeting hopes (Reuters)

Rosneft chief Igor Sechin says low oil prices will not last (FT)

Banks Face Massive New Headache on Oil Loans (WSJ)

Wells Fargo Misjudged the Risks of Energy Financing (BBG)

Hedge Funds Abandoning Dollar's Biggest Bull Run in a Generation (BBG)

Boeing Meets With Iranian Airlines to Discuss Jets, Aircraft Services (WSJ)

Bundesbank's Weidmann rebukes Draghi critics in Berlin (FT)

A year after Freddie Gray, Baltimore makes slow progress (Reuters)

Who Loses the Most From 'Brexit'? Try Goldman Sachs (WSJ)

US faces 'disastrous' $3.4tn pension funding hole (FT)

As Isla ...

Earnings Season: Time to Tweak Warren Buffett's Maxim

Amid an overall earnings slowdown, investors need to be sure companies aren't stepping out of bounds to prop up results.

Why It's Time to Get Out of China's CAR

China's leading rental company CAR Inc. is leaving investors feeling like the vehicle they rented is missing some key features.

Yahoo: Verizon Is Still the Bidder to Beat

Yahoo may be attracting attention from a number of potential buyers, but Verizon has the heft to guarantee itself a win.

Import and Export Price Year-over-Year Deflation Continues in March 2016.

Written by Steven Hansen

Trade prices continue to deflate year-over-year.

Deep Dive: 10 companies bucking the depressing profit-margin trend

There are some alarming signs for corporate profits, but these companies are improving their margins while growing sales.

Capitol Report: Import prices climb in March on higher gas costs

The cost of imported goods rose in Marc for the first time in nine months, mostly because of a rebound in the price of gasoline.

Market Extra: 6 reasons for the Japanese yen's big 2016 rally

Even as so-called risky assets like stocks and commodities have stabilized, the yen has remained buoyant, defying expectations for the dollar to resume its push higher against its main rivals in 2016.

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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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