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19Apr2016 Pre-Market Commentary: US Housing Starts Down, Crude Prices Fractionally Higher, US Dollar Sliding Lower And Gold Moving Higher

Written by Gary

US stock future indexes are fractionally higher as are crude prices. Stocks seems to be getting a further lift from the ongoing first-quarter corporate earnings season. Oil prices have regained some ground as a result of an oil worker strike in Kuwait that has reduced output, however Russia is now saying they will increase their output. Housing starts came in lower this morning missing analysts higher estimates.

Here is the current market situation from CNN Money

European markets are broadly higher today with shares in Germany leading the region. The DAX is up 2.26% while France's CAC 40 is up 1.18% and London's FTSE 100 is up 0.34%.

What Is Moving the Markets

Here are the headlines moving the markets.

Goldman Sachs profit slumps for fourth straight quarter

(Reuters) - Goldman Sachs Group Inc's profit slumped for the fourth straight quarter as market volatility hit the company's bond trading and investment banking businesses.

J&J shares poised to hit record after earnings

(Reuters) - Johnson & Johnson , the maker of Band-Aids and Tylenol, reported higher-than-expected quarterly earnings on Tuesday and nudged up its 2016 sales and earnings forecasts.

Global stocks rise as strike in Kuwait lifts oil prices

LONDON (Reuters) - Global stocks reached their highest levels since early December on Tuesday as oil prices rose, driven by a strike in Kuwait, and signs of economic stabilization in China improved demand for risky assets.

Oil rises as Kuwaiti oil workers strike cuts output for third day

LONDON (Reuters) - Oil rose around two percent on Tuesday as a strike by oil workers in Kuwait nearly halved crude production from the OPEC member, overshadowing bearish sentiment following Sunday's failure by producers to agree to freeze output levels.

Anheuser-Busch InBev accepts Asahi offer for SAB's Peroni

LONDON (Reuters) - Anheuser-Busch InBev , the brewer which is in the process of acquiring rival SABMiller , said it accepted an offer from Japan's Asahi Group for Peroni and a group of other SAB beer brands.

Debt-laden Valeant faces tough choices in asset sales

NEW YORK (Reuters) - As Valeant Pharmaceuticals considers a multibillion-dollar auction to pare down $30 billion in debt, its challenge will be choosing which assets to sell without compromising any of its key businesses, analysts and investment bankers said.

Exclusive: Target increases minimum wage to $10 an hour - sources

CHICAGO (Reuters) - Discount retailer Target Corp has started raising employee wages to a minimum of $10 an hour, its second hike in a year, pressured by a competitive job market and labor groups calling for higher wages at retail chains, sources said.

As global steel crisis grips, China says March output was a record

BRUSSELS/BEIJING (Reuters) - Under pressure to curb steel output and relieve a global glut, China said on Tuesday its production actually hit a record high last month as rising prices, and profits, encouraged mills that had been shut or suspended to resume production.

Netflix shares plunge as subscriber forecasts miss estimates

(Reuters) - Streaming video service Netflix Inc forecast U.S. and international subscriptions would grow at a slower pace than Wall Street expected this quarter, sending its shares tumbling 8 percent in after-hours trading on Monday.

Which Narrative Will Win Out: Bulls Or Bears?

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The battle boils down to what controls the market: central banks or fundamentals.

The tug of war between Bull and Bear has rarely been so clearly matched--and the stakes have rarely been so high.

Bulls are confident that central banks have their back in 2016. After all, whatever it takes has successfully pushed equities higher for seven years. Why not an eighth?

Many Bulls also believe the global downturn is over and higher growth is just ahead.

Bears see equities in a multi-year topping process that is remarkably similar to the tops in 2000 and 2008. Bears see sagging profits and stagnant sales as evidence that fundamentals no longer support historically high valuations.

Bulls and Bears can tout data, historical patterns and charts to support their case. Two simple charts cut to the chase: a simple chart of the SPX (S & P 500) and a chart of the real SPX (adjusted to present-day dollars, i.e. inflation) and margin debt, which is the debt punters have borrowed against their stock portfolios (courtesy of chartist Doug Short: NYSE Margin Debt Falls Again: More Confirmation of a Major Market Turning Point Last Year?

Though Bulls try to make the case that the global economy is about to enter a new growth cycle and equities are under-valued, this is simply code for central banks cannot afford to let equities decline. Given high levels of debt, decli ...

Silver Soars To 10-Month Highs, Gold-Ratio Continues To Plunge

It appears a combination of Rosengren's comments (panic-jawboning about rates raises policy error fears), positioning unwinds (commercial hedgers covering), and gold/silver ratio compression has sparked a surge in both silver (10-month highs) and gold (back above 50dma) overnight.

The overnight spike...

Smashing Silver to 10-month highs..

UBS analyst Joni Teves tells The Financial Times:

"It's a combination of silver getting a bit of attention over the past week with the big move in the gold/silver ratio and quite a few market participants looking at silver in and its relative performance to gold and thinking it might be time for a bit of catch up."

As the ratio drops to 5-month lows...

Even as Gold lifts back above its 50dma...

Goldman Earnings Plunge 55% In Worst Quarter Since 2011; Average Compensation Crashes

There was some hope that after a better than expected result from JPM and, to a lesser extent MS and WFC, that Goldman would surprise to the upside. That did not happen even though the company moments ago reported EPS of $2.68 beating expectations of $2.48, which nonetheless was a 55% plunge in earnings from a year ago.

But the real story was in the company's revenue which printing at $6.4 billion was not only a huge miss to expectations of $6.7 billion, but a massive slide of 40% from Q1 2015 driven by top-line weakness across the board. This was the worst revenue quarter for Goldman since Q4 2011.

As the chart below shows, revenues declined in virtually all groups, with the all important FICC plunging 47% to $1.663 billion, Investment Banking down 23% to $1.46 billion, Equity trading down 23% to $1.78 billion. Goldman's explanation:

Net revenues in Fixed Income, Currency and Commodities Client Execution were $1.66 billion for the first quarter of 2016, 47% lower compared with a strong first quarter of 2015. During the first quarter of 2016, Fixed Income, Currency and Commodities Client Execution operated in a challenging environment characterized by economic uncertainty and difficult market-making conditions, which resulted in significantly lower net revenues across all major businesses compared with the first quarter of 2015.

Net revenues in Equities were $1.78 billion for the first quarter of 2016, 23% lower than the first quarter of 2015, due to significantly lower net revenues in equities client execution c ...

Frontrunning: April 19

Early Warning Signs of Recession Flash Faintly in U.S. Jobs Data (BBG)

Who Needs Buybacks? One S&P 500 Variant Just Rallied to a Record (BBG)

The unpredictable new voice of Saudi oil (FT)

Saudi's Other Warning Makes Oil Traders Sweat After Doha Failure (BBG)

U.S. oil investors rush for protection at $35 as Doha talks collapse (Reuters)

Trump candidacy: Where some fear to tread others see a path to victory (Reuters)

Iron Ore Powers Above $60 as Steel Rally in China Spurs Demand (BBG)

Syrian government says Assad's future not up for discussion (Reuters)

Low ECB Rates Leave Germans Worried About Dwindling Savings (BBG)

China Sovereign Fund to Seek Control of $8 Billion Yum Unit (BBG)

Reserve Bank's Glenn Stevens shoots down 'helicopter money' desperados (

Oil's Anti-Freeze: The Saving Grace of a Stalemate

Exporters' failure to reach agreement in Doha is a blow to sentiment. But the longer-term market is still creaking in the right direction.

What Will the Bank of Japan Think of Next?

Bank of Japan Governor Haruhiko Kuroda all but promised more monetary easing. The question is, What buttons will he push?

Investors All Mixed Up About Chinese Property Bonds

China's bond market has been showing signs of indigestion, with dozens of failed offerings and rising yields. Offshore property-bond investors haven't seemed to get the message.

Economic Report: Housing starts sink 8.8% in March

Builders broke ground on fewer homes in March as the housing recovery lurches forward.

The Wall Street Journal: EU set to slap Google with antitrust charges over Android

European Commission focusing on demand that phones load Google apps.

Need to Know: This jungle of a market needs two big things to keep moving higher

Dow's move to 18,000 looks pretty good on paper and in the headlines, but the 'Jungle Book' fueled rally is going to need more to keep it going, especially with 'Sell in May' around the corner.

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