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20Apr2016 Market Close: Markets Closed Higher, Crude Higher, Investors Worried About Being In A Possible Bearish Position

Written by Gary

Markets closed marginally lower, but in the green. The DOW closed up 43 points, WTI crude settled higher in the high 43's after going above 44. The US dollar displayed strength during the afternoon session, but remains in the mid 94.s. The Spooze closed with a spinning top Doji which means a direction reversal if confirmed tomorrow.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street nears record high after upbeat quarterly reports

(Reuters) - Wall Street was just 1 percent short of a record-high close on Wednesday as a rebound in oil prices added to optimism sparked by a raft of earnings reports that beat low expectations.

Oil up 4 percent on small U.S. crude build, talk of another producer meeting

NEW YORK (Reuters) - Oil prices rose 4 percent on Wednesday after a smaller-than-expected build in U.S. crude inventories offset glut worries stirred by the end of a Kuwaiti strike, and as oil bulls bet that major crude producers would meet again to try to curtail output.

U.S. home sales rebound signals strong spring selling season

WASHINGTON (Reuters) - U.S. home resales rebounded more than expected in March as supply improved, suggesting the housing market recovery remained intact despite signs that economic growth probably stalled in the first quarter.

VW to pay each U.S. customer $5,000 to settle dieselgate: Die Welt

BERLIN (Reuters) - Volkswagen has reached a deal with U.S. authorities to settle the case over its cheating of diesel emissions tests that would involve it paying each affected customer $5,000, Germany's Die Welt newspaper reported on Wednesday.

Exclusive: Investor Gabelli says he expects 10-day blackout of Viacom on Dish

(Reuters) - Mario Gabelli, the largest owner of voting shares in Viacom Inc behind Sumner Redstone's family, told Reuters on Wednesday he expects a 10-day blackout of Viacom's programming on Dish Network Corp as a midnight deadline looms on their distribution deal.

In riposte to Riyadh, Russia says ready to ramp up oil output

MOSCOW (Reuters) - Russia said on Wednesday it was prepared to push oil production to new historic highs, just days after a global deal to freeze output levels collapsed and Saudi Arabia threatened to flood markets with more crude.

Trump leans toward replacing Fed chief if he wins White House

WASHINGTON (Reuters) - Republican presidential candidate Donald Trump would be inclined to replace Federal Reserve Chair Janet Yellen if he wins the White House despite supporting the U.S. central bank's efforts to keep interest rates low, he told Fortune magazine.

Banks pile into equities trading as salve for bond wounds

(Reuters) - Wall Street banks are piling into equities trading and doing increasingly creative things to win over clients. But as competition heats up, the low-margin business may come under further pressure.

Daily Mail says may partner to bid for Yahoo

(Reuters) - The parent of Britain's Daily Mail said on Wednesday it had not submitted it's own bid to buy Yahoo Inc's core Internet business, but was still in talks to partner with other suitors of the U.S. company.

"We Are Taking Them To The Cleaners" - State Street Caught Stealing From Clients With Up To 1,900% Markups

In a scene right out of Office Space, one week ago we read that TD Bank, the fourth-largest retail bank in Massachusetts, was pulling out its coin-counting equipment for servicing following reports that the machines were short-changing customers who came in to exchange their nickels and pennies for bills. As a recent NBC's Today show revealed when it tested several coin counting machines, it found that TD's Penny Arcades weren't accurate. In one case, the bank's machine gave $43 less than the change deposited.

TD officials said they were disappointed by the œToday show's experience. œAll of our coin-counting machines are in the process of being taken out of service and will be evaluated and retested, TD said in a statement.

What else were they going to say: that they literally nickel and dime their customers?

But while that excuse may have flown, another far more egregious example of "nickel and diming" from one's clients was revealed today when Massachusetts' top securities regulator alleged a unit of custody bank State Street Corp routinely overbilled customers for items such as messaging services, even as an executive worried one client might "discover that we are taking them to the cleaners."

According to Reuters, in its administrative complaint, Secretary of the Commonwealth William Galvin said State Street has engaged in a pattern of overcharging, noting the company often labeled charges for secure electronic messages, also known as SWIFT messages, as "out-of-pocket" expenses that contained concealed markups of up to 1,900 percent.

In a statement e-mailed by spokeswoman Anne McNally, State Street said in December "it discovered invoice errors on some expenses and notified authorities includi ...

Keynesian Central Bankers - Wrong From The Beginning, But No One To Stop Them

Submitted by Jeffrey Snider via Alhambra Investment Partners,

Amidst all the pearls of wisdom unleashed in mainstream economics over the past unbelievable eight years or so, it was one paragraph of common sense that had it been written and appreciated at the start of this period might have saved us all the inordinate and totally unwarranted trouble.

But borrowers will only demand more credit if they have optimistic expectations of future income - and banks will only supply it if they deem them creditworthy. Interest rates, which is [sic] all ECB policy can affect, are less important than economic expectations.

That was published by the Wall Street Journal in an article describing how European banks are largely if not completely at the margins indifferent to QE and NIRP. Monetarism has failed on every count and by every standard. QE was supposed to be a simultaneous boost to liquidity, a push on banks (into lending) from "portfolio effects", and then via price channels a huge lift to those very economic expectations.

None of it worked anywhere it was tried. Full stop.

The worst part is that anyone operating on common sense rather than ideology knew it wouldn't work right from the start at the very least because of the reasons stated in that exact paragraph. Throw in some continued monetary irregularity and there was no chance.

Ben Bernanke claimed that sav ...

Why Competing With HFTs To "Trade By Headlines" Just Doesn't Work

While trying to make sense of the "market" seems like a lost cause today more than ever, and it certainly led Bloomberg's Richard Breslow to flip out on Monday, here is Breslow again, stoically trying to uncover the fundamental logic in what has devolved to nothing more than carefully calculated central banker verbal outbursts (and in some cases, actions) and the corresponding pre-programmed algorithmic reactions to a flurry of headlines. Which, incidentally, is precisely his lament today: that trading has devolved to doing noting more than reacting to flashing red headlines.

From Richard Breslow

Don't Get Lost Without the Details

An unfortunate consequence of the instant information age is that humans have an utter inability to process the deluge of news raining down on them. Their defense mechanism has led to a superficial approach rather than greater insight. There is so much to read, we end up merely judging the book by its cover.

The investing equivalent of this is trading by the headline. The body and context of comments or data be damned.

Policy makers constantly, and futilely, bemoan the fact that their nuance is missed. They can't afford to speak with Delphic flourish and blame it on the listeners. The œnormal they enjoyed at the Princeton Debating Society doesn't exist any longer. And they won't get any help from a press judged by beating the competition to the punch.

This is true as we head into the blessed blackout period before next week's FOMC meeting. And, no, they're not going to tighten and if they're hawkish about June, the rest of the world will vomit on them.

Bill Gross Covers Brazil CDS Trade 'Just In Time'

Back in October 2015, Bloomberg reported that Bill Gross made a big bet that Brazil's credit was improving. He sold enough Brazil CDS to make it a top 10 holding of his $1.4bn Janus Global Unconstrained Bond Fund. As Bloomberg pointed out, the contract maturities were December 2015, March 2016, and June 2016. This was just after CDS prices were starting to come down from recent highs.

Fast forward to today, a time when Brazil just posted its largest budget deficit ever, the economy is expected to contract 3.6%, and the political landscape is in complete meltdown mode as a result of President Rousseff's impeachment. Bill Gross' decision to exit the position in March, just as CDS prices are beginning to spike again seems almost prescient.

Bloomberg notes that the fund may still have positions left in Brazil CDS, they're no longer among the top ten holdings.

Zeroing In on the Allure of a $1 Billion Sales Target

When a big round sales number beckons, companies go overboard to meet it. What happens next is a concern for investors.

The Very Good News In Goldman Sachs's Bad Earnings Report

Goldman Sachs had a lousy first quarter. But Wall Street isn't as troubled as it seems

Why Mitsubishi Motors' Fuel-Economy Problems Won't Clear Quickly

If Volkswagen is a model, investors shouldn't place much hope in a quick restart for Mitsubishi Motors.

Bond Report: Treasury yields jump, with oil rally setting the tone

Treasury yields jumped by the largest amount in seven weeks on Wednesday, following a bounce in oil and equity markets, marking a third straight session of increases

Summary of Economic Releases this Week

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Earnings Summary for Today

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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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