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25Apr2016 Pre-Market Commentary: US Futures Lower, Crude Pushing Higher, Markets To Open Lower And Then Melt Higher

Written by Gary

US stock future indexes are down fractionally ahead of a Fed meeting that could ultimately decide market direction. WTI crude remains above 43 testing resistance and the US dollar trading sideways at support. Today's session could drift north as crude pushes higher on expected low volume.


Here is the current market situation from CNN Money

European markets are lower today with shares in Germany off the most. The DAX is down 0.92% while France's CAC 40 is off 0.83% and London's FTSE 100 is lower by 0.70%.

What Is Moving the Markets

Here are the headlines moving the markets.

Gannett makes unsolicted bid for Tribune

(Reuters) - Gannett Co Inc, the publisher of USA Today, said it offered to buy Tribune Publishing Co but the publisher of the Los Angeles Times refused to begin constructive talks.

Global stocks, dollar stumble ahead of Fed, BOJ meetings

LONDON (Reuters) - World stocks, the dollar and oil all fell modestly on Monday as investors locked in recent gains before central bank meetings in the United States and Japan this week.

Xerox's revenue falls on lower printer sales

(Reuters) - Xerox Corp reported a 4.2 percent fall in quarterly revenue, hurt by a strong dollar and lower sales of printers and copiers.

Exclusive: Perrigo to name Hendrickson CEO as Papa joins Valeant - sources

(Reuters) - Drugmaker Perrigo Co Plc will not fight Chief Executive Officer Joseph Papa's joining rival Valeant Pharmaceuticals International Inc as CEO and will replace him with President John Hendrickson, according to people familiar with the matter.

Less than 5 per cent of Aramco to be sold: Saudi deputy crown prince

RIYADH (Reuters) - Saudi Arabia plans to sell less than 5 percent of its state oil giant Saudi Aramco [SDABO.UL] via an initial public offering (IPO), Deputy Crown Prince Mohammed bin Salman said in a television interview on Monday.

Saudi prince unveils sweeping reform plan for economy

RIYADH (Reuters) - Saudi Arabia's Deputy Crown Prince Mohammed bin Salman announced a sweeping reform plan on Monday that he said would transform the kingdom into a global investment power and wean the world's top oil exporter off crude by 2020.

Mitsubishi Heavy says too early to decide on support for Mitsubishi Motors

TOKYO (Reuters) - Mitsubishi Heavy Industries Ltd on Monday said it was too early to decide whether to offer support to sister company Mitsubishi Motors Corp , which is facing a financial hit after admitting to falsifying fuel economy data on its vehicles.

Taking on Tesla: China's Jia Yueting aims to outmuscle Musk

BEIJING/DETROIT (Reuters) - Tomorrow's cars will be all-electric, self-driving, connected to high-speed communications networks ... and free.

Oil falls as traders cash in after three weeks of gains

LONDON (Reuters) - Oil prices slipped on Monday as traders took profits after three weeks of gains and as a jump in the dollar late last week was priced into fuel markets.

The Most Dangerous Divergence

Submitted by Jim Quinn via The Burning Platform blog,

The chart below would appear to be in conflict with the results of a recent Gallup poll regarding stock ownership by Americans. The ratio of household equities to money market fund assets is near a record high, 60% above the 2007 high and 30% above the 1999 internet bubble high. The chart would appear to prove irrational exuberance among the general populace.

In reality, the lowest percentage of Americans currently own stock over the last two decades. With the stock market within spitting distance of all-time highs, only 52% of Americans own stock, down from 65% in 2007. As the stock market has gone up, average Americans have left the market. They realize it is a rigged game and they are nothing but muppets to the Wall Street shysters.

InvestInStocks1

The reason the ratio of household equities to money market funds is so high is due to the Federal Reserve's "Save a Wall Street Banker" policies implemented over the last seven years. When you purposely destroy the lives of senior citizens by reducing interest rates to "emergency" levels of 0% and keep them there six years after the great recession is over, it tends to reduce the amount of savings in money market funds. The divergence created by the Fed's insane policies is borne out by the data.

The average middle class American has experienced two Fed induced financial collapses since 2000, with another coming down the tr ...

Key Events In The Coming Central Bank-Heavy Week

As DB previews, the April FOMC gathering headlines a crowded economic events calendar this week.

The post-meeting statement, released Wednesday afternoon, should continue to strike a cautious tone. There will be no press conference and updated economic and financial forecasts will not be released. Few expect the FOMC to add the œbalance of risks sentence back into its communiqué at this point. Doing so would be quite bearish for risk assets as it would definitely open the door for a June rate hike. Over the past week, the probability of a June move increased, although the chances are still relatively low. At the time of this writing, the June 2016 fed funds contract was discounting a 23% probability of a 25 basis-point rate hike, compared to just a 14% probability one week ago.

One reason the Fed is expected to be cautious is Q1 real GDP, which is the second-most important event this week. While policymakers will not have the data when their meeting ends on Wednesday "the figures are released on Thursday "expectations will be for a soft print: consensus is 0.6%. Recall that the latter had been around 2% to start the quarter. A troubling aspect of the forecast is that most of the major categories of GDP likely moderated further after only 1.4% top-line growth in Q4 2015.

However, expectations of advance Q1 GDP could change based on the March data for durable goods orders (+1.0% forecast vs. -3.0% previously), released on Tuesday, and the advance international goods trade balance (-$60.0 billion vs. -$62.9 billion), released on Wednesday. Regarding the former series, aircraft orders should boost the headline, while orders excluding transportation are projected to increase modestly (+0.5% vs. -1.3%). Trade will potentially be more important for Q1 real GDP expectations, because of recent activity on the West Coast. Port data for March indicate that inbound loaded containers into Long Beach, Los Angeles and Oakl ...

Why the Saudi Princes are Panicked

Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

The Saudi deputy crown prince, Mohammed bin Salman, recently pulled the plug on an output freeze deal that was scheduled to have been signed by oil producers in Doha, Qatar. Since then, the press has been filled with the same story: Prince Mohammed was offended because Iran was a œno show in Doha. So, he shredded the draft output freeze agreement.

As it turns out, there is an economic story that explains why the Saudis began, in late 2014, to pump crude as fast as they could " or close to as fast as possible. In fact, there is a good reason why the Saudi princes are panicked and pumping.

Let's take a look at the simple analytics of production. The economic production rate for oil is determined by the following equation: P " V = MC, where P is the current market price of a barrel of oil, V is the present value of a barrel of reserves, and MC is the marginal recovery cost of a barrel of oil.

To understand the economics that drive the Saudis to increase their production, we must understand the forces that tend to raise the Saudis' discount rates. To determine the present value of a barrel of reserves (V in our production equation), we must forecast the price that would be received from liquidating a barrel of reserves at some future date and then discount this price to present value. In consequence, when the discount rate is raised, the value of reserves (V) falls, the gross value of current production (P " V) rises, and increased rates of current production are justified.

When it comes to the political instability in the Middle East, the popular view is that increased tensions in the region will reduce oil production. However, economic analysis suggests that political instability and tensions (read: less certain property rights) will work to increase oil production.

Let's suppose that the r ...

Frontrunning: April 25



Obama sending more forces to Syria to consolidate gains against Islamic State (Reuters)

Global stocks, dollar stumble ahead of Fed, BOJ meetings (Reuters)

The Rise and Deadly Fall of Islamic State's Oil Tycoon (WSJ)

Oil Producers Lock In Once-Snubbed Prices (WSJ)

Yellen's Scope for Summer Rate Hike Widens as ECB Signals a Hold (BBG)

11,000 jobs at risk as BHS teeters on brink (The Times)

China's Xi Shakes Up Rival Power Base Before Party Reshuffle (BBG)

As Bond Yields Rise, Some Investors Fear Another False Dawn (WSJ)

It's Dangerous Out There in the Bond Market (BBG)

Yieldcos enabled SunEdison's debt-fueled acquisition spree (Reuters)

Fed Statement Could Offer Clues Toward June Rate Decision (WSJ)

Shanghai CBRC Halts Banks' Business Wit ...

The Fed Fights the Tape Over Interest Rates

Despite the Federal Reserve's protests to the contrary, the market remains unconvinced a rate increase is coming.

Big Pharma Gets Solace From Europe

Are the transatlantic tables turning in the pharmaceuticals industry? Switzerland's Novartis says it is seeing faster uptake of heart-failure drug Entresto in Europe than in the U.S.

Too Big to Fail? So What, Say Bank Depositors

The biggest U.S. banks continued to gain deposits in the first quarter.

Jeff Reeves's Strength in Numbers: Twitter needs to show investors it's at a tipping point

The social-media company has repeatedly disappointed, and more of the same could bury the stock, says Jeff Reeves.

The Wall Street Journal: Cruz, Kasich ally to block Trump in remaining primaries

In an unprecedented last-ditch effort to stop Republican presidential front-runner Donald Trump, his two remaining rivals announced Sunday night they are divvying up the remaining primary states to try to block the New York businessman's path to the GOP nomination.

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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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